Choosing Bureaucrats Over Entrepreneurs

(Michael Chamberlain/Nevada Business Coalition) – Two years and nearly a trillion dollars later and the federal stimulus has not made a noticeable impact on economic growth or unemployment.

The experiences of other countries who attempted to use similar methods to reverse economic downturns have been similar.

Unfortunately, leaders of our state, of both parties, are attempting to create such government programs of their own to give a boost to the Silver State’s struggling economy.

NPRI’s Geoff Lawrence explains why government “stimulus” programs never achieve their objectives and why attempts at such programs in Nevada are likely to fail.

The economic plans made by bureaucrats, no matter how well intentioned, would almost assuredly be inferior to those made by private entrepreneurs staking their own savings. It is impossible for bureaucrats to ascertain and then aggregate the value that every unique individual places on the fulfillment of an infinite array of human needs. As such, bureaucrats cannot know how to allocate resources in concordance with the highest needs of every individual, as markets do. Yet, the economic plans laid by these bureaucrats, relying on coercion, would unjustly compel citizens to contribute toward economic plans likely to result in lower living standards than would otherwise be the case.

And that would be the best-case scenario. If these new bureaucrats and committees of economic planning are anything less than completely scrupulous, Nevadans are likely to see the entire agency devolve into a nightmare of rent-seeking, kick-backs, special favors and other unethical dealings in order for politically connected individuals to gain access to moneys taken from the people.

All too often, money placed in the hands of politicians and bureaucrats eventually ends up in the pockets of those with the best political connections rather than the most promising ideas or most formidable entrepreneurial skills.

When government funds private business even bad ideas often are not allowed to fail. Most private ventures are unsuccessful. But this is a strength of the market, not a weakness. When poorly conceived or implemented ideas are allowed to fail, it frees up resources for better uses.

On the other hand, once government has invested in something that venture is rarely allowed to fail. Government tends to continue to waste resources and pour good money after bad attempting to prop it up, no matter how ineffective or inefficient it is. In many cases, the more poorly a government venture performs the more resources are dumped into it.

As Lawrence points out, government programs to stimulate economic growth and development, no matter how well-meaning, distort markets and often hinder economies from reaching their potential. Lawrence’s conclusion is right on the money.

To spur recovery, Nevada needs policies that open the doors for real entrepreneurship — not more bureaucrats.