Monday, April 1, 2013

Concerned scientists probably should stick to their specialties...

Below is my comment to Don Boudreaux regarding his letter-to-the-editor of the Wall Street Journal. Please read first the brief article, then Don’s brief letter. As Don states, “it’s impossible in one letter-to-the-editor to do more than scratch the surface of the mountain of errors in Mr. Friedman’s reasoning.”

So, the Union of Concerned Scientists, or one of its members, finds economic justification for politicians subsidizing their pet projects by extracting resources (subsidies = taxpayer money) from those who literally stand to lose should they miscalculate---who know their investors will look elsewhere should their enterprises not yield substantial profits (as opposed to substantial political gains)---oh my! 

Comparing simply the survival rate of venture capital-funded firms with government subsidized firms is like comparing two groups of organisms: one existing in nature, left to brave the elements (thus, the survivors growing stronger with each successive challenge to their existence), to a group that exists in a lab receiving a steady flow of synthetic nutrients. No doubt, over time, the mortality rate would be higher for the organisms exposed to the elements. But imagine what would happen should the lab-raised organisms be released into nature. No doubt the study would abruptly turn on its head.

"The curious task of economics is to illustrate to men how little they really know about what they imagine they can design." Friedrich August von Hayek 

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