By Jonathan B. Wight

The title of this piece is tongue-in-cheek.  Mort’s post on “Why I Fear Government” is completely understandable.  He’s wise and mature.  He’s experienced how the most benevolent plans of government leaders often produce horrible unintended consequences., and many government leaders are not paragons of virtue to start with.  Point well made.

However; I don’t believe our only choice is between a) laissez faire free market capitalism and b) Stalin, Hitler, and Mao.  Aren’t there any options in the middle?  

But as Mort noted, young people, who have their whole lives ahead of them, are increasingly saying they prefer more socialist policies. 

Michelle Goldberg explores why in “No Wonder Millennials Hate Capitalism" in the NT Times. 

While much of the angst young people feel toward capitalism is partially misguided, and reflects misunderstandings about the role of markets, our current leaders in Washington are making things worse for defenders of capitalism. 

Crony capitalism that trickles up through rent seeking is one symptom of dysfunction.  The new tax bill blows up the budget deficit to favor the 1%, not to address any urgent need given the current state of the economy.  Entitlement reform needs to be on the table, but not because of a debt crisis fueled by tax cuts. 

Not all government is bad; sorry—it’s not that simple.  For example, Ronald Coase showed that when there are negative externalities with high transaction costs, the market has no incentive to fix that inefficiency.  When nitric and sulfuric acid from factories in the mid-West fell as acid rain in New England, it ruined lakes and forests, but what market mechanism could ever correct this?  Instead, some sort of non-market mechanism is needed to force polluters to pay for their externalities or to limit their externalities.  I would prefer a mixed market mechanism, like cap and trade, but the bottom line is it took the threat of force by government to reduce the severity of acid rain over many decades.

Capitalists, if allowed to, will pollute at other people’s expense.  They will overfish the commons if it’s profitable.  It’s lovely to think about ways to privatize and create property rights, but it doesn’t always work.  And yes, government will also pollute and overfish.  It takes vigilance on both sides.  There are plenty of other reasons why we need good government, but that’s enough for today.