How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.

Well, they've already built an interstate highway system and the US state dept and military are already going to bat for us worldwide ensuring access to oil.

But yeah. THIS is the real case of the government getting too involved in the market.

Government doesn't bet than society as a whole loses out.

Ideally your government should be attempting to maximize everyone's utility (read:society). Private corporations are attempting to maximize their utility (In the case of modern economies: money).

Having an organization giving money to projects that are a net monetary loss, but provide a social benefit is the core reason why we have a government in the first place.

I disagree. The core function of government is to provide a social order. Police enforce rule of law, and legislatures write the law. Military protects our sovereignty against outsiders, and citizens pay taxes for these benefits. While military and police spending fit your description (they are not necessarily profitable but provide a social benefit), I argue that social order is the primary function of government.

In the U.S.'s case, our government happens to do much more than this, but this is not the core of why government exists.

Governments have been involved in 'public works' for at least the last 10,000 years. Without it you end up with a weaker society with a weaker military which is then easy pray to invaders.

It may have started out as roads, bridges, defensive structures, and irrigation systems. But the CDC is well within that domain.

I agree that the CDC is a legitimate example of something that only government can afford to offer. But we can have a government without the CDC. We can have government without welfare or social security. We can take many things away from government and still call it a government. Taking this to its extreme, if we remove the social order provided by police or the sovereign protection provided by military, laws and borders become meaningless and our government becomes anarchy.

This is not to day that we should or shouldn't take these things away (or add more, for that matter), but that the core of government's purpose is social order for its citizens.

You can have minimal governments, and going in that direction often seems like the right choice. Like most people I would be happy to cut 50% of all government spending, the problem is we don't want to cut the same 50%.

Take the US government remove the Air-force and you still have a functional government. In fact, we would still have the largest and most powerful Air force due to the Navy. But, that does not mean the Air force is worthless or even that taken in it's entirety it's a waste of money. And a lot of people want the Airforce which in a democracy means a great deal.

The real question is not how you can make a smaller government, but how you can have a better society and those are not always the same thing.

Agreed. The size of military and police forces are a completely different matter. It seems that many people have strong emotional reactions to military and/or public works spending, and I want to steer clear of that here.

Your argument is flawed and this can be demonstrated with countless examples. For example, it is difficult to have social order when your elderly and your poor are dying on the streets. This is why we have welfare and social security.

OK. Let's look at my argument. I posit that the core purpose of government is social order. I also imply that this is primarily provided through rule of law (police and legislatures) and sovereignty (military protection).

You state that it is difficult to have social order without welfare and social security, because the poor and elderly would be dying on the streets. This example doesn't dispute my core argument that government provides social order. In fact, it supports it, showing that social order is necessary and provided through government.

Remember, I argue that the core function of government is social order (which you seem to agree with), and that the primary means of providing this order is through police and military. I agree that there are other secondary means of providing social order (welfare and social security), but they can all be linked to the primary means of social order.

Here is an example: Let's say that we do not have any form of welfare or social security (America didn't for nearly half of its existence). When times get particularly tough, the poor may start stealing more in order to survive (notwithstanding the impact of food banks, churches, and other charitable organizations). If theft goes up, the government's primary means of providing social order is strained, because police must protect against more thieves.

Here is how I support my claim that police and military are the primary means of providing social order. Can our government exist without welfare? It has. Can it exist without the public school system? It has. A government that ONLY created and enforced rules is still a government. A government stops being a government if it cannot create and enforce laws, even if it provides all of these other things, will quickly fall into anarchy. Why pay taxes if there is no threat of imprisonment?

This might be an interesting argument from the point of view of pure philosophy or ideology, but it is a pointless argument when discussing practical politics. It does not matter which is the primary means of providing social order.

It is particularly pointless because "being a government" is not an interesting measure outside of the realms of philosophy and ideology. There are very many governments that would have done the world a great service by ceasing to "be a government".

Personally, I'd argue that a government that provides no welfare are often a net negative - many of the early nation states saw enormous societal harm resulting from law enforcement and military being used as a bulwark against the effects of the lack of working welfare systems.

E.g. I'm from Norway. A large proportion of the Norwegian emigrants who settled in the US (like the Irish) came during periods of extreme poverty and often starvation in Norway (Norway didn't become wealthy really until oil finds in the 60's, and until at least the 20's it was really a quite poor country). Poor people could get forcibly put to work in poor-houses, as they were in many other countries. Yet the state at the time used the police to restrict emigration:

You needed permission, or you could get thrown in jail for trying to leave. It was seen as essential in order to provide social order. As it was in many other countries.

> Here is how I support my claim that police and military are the primary means of providing social order. Can our government exist without welfare? It has. Can it exist without the public school system?

Can it exist without government run police? Many governments have historically largely deferred policing to volunteers (UK for example, where volunteers still have a role in policing). Without military? There are examples of that too - the modern nation state with standing armies is a relatively new invention and prior to that at least some societies had what amounted to functioning governments without military or police - Iceland, for example, which had a functioning parliament and established laws and court system for hundreds of years before it got a government run police and military.

While the nature of a government that is not a monopoly provider of violence and force is by necessity very different, that does not mean they can not exist.

Horrible idea. Especially in industries that are capital intensive (i.e. high starting costs), the markets heavily favor the existing players, who have a vested interest in preserving the status quo. In such markets, if you want innovation then you need government assistance for startups.

So you're arguing that the search engine space, or new computer manufacturers, or rocket ships did better before venture capital and startups got involved?

What?

While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.

Does the market always pick the highest quality of winners? I really don't think it does.

I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.

Define "highest quality". I'd say "of most utility to the largest number of people." By that metric, the market picks the highest quality of winner pretty much by definition.

Exceptions I can think of are cases where individuals don't have enough info to decide (eg, a product will cause cancer, but the company can get rich before consumers find out) and Tragedy of the Commons issues (eg, every individual has incentive to pollute and only collectively do we have incentive to prevent it).

You might argue that the pollution exception applies here, but I'd still want the market involved. For instance, "the government will award $LargeAmountOfMoney to the first company who sells X vehicles meeting the following efficiency requirements..."

> By that metric, the market picks the highest quality of winner pretty much by definition.

I dunno, Windows and Internet Explorer has been the "winner" for the past few decades ;-) By the metric you mention ("of most utility to the largest number of people."), yes, they are "high quality". By many other metrics, they are not the highest quality products.

Jokes aside, I absolutely want the market involved as well. I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency).

I don't think the government has all the answers - but I don't think the market does either.

>> I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency).

I agree, but since patents are government-granted monopolies, that's really an example of government intervention rather than market freedom

>> I don't think the government has all the answers - but I don't think the market does either.

Agreed. By itself, the market can be ruthless. One proper role of government, in my view, is to ensure fair play.

Another is to provide incentives, when necessary, for research and infrastructure needed by society at large. ARPANET is a good example: a government initiative carried out by private contractors which never would have been undertaken by entrepeneurs.

BTW, Windows has been the market winner for good reason: more usable and universal than Linux, and cheaper than Mac. It's not my favorite, but there you go. IE has ridden Windows' coattails; few Mac users and no Linux users have ever used it.

I am okay with governments betting on winners as long as these were similar to the Ansari X Prize. Any government interventions should be there to stimulate and reward competition and not to decide winners and losers.