Well administered, a little government is an excellent thing. It protects property, sees to the enforcement of contracts, defends the borders, keeps the streets safe. Even those “stale political debates” that fill the president with sighs have their place: Government is an art, not a science, and it cannot be plotted out via mathematical formulas. How much government is too much? How little too little? That depends to some degree on the complexity of your economic environment (software patents aren’t stray chickens), the scope of your borders, and the number of your streets. How much government is enough when you’re trying to keep crime under control? It depends on whether you’re in New York City or Muleshoe, Texas. How much government is too much when you’re trying to steer extraordinarily complex markets, such as the ones involved in electricity generation? In that case, $1 is too much, because it is $1 spent on something that government not only should not be doing but in fact cannot do. From Soviet central planning to the Spanish green-energy racket to the U.S. housing bubble, one of the inescapable lessons of economic history is not that government should not attempt to steer industries but that government cannot steer them in any predictable and productive fashion. “Should not attempt” is a second-order conclusion, deriving from the fundamental condition of “cannot.”
I have spent a fair amount of time around elected officials, regulators, and the like, and when I see them, I think: space monkeys. The first monkey to make it into space was called Albert II, who went up on a V2 rocket. Albert II survived the space flight but not, unlucky little beast, the parachute failure that followed. We primates are in a sense one big family, and the first of us to see the majesty of our little corner of the universe from a vantage point beyond the surly bonds of Earth was a rhesus monkey, the stars laid out like a trail of diamonds before his uncomprehending eyes. The complexity of even the simplest markets is as far beyond the understanding of any politician or bureaucracy — or any single human mind — as astrophysics is beyond a rhesus monkey. Politicians steer the economy like Albert II steered that rocket. It isn’t just that they don’t know which levers to pull at what time — they’re clever enough — but that the thing itself is so incomprehensibly complex as to be effectively unknowable to them.