Don’t let government intervene in innovation

24 05 2011

If you ever doubt the ability of ordinary men to accomplish extraordinary things when allowed to innovate in a free market, head over to Greenfield Village for an afternoon.

The inventions showcased at the Village and the Henry Ford Museum, from the now-endangered incandescent light bulb to the affordable automobile, were the result of pure individual initiative. They became wildly successful because they fulfilled a real need. The same cannot be said about the recent crop of “green” products, from wan compact fluorescent bulbs to massively subsidized hybrid-electric cars.

"Better" = "No tax credits needed"

The government has long tried to turn the process of innovation on its head in an attempt to make the market respond to top-down edicts instead of bottom-up demand. Mandates, subsidies, targeted tax credits, and outright bans are all tools in the state’s arsenal. Now, in his self-appointed role of Henry Ford-in-Chief, President Obama is trying to engineer widespread adoption of eco-friendly vehicles where the market has, in his mind, failed.

But the purchase of expensive Chevy Volts and other high-efficiency vehicles for the government motor pool isn’t just a waste of tax dollars (does the federal government qualify for federal green vehicle tax credits?); it represents yet another bid to alter the course of innovation to fit the vision of bureaucrats, consumers be damned.

There’s a reason that East Germans began driving the infamous Trabant in the same year that American consumers were treated to the ’57 Chevy: the economy in the former nation was planned, the latter, decidedly less so. Planning always fails, whether done by dictators or democratically elected representatives.

Likewise, unless a genuine, organic demand develops for expensive high-efficiency vehicles, Obama’s top-down efforts will eventually fail as well–but in the process, vast resources will be wasted pursuing dead-end technologies, slowing the pace of real technological progress.

Compare that to the remarkable successes of of Edison, Ford, and their modern-day counterparts, whose developments have benefited billions of individuals around  the globe. It ought to be obvious which path fosters real prosperity.

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