Biden and Ryan differ sharply on government’s role in innovation

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During the vice-presidential debate on Thursday night, voters will be looking for answers about the economy. There’s an easy way to draw out the differences between Vice President Joe Biden and Congressman Paul Ryan: ask them to comment on their own statements on the government’s role in prosperity and innovation.

Congressman Ryan has made his case unequivocally: “Big-government economics breeds crony capitalism. It’s corrupt, anything but neutral, and a barrier to broad participation in prosperity.”

Now contrast that with what Vice President Biden has said: “Every single great idea that has marked the 21st century, the 20th century, and the 19th century has required government vision and government incentive.”

President Obama made a similar point when he infamously said, “If you’ve got a business, you didn’t build that.” These weren’t off-hand comments. They betray the true nature of progressive ideology — and they are as startling a display of hubris as they are of ignorance.

The challenge, in fact, is finding at least one great idea that could be attributed to government.

Consider some of the major inventions of the past two centuries: the telephone was invented by scientist Alexander Graham Bell; the internal combustion engine was invented by Catholic priest Eugenio Barsanti and hydraulics student Felice Matteucci; the light bulb was invented by self-employed entrepreneur Thomas Edison; the airplane was invented by self-employed entrepreneurs Orville and Wilbur Wright; the television was invented by privately backed scientist Philo Farnsworth. Private enterprise is responsible for these inventions, not government.

But as Biden’s and Obama’s comments reveal, progressives dismiss the importance of private enterprise. Their lip service to America’s entrepreneurial spirit aside, progressive politicians act as if it is up to government workers, under the direction of our betters, to initiate, direct, propel, and organize.

There is nothing stopping bureaucrats and politicians from contributing entrepreneurial talent. But in the past few centuries, such displays of entrepreneurship (when applied outside of warfare) have been the rare exception, not the rule. The problem is not the talents of the people but the incentives of the system. Those in government are neither rewarded for wise entrepreneurship nor punished for unwise entrepreneurship. In the private sector, profit provides the lure for entrepreneurs to produce things that are of greater benefit to society than the resources consumed in their production. Just as important, the threat of loss dissuades entrepreneurs from producing things that provide less benefit than the resources required to produce them. Where profit and loss rule, we have the iPhone instead of the Iridium phone (a $3,000 precursor that could only be used outdoors and was the size of a brick). Where profit and loss do not rule, we have the Postal Service instead of FedEx. Compare advances in customer service at Wal-Mart (self-checkout, greeters at the door, wide aisles, pharmacy, eye care, and food services) to advances in customer service at the DMV.

When government is involved in invention, the absence of profit and loss almost always results in inventions that make society worse by wasting resources. The government invested billions of dollars to force General Motors to produce the Chevy Volt. Meanwhile, sales figures show that customers would much rather have the Chevy Cruze — a gasoline-powered equivalent. To produce one Volt requires $60,000 of society’s resources. One Cruze requires $15,000 of resources. The Volt saves some resources over its life because it is coal-powered rather than gasoline-powered (the electricity that powers it typically comes from burning coal). But the resources it saves do not come close to making up for all the additional resources it takes to produce.

Government’s entrepreneurial vision is blind to the demands of the people because government’s incentives are isolated from real economic conditions. That is the difference between motivation by profit and loss, and motivation by government command. Biden and Obama believe only government is capable of satisfying the needs of society. In reality, the most useful inventions come from the private sector, where the people judge the value of an entrepreneur’s innovation by whether it benefits them.

What government views as its greatest contribution to society, replacing the greed of profit and loss with beneficent mandates, is actually society’s greatest hindrance. Let’s hear Vice President Biden try to defend that position during the debate.

Kelsey Rupp has worked for the Washington Examiner and Red Alert Politics. She is a junior at the University of North Carolina at Chapel Hill, where she is editor in chief of the conservative journal Carolina Review.

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