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

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.