By Jeff Madrick
The New York Review of Books - April 24, 2014
“The great advances of civilization,” wrote Milton Friedman in Capitalism and Freedom,
his influential best seller published in 1962, “whether in architecture
or painting, in science or literature, in industry or agriculture, have
never come from centralized government.” He did not say what he made of
the state-sponsored art of Athens’s Periclean Age or the Medici family,
who, as Europe’s dominant bankers but then as Florentine rulers,
commissioned and financed so much Renaissance art. Or the Spanish court
that gave us Velázquez. Or the many public universities that produced
great scientists in our times. Or, even just before Friedman was
writing, what could he have made of the Manhattan Project of the US
government, which produced the atomic bomb? Or the National Institutes
of Health, whose government-supported grants led to many of the most
important pharmaceutical breakthroughs?
We could perhaps forgive
Friedman’s ill-informed remarks as a burst of ideological enthusiasm if
so many economists and business executives didn’t accept this myth as
largely true. We hear time and again from those who should know better
that government is a hindrance to the innovation that produces economic
growth. Above all, the government should not try to pick “winners” by
investing in what may be the next great companies. Many orthodox
economists insist that the government should just get out of the way.
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