I saw a tweet from a rising celebrity "conservative" today sounding a tired refrain...that one of the key differences between progressives and conservatives is that conservatives don't believe government can create wealth and progressives do...
It's of course not the first time I've heard or seen this, but I remain as curious as ever about this idea.
“Government can’t create wealth, only the private sector can.”
I guess the first question is, what do you mean by wealth creation or even more fundamentally, what is wealth?
The planet is covered in natural resources. Since the planet is dynamic, the level of total resources is changing over time, but at any given moment there is some finite amount of resources on the planet which is translatable into some common measure of value.
That amount is a starting measure of total wealth. That measure can be improved upon in a couple of different ways. One way is to utilize some of those resources in some combination to create something that has a value to society (or at least to someone) greater than the value of the portion of resources that went into building it. The inspiration and perspiration that go into building that something are the sources of the additional value – the additional wealth. Another way is to improve upon the rate of usage of resources such that less are used and more value is retained.
Any entity is capable of exercising these methods. Government entities, like corporate entities, are comprised of individuals with a purpose. It makes no sense to say that a group of talented individuals thinking and working for a government entity are incapable of creating wealth whereas a group of talented individuals thinking and working for a “private sector” corporation are capable.
The fact that government entities are funded largely (but not exclusively) through involuntary contributions of wealth whereas private sector entities are funded largely (but not exclusively) through voluntary investments is an important distinction, but not one that necessitates the conclusion that government entities cannot create wealth. Ultimately, regardless of the means of collection, what you have is a transfer of some amount of wealth from individuals’ pockets into the coffers of either a government or private entity. That entity then has the opportunity to use that collected wealth wisely to create more wealth.
Both government and the private sector often fail in this endeavor and destroy wealth instead. Sometimes however they both succeed.
What value has been added into the economy by the US government’s financing and construction of such a comprehensive system of road, highway and port infrastructure? How many people have based their entire livelihoods on the existence of this infrastructure? How much less expensive and less time consuming has this infrastructure made people’s lives? Has this not generated wealth? What about telecommunications and electricity infrastructure built either directly by government or by monopolies under government concessions? What about the original broadcast infrastructure that launched the industry that enables so many of these talking heads to earn a living? What about the creation of the internet? How about all the innovations associated with the space exploration program or the military? The fact is these are all big ticket items involving great risk and very very long investment time horizons – the types of investments that the private sector generally avoids. Yet it is simply impossible to credibly argue that these government investments, financed by collectivized wealth have not been of enormous value to the society and enabled millions to generate wealth of their own. You can argue in theory all you want about the superiority of the invisible hand in rationing resources, but the fact is that much of our society’s wealth has and will continue to be created by government.