How Government Impedes Progress

There are those who believe that government through “investing in the future” can promote progress. There can be nothing further from the truth. Government can only impede progress. The case of Telsa Motors helps to explain why.

How much demand do you think they would be for an electric car that was able to travel approximately 200 miles between charges, needed an hour of electric charging at a Supercharger station (much more time at home) and had a base price of $109,000? (Telsa does make cheaper models starting at $52,000 with a lower range of operation between charges). Well let's say, most people you know will not be lining up at their dealership to make a deposit.

And perhaps if you are among the few who are considering buying such a car, a recent New York Times article might change your mind. The New York Times reporter, John Broder, set out from Washington, D.C., and drove up I-95, thinking that the Supercharger stations which have been installed two- hundred miles apart at I-95 rest stops would be more than adequate for the claimed 265 mile range of the Telsa car.

The Telsa had much less than the purported range. Despite shutting off the heat in the car on a 30° day and despite reducing speed to an unsafe driving speed, John finally had his Telsa towed away on a flat-bed truck. John may have had a better experience driving a Yugo.

As you might suspect, Telsa needed a $465 million dollar loan from the Department of Energy to get up and running. But isn't that a small price to pay to secure our energy future? Isn’t the government investing in our future?  Surely, as a result of the current experiment, future Telsa’s models will be successful by costing less and having a much bigger range.  If you believe that, please invest in Telsa Motors; you can buy their stock at a mere $38 dollars a share.

In her riveting book The Discovery of Freedom, Rose Wilder Lane observed, “Human energy works to supply human needs and satisfy human desires, only when, and where, and precisely to the extent that men know they are free.”

She goes on to explain, “The unhindered use of natural human rights creates this whole modern world. Nothing else makes it possible for men to create new things, and improve them and keep on improving them.”

If, on the other hand, we believe that human progress must be guided by government, we will be supporting the use of force to hinder human energy. Progress must be impeded.

Why, you may wonder, is that necessarily the case even when subsidies are going to a so-called progressive company?

The case of Telsa Motors answers this question. The money of taxpayers subsidize Telsa Motors; but as independent investors, few of those taxpayers are willing to invest in Telsa Motors. Thus the hundreds of millions of dollars of precious capital that are going to subsidize Telsa and the Supercharger stations would be better directed to other uses as judged by the most urgent needs of the consuming public.

In other words, there are emerging companies who are not politically connected, who need the capital that is being misdirected to Telsa by force. A high percentage of emerging companies will fail, but this is not waste. It is a necessary part of the entrepreneurial discovery process. Emerging new forms of energy will surprise us just as a person born in 1820 was surprised when, in her lifetime, she came to rely on kerosene. Or, a man born in 1880 was surprised to turn on a light switch in his lifetime.

"The economic miracle that has been the United States was not produced by socialized enterprises, by government-union-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline," wrote Milton Friedman.

Using the case of Telsa motors, we can see the implications of socialized enterprise. Government cannot plan the economy; government cannot direct the economy; government action only hinders the economy by blocking the use of productive energy and misallocating resources.

Emerging entrepreneurs who are not being subsidized, individuals we may never hear of, are having their talents and dreams destroyed by government subsidization of Telsa, of Solyndra, of ethanol, of nuclear power, and of windpower. The result is, and will continue to be, higher energy prices than would otherwise exist. The result is, and will be, a lower standard of living for Americans. Keep all of this in mind when in his State of the Union address on Tuesday night President Obama tells you about all the “investments” he is making in your future.