Reverse Your Expectations
by on NOVEMBER 15, 2012
On the subject of the effectiveness of government programs, Milton Friedman once wrote:
“There is a sure-fire way to predict the consequences of a government social program adopted to achieve worthy ends. Find out what the well-meaning, public-interested persons who advocated its adoption expected it to accomplish. Then reverse those expectations. You will have an accurate prediction of actual results.”
If we take a trip through American economic history, we find Friedman’s formula vindicated more often than not. Let’s begin with the first government subsidy in U.S. history: a government-operated fur company in the American Northwest. Its purpose was to allow the U.S. to trade furs with the Indians, earn their loyalty, and keep the British fur traders away from the Mississippi River. What happened? Just the opposite. The government fur company was incompetently managed; Indians mocked it because it sold farm equipment and jews harps instead of cheap and useful blankets, guns, and axes. The British, therefore, flagrantly expanded their fur trading deep into American territory.
In the 1860s, the U.S. began building transcontinental railroads to pull our nation together and give passengers cheap railroad fares across the country. What happened when the federal government poured money into railroad building? ...
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