liber8

Delayed gratification never gets talked about enough. It is the heart of capitalism. It's also, without a doubt, the most important contributor to success.

But, I don't think it's fair to say it has to come from inside the person somewhere. Obviously, you're right in the literal sense, as you can't impose delayed gratification on a free adult. But, that doesn't mean its inherent in someone's genetics. I think the far more likely reality is that people learn delayed gratification by watching those around them. Even if you do have some preternatural foresight as a child, it's extremely difficult to see how delayed gratification makes you successful in life if you never see anyone that's successful due to their practice of delaying gratification.

This cuts across wide social divides as well. I grew up in a wealthy family, in a wealthy suburb and had wealthy friends. Everyone had wildly successful parents. Guess which kids ended up losers (and there are a lot of them)? The ones whose parents were too busy with their careers and placated their guilt by trying to buy their children's happiness. These were the kids who got everything they wanted, any time. These were also the first kids to smoke, try drugs, have sex, and play video games instead of do homework or go to football practice. Now these people are working minimum wage jobs, if they're working at all. The few who used their family connections to get into sales gigs, or similar, are generally broke. They make a little bit of money, then blow it all in a weekend.

I can only imagine how this effect is amplified growing up in the lower socio-economic classes. My friends at least knew people that became successful, and saw that it was possible. I'm sure it's easy to think that improving your life is impossible if you'd never met anyone who did it, or if your parents, family, and friends were impoverished, or alcoholics, or drug addicts.

First, the stock trader bit was an example, and doesn't demonstrate limitations. It demonstrates that people will invest huge sums to generate returns. I will agree that they likely could calculate the returns ahead of time, and the payback time was very small. (This example is further complicated, since the builders actually licensed the use of the cable to other companies and essentially made their money back immediately.) Nevertheless, I simply can't buy the argument that the military and a bunch of academics were the only ones who foresaw the use of the internet, and thus the private sector never would have built it. It simply doesn't make sense, even without the hindsight bias.

Second, whether VCs in biotech are harmful to innovation is irrelevant, both to the current biotech field and to the history of pharmaceuticals.

My point, again, is that if you want the government involved in research, you should want it involved in research individuals aren't willing to pay for, but has the chance to significantly improve society. Otherwise, you're going to see a ton of taxpayer money ultimately flow into the pockets of the rich who likely would have funded the work anyway.

This doesn't take away from your point, but from a practical perspective, small businesses pay 0% corporate tax. When you have just a few shareholders, as nearly all small businesses do, all profits get paid out as salary. If small businesses didn't do this, their owners would be taxed twice (first at the corporate level and then again individually).

The companies that get squeezed are not the Regular Joe Businesses but the midsize businesses that can't get away with paying out all profits as salary (because they have third party shareholders who don't work for the business) and yet can't afford to set up the necessary bureaucracy to take advantage of things like a Double Irish With a Dutch Sandwich.

That's an extremely narrow argument though. There's a huge world of funding outside of VCs. Of course, this also overlooks the fact that even VCs fund tons of biotech work, and are funding green energy right this very second. (In fact I personally know one VC who made his 9-figure fortune almost exclusively from funding biotechs in the 90s. I'm sure there are many others.)

The internet may have taken 30-years to reach commercial viability, but that doesn't mean it would not have happened privately. Again, as soon as people began using computers as more than simply adding machines, it was pretty clear how beneficial it would be if computers could talk to each other. Eventually, the internet would have happened. Who knows if it would look like it did today (or would be better, or worse) without government involvement. It's impossible to say. But, when stock traders, for example, are willing to invest hundreds of millions of dollars to build a fiber cable to shave 3 milliseconds off their trade times, I have no doubt they would have invested similarly to have the communication abilities afforded by the internet.

My original point was, be careful when people hold up the fruits of government investment. Government fertilizer might have had nothing to do with the size or taste of the fruit. And moreover, that fertilizer might have been much better used on some other type of fruit.

The author's hilarious use of the Medici family[1] as an example of government contributing to great advances of civilization aside, one of the things that is often overlooked is not that government has successfully contributed to some major technological advances, but why, and whether government contributions were really necessary.

The examples of government successes range from those that almost certainly required government backing to those that almost certainly did not. I have a hard time imagining that anyone but a government is going to finance atomic research. The profits simply aren't there to justify it, particularly when compared to existing means of energy production.

But I have an equally hard time believing that the internet or pharmaceuticals wouldn’t have come to market if government had nothing to do with them. The profit potential, even in those early years, was simply too staggering for the market to ignore. The fact that, in many cases, companies were able to persuade governments to share their costs or flat-out underwrite their research doesn’t change this. And so, because government was persuaded to share or pay for many of these costs, I think we get a distorted view of history, including success stories that can be attributed to government involvement, even though we don’t know whether government involvement was really necessary at all. [2]

[1] If you're unaware, the House of Medici became so wealthy that they were able to essentially buy control of Florence, then most of Italy, and turn it into their own little kingdom. They used their wealth to foster wars that expanded their sphere of control, but are now generally known for underwriting the production of some of the great art of the 15th century. Shockingly, much of that art lionized the House of Medici. Claiming that the House of Medici is an example of a government contributing to the advancement of the arts is like claiming Brunei contributed to the advancement of the automotive industry because the Sultan spent a billion dollars on Ferraris, Lamborghinis, Bentleys, and crazy one-off concepts.

[2] Another example from the article highlights this: touch-screens. Once it was clear computers would eventually be more than simply adding machines, was there any doubt that users would eventually want touch-screens? (The Jetsons, in the early 1960's, featured consumers using touch-screens, for reference.) And is there any doubt that this is something that absolutely could have been developed privately?

Honest, non-snarky question for you: How is it that you could not afford a half-dozen trips to your doctor, but you could afford your medical insurance premiums? Are your premiums subsidized or free? Is the doctor terribly expensive?

(I'm assuming that your doctor charges $250 or less per visit. Six visits would cost $1,500. I'm assuming those visits were spread over at least a number of months, so you could see whether each medication was effective. I'll also assume your health insurance is at least $400/month, though that number is likely higher if you're over 30 or female. This means your six visits cost roughly four months worth of insurance premiums.)

>>If you're talking about streamlining the process at the cost of higher risk, then that's probably a nonstarter.<<

I hate to be that guy, but this is the fallacy of false dilemma, and directly ignores the example I gave above.

>>I (and most people) am not willing to increase my odds of being harmed on behalf of someone else's profit margin. You'd have to be crazy to accept that deal.<<

This isn't the deal. Do you feel that your odds of harm from taking a supplement are significantly too high, since of course supplements are not currently regulated by the FDA or any other government body? Are people who takes supplements crazy?

>>Expecting the market to 'just do your research' on drugs is crazy. It takes experts with PhDs a long time to verify a drug as safe, and they still make mistakes sometimes as you indicated... you're expecting me to do it? I haven't taken chemistry since high school.<<

Why is it crazy to expect the market to do research? This happens with literally every other product available. There are thousands of organizations dedicated to reviewing automobiles, blenders, mattresses, and literally every product you can buy. If people voluntarily want to purchase medicine that has not been evaluated by the FDA or some other testing organization (as is currently the case with thousands of medical supplements that are for sale) why must those people be stopped? Again, the choices aren't FDA approval or no access. There are all sorts of solutions that could be implemented to both increase availability of medicine while still offering consumer protection.

Yes, PhDs make mistakes, but that wasn’t the point of the Vioxx reference. Vioxx was a fantastic pain drug that worked for some people when nothing else would. And that drug was taken away because Vioxx might increase the risk of heart attack. While this may sound fine to you, it was devastating to many people who would have preferred even a large risk of heart attack rather than living with the pain eliminated by Vioxx. (Vioxx was thought to increase the incidence of heart attack a staggering 4 times in one study . . . from .1% to .4%)

Again, nobody is expecting you to do your own research. But that shouldn't limit our options to (1) FDA approval or (2) no drugs for you.

>>the TSA has never caught an actual terrorist. The FDA has stopped potentially harmful and/or ineffective drugs from coming to market<<

This is an excellent example of the "seen" vs. the "unseen". Sure, the FDA has stopped harmful and/or ineffective drugs from coming to market. But the FDA has also stopped plenty of effective drugs from coming to market, both directly (e.g. no more Vioxx because it might slightly elevate your risk of heart attack) and indirectly (the billions of dollars it costs, directly due to FDA requirements, to bring a drug to market).

Is the assurance that FDA-approved drugs are safe[1] worth the inhibited advancement of medicine? I don’t know, but I doubt it. I think a much wiser approach would be to have potential drugs freely available, and subject to testing by third or quasi-third parties (ala Underwriters Laboratories). Hell, you could even leave the FDA in place if you want to, only limit its ability to restrict drugs to market. For example, you could reverse their decision-making criteria: FDA will only pull drugs from market if it can be shown that the drugs are more harmful than beneficial for their intended use. This would leave the choice to use a certain medication to individuals and their doctors, with guidance from FDA/labs who conduct the same sort of testing the FDA does now.

[1] Note that the FDA’s stamp isn’t really an “assurance” anyway. Vioxx (and loads of other “harmful” drugs) still made it to market.

Ah, you raise a few interesting points.

>>the concerns of the unemployed and underemployed have tended to be politically ignorable (due to lack of numbers, cultural shaming, the perception that unemployment is always temporary, etc.<<

This seems like it must be true, but I'm not sure it is upon further consideration. Politicians have spent a great deal of time and effort on issues that affect the poor (and the comparative "poor"). In the US, we have a substantial welfare system that includes housing subsidies, a variety of food subsidies, and a variety of medical care subsidies. I would add that benefits under each of these systems has been pushed through by both "liberal" and "conservative" governments. (Many European countries have had an even greater focus on policies that benefit the poor.)

But I would argue that the biggest gains those on the poor end of the spectrum have made over the last 30 years (and certainly over the last 200 years) has been driven by market forces, not political ones. The widespread decline of food prices has been due to private activity, in spite of government policy (see, e.g., various agricultural subsidies/tariffs that maintain above-market prices). The enormous decline in prices of finished goods, durable goods, electronics, and basically anything you’d put in your home, has similarly been driven by market forces. This leads to a tremendous decrease in suffering that is difficult to measure. [For example, cheap air conditioners, furniture and televisions make what would have been miserable conditions in 1950's New York into perfectly pleasant conditions today.] So, perhaps focusing on overall growth will produce greater benefits to the poor than simply focusing on symptoms of poverty.

>>Since I think we probably both care a lot about equality of opportunity...<<

Equality of opportunity is a terrifying outcome. Of course it sounds wonderful in theory, but how do we attain it? The novel Brave New World illustrates how this would have to be done: (1) prohibit natural births, instead hatching babies under laboratory conditions; and (2) raise and educate children en masse, in a (presumably) government-run institutions. Of course even this would result in slight differences in opportunity. Even if everyone shared the same DNA, it would be impossible to ensure each person had the same experiences during childhood (i.e. Billy gets bullied for some reason and never reaches his potential while Bobby doesn’t and attains success).

So, in this respect, I don’t believe that anyone wants true equality of opportunity. The question is, how close is close enough, and at what cost? Because, at a certain point, the only way to increase equality of opportunity is to decrease freedom. We’re currently at the point where the main freedoms we are losing relate to how much of our income we get to keep (i.e. increase tax revenue to provide subsidies/programs for the poor). Most people don’t have a huge problem with this.

But we’re already begin to sacrifice other freedoms, and this is only accelerating. If your kid is fat, he will have a decreased opportunity to succeed. So, we impose sin taxes on certain ingredients. The FDA bans trans-fats. New York City tries to impose size restrictions on sodas. All of these rules are meant to save us from ourselves, or in essence, to give those with less information or willpower a more-equal opportunity to succeed. The same logic applies to smoking or drinking, housing, schooling, etc.

I’m not sure I see a logical place to stop. If someone notices you drinking or smoking during pregnancy, should society step in? There is a chance the child will be negatively impacted. Of course, this means he won’t have the same opportunities as if you had not drunk or smoked during pregnancy. This means the child’s opportunities won’t be equal to others due to your choices. Should we supervise or jail you to ensure you don’t drink or smoke while pregnant? Even terminate the pregnancy if we discover you drank or smoked while pregnant?

Of course, the child of a successful 35-year old mother who drinks or smokes while pregnant may have far better opportunities than the child of a 15-year old mother with no education who doesn't drink or smoke. To what extent should or must society intervene in the latter case?

The converse case is even more terrifying. I didn’t have an equal opportunity of succeeding because I had a stay-at-home mom who taught me to read when I was 4. She taught me years of history and science outside of school, things my peers never learned after 20 years of schooling. I got to peer over the shoulder of friends and relatives who ran successful small businesses. There’s simply no way replicate or ensure that everyone has these experiences (outside of a Brave New World-esque regime). Should my parents therefore be prohibited from trying to give me an advantage over others?

It’s fascinating to me that America chose a revolution based on liberty near the time the French chose a revolution based on equality. 200 years later, the world is a far richer place due to the advances wrought under freedom. Certainly giving people as much opportunity as possible is a worthy goal, but I fear the consequences of what would be required to ensure true equality of opportunity. So then, perhaps we’re back again to the more worthy goal: eliminating suffering.

This is an excellent point, though I'm not sure you'll be in agreement with why I feel that way. The issue comes down to how you define "suffering".

One of the reasons income inequality is such a silly measurement of overall economic well-being is because people often believe it must be correlated with suffering. In other words, those at the poorer end of the spectrum must be suffering relative to those at the rich end (and usually because of those at the rich end). But this doesn't appear to be true in modern society at all.

In reality, those at the poor end of the spectrum have never experienced less (physical) suffering. Food, clean water, and basic shelter have never been cheaper. On a minimum wage salary, you can live a life without what I would call suffering, though it will look nothing like the typical portrayal of "middle class" life we see on TV. If you're sick, you can get extremely advanced medical care without cost (even in the US, there are free clinics in all major cities, and if you visit the emergency room, though you may be billed preposterous sums, you'll still get care).

What constitutes "suffering" is probably one of the biggest disconnects that plague liberals and conservatives.

The most accurate way to phrase it would be to say that "natural selection is about less fit individuals having a decreased chance of passing on their genes."

Evolution is really about which genes are passed on to the next generation. Most of the population at any given time is going to be less-fit than the fittest (by definition). That doesn't mean they don't pass their genes on. While totally unfit people may not be able to pass on their genes at all, many, if not most, of a generally less-fit population will pass on their genes at least one generation. Depending on the quality of the mate they are able to obtain, their genes may not go further than the one generation, or they may keep going for many generations. On average, the less-fit genes will "die off" but this isn't always the case, for many reasons.

Yes, I provided it in the above comment. Go read about the Kingsbury Commitment, the The Willis-Graham Act, the history of the ICC and the FCC. In sum, the US granted AT&T a monopoly in exchange for being able to set the rates AT&T could charge (guess how beneficial that ended up being for consumers).

I don't know why people think the historical lack of monopolies (without government backing) is some right-wing nut-job theory. Not even the robber-barons wielded monopolies that allowed them to engage in "predatory pricing" or the other feared ills of monopolies. Go read about Vanderbilt or Getty or Carnegie. In each of their industries, consumers saw prices fall dramatically, even after each consolidated control over major portions of their respective markets. The fear that they would raise prices dramatically after acquiring their near-monopolies never materialized.

Edit:

>>Tell me more about functioning markets and how they can only be prevented by government force<<

Sorry, I misread your snark. I never said functioning markets can only be prevented by government force (whatever that even means). I'm saying that throughout history, you do not get monopolies that harm consumers unless the government backs the monopoly.

...right, see my above comment:

>>US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.<<

AT&T was only able to retain its monopoly because the government helped it enforce that monopoly by prohibiting competitors from entering the market. See the Kingsbury Commitment.

The only way monopolies succeed is if government force prevents markets from functioning.

I don't follow. In the US, we went from ridiculously expensive per minute plans 10 years ago to unlimited, nationwide calling for a pretty low flat-fee per month. This seems to be the opposite of predatory pricing...

US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.

>>Giving away delivery for free is a form of predatory pricing<<

This line of reasoning always amused me. Free = predatory? Can someone explain how one arrives at this logic?

If the thinking is that "free" leads to "monopoly" which then leads to dramatically increased pricing once all competition is eliminated, this has absolutely, empirically and historically, been shown to be false. It simply never happens. Or more accurately, if/when it has been attempted, this practice has swiftly been defeated by competition.

Edit: An afterthought: If free = predatory pricing, why do we allow charities to distribute free shelter, goods, and food? Surely these institutions are displacing some sales that would otherwise take place, thus negatively impacting those businesses that would otherwise have profited from those sales?

This is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil.

This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).

This is ludicrously, hilariously, almost unbelievably ironic, coming from Krugman:

>>"In general, the thing about Apple is that it reflects the spirit of Steve Jobs, who knew what was good for you — and left you no way to do things differently. And if you are an atypical user, you end up putting a lot of effort into fighting iOS in order to do simple things."<<

It should baffle me that this problem is so obvious to Krugman and others in the field of electronics, but simply beyond mention when it comes to governance. It doesn't baffle me because it's clear that Krugman and others stopped being scholarly thinkers as soon as they gained a national audience to preach to.

Can you provide one example of such a phenomena operating on anything longer than a very short timescale? I'm genuinely curious. Nearly every example I can think of is long-term negative.

edit: I'd venture to say anything longer than 5-10 years could be considered long term for this question. Under that measure, I'd say government spending has exhibited positive-feedback behavior over the last 50+ years. Anything else?

It's very easy to say these people were right, in hindsight. There's many from the austrian school who had been calling for the 2008 recession for 10 years. So, they were right, but it's pretty hard to listen to them when things keep chugging along for so many years.

Likewise, there were many people who saw the 2008 pop coming and bet on it, but just mistimed it by a few months. The handful of Wall Street guys who timed it just right made their careers and look like geniuses, but there were numerous times that many people who took massive hits because they were just a few months too early.

The point is, the doomsday message is never going to appeal to incumbents, because it's pretty hard to know where you are in the bubble. If you're only in the middle and you start jacking interest rates up (prolonging the bubble but not popping it), its very likely that it will look like you made the wrong move (after all, prices kept going up the whole time, regardless of the rate increases, so maybe it wasn't a bubble?) Greenspan was a genius ... until 2.5 years after he stepped down. Now he gets a large part of the blame for causing the bubble.

We're in another real estate bubble right now. Guaranteed. My so-cal house is up over 20% just in the last year (after only falling about 20% from its 2008 peak), and things are only accelerating in my area. But real estate is basically the only thing driving the economy, so there's no way they're lowering rates in the next two years, so there's no way prices are falling. Asset prices overall are going to skyrocket over the next few years, and then will crash again, probably close to as hard as in 2008. But whether that crash is 3 years out, 5 years out, or 10 years out, I have no idea. Nobody does. So if you're a politician, the safest bet is to ride the wave and just hope you don't get smashed into the rocks.

Perhaps this is a stupid question, but your password checker claims "vertex112" would take 3 months to crack, but "vertex1123" only 3 days to crack. Why would adding an additional, non-repeating number make it easier to crack?

Snark aside, adopting the culture or behavior of those you aren't intimately exposed to is a legitimate concern. However, if we look at just about any period of history we see that just about every group has been able to do it [not including periods were systematized violence or oppression of minority groups was sanctioned by those in charge].

Traditionally, it was done via military service. In exchange for risking your life, those in power will educate you, give you a set of skills and some discipline, and surround you with people also looking to get ahead. If you wanted your child to have a better life, military enrollment was a good, if risky, way to go. More recently, schools have been the answer. If you wanted your child to succeed, you put an emphasis on education so he could get into the best schools, learn a valuable skill, and be surrounded by those with similar aspirations. I’m sure that going forward, even more and cheaper opportunities will arise based on technology.

If you look just at the United States, nearly every immigrant group has done this. The Irish, Italians, Japanese, Chinese, and Korean immigrants, all of which were at the bottom of the social totem pole at one time, have all adopted the prevalent socioeconomic background of the dominant groups of the time. And they’ve all succeeded to the point where nobody in the United States considers “the Irish” or “the Chinese” to inhabit a separate or distinct socioeconomic subgroup of Americans.

>>* we strengthen existing patterns of advantage and disadvantage because our friends, neighbors and children's classmates are overwhelmingly likely to share our own racial, religious and socioeconomic backgrounds.*<<

It's interesting that the article (and presumably the researchers) presume this is a bad thing. This is, in essence, natural selection playing out. Adopting the behaviors of those closest to us is also how will advance (or retreat) as a species.

I'm curious as to why you think this is unique to capitalism. Politicians in every political system tend to help those who can return the favor. Whether it's communist leaders who award control of industries to their army buddies or socialist leaders who enact barriers to entry to advantage their schoolmates, this occurs everywhere.

At least when it's pay-for-favors the public can follow the money. Not to mention the fact that under this system, any ordinary citizen has a much better chance of affecting outcomes by encouraging others to pool resources than he would have under systems that afford people power mainly, or solely, through kinship or affiliation.

Right, except the IRS has included perks such as housing, automobiles, even frequent flier miles[1], as "income" for over 60 years.

I think the outcry here is that government has much bigger fish to fry than hounding taxpayers over a few thousands bucks worth of free food every year. Your slippery slope argument isn't too far fetched though: this same sort of tax policy is exactly how the U.S. ended up with its ridiculous employer-paid health insurance scheme.

[1] In some cases. See 91 F.3d 72

This example always amuses me because Krugman guilelessly puts forth the case for central control while glossing over the results:

>>"But eventually the economists prevailed. More coupons were issued, couples became more willing to go out, opportunities to baby-sit multiplied, and everyone was happy. Eventually, of course, the co-op issued too much scrip, leading to different problems ..."<<

Of course, these different problems are just ignored. Krugman never seems to want to discuss whether these new problems, entirely caused by centralized control, are worse than the problem the "alert management" intended to solve in the first place.

It's what makes his oft-use example so excellent. Here you had, presumably, a small group of highly-educated and, presumably, reasonably intelligent folks who couldn't even manage an economy with 150 homogenous players. And yet, we expect much better results when we introduce billions of players and millions of additional variables.

Speaking strictly for Americans, this simply isn't true. There are very, very, very few benefits to keeping your money offshore. Tax fraud is benefit #1. "Asset protection" (which generally means you're hiding money from your spouse or business partners) is benefit #2. Unless you actually own property in the country where you keep your money, or do real business there, those are basically the only benefits. There are also massive costs: (1) the literal costs that the foreign nation (and bank) will charge you to hold your money; (2) the risk that the money will actually be available when you want to access it; (3) the risk that the foreign government and bank will cooperate with the U.S. government when it comes knocking (this risk has greatly increased since the passage of MLAT and other recent treaties).

I could definitely see how citizens of other countries could legitimately use such accounts to get around immoral laws in their home countries. Whether this makes up "most people" who use offshore accounts, as you claim, is beyond my knowledge.

I would bet that a great percentage of the volume of money moving through these offshore havens are indeed a hedge against insolvent governments: the governors' own. There's a reason these island nations are where despots like Gaddafi, Mugabe, Marcos, Bashir, Afwerki, Mbasogo, Mubarak, Kagame, and others, and their extended families, park their money.

This isn't really accurate. Bastiat, even Adam Smith, explored these concepts in fair depth well before 1937. On top of that, trade simply isn't that complicated. We've been doing it for thousands and thousands of years. I think it has been pretty clear to any ancient Egyptian or Greek farmer, medieval peasant, or Bedouin trader that if the king guaranteed to give some people gold for as much product as they could produce, no matter what, that those people would begin producing as much product as they could, regardless of whether that product was needed or useful.

"Absolutely no monopolies or cartels, unless, you know, we think its fun or directly benefit from it." - Politicians worldwide

It's interesting that people readily recognize the absurdity of this truth when it comes from some places, but insist that it's not only acceptable, but actually required, when it comes from other places. Note that this has become widespread in many parts of modern capitalist societies, and, by definition, ubiquitous in every single experiment we've had with communism and socialism.

Right, that's what he's saying. He believes that a certain good makes society better off. And yet, the pricing mechanism, the fundamental underpinning of capitalism, shows otherwise. (I'm speaking obliquely about Reader, but more broadly about nearly everything technocrats love that people aren't willing to pay the full cost of.)

You can argue that this reasoning is flawed (people aren't rational!), but the results are hard to argue with. The market does a fabulous job of allocating resources. Individuals, no matter how smart, don't.

This is the fundamental problem with modern liberal economic thinking:

>>First, it’s a well-understood though not often mentioned point that even in a plain-vanilla market, a monopolist with high fixed costs and limited ability to price-discriminate may not be able to make a profit supplying a good even when the potential consumer gains from that good exceed the costs of production. Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs.<<

Sure, it's well understood that certain people want others to provide a service that certain people find very valuable, but aren't willing to pay for. That doesn't mean that service must be provided by the government when private parties refuse to provide it.

In 2003, I wanted an online store where I could purchase all of my pet-related supplies. This would make me, and society, far more productive because we would not have to spend time going to the pet store and purchasing those products. We could all then spend that extra time being productive. Potential consumer gains exceeded production costs.

Unfortunately, actual consumer gains did not exceed pets.com's production costs. So it died. And guess what? It turns out that when a company learned how to properly structure, supply, and support such a service at the right price, people were willing to pay for it, and thus actual consumer gains exceeded actual production costs.

The government didn't have to step in and supply this vital service to its citizens. Some of the smarter citizens figured out how to do it, at assuredly a fraction of the cost of whatever government program might have been implemented.

Note: before you claim that pets.com failed for some other reason, please stop. I picked it as an obviously frivolous example. You can substitute most other recent government programs if you’d like.