Why My Billion-Dollar Plan Won't Work The Way I Want it To
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
On May 29, I offered my proposal for how I would answer Bryan’s “spend a billion dollars” proposal and asked readers to explain why it wouldn’t work. My proposal was to spend a billion dollars subsidizing quantum and DNA computing. Mark Bahner offered a link to his claim that “economic growth will be spectacular” in the 21st century because of growing computational power (“human brain equivalents”). David C writes:
Your example is an example of ways better computing algorithms could improve our daily lives. It’s a separate issue from processing power. I’m pretty sure match.com and eHarmony have plenty of processing power to run their algorithms, which are probably very simple.
Politics Debunked offered a great answer that’s too long to reproduce but that contains a great question:
As an entrepreneur who has also worked in tech research at big companies: why the heck do you want to waste money and politicize tech research?
I take a very skeptical view of state power; thus, if I propose a state action, it’s usually going to be least-bad rather than most-good. In my view, here’s why my proposal wouldn’t work the way central planners want it to:
Incentives. Great. Let’s get technology even more tangled up in the rent-seeking society. As David C writes above, these might not even be the right problems. His comment raises an important point: if you think policies like this will be made by the “right” people–whoever they are–you’re probably very badly mistaken. At a Jack Miller Center event in 2009, frequent EconTalk guest Mike Munger said that whenever we want to say “the state should…” we should replace “the state” with “politicians who can actually get elected.” The set of activities following “should” will get much, much smaller.
Information. Say it out loud: “quantum computing.” It sounds all smart and science fiction-y, doesn’t it? Making this a fundamentally political decision, though, means removing it from the knowledge context in which we can decide whether we are using resources wisely or wastefully. Who should we subsidize? Should the project be headquartered at Stanford? Caltech? MIT? Who decides (see “Incentives,” above).
It’s probably not as bad as other things the government can and will do with money, but that’s hardly high praise. At the end of the day, the best answer probably is “make it easier to have more babies.” Here’s a creative way the Finnish government helps parents (HT: Justin Wolfers via Twitter). Holding spending constant, might that be a better way to help dependent children than a lot of the other things governments do in the US?