Does the visible hand of government always get it wrong?

[simplicitus]

Spotty J has it wrong. There are too many people who think that the government usually gets it wrong and that is a good enough reason not to let the government try anything. The laissez-faire people are an example (though I don't really know of any laissez-faire economists)

But the reality is obviously different. Most (but not all) governments get most (but not all) things right. There is a reason the U.S. used to have the best educated citizenry in the world, until we started cutting back on funds for education; there is a reason the U.S. used to have excellent infrastructure, again until we started cutting back on funding.

Computers, the Internet, all satellites, and many medical innovations came out of research paid for by the government.

etc.

And the countries with the highest standard of living in the world all have more government involvement in their economies than does the U.S.
http://www.prosperity.com/Ranking.aspx
http://streetlightblog.blogspot.com/2011...r-two.html
http://www.scientificamerican.com/articl...fare-state

Even people who are considered icons of "free market" thought such as Adam Smith and Milton Friedman recognized the need for government intervention in education, infrastructure, taking care of the poor (Friedman proposed a negative income tax)
http://en.wikipedia.org/wiki/Negative_in...fic_models
controlling the currency and regulating the banking system, dealing with negative externalities such as pollution, etc.

Laissez-faire advocates say the private sector can do it all, but:

A. It is clear that they can't.

B. It is clear, looking at the countries where weak governments do not intervene in these constructive ways, that the private sector doesn't either.

As for the invisible hand, it is fine for personal goods, but otherwise, it is no great shakes. It does no basic research, relying on government for that. And when it comes to heavy industry (as opposed to specialty goods) the Soviet Union demonstrated that the invisible hand really wasn't needed. After all, the Soviet Union went from a peasant economy to a super power that was the first in space and the first to reach the Moon - all without the benefits of the invisible hand.

Yes, many market economies are richer
http://delong.typepad.com/sdj/2010/10/ho...atter.html
But it is no miracle worker. Just look at all the market economies in Africa and how poor they are even compared with the Communist economies of the Soviet Union, China, Vietnam, Cuba, etc.