This article was written by Nicholas Mitsakos: Chairman and CEO at Arcadia Capital Group.
Stupidity and Misery by Another Name
A National Investment Authority, an idea gaining traction among the administration, would be responsible for “devising, financing, and executing a long-term national strategy of economic development and reconstruction.”
This is not the job of a government; this is the role of the free market. The market does this quite well, and government does this quite poorly. An NIA is another way to bring misery and inefficiency.
Policy reflective of central planning, socialism, or industrial policy brings misery to all. This discredited philosophy that tortured so many in Eastern Europe and Soviet Russia seems to be getting more traction today bewilderingly. It leads to nothing more than bureaucratic idiocy, waste, and disregard for any consumer needs.
A planned economy may have an appealing theoretical base, but it never works as it is supposed to. Widespread state ownership and centralized industrial policy are simply not compatible with market forces. For example, it is impossible to get a proper balance of supply and demand, and, therefore, pricing – essential for any reasonably functioning economy.
Under a free market, a firm cannot defy the laws of supply and demand (and therefore command its price) for any product without ultimately going broke. Under industrial planning, state-owned firms and government-directed capital will bail out inefficient firms, stealing resources from efficient ones who actually deliver value to their customers, destroying and incentive, efficiency, and innovation. Lack of financial restraint leads to shortages, limited and usually awful product selections, and overall general misery.
Let’s forget the NIA and any similar policy, and let the market determine the best products and services at the most attractive prices. Free markets and competition bring innovation, and firms ranging from Apple to Amazon to Tesla would be nonexistent in an economy dominated by a centralized industrial policy.
After all, it looks so easy any bureaucrat can do it.