GOVERNMENT FAILURE.

Elizabeth Warren, a Harvard professor with aspirations to elected office, has reiterated a challenge to anarchy without rules that, in the minds of aspiring philosopher kings, is a defense of government action.

The court intellectuals for the technocrats will credit much of the opportunity that people enjoy, and the rewards some people secure, to Good Government.

Every person’s success is a product, in part, of investments that Americans made, collectively, going back generations. As she says, it was the taxpayers who paid for the schools, the roads, the scientific research, the first-responders, and all sorts of other public goods on which every business – and, indeed, every American – depends. Those who benefit the most from these investments don’t merely have the ability to pay more for them. They have an obligation.

And this argument isn’t simply about taxation. It’s also an argument for making more of these investments going forward. It’s worth spending government money on infrastructure, schools, and other public goods – even if it means paying for them, eventually, with higher taxes – because we all stand to benefit from them.

The case for the negative is in some ways simple, and in other ways subtle.

Here's the simple case.

If the factory is important to the owner then he would protect it himself if the local government did not provide a police force.  Does she not know this?  Plus, she's making a point that is really very frustrating.  If I don't agree with her now, then is she going to tell the police to NOT come to my assistance when bands of marauders come to the factory and steal things?

What does she mean that the "rest of us educated!?"  I can't hire students who studied at a private school?  Compare students who went to a private school and students who went to the public school...which one is more prepared!?

The simple becomes subtle with a few observations, such as the temptation for elected officials to shake down factory owners with taxes, something incorruptible professional police forces were created to prevent when the local godfather offered to provide protection, or the very real cost to corporations providing a refresher course in high school composition or college engineering because the common schools and the state universities didn't bother.

Professor Munger has the short form of the subtle riposte.

If a group of us need security, we might sign a contract and get a really big, strong dog. Let's call it...I don't know... GOVERNMENT. It's big, stupid, poops in places it shouldn't and wastes a lot of time sleeping and licking its "Representative Wiener", because it can.

But, suppose that big smelly dog also does a reasonably good job protecting my house, and yours. We build factories, we create wealth, we do a lot of useful things.

And it's true that we needed the dog, for security, so we could concentrate on things that idiotic, lazy dogs can't do.

Makes policy analysis somewhat more challenging than market-failure-warrants-government-intervention, no matter how pretty the optimal policy response looks rendered into four-color diagrams or sigma-algebras.