The Myth of the Entrepreneurial State

The Myth of the Entrepreneurial State by Deirdre N. McCloskey and Alberto Mingardi

This book has good ideas, but is not well written. It was written as a refutation of Mazzucato's Entrepreneurial State. It tries too hard to refute points and often comes across as pedant bickering. The style is also very loose and casual. It is a book, but barely.

Despite the poor writing, the argument is sound. The state is just not good at entrepreneurship. It is very bad at picking winners. It is even bad at picking areas to invest. The lack of signals can cause it to spend way too much time investing in the wrong things. It is much more inclined to protect the status quo. After all, the state is beholden to voters who tend to like their current jobs and have difficulty seeing what could happen in the future. Central planning has been a huge failure nearly everywhere it is tried. Touted benefits of government regulation are often "fixes" to excesses that previous regulation encouraged.

The government can take credit for encouraging some innovations. It has played a huge role in the economy and thus some would be hits. However, to achieve these hits, it was required to take money out of the economy. Could there have been even greater innovations elsewhere? The Concorde was the result of huge amounts of government outlays to provide supersonic travel. It does not fly anymore. Was that money well spent? Would it have been better to allocate it elsewhere?

In the end, the state is made up of people. In a democracy, these people are selected by voters. It may be nice to envision a technocratic elite that have thoroughly studied in the area and can provide the guidance of what would be best for the country in the long term future. Alas, what we typically get is politicians with their own beliefs and cronies. Democrats are not too happy with Trump being empowered to redirect science funding. However, in empowering the state, you are beholden to people to act in whatever way they see fit.