Free-marketeers sometimes act as though the private sector’s superiority to the public sector were something like an immutable law of physics, applying in every time, place, and instance. Of course, that is not the case. As countless examples have demonstrated, ineptitude and corruption are human failings—so as long as private enterprise is run by humans, private enterprise will be plagued with ineptitude and corruption as well.

The virtue of the private sector is not that superior individuals go into business while inferior individuals go into government. The virtue of free enterprise is that it usually confines ineptitude and corruption to isolated institutions. Norm recently linked to an interesting essay alluding to this point. (By contrast, a government policy subjects everyone to the consequences of folly. One of the most frequent complaints about Virginia’s Standards of Learning is that they impose a “one-size-fits-all” regime on schools, classes, teachers, and students that are not all one size. Those making that complaint never seemed to ponder its broader implications relating to school choice.)

It takes government to socialize the costs of bad decisions by private entities. Classic examples: federally subsidized flood insurance and corporate bailouts. In the short term they look like compassion. In the long term they erode the barriers that confine failure and the incentives to avoid it.

Sort of like negatihg the jungle rule of survival of the fitest? Makes sense. Wonder what we would be like now if the evolutionary process of retaining what works best had been interfered with.

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