Our evil government at work

Quote, unquote, from Michael Lind in Salon:

In fact industrial policy is as American as domestically produced apple pie. George Washington supported Alexander Hamilton’s plan for promoting American manufacturing by means of subsidies and tariffs, and Hamilton’s opponents Thomas Jefferson and James Madison eventually reconciled themselves to federal support for American manufacturing. Henry Clay proposed a similar “American system” of infant-industry protection and federal support for infrastructure. During the Civil War, Clay’s disciple Abraham Lincoln presided over the enactment of a version of the American System, based on high tariffs to protect strategic industries and federal land grants and financial subsidies for transcontinental railroads.

Industrial policy was even more successful in the 20th century U.S. After the Wright brothers invented the airplane, the federal government used airmail to subsidize the infant American civil aviation industry. The U.S. Navy worked with American companies to create the Radio Corporation of America (RCA), which spun off the NBC and ABC radio and TV networks. During World War II the government built vast numbers of factories, which were turned over at low prices to private companies after 1945.

The most innovative entrepreneur in the 20th century was the U.S. government. The federal government invented or developed nuclear energy, computers, the Internet and the jet engine. And it built the interstate highway system and completed the national electric grid, creating a continental market based on the technologies of the second industrial revolution.

To be sure, the government has sometimes backed failures, usually in the fad-driven energy field, like Solyndra or synfuels back during the Carter years. But few private venture capitalists can match the remarkable record of success of Uncle Sam. Indeed, venture capitalists in IT and social networking have exploited and commercialized technologies from the transistor to the Internet that were originally developed by America’s home-grown version of state capitalism.