On a recent episode of Freedom Watch, Caroline Heldman said, “…government provides economies of scale and it doesn’t have a profit motive, so there are a lot of good things that government does…”
I think Heldman is incorrect. Does economies of scale necessarily depend upon [market] prices? Heldman’s statement seems to imply that it’s possible to ascertain the efficacy of economies of scale in the absence of profit.
That is just reheated Karl Marx. Marx observed that free markets tended to produce larger and larger firms because of economies of scale, and thought that it would benefit humanity to shortcut the process to create the ultimate economy of scale, the socialist state, resulting in unlimited abundance of goods.
I think people forget that there are also diseconomies of scale. And the fact that the government doesn’t operate with a profit motive is not a good thing.
Yeah, that’s a ridiculous statement. Government doesn’t provide economies of scale. Government doesn’t have a profit motive but only because it has the power to tax and judge in its own disputes. This is also the reason that governments cannot perform economic calculation. But governments do act - that is, governments use means to achieve (their own) ends, just like any other organization. So, saying the government doesn’t need profits is just another way of saying government taxes and judges in its own disputes but is no different than any other organization, otherwise.
Clayton -