Stephen Slivinski of Cato writes here about the increasing trend of governmental funding of business. A key finding is that most firms (63%) that sought federal money under the “Advanced Technology Program” of the Department of Commerce never even tried to obtain private financing before turning to Uncle Sam.
What’s the problem? Well, besides the fact that the Constitution does not authorize any branch of the federal government to go into the lending business, there is Milton Friedman’s well-known adage that no one spends other people’s money as carefully as he spends his own. When federal officials decide to ladle out money, they don’t have anything at stake — no profit from making a good decision, no loss from making a bad one. That’s a recipe for a lot of bad decisions.
Uncle Sam should have stayed out of corporate welfare.
