In addition to all these arguments based on sound economics, Peter, (in stark contrast to Tyler Cowen’s non-economic New York Times article), there are public choice considerations that are relevant.  Namely, the kinds of “innovations” that government will fund will always be heavily weighted toward politically-connected companies that have supplied the most “campaign contributions” to the political class.  Obama’s lavishing of subsidies to bankrupted and useless “solar energy” companies is one recent example.

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