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"In retrospect, it is clear that the motive behind the loan guarantee was political: to foster green energy, an obsession of the left. And that’s the problem with government investment: Politicians make political decisions, not economic ones. They’re playing with other people’s money, after all."

"The Clinch River Breeder Reactor, for instance, authorized in 1971, was estimated to cost $400 million to build. The project ran through $8 billion before it was canceled, unbuilt, in 1983. A half century earlier, the Woodrow Wilson administration thought it could produce armor plate for battleships cheaper than the steel companies. The plant the government built, millions over budget when completed, could not produce armor plate for less than twice what the steel companies charged. In the end it produced one batch—later sold for scrap—and shut down.

The Clinch River Breeder Reactor, for instance, authorized in 1971, was estimated to cost $400 million to build. The project ran through $8 billion before it was canceled, unbuilt, in 1983. A half century earlier, the Woodrow Wilson administration thought it could produce armor plate for battleships cheaper than the steel companies. The plant the government built, millions over budget when completed, could not produce armor plate for less than twice what the steel companies charged. In the end it produced one batch—later sold for scrap—and shut down."

"The Erie Railway was initially estimated to cost $4,726,260 and to take five years to build. In fact, it would take $23.5 million and 17 years. With the depression that began in 1837, it soon became clear that only massive state aid would see the project through. So New York State agreed to put up $200,000 for every $100,000 raised through stock sales. Even that was not enough, however, and the railroad issued a blizzard of first mortgage bonds, second mortgage bonds, convertible bonds, and subordinated debentures to raise the needed money. This mountain of debt got the Erie completed in 1851, but it would haunt the railroad throughout its existence. Indeed, the Erie Railway would pass through bankruptcy no fewer than six times before it disappeared as a corporate entity in the early 1970s.

Why was the Erie Canal a huge success—it even came in under budget and ahead of schedule—that made huge profits from the very beginning, while the Erie Railway was a monumental failure? One reason was that canal technology was well-established and well-understood by the early 19th century. More important, the route of the Erie Canal was the only place a canal could be built through the Appalachian Mountains. Thus it would have no competition. And the reason the canal was built by government was that the project was simply too big for a private company to handle."

"Both the Erie Canal and the Interstate Highway System are passive carriers of commerce. Anyone can use them for a fee, although many Interstates are paid for through the Highway Trust Fund. But a railroad is a business that can only be profitable with careful attention to the bottom line forced by competition. And governments are notoriously bad at running businesses because government businesses are always monopolies. Just remember your last customer-friendly visit to the Department of Motor Vehicles.

In addition to building infrastructure such as the Erie Canal and the Interstate Highway System, government can be good at doing basic research, such as in space technology, where the costs were far beyond the reach of any private organization. Only government resources could have put men on the moon. Nevertheless, I’m encouraged to see that the next generation of rockets is being developed by private companies, not NASA. That’s a step in the right direction.

Unfortunately, we are headed the other way with the American medical industry."