When it is operating properly, government's role in our free-enterprise system is mainly to act as a check on those who would defraud, coerce or otherwise harm others.
But beyond those basic functions, government should mostly keep out of the way of the economy. Government does not produce jobs and economic growth. With the right policies, however, it can foster the conditions -- such as the rule of law and respect for private property -- that allow the free market to generate prosperity through the voluntary production, sale and purchase of goods and services.
So it is troubling that President Barack Obama recently suggested that government -- not the free market -- is the source of American advancement.
In his State of the Union speech, he went on the attack against Republicans who want to make serious cuts in spending to begin bringing down our crippling $14 trillion debt. Opposing major cuts in government spending, he offered this analogy:
"Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine."
Now think about that for a moment.
The president of the United States, which became the richest nation in history on the strength of free-enterprise values, believes that government spending is the "engine" of innovation and education.
Where is the evidence of that?
Look, for instance, at the tens of billions of tax dollars that have been funneled through the federal government into alternative energy such as wind and solar power. Have those subsidies made wind and solar energy affordable and practical? Certainly not. Many alternative energy projects would simply dry up for lack of market demand if the subsidies were shut off.
As for education, we see no evidence that vast amounts of federal money have significantly improved academic achievement among America's students. Consider the federally funded Head Start program for children from low-income families. A study by the U.S. Department of Health and Human Services concluded that whatever academic or social benefits pupils supposedly gained from Head Start almost completely disappeared by the end of the first grade. In other words, the well-intended program is a failure. Yet our country continues to pour billions of dollars into Head Start annually.
Rather than boost accomplishment, what federal spending on education has done is give Washington enormous control over local school districts, even though state and local governments still provide the bulk of school funding.
You'll notice that the president refers to the spending of your tax dollars and of trillions more borrowed dollars as "investments." That is a serious misuse of that word.
"Investing" is what private individuals and businesses voluntarily do with their own money in hopes of getting a return by meeting market demand for a good or service. That is the kind of economic activity that built America. Investing is not what government does with taxpayers' money to promote certain favored industries or companies with government funds. If $14 trillion in cumulative federal deficit spending is an "investment," then where are the "returns"?
The president has it backward if he truly believes that government spending is the source of America's success.