Today I remarked that the 19th century was the era of corporate welfare for railroads, whereas the 20th century saw corporate welfare for trucking. My brother replied, "Well, then I hope the 21st century is the age of corporate welfare for helicopter landing pads." When you think about it, if we are forced to live with corporate welfare anyway, that'd be kind of cool.
But the issue of corporate welfare, and government "public works" projects - all of which are really subsidies to merchants, raises interesting questions. Many people believe that government is needed to build these things, because the private sector doesn't have the resources. But the private sector does have the resources - government pays for its projects by taxing the private sector. If merchants and shippers, who would benefit the most from lighthouses, are not willing to pool their resources to build them, they shouldn't have the government steal from the taxpayer to build them. If automobile manufacturers and oil companies weren't willing to build the modern highway, why should the taxpayers, particularly those who can't drive, build them?
The response would be that without government doing such and such, we wouldn't have many things we enjoy today. In short, without government, we wouldn't have mass production and consumption.
Libertarians, particularly disciples of the Austrian school of economics, would reply that the opposite is true: without government intervention, we'd have even more and better stuff and lower prices than we do already. Others argue, however, that the Austrians rely on private monopolies on land which are themselves either the product of Statist privilege, or are de facto states themselves. For them, the problem of political intervention isn't just an issue of coercing individuals, but also of controlling land. I see plenty of merit on both sides of this libertarian debate. But both sides would agree that the free market is superior to government intervention. The mainstream, however, believes that government intervention is necessary. But necessary for what?
It's tricky issue, because let's face it: we are all addicted to mass production, even those who hate themselves for it. Some people say, "without government, who would build the highways?" and in the next breath complain about how Americans are too gluttonous and corporations too greedy. Well, if the taxpayer wasn't forced to build that highway, the corporation would have had to find another way to transport its products to far-away markets, perhaps building the road by itself. This cost would have been their expense, which they would have passed on to their customers. Instead, the taxpayers pay the cost, making the goods articially cheap and corporate profits articially high.
Government-built works like roads subsidize industry and encourage mass production. When goods are easier to transport, they can reach more and more people, which encourages greater production. But when the market becomes national or even global, and the company grows larger, there is too much information to interpret and too much to coordinate. That is why large corporations can lay off thousands or tens of thousands of workers at a time - even when they're making a tidy profit. If one segment "doesn't work out," then those workers are toast.
As a layman, I don't know if I can be convinced that, absent government intervention in the economy, we'd enjoy the kind of life we do with all the inexpensive gadgets and such. Maybe so, but it is more likely that life would be different. Perhaps we wouldn't be so "advanced" in some ways. Subsidized transportation, and technology developed originally for the military-industrial complex, have steered the economy and culture on one course instead of others. Then again, maybe we would have advanced all the more, because the money not taxed and inevitably wasted in government projects would have been put to more productive uses in the private sector by individuals driven by profit, adventure, and scientific curiosity.
Who's to say? It's hard to imagine a life without heavily subsidized airliners that allow us to cross the continent in a few hours - but those airliners are economic holes that have not benefitted the economy in the long run - the enterprise really does seem to be more expensive than we tried to make it appear. We don't know what is "not seen," which is what would have happened without government intervention.
Perhaps a genuinely free market would have seen the development of organic economies driven by local production and less on mass production and trade. People might have less of what they didn't need anyway, and lead quiet, simple, but happy and stress-free lives. Or perhaps the free market would have taken us to unimagined technological heights and a prosperous and peaceful planetary economy.
I find both possibilities appealing. And that is why, ultimately, I can't advance a libertarian worldview that exalts one vision over the other: I'd take either one, because both are better than the regime of taxation and regulation that we have now. The libertarian argument is not, ultimately, a utilitarian one; the principle is not that freedom will make us "better off" dollars-wise, but that it is a moral imperative to not force peaceful people into parting with their liberty or property to advance the vision of someone else. I have no right to initiate force against my neighbor to satisfy my own economic interests or moral preferences, and that means I also have no right to have the government initiate force against my neighbor on my behalf.
So even if it can be proven beyond all doubt that government intervention will lead to a higher GDP, it is still wrong. It is happier to be poor and free than to be a slave to ill-gotten wealth.