People complain about the demise of the shuttle program, usually with some sort of political grumbling, but the fact remains that the old shuttle program was obsolete and dysfunctional. Instead, the Bush and especially Obama administrations have created the world’s first viable commercial space program. The space race is no longer about which government has the biggest program. That ship has sailed or will sail eventually. In the long run, it’s about which nation’s businesses will develop a global monopoly on the space race. This will have huge economic, geopolitical, and technological implications. The role of government is a question for the ages with a broad spectrum of potential answers, but one of the things government is really good at is developing basic technology and then passing that off to the private sector for economic benefits and further development. NASA may no longer have a space shuttle. It doesn’t really need one, but it’s still working on it’s mandate: discovering fundamental science and developing new technologies.
The point is that is that while the government could have focused on short term (and expensive) shuttle program, instead the government made a decision for long term gains. This is what governments should do, make investments. Consider the New Deal. Economists have mixed opinions about how effective the New Deal was in ending the Great Depression. There are arguments on both sides. It probably helped some, but what’s missing from most analysis is what was the effect of the New Deal beyond the Great Depression. When I was a kid our favorite field trips to grand coulee dam (ok, maybe it was just my favorite trip). It’s one of the largest structures in the country. Half the people on the west coast still get their power from Grand Coulee or Hoover Dam and will for generations to come. They were a key economic factor during World War II. More than the dams all over the country, trails, camp sites, water ways, irrigation, cultural achievements, did more than anything else to build the west. Can anyone say “Hollywood?”. If you’ve ever eaten an apple in your life it almost certainly came from Washington and grown with power and an irrigation system that got it’s start during the great depression. These are the kinds of investments that pay off in dollars, jobs, and technology.
The New Deal more than paid for itself in economic benefits many times over. Maybe not in the short run where it was expensive, and some considered it a failure, but certainly in the long run. In fact, the return on investment is literally incalculable. I’m not even going to talk about the Eisenhower highway act. The 2007 and 2008 stimulus programs were a failure because they didn’t create anything of substance. Governments are exceedingly effective at planning for the short term, but highly proficient over the long term especially when it comes to infrastructure. Something to bear in mind when talking about current economic policy. It’s not about immediate tax cuts, or spending programs. It’s about planning for the long term.