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The Invention of Government, starring Mariana Mazzucato

Summary:
In an op-ed in the New York Times, Mariana Mazzucato offers a summary of her last book, The Value of Everything. The book is both a polemic against marginalism, which she considers a cover-up for laissez-faire (as if Jevons, Marshall, Walras, or Menger were champions of unfettered competition), and a plea for more government intervention in the economy. Mazzucato does not argue: she tells a story, sometimes very effectively. Here’s the story in a nutshell: When the economy is in crisis, whom do we turn to for help? Not corporations — it’s governments. But when the economy is flourishing, we ignore governments and let corporations soak up the rewards. This was the story of the 2008 financial crisis. A similar story is unfolding today. Governments have spent

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The Invention of Government, starring Mariana Mazzucato

In an op-ed in the New York Times, Mariana Mazzucato offers a summary of her last book, The Value of Everything. The book is both a polemic against marginalism, which she considers a cover-up for laissez-faire (as if Jevons, Marshall, Walras, or Menger were champions of unfettered competition), and a plea for more government intervention in the economy.

Mazzucato does not argue: she tells a story, sometimes very effectively. Here’s the story in a nutshell:

When the economy is in crisis, whom do we turn to for help? Not corporations — it’s governments. But when the economy is flourishing, we ignore governments and let corporations soak up the rewards. This was the story of the 2008 financial crisis. A similar story is unfolding today. Governments have spent trillions on stimulus packages without creating structures — like a citizens’ dividend, which would reward public investment — that turn short-term remedies into the means for an inclusive, sustainable economy. This gets to the heart of what fuels inequality: We socialize risks but privatize rewards. In this view, only businesses create value; governments merely facilitate the process and fix “market failures.”

If only there were a mechanism by which these corporations were taxed!

I don’t know if you have seen The Invention of Lying. In the movie Ricky Gervais lives in a world where nobody ever lied; he is the first who come up with the idea and builds his success on it. It seems to me that Mazzucato may star in a similar movie, The Invention of Government. Her narrative that we socialize risk but never properly compensate governments fits very well a world where taxation does not exist. Sadly, that is not the world we live in.

Alberto Mingardi
Mingardi, one of the rising stars of European libertarianism, is the founder and Director General of the Italian free-market think tank, Instituto Bruno Leoni. His areas of interest include the history of economic thought and antitrust and healthcare systems. He is particularly well known for popularizing the work of past scholars under-appreciated by today’s libertarians. Currently an adjunct scholar at the Cato Institute, Mingardi has also worked with the Heritage Foundation, the Atlas Economic Research Foundation, the Acton Institute, and the Centre for a New Europe.

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