A damaging effect of government expansion is the “crowding out” or displacement of private-sector activities. Governments often think that they can do better than businesses, and they take over industries or intervene to set things right. But they misjudge, and government-dominated industries usually become bloated, stagnant, and distorted.
In infrastructure, governments over the past century have displaced private-sector airports, urban transit, passenger railways, and other facilities. America is a land of entrepreneurs, but we effectively bar them from many important industries. An entrepreneur could start an airport, for example, but it would be hard to compete against subsidized government airports that do not pay taxes.
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