Iron Curtain, Government Production Of Goods And Services, And The East Asian Miracle

Our discussion so far suggests that the private sector is inherently better at producing goods and services than the government. Common sense alone tells us that entrepreneurs motivated by the desire to make money are better at producing goods and services than bureaucrats who face no such compelling incentives. With a few exceptions such as national defense, this is generally true. While Ronald Reagan and his hawkish national defense policy are widely credited as having ended the Cold War, the West’s victory was due to its vastly superior economic system. It was the night-and-day contrast in material well-being between the two sides of the Iron Curtain, not tanks and fighter jets, which brought about the downfall of the Berlin Wall, the Soviet Union, and communism. Once the masses on the wrong side of the Iron Curtain saw how the masses on the other side lived, it was curtains for the Iron Curtain. Capitalism is such a patently superior system for producing goods and services and delivering higher living standards than socialism that it needs no repetition here…