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Why Private Investment Works & Govt. Investment Doesn't

21588 ratings | 1082992 views
From transportation to energy, and everything in between, should the government invest money in as many promising projects as possible? Or would that actually doom many of those ventures to failure? Burt Folsom, historian and professor at Hillsdale College, answers those questions by drawing on the fascinating history of the race to build America's railroads and airplanes. Donate today to PragerU! http://l.prageru.com/2ylo1Yt Joining PragerU is free! Sign up now to get all our videos as soon as they're released. http://prageru.com/signup Download Pragerpedia on your iPhone or Android! Thousands of sources and facts at your fingertips. iPhone: http://l.prageru.com/2dlsnbG Android: http://l.prageru.com/2dlsS5e Join Prager United to get new swag every quarter, exclusive early access to our videos, and an annual TownHall phone call with Dennis Prager! http://l.prageru.com/2c9n6ys Join PragerU's text list to have these videos, free merchandise giveaways and breaking announcements sent directly to your phone! https://optin.mobiniti.com/prageru Do you shop on Amazon? Click https://smile.amazon.com and a percentage of every Amazon purchase will be donated to PragerU. Same great products. Same low price. Shopping made meaningful. VISIT PragerU! https://www.prageru.com FOLLOW us! Facebook: https://www.facebook.com/prageru Twitter: https://twitter.com/prageru Instagram: https://instagram.com/prageru/ PragerU is on Snapchat! JOIN PragerFORCE! For Students: http://l.prageru.com/29SgPaX JOIN our Educators Network! http://l.prageru.com/2c8vsff Script: In 2011, a solar power company called Solyndra declared bankruptcy. A company going bankrupt is not news. But Solyndra was not just any company. Its biggest “investor” was the federal government which had given it $500 million dollars. That was news. But, really, it shouldn’t have been. If history is any guide, it was quite predictable. The government is a very poor investor. And always has been. There are countless examples, but two should serve our purpose here. After the Civil War, American leaders were anxious to bind the country’s North, South, East, and West regions together with transcontinental railroads. Congress therefore gave massive federal aid to build the Union Pacific, the Central Pacific, and later the Northern Pacific Railroads. But all three of these roads had huge financial problems. The Union Pacific, for example, was mired in financial scandal from its inception, went bankrupt several times, and had to rebuild large sections of track thanks to shoddy construction practices. At that same time, James J. Hill, with no federal aid whatsoever, built a railroad from St. Paul to Seattle -- the Great Northern. How was Hill able to do with private funds what the Union Pacific failed to do with a gift of tens of millions of federal dollars? The starting point is incentives. The Union Pacific was paid by the government for each mile of road it built. It was in the railroad’s interest not to build the road straight. The more miles it took the UP to cross Nebraska, for example, the more money it made. Hill, by contrast, used his own capital. To make a profit, he had to build his Great Northern Railroad sturdy and straight. Hill’s company remained in business for almost a hundred years until 1970 when it merged with other railroads. The original Union Pacific, riddled with corruption and numerous other financial misdeeds, including the wholesale bribery of public officials, went broke within ten years. The story of the airplane is even more stark. By the opening of the twentieth century, the major nations of Europe and America were frantically at work trying to invent a flying machine. The first nation to do so would have a huge military and commercial advantage. In fact, leading American politicians of the day, such as Teddy Roosevelt, President William McKinley, and others argued that building an airplane was a national emergency. There was no time, they argued, to wait for private industry to get the job done. The government needed to pick the best aeronautics expert and give him the money he needed. That expert was Samuel Langley, the president of the prestigious Smithsonian Institution and holder of honorary degrees from Harvard, Yale, Oxford, and Cambridge. Langley was already an accomplished inventor and he had written a highly praised book Experiments in Aerodynamics. Federal officials gave Langley funds for two trial flights. He immediately set to work. His theory was that his plane needed to be thrust into the air from a houseboat on the Potomac River. The big engine on the plane would then propel it through air for several minutes. For the complete script, visit https://www.prageru.com/videos/why-private-investment-works-govt-investment-doesnt
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Text Comments (2839)
Jayasurya Maker (3 hours ago)
A great smelly piece of shit from PragurU . According to this logic only people who have " their own money can do something for society " . PragurU is a disastrous Channel
mefer swift (10 hours ago)
Well, not if the goverment run like private sector.
draugami (2 days ago)
Slight inaccuracy. The Wright brothers didn't want planes to become part of the war machine. They thought that planes would put an end to war because everyone would see the invading army.
It's-All-Happening (5 days ago)
More like "not from politicians WASTING you money".
Damian Grouse (6 days ago)
And yet they named a USAF base in Virginia...Langley...deep state even then.
yukitaka oni (7 days ago)
So invest in private companies and invest nothing in government. Got it
Oru Tamizhan (8 days ago)
Example: Air India
GT K (8 days ago)
Please research 😩😑 the stupid case that the Korean government is doing right now. About income-led growth??? 😩
Hayden Case (1 day ago)
@GT K Whar are they doing this time exactly?
SeekerPsycho1 (10 days ago)
I understand how bad incentives caused the railroad problems; but how did having more money at his disposal cause Langley's failure? Isn't it just a case of the Wright brothers being smarter?
Mark Shane (11 days ago)
I kinda disagree with this video. It's not like Langley, and subsequently every other agency who receives government handouts, spent that money in foreign markets. They invested it in american engineers, technicians, supplies and equipment to complete R&D. Sure they spent our money, but the people who received it ultimately cycled it back into the economy through taxation and private purchases. Also the Wright brothers used Langley's failures as a jump point for their experiments. I think its a gross over-simplification to say that economic growth is spurred from private money over the government's. Another point. Sure the wright brothers invented the first flying aircraft, but the real innovation came from the war machine of WWI and II and the postal system. That's when large combustion engines took our aircraft to new ranges with more cargo. The same goes for space. There was no Elon Musk when the government put man on the moon. As a matter-of-fact, there would be no private space or aviation corporations if it wasn't for the government footing the R&D/innovations bills. You also state that Langley, with the full support of the government couldn't achieve flight. In that same section you just said how both Langley AND the government gave up. Doesn't sound like full government backing to me. Your example of railroads is an example of corruption, not failed government acquisition. Don't get me wrong I'm anti- big government and the government does misstep, quite often. But, your blanket statements are far too chili for my needs.
Threelly AI (11 days ago)
A normal conversation https://chrome.google.com/webstore/detail/threelly-ai-for-youtube/dfohlnjmjiipcppekkbhbabjbnikkibo
Sodhan Manandhar (12 days ago)
SpaceX shout out
Art76 (18 days ago)
When I was in the Navy, I got laughed out of the wardroom for suggesting that captains be rewarded for operating their ships efficiently. The others thought our job was to show the flag, and cost was not a factor whatsoever.
Stupid Storm (18 days ago)
So true. Look at Amtrak and the Post Office, Medical, Social Security, etc...all a disaster.
John Doe (18 days ago)
Then why has the Republican Party done NOTHING about REDUCING THE SIZE AND SCOPE OF GOVERNMENT for the past 60 YEARS???!!! Answer: Because they DO NOT give a rats f*cking ass about it. And it wouldn’t surprise me in the least that they rely on Prager U to continue peddling this kind of bullsh*t to suggest that they do! Sincerely, A TRUE small government conservative
Rainbowrider JT (18 days ago)
Not long ago a thriving business that had been around for over 140+ years got taken over by the IRS because they claimed this company owed a lot of back taxes. So the IRS decided they were going to collect those back taxes by running the company themselves! Well, within 6 months, this thriving company was laid to rest! The real sad thing here is that the company the IRS took over was marketing one of the oldest product that carried the oldest profession known to man! Prostitution! And the company was the Mustang Ranch!! If the Government can't even keep the oldest no brainer profession going, why would we trust them to run anything else? Our "Republic" was created to be a "minimal" government that enforced our law which is the Constitution! Sadly over time, the globalist left and traitorous Rinos have pushed more and more Government on to us and we finally see the end result of what they want! Socialism! Full dependence on Government! Yet in history, it's clear that when you spend other peoples money, it never works out! So far, 1 thousand 100 hundred people who watched this video must like or want Socialism! They just never learn!!!
Rainbowrider JT (1 day ago)
@Hayden Case I shouldn't have to tell you if you really read it! It's in the second to the last sentence in the first paragraph after the word "Prostitution".
Hayden Case (1 day ago)
@Rainbowrider JT Can you tell me the name of this 140+ years business?
S L (20 days ago)
You can add the F35 & The big dig to the list - massively over budget, huge delays with spurious result. Given the government is inept, incompetent, and absolutely corrupt, it’s no surprise. It’s just not the federal government, when the socialist ran the economy in the USSR, it was a disaster. The only exception is where they directly competed with the West - space race and militarily.
Charles124 (21 days ago)
Theoretically the government can pay for these things but they just needed to pay them for how fast,sterdey,safe, and cost effective it was if they put these in place for paying like for the railroad it would be shorter, last longer, safe for all riding it or working on it, and it would cost less money to run them and to diliver goods and services. I am not saying that the government is better than private industry but saying it would be as good as private industry and if you reading this I am only puting this here to show you that is theoretically possible if it is done right,not like have the government has done it in the past. PS I am still a little sceptic if you guys are true but I know you have good intentions and that is all that should mater. Ps.ps. in one of your videos one of you said that global warming is not as bad as we see it but I hate to say it but there is too much evadents that says otherwise so here's some advice even if it looks small it dose not mean it is not gonna do big things and here's some more look for notable study's that have these 3 things: 1 it must show that is no kinds of biased 2 it hast to have a large sapmle size and 3 look for the placebo effect which is not important in this case so ya love your videos
Kenny Dunne (25 days ago)
Skips over the fatalities these railroad companies wracked up due to their Private business practices.
True Fan (1 month ago)
1.1K dislikes from Democrats, leftist and Prager U haters 🤭. 🇳🇵
Brian Hegarty (1 month ago)
Hey looks like Union Pacific had presidential qualities :/
Allen Linares (1 month ago)
So all the defense contracts are also a waste of money?
Tom Trottier (1 month ago)
Is this supposed to help support for Trump's wall? Because now it sounds like an even worse investment idea.
Fiddle Pants (1 month ago)
PragerU cherry picking some events from history to fit their shotty agenda. Look at the Manhattan project. What an achievement by American scientists, funded by the government. Just making a point here... I can also cherry pick events from history. Good fight Prager fags
TheSenordonut (1 month ago)
he forgot to mention that the union pacific railroad continues to this day unlike the great northern railroad.
Pathologically_Cute (1 month ago)
Okay, I believe you. 🙃 https://youtu.be/v6lzbIw7eFc
Cye Lannford (1 month ago)
This is the foundation of the Right's LIES-Propaganda-Godless deception!! Also, this is how they maintain Authoritarian Economic dominance... they control the narritive, they use what is supposed to be a Constitutional Democratic government, they force their Globalism on the working-class, and they hold almost all the Wealth-Capital needed to establish businesses. Need proof?? Why do they LIE ENDLESSLY about an Enlightenment Era THEORY that has (yet) never existed?? Why do they tell us Socialism is evil?? You know _why_ !! Socialism: an Enlightenment Era THEORY prescribed that SOCIETY fund, own, operate, manage, distribute goods, and profit from local businesses. Existing within the *Free Market/self-regulating market* system, under a Constitutional Democracy, where citizens build a civilized SOCIETY with sustainability, stewardship, and prosperity for the working-class. --------------------- Privatization, Statism, Wealth/Ruling Elitism, Authoritarianism, etc etc are not the Economic models that build the type of SOCIETY most in-line with a Christ-like Nation and people... but the human race is unlikely to build a civilization allowing full Liberty. It is nonetheless important to EXPOSE the Right's endless LIES and Godless destruction of Protestantism, and America.
Triyan roy (1 month ago)
Does anyone remember the Great Depression, Keynesian economics, the greatest failure of free market capitalism. I'm not saying that government is a good investor this video is proof it isn't . But we must keep in mind that if the market is free of government interruption the economy will inevitably be the target of the business cycle and go into recession or depression. So all i want to say is that it's fine criticizing the government investment (after all criticism is the path to transparency and progress) but we shall not forget its importance.
Anne Mouse (1 month ago)
The New York times; Wrong for more than a century!
Matt Hansen (1 month ago)
Prager is the man!!
Robert Boehringer (1 month ago)
This is one of the most ludicrous channels on youtube.... I feel sorry for that people actually believing this is education and not funded propaganda. The videos on this channels make abhorrent nonesensical claims and get away with it.... So sad
William Overton (1 month ago)
what about the space industry?
Owen Cairns (1 month ago)
Teh FrEE MarKet WilL DeCIdE
Aditya Mahakali (1 month ago)
Not necessarily ISRO is completely funded by government and it does brings economic prosperity to India
Jonathan Stern (2 months ago)
You've pointed to two government investments that went wrong. Here are three that went right. The Interstate Highway System. The Internet. Going to the moon.
Charlie Harvey (2 months ago)
I'm sorry but using two examples for the majority of the video from 90+ years ago just wasn't a great argument.
john tabler (2 months ago)
At least Langley got the consolation prize of having the first Aircraft Carrier named after him
Frank Castle (2 months ago)
Obama gave away the money to his buddies and not one solar panel was made
D (2 months ago)
You really should add NASA vs SpaceX to the list.
Paragjyoti Deka (2 months ago)
"Economic growth comes from Entrepreneurs risking their own money, not from govt politicians risking your money. " Can't be more true.
Ch4os4ever (2 months ago)
Check the Brazilian oil company Petrobras to see what a real bad governments administration looks like.
Notoriously Neutral (2 months ago)
Nevermind the fact that the wright brothers had figured out that you need to be able to control yaw to fly. It had nothing to do with investment and everything to do with physics
Lucsar 27 (2 months ago)
The creator of airplanes was Santos Drumont de Andrade and not the Wright brothers
Bob Finkenbiner (2 months ago)
how many times was the New York Times actually reporting the truth? rarely or never?
Bob Finkenbiner (2 months ago)
explains NASA.... focus on climate change instead of space exploration. seems that politics and corruption and inefficiency go hand in hand. hard not to explain why NASA is sitting in Houston Texas.
Collin Woodard (2 months ago)
One reason why the f-35 is the worlds leading 5th gen fighter
William Black (2 months ago)
I mostly agree, with the notable exception of nuclear weaponry—that's not something that should become public domain.
mohamed akram slimani (2 months ago)
i weep for the 1.1k who disliked this video
Avry (2 months ago)
Why anyone gives credits to santos Dumont?
mahesh karthick (2 months ago)
That's the reason why indian economy, stagnated in the 70s and 80s. 😡 😡 😡 😡
John P (2 months ago)
heretic - burn him at the stake!
Stalin Gulag (2 months ago)
I think the state is a bad investor manager etc... Because corruption isn't punished properly, if the state would go full medieval on it's corrupts it would be another story
KD Marrison (2 months ago)
Propaganda channel funded by the billionaire class who buy off the politicians! Definition of fascism? ... collusion of corporate and Govt sector Internet, texting iPhones computers etc all came about by massive govt R and D in the military sector ;
Kurt Cunningham (2 months ago)
how about ford and the assembly line, or christlers diesel engine. or the power hammer for the railroad to make working steel quicker
David Sawyer (2 months ago)
Um wait wasn’t the internet the thing were watching this video on made by the government?
אדיר יוסף (2 months ago)
to that I got only one Question if that is true how our economy works HOW ISRAEL WORKS
LordDyhalto (2 months ago)
In stock market lingo, OPM is the acronym for Other People's Money, which is often attributed to either overcautious impotence or *reckless abandon.* It's pronounced like 'opium'.
Forest Frost (2 months ago)
This happen in Brazil with Petrobras and the Mails, there only mails federal organization here and even like that they went bankrupt
TexasWalker Woman (2 months ago)
The difference between College knowledge and hands on practical knowledge. you maybe able to use big words but you have no idea how to make solid objects work. that's why engineers have ideas , that the working man bring to life.
Abraham .J (2 months ago)
Was Titanic also subsidised and built by the government?
New Peoples Society (2 months ago)
Its a capitalist cult
zakariye Abdirahman (3 months ago)
That's not always true. U.S government invested money in Tesla and SpaceX and today both companies are doing great.
vasilisking (3 months ago)
Private industries are great, just watch the volkswagen scandal. American idiots.
1966bluemax (3 months ago)
It’s like the water company in the Philippines. Before privatization, the pilferage rate was 50%. The government agency didn’t care cause they charge the pilferage lost to customers as surcharge. After privatizing the water services in 1997, guess what? A miracle.... pilferage rate becomes almost 0%.
Wei Neng Chen (3 months ago)
Privatization of train did not work for UK https://www.youtube.com/watch?v=nP95Frc0v4k I have been convinced by this video gov investment is shit. Only after I see this video with actual result of UK train privatization found out privatization might be worse. It is nice to see different opinions. I think the moral is: In some cases, privatization works, in some cases, gov investment works. There are no straight answers. Think and research after watching a youtube video...
hbarudi (3 months ago)
That solyndra messed up so badly, 9% efficiency CIGS solar cells? Now we have over 18% efficiency on those solar cells and panels ready for a manufacturer to be built for them, but we are adding another top layer and planning for a much better 2 active layer thin film solar cell. We really need to rely on private funding for research at this rate.
Murilo Santos (3 months ago)
Santos Dumont was the first pilot to fly😡
Hp Ck (3 months ago)
This is why we American put Trump in the WH. Career layer politicians do not know how to run a country as a big business. They do not have hands on street experience,
Cody Patino (3 months ago)
You’ll always appreciate it more when it’s your own money.
Brian (3 months ago)
Seems like you could have found a few examples from the last century at least.
Ben Goodwin (3 months ago)
You didn't even try to explain why you think the government is bad at investments; i.e. what drives their decisions to be bad, you simply gave two examples and then concluded from there. This is an improper use of data and we both know it, these could be outliers; Ben Shapiro would be furious.
Gabriel Bayona (3 months ago)
Thank you professor
yorick van uijthoven (3 months ago)
Two failed attempts as example to make your point is not representative. The failure in these two examples isn't due to state spending but due to failure of the experts and wrong policy. There are lots of succesful examples. Very one-sided youtube explanation
Standing Man (3 months ago)
And no one has gone to the Moon since.
Dude (3 months ago)
Dearest Prager. The Michelin prize was the biggest driver for the airplane being invented .
Mike Tackett (3 months ago)
This v8deo is straight B.S. it's someone being a puppet saying what people want also if it's a really risky field with little to no knowledge available then private finding want come also when the investments will benefit the masses equally then it will not happen also if you had to go all the way back to the Wright brothers to show your point how many did you over look the proved you wrong
somthing goeshere (3 months ago)
If you look at space travel today you'll see the terrible investments that the us made in rockets, they never thought to reuse the rockets like SpaceX is, the government is bad at doing things and there's examples showing this happening all around us right now
Mersedes De (3 months ago)
Like the $33 billion they said it would cost for the California bullet train that it came out to be $77 billion and they say it might take $ 98 billion to finish it.
P G (3 months ago)
문재인 새겨들어라
7EiamJ7 (3 months ago)
Hey, I think we can all agree that the funds to NASA at least got US to the moon...
Kybur (3 months ago)
And all this wouldn’t be possible if Colombus hadn’t been funded by the Spanish Crown
QE oo (3 months ago)
Just like Tesla. Without subsidies it is bankrupt
darth rias gremory (3 months ago)
Robo vacuums are for people who do not want to have to get off there ass to do things
Marius Wong (3 months ago)
Capitalist's edge over Socialist
SonicsJoe2013 (3 months ago)
Another reason why sports owners should stop asking money from the government for stadiums The government cant be trusted
Ruiz Railroad (3 months ago)
Now the Union Pacific is the richest railroad in the world.
Only to remember: the inventor of the first aeroplane in the world was Santos Dumont, not the Wright brothers, who you made seem it were.
TheConversation (4 months ago)
Cool story bro. Who funded the internet?
javier A (4 months ago)
That is true, but it is no less true that the United States flew to the moon with public funds.
Johan Gustav Lammers (4 months ago)
Well, imagine the government would act like an enterprise. It could.
Bill Hollingsworth (4 months ago)
The worst government investment was in the Iraq war, the longest war the US has engaged in but hey it has been an absolute bonanza for the private defence contractors, if not the tax payer.
David Lin (4 months ago)
This is clear as blue sky that government are going right direction cause no other private investor going to risk. Only government pave them way so other can have idea or make the same mistake simple as that.
Blargh Largh (4 months ago)
The premise of your argument is that because some private projects worked out better than some government projects then private projects must always work out better than government projects. That is not so. A real analysis would involve more than a couple anecdotal examples.
Blargh Largh (3 months ago)
@7EiamJ7 private industry has gotten to the moon thanks to Elon Musk. He did however rely on a hefty gov loan so that doesn't prove anything. I wasn't really arguing for or against privatization. I was arguing against this particular videos argument. It's clearly a logical fallacy.
7EiamJ7 (3 months ago)
I dunno, when your doing it privately you watch the pennies and need to succeed. But when your using collected taxes there's no personal responsibility, project leaders still get paid and the losers are the working class. Of course the state will have success stories they need those to sell the idea they can take on big projects, like going to the moon, get the funding and delay for more funding. Surprised private industry haven't gotten to the moon yet, that is odd.
Will Devine (4 months ago)
Yet conservative parties globally give handouts and bailouts to big business in the form of tax cuts which makes the majority foot the bill. So much for caring about the taxpayer
C R. S. (4 months ago)
Good example, but the first flight was made in France by Santos Dumont... and with a cheaper airplane and without rails to impulse
Dony Prasetiyo (4 months ago)
*communist/socialist/Marxist has left the chat*
Random Diaster (4 months ago)
The internet is one the best examples of why Government investment works.
Rand Dickson (4 months ago)
What about Tesla? They got a lot of government money and they seem to be working.
O analista (4 months ago)
About the second vídeo only one name .... Santos Dumont
vincent fong (4 months ago)
Democrats want more money to pay for free healthcare and green new deal and they will solve all the problems with your money. Good luck! We should head to venezuela to enjoy the maduro diet to lose some weight.
Gyuwaaz (4 months ago)
21 more views to a mil

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