Comment: Musk doesn’t understand what Lincoln knew

By Gautam Mukunda / Bloomberg Opinion

In 1854, Abraham Lincoln, who would not be elected president for another six years, mused about the purpose of the government he would one day save.

He concluded that “the legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do for themselves, in their separate and individual capacities.” In this, as in so many things, Lincoln saw to the heart of an issue that still plagues us. His insight tells us that many of the DOGE cutbacks, which are supposedly aimed at “waste, fraud, and abuse,” are slashing away at government’s core function: providing public goods.

Lincoln’s transformation of America went far beyond the Civil War. His administration also gave us the Homestead Act that allowed settlers to claim government land, created the American system of land-grant colleges and helped build the Transcontinental Railroad. Farmland, education and transportation are all economically valuable to the people who use them. So why did they need government support?

Lincoln saw that there are also broader societal benefits to all three. Because of these benefits, which economists call positive externalities, markets, if left to themselves, will undersupply the good. In the case of land-grant colleges, Lincoln believed that American democracy would be stronger with an educated population, and this would aid even those who didn’t go on to higher ed. That means it’s in the country’s best interest to fund schools, so they can take on more students. But all the Americans who aren’t going to a land-grant college are not going to provide that money; so government steps up to correct this market failure.

Another economics concept — public goods — has a similar issue. These are goods whose provision improves society, but whose benefits can’t be restricted only to those who contribute to them.

National defense is the classic example. Free markets can’t provide it. Even setting aside the coordination issues (if New Jersey were invaded, should Citigroup raise its own tank regiment to fight back?), it’s impossible for a private company to exclude someone from the benefits (if you don’t contribute to Citigroup’s private army and they throw the invaders out, you still get to live in a free country). That means the temptation will always be to free ride, giving private actors little incentive to supply the service. If public goods are not provided by the public sector, they will barely be provided at all.

Defense spending is far from the only example. Take the National Weather Service, which provides the data for all weather forecasts in the U.S. The federal government spends only $5.1 billion per year on weather forecasts, but they generate $31.5 billion in annual economic value and the average American consults one 3.8 times per day.

Perhaps the most misunderstood public good is scientific research. After all, not all science needs government support; the market rewards applied research. Pharmaceutical companies, for example, develop new drugs and have built extraordinary skills in areas like organic chemistry and pharmacokinetics that have no public sector equivalent. Individual medicines might have positive externalities that suggest they should be subsidized, but overall, drug development is so profitable that there’s no need.

Pure research is different. It seeks to understand the world but usually has no immediate practical value. When trailblazing British scientist Michael Faraday was asked about the use of his research, he replied, “Of what use is a newborn baby?” He was, wonderfully, quoting Benjamin Franklin’s own response to the same question. Faraday discovered much of the basic physics underlying electricity and magnetism. Few people would question the value of his newborn today.

We all benefit from pure research, the most non-excludable of all public goods. Once Albert Einstein wrote out that E=mc2 and laid the foundations of the nuclear industry, or Crick and Watson discovered DNA’s double helix structure and made modern biology possible, the knowledge could not be contained.

Pure scientific research isn’t just something that the government does. It is something that only the government can do, or pay to have done, at anything close to the optimal level. This is what DOGE is threatening.

Not just through the denial of funding, but also through the disruption and elimination of expertise. Public goods require high levels of technical and managerial skill to provide successfully. Scientific research, for one, is a delicate process. Even in the private sector, the disruption from a merger can substantially decrease research productivity. Providing for the common defense takes similar levels of skill; and eliminating the Office of Net Assessment, the Pentagon’s premier think tank, will make sure that the Defense Department has much less of it at its disposal.

Government waste is something everyone opposes, and that goes double for fraud and abuse. But Lincoln knew, and we should know, that there are still many things that the public needs and which only the government can do.

Gautam Mukunda writes about corporate management and innovation. He teaches leadership at the Yale School of Management and is the author of “Indispensable: When Leaders Really Matter.”