In principle, government has the capability to be less stupid than the market. Companies are driven by competition, which seriously limits their choices and forces them to dig us a deeper hole. The government can, in principle, just arbitrarily decide that maybe, just maybe, we need to care about surviving for longer than next fiscal quarter or at least try and not create ourselves a hell on Earth.
Keep in mind that the golden age of capitalism was the beginning of Industrial Revolution - it took a lot of blood and subsequent regulations to get us to the point we're not slaving away 16hrs/day in a sweatshop only to die early because some "entrepreneur" sold us poison.
"In principle, government has the capability to be less stupid than the market."
It also has the capacity to be a great deal stupider, because it lacks the immediate feedback of the market spanking it.
It is not sufficient to just wave the word government at a problem. You need to do a full analysis of the incentives and demonstrate they are better. Just as raw capitalism has the obvious problems of a short-term focus, being driving by money above all else, and the issues of externalities being imposed on others, governments have the obvious problems of regulatory capture by interest groups, internal bureaucratic inefficiencies, creating high-level administrators who don't particularly care about the problem and just use the regulations as tokens in a war of turf-building, and being driven by politics above all else. And that's just the high-level table-of-contents of the problems both can have.
Governments are perfectly capable of deciding that up is down, blue is red, and don't you DARE question them or you're unpatriotic and we're going to lock you up, and they're amazingly capable of retaining these beliefs for far beyond their best-by dates because they have the power to just bull through whatever problems may arise (until they suddenly run out).
In the particular case of a supply problem it is not at all clear to me that letting the normal mechanisms of supply and demand handle it is that catastrophic... these issues happen all the time and you don't even notice. Again, let me emphasize, this happens daily. It's what the markets deal with. It's not like this is some bizarre scientific theory, it's to the level of engineering. We do it all the time.
To tack on to this, we have government subsidies of oil and ethanol production in the US, specifically to keep the price of gasoline lower than what the market would clear on its own. Government, the one that our parent post supposedly wants to regulate limited resources to save more for the future, is actively encouraging consumption faster than normal.
The only case that I'm aware of in which government regulation has successfully protected a limited resource is the fishing fields of Iceland, and they fixed that issue by creating a system of ownership--i.e. capital--where there was only the commons before.
> In principle, government has the capability to be less stupid than the market.
Only if you're applying favorable "principles" to government but not doing the same for the market. If you're treating government as a black box that acts as a perfect aggregate of the population's preferences, then yes, it can maximize economic efficiency (or probably accomplish whichever other goal you have, like egalitarianism, utilitarianism, etc.). But if you do that, it's only fair to treat the market as a black box that does exactly the same thing.
Of course, neither the government nor the market can act as a perfect aggregate of the population's preferences.
> The government can, in principle, just arbitrarily decide that maybe, just maybe, we need to care about surviving for longer than next fiscal quarter or at least try and not create ourselves a hell on Earth.
To use your example, the market can also in principle just arbitrarily decide that maybe, just maybe, we need to care about surviving for longer than next fiscal quarter or at least try and not create ourselves a hell on Earth. There's no rule in the market that says a rich capitalist, or even a group of private companies, can't just spend a bunch of resources on whatever you're talking about.
I don't think business is the answer to everything. There are a lot of ways that I think the shear size of some corporations gives them the capacity--through vertical integration--to ignore some market forces. Oligopoly is not a free market. But I think you're way off base here and are severely overstating what we should realistically expect out of government.
Even as early as Henry Ford (in positing that greater leisure time for workers was good for the business as well, as it increased per-hour productivity and created a larger consumer class), we see capitalists bucking such simplistic and reductive thinking. Also, the only modern movements towards reducing working hours lately has been from private industry as well.
I don't think there is any principle to any study of government or economics that says what you have said. Government has the capacity to enforce laws. Beyond that, what those laws are, for whose benefit they are written, that's not guaranteed. To hope that a government will adopt a certain policy for humanitarian reasons is wishful thinking.
But, if you can make an economic case for a certain policy, then it becomes much, much harder for people--either businesses or governments--to ignore.
>In principle, government has the capability to be less stupid than the market.
That may be true, but the US had a "strategic helium reserve" that we decided to sell off for no reason I can discern. I have more trust in people who are trying to maximize the amount of money they make than Congressman who can be bought and sold more easily than helium.
Keep in mind that the golden age of capitalism was the beginning of Industrial Revolution - it took a lot of blood and subsequent regulations to get us to the point we're not slaving away 16hrs/day in a sweatshop only to die early because some "entrepreneur" sold us poison.