Ideally, the federal government should be limited to the functions specified by the Founders in Article 1, Section 8, of the Constitution.
If we are to have any hope of getting back to that system, it may require two practical steps.
- If Washington is operating a program, the first step
may be to replace it with block grants and let state and local governments decide how to spend the money. - If Washington is providing block grants, the second step may be to phase out that funding and let state and local governments figure out if they want to pick up the cost.
To elaborate, programs that are both funded by Washington and operated by Washington not only suffer from waste (common to all government activities), but also produce the inefficiency and stagnation common to a one-size-fits-all approach.
This is why welfare reform under Bill Clinton was a good idea.
Taxpayers saved some money because the block grant was capped. But the best outcome was that states then could use their flexibility to innovate and find approaches that actually helped poor people by encouraging employment and reducing dependency.
In an ideal world, however, there should not be block grants. State and local governments should decide not only how to operate welfare programs, but also how to finance them.
To understand the problems associated with block grants, let’s look at a new study published by the National Bureau of Economic Research. Authored by , it finds that pandemic grants were grotesquely inefficient.
We use an instrumental-variables estimator reliant on variation in congressional representation to analyze the effects of federal aid to state and local governments across all four major pieces of COVID-19 response legislation.
Through September 2021, we estimate that the federal government allocated $855,000 for each state or local government job-year preserved. Our baseline confidence interval allows us to rule out estimates of less than $433,000. Our estimates of effects on aggregate income and output are centered on zero and imply modest if any spillover effects onto the broader economy.
Needless to say, it’s absurd to spend $433,000-$855,000 to save a job that pays an average of $100,000. Or less.
On net, that’s going to reduce total employment when you count the private-sector jobs that are foregone because politicians are diverting so much money from the economy’s productive sector.
And if you want to know how much money was diverted specifically for state and local governments, Figure 3 shows both Trump’s pandemic boondoggle in 2020 and Biden’s pandemic boondoggle in 2021.
In a column for the Foundation for Economic Education, Peter Jacobsen discusses the new study.
The authors find that federal aid to state and local governments to save jobs was incredibly ineffective. In fact, this program was even more inefficient than the notoriously inefficient Paycheck Protection Program (PPP). …The PPP was estimated to have cost somewhere from $169,000 to $258,000 per job each year.
This program to save state and local government jobs cost in the range of $433,000 to $855,000 per job each year. This is as much as 5x more waste! …So how did the government spend more than $800,000 per job to save jobs which normally pay five figures? …a business engaging in an ineffective and wasteful policy like this would make a loss on each worker and go out of business. …government is particularly prone to generating these wasteful jobs. …Without a mechanism like profit and loss to evaluate the value of alternative options, we are left with a policy which spends nearly a million dollars to preserve a single job with a salary less than one tenth of that.
I’ll conclude with the should-be-obvious observation that politicians don’t actually care about net job creation. They care about buying votes with other people’s money.
So the state and local bureaucrats who directly benefited (by keeping their over-compensated jobs) presumably will remember and reward the politicians who supported for the boondoggles.
P.S. The rest of us also should care – and oppose spendthrift politicians, but most of us don’t pay enough attention to recognize the “unseen.”
International Liberty 
Here is my personal understanding about the current status of our government’s ruling tendencies and how it does not and has not represented the actual desires of its citizens.
My pet peeve is with voters who continually support the same or current politicians along with its bureaucrats (kings men and women) who now control USA’s local, state and federal governmental systems since who knows when?
The current governmental system’s objective (desires of those people now and in the recent past that have held down a government position) is to retain the same individuals, both now and forever, within government employment, whether that person be holding down an insignificant or a powerful position, The following is written by David Johnson, a past county, university, state and federal or be it an elected or a bureaucratic position.
OUR CURRENT GOVERNMENTAL STRUCTURES IN THE YEAR 2022 CLOSELY RESEMBLES MONARCHICAL SYSTEMS OF THE OLD WORLD AND DOES NOT RESEMBLE THE REPRESENTATIVE GOVERNMENT OUTLINED IN OUR DECLARATION OF INDEPENDENCE AND OUR CONSTITUTION.
Our ancestors escaped to America to rid themselves of Kings including the king’s men and women!
REPRESENTATIVE = RANDOMLY SELECTED:
We as US citizens were meant to have a representative government. Representative does not mean a lawyer representing you or whatever. A good example of “being representative” is like when you take a truck load of wheat off your farm and deliver it to a grain elevator to sell. When the truck is unloaded with wheat spilling out the rear of the truck, the grain elevator attendant will “RANDOMLY” take several small samples of the spilling wheat and immediately take the same combined samples to a sorting machine to where the weed seeds are separated from wheat seeds. From these random samples the elevator official will dock the percentage of weed seeds found in these same combined samples, as a percentage, of the total load of wheat grain. The elevator employee docks (eliminates or subtracts) weeds seeds from the wheat grain (as a percentage) and pays farmers only for the actual wheat in the load of grain.
Later, anyone can purchase these same weed seeds in order to feed you tweety birds, cattle or etc. from the same grain elevator.
Being representative of the whole (elected Senator, Congressman, President, Governor etc. in 2020) should be identical to those random samples of grain taken from the truck load of wheat harvested off a particular 80 acres of land in 2020. Those combined random samples of wheat along with their weed seeds are TRUE for only that one particular time and place. NEVER EVER WILL ANOTHER SAMPLE OF GRAIN BE REPRESENTATIVE of that same 80 acres of land or for different truck loads of grain!
Randomness is critical to being representative! What is/was true of being representative in one particular instance in time (random sample of grain taken off a truck from a specific 80 acres) will never ever again be “true” for future harvests of grain or whatever resources taken off that same 80 acres.
BY DEFINITION: NEVER EVER WILL A SITTING OR CURRENT POLITICIAN OR BUREAUCRAT BE “CONTINUALLY” REPRESENTATIVE OF A PAST, CURRENT OR FUTURE CONSTITUENCY, BE IT A RACIAL GROUP, DISTRICT, CITY, COUNTY, STATE OR NATION.
Politicians wishing to be re-elected forget that their constituents are quite similar to those random samples of wheat grain plus weed seeds (dockage) delivered to grain elevators in a specific year from a specific 80 acre plot of land. Most incumbent politicians desire that voters would retain their identical desires and views on politics forever. THIS WOULD BE LIKE a grain elevator and their employees would forever give the same dockage for a future load of grain taken off the same 80 acres of land. Meanwhile, that same 80 acres of land that had previously been planted in wheat could easily be transformed by being planted into corn in preceding years or could even become a cow pasture with no resemblance to the past agricultural activities (2020’s wheat crop).
Being a bureaucrat or an elected government official is an extremely time sensitive endeavor! Being in public service means that the same person is extremely aware of their constituents’ needs yet most of the time the very opposite is true. A politician must always be able to place themselves into the same shoes as their constituents, such as any future political candidate should not be employed by the government or be holding a political office previous to running for public office or even more critically like extending their time as a bureaucrat. Government employees get ever more contaminated by their extended employment or may I say, time spent wallowering in the government feed trough. A representative (elected or bureaucratic position) should be a person who lived by his own wits, in private enterprise, prior to obtaining any short term elected or bureaucratic positions within government. NO CITIZEN SHOULD EVER BE IN GOVERNMENT SERVICE, WHETHER ELECTED OR BUREAUCRATIC, COMBINED, FOR OVER 10 YEARS IN A LIFETIME. Of course those ideals are not now practiced, and in fact, that is why our government, at all levels, are no longer representative of their constituents. Most of our career bureaucrats and elected types are NOW completely unaware of the wants and desires of private enterprise citizens in modern day America.
Currently, the concept of being a career government official (elected/re-elected politician or career bureaucrat) ends up to where most of their daily actions are often the very opposite of, or injurious to the very concept of being representative of their constituencies but rather their main objective is to continue feathering of their own nests while living off from the ill begotten contributions of their constituents (private enterprise) who paid their salaries, while most private enterprise types are struggling to make a living.
The closest the USA has ever been to possessing presidential leaders who actually came from the private sector in order to govern as president, during my lifetime, were Ronald Reagan and Donald Trump. Most of individuals now found within modern day media, along with the ever more socialist types found within the Democratic party and the RINOs within the Republican party, most all of whom wanted to burn both Reagan and Trump at the stake because those two leaders came from the masses and not from the decadent or ever-current crop of government feed trough dwellers otherwise called career bureaucrats and ever incumbent politicians.
Since seeing you on Marc Victor’s Peace Radicals podcast, I’ve subscribed to your daily newsletter. I am truly impressed how simply you explain the consequences of excessive government and the obvious solution: less government. Thank you for your excellent work.
Richard Fisher, MD