And “wasteful” is not an idle adjective when writing about Canadian fiscal policy.
Here are some excerpts from a story from Bloomberg about a pipeline being built by Canada’s government. And since it’s being built by government, there are giant cost overruns.
The expansion of the Trans Mountain oil pipeline will cost about $3.1 billion more than the Canadian government-owned company running the project projected in May, another financial setback for a project beset by spiralling expenses and years of delays. …That brings the total cost to about $34 billion, more than six times the original estimate of $5.4 billion in 2013. …another setback for a project that Prime Minister Justin Trudeau has expended significant political capital on. …The expansion, years behind schedule, is set to go into operation in the second quarter, a delay from the previous first quarter start date, according to Trans Mountain.
But New York also belongs on that list. Some of the Empire State’s problems are summarized in my five-part Florida-vs-New York series (available here, here, here, here, and here).
Today, let’s look at some additional evidence. Jay Root of the New York Times has a sobering story that illustrates the blundering nature of the state’s government. Here are some excerpts.
Ten years ago, the agency overseeing the upkeep of the majestic New York State Capitol reported that the granite staircase leading to the main entrance was warped and bulging so badly that part of it might collapse at any moment. …A thorough repair, estimated at $17 million, was recommended. …The entrance, known as the Eastern Approach, has been closed to this day… In a state capital known for its inefficiency and inability to meet deadlines, the staircase and the Capitol’s exterior are visual reminders of Albany’s tendency toward disrepair and dysfunction. …Gov. Kathy Hochul…pushed through a $41 million appropriation to fix it, more than double the estimated cost in 2014. …they’re lining up contractors, with an eye toward starting work next spring and finishing it in 2028. It’s possible…that the estimated cost could rise again.
And (assuming the stairs ever get renovated) I’ll make a very safe prediction that the final cost is over $50 million.
By the way, it’s also not a surprise to learn that the entire building has a history of inefficiency and incompetence.
The Capitol was painstakingly built over 32 years beginning in 1867, a period marked by mishap, contracting abuses and cost overruns. It was the most expensive government building of its time.
Let’s close by acknowledging that New York is consistent. It had the most expensive government building and now it has the most expensive mile of subway.
Today, let’s focus on the third item so we can remind ourselves that government is inefficient and incompetent.
And we’ll focus specifically on Biden’s push for more electric vehicles. The President wants to encourage consumers to transition away from the internal combustion engine, so his legislation has big subsidies for more electric charging stations.
How’s that working out?
Just as you might suspect. Here are some excerpts from Shannon Osaka’s report in the Washington Post.
President Biden has long vowed to build 500,000 electric vehicle charging stations in the United States by 2030. …But now, more than two years after Congress allocated $7.5 billion to help build out those stations, only 7 EV charging stations are operational across four states. …$5 billion was allocated to individual states in so-called “formula funding” to build a network of fast chargers along major highways… But after two years, that program has only delivered 7 open charging stations with a total of 38 spots where drivers can charge their vehicles… requirements…slow down the build-out of the chargers. “This funding comes with dozens of rules and requirements,” Laska said.
Since the article does not specify how much money has been spent so far, we don’t know the per-station cost, but it surely will be enormous.
To be fair, the per-station cost presumably will decline over time, but I’m sure it won’t be anywhere as low as the cost of private charting stations.
And the article notes that Tesla is doing a much better job than the klutzes in Washington.
The United States currently has close to 10,000 “fast” charging stations in the country, of which over 2,000 are Tesla Superchargers, according to the Department of Energy. Tesla Superchargers — some of which have been opened to drivers of other vehicles — are the most reliable fast-charging systems in the country.
So what’s the moral of the story? Maybe, just maybe, we should let market forces rather than a “green new deal” determine the number of charging stations.
P.S. Absurdly expensive charging stations are bad, but the behavior of electric-vehicle-promoting politicians is worse.
Today, let’s look at mindless incompetence by a foreign government.
Or perhaps deliberate incompetence would be a better term. That’s because bureaucrats in the United Kingdom have decided that the government can’t discriminate against companies that are incompetent.
I’m not joking. This tweet tells you everything you need to know.
I don’t know anything about the guy who issued the tweet, but he has a snapshot of a story from the Financial Times, and it deals with a very real scandal.
Basically, the British government contracted with a Fujitsu subsidiary for some software for post offices. But that software had terrible glitches that resulted in hundreds of local postmasters being falsely accused and convicted of financial malfeasance. If you want more information, you can read the horrific details on Wikipedia.
But I’m instead including it in my “Everything You Need to know” series because I’m flabbergasted that the British government decided that it can’t give contracts to companies based on competence and performance.
That says a lot – and explains a lot – about why government does so many dumb things.
And it makes me wonder if we have a similar approach for the “beltway bandits” that get contracts from the US government?
P.S. What’s worse, the British government deciding it must do business with incompetent contractors, or the AOC plan to give handouts for people “unwilling to work“?
In other words, the FDA does a bad job and thus is a typical Washington bureaucracy.
It’s also a typical bureaucracy in that it wants more power and authority.
Here are some excerpts from a column by Joel Zinberg for National Review.
…the FDA’s proposed rule…explicitly asserts its long-claimed authority to regulate laboratory-developed tests (LDTs) as medical devices. …LDTs are performed billions of times a year in approximately 12,000 CLIA certified high-complexity laboratories… Despite the FDA’s claims to the contrary, there is little evidence that LDTs are less reliable or accurate than FDA-approved tests. And awaiting the FDA’s review and clearance of new tests can delay critical testing with disastrous results. Early in the Covid-19 pandemic, the FDA ceased its usual exercise of enforcement discretion… Unfortunately, the only EUA the FDA initially granted was for the Centers for Disease Control and Prevention’s test. Despite evidence that the CDC test was unreliable, the FDA persisted in requiring test EUAs that it seemed unwilling to grant. Testing was essentially unavailable during February 2020 as Covid-19 spread around the country.
Zinberg also explains that the FDA is ignoring the law as part of its campaign to impose billions of dollars of costs the industry.
It is doubtful that the FDA has statutory authority to regulate LDTs. The 1976 Medical Device Amendments to the FDCA do not mention laboratories, laboratory tests, or laboratory-testing services. …The FDA acknowledges that its rule will impose significant compliance costs on laboratories that offer LDTs — $35.5 billion over the multi-year phase-in and additional recurring costs of $4.2 billion — leading some laboratories to exit the market or discontinue certain LDTs they offer. Ninety percent of the laboratories offering LDTs are small businesses.
By the way, take a wild guess who will bear this multi-billion-dollar cost.
If you answer consumers, congratulations for being brighter than 98 percent of the people in Washington (admittedly that doesn’t say much).
Professor Alex Tabarrok of George Mason University was very blunt about the FDA’s proposal in a post for Marginal Revolution.
I have been warning about the FDA’s power grab over lab developed tests. Lab developed tests have never been FDA regulated except briefly during the pandemic emergency when such regulation led to catastrophic consequences. Catastrophic consequences that had been predicted in advanced by Paul Clement and Lawrence Tribe. Despite this, for reasons I do not understand, the FDA plan is marching forward.
Actually, based on this video, I bet Professor Tabarrok does understand why FDA bureaucrats are marching forward.
But he is expressing understandable frustration that they may get away with their bureaucratic power grab.
But it’s always possible to have a system that is even worse. I have often cited the United Kingdom, which has genuine socialism (government employs the doctors and runs the hospitals).
Here are some excerpts from a news report about a massive failure by Canada’s system, which may be even worse than the one in the United Kingdom.
Authored by Amy Judd and Kylie Stanton, the article explains how a woman from British Columbia named Allison Ducluzeau traveled to the United States to save her life.
It all started last year at Thanksgiving when Ducluzeau said she started to feel pain in her abdomen. …She started doing tests, an ultrasound, and a CT scan, but she said everything would take weeks to get an appointment. …the results of the CT scan indicated it looked like it might be something called peritoneal carcinomatosis, which is abdominal cancer.” …her doctor referred her to the BC Cancer Agency. …She said she didn’t even see an oncologist with BC Cancer until two-and-a-half months later but at that point, she had already received treatment somewhere else. …Ducluzeau decided to get treatment with Sardi in Baltimore. …Before she left, Ducluzeau said she called BC Cancer to ask how long it might be to see the oncologist was told it could be weeks, months, or longer, they had no idea. …No word at all from (BC Cancer) until after I flew to Baltimore, had my surgery and got home.”
You may be thinking that there is nothing surprising about this story. Especially if you remember the Hypocrite of the Year from 2010.
But here’s the shocking part.
Ducluzeau said the surgeon told her. “…I suggest you talk to your family, get your affairs in order, talk to them about your wishes, which was indicating, you know, whether you want to have medically assisted dying or not.”
Yes, you read correctly. The government’s helpful suggestion was that she should kill herself.
I guess that would have been a cost savings for taxpayers, but hardly an ideal approach since Canada already has demonstrated a better way of dealing with fiscal policy (though Paul Krugman missed the boat).
I have a series of columns analyzing “Great Moments in Foreign Government” to show that other countries have politicians and bureaucrats who are just as foolish as their American counterparts.
An Italian man learned that good deeds get punished. At least they get punished when you expose the sloth and inefficiency that seems to be an inherent feature of government.
Here are some excerpts from a report in the U.K.-based Guardian.
Claudio Trenta was so frustrated by the local council’s failure to repair the 30cm pothole on a pedestrian crossing in Barlassina, a small town in Lombardy, that the 72-year-old decided to take action himself by filling it… This led to a fine of €882… He was fined for carrying out a potentially dangerous job in a public space without permission or the competence to do so. Trenta has been ordered to restore the hole to its original state. …Trenta, who says he reported the pothole to the local authority several times over three months, has received a wave of solidarity from across Italy.
Now let’s visit France, where the health care system is sometime bad for the living.
But, as the New York Timesreports, it’s also sometimes bad for the dead.
…when Sandra Lambryczak’s 80-year-old mother died…in the predawn hours of a Saturday morning, the daughter suddenly discovered a growing problem in France’s medical system: By law, the body couldn’t be moved until the death was certified by a medical doctor, but a shortage of personnel can sometimes force families to keep their deceased loved ones at home for hours or even days. …She turned off the heaters and flung open the windows. …half a day later, after her mother’s nurse was able to locate her personal physician, was the body allowed to be taken to the funeral home. …Such agonizing waits have been occurring with increasing frequency… Exasperated, one town issued a bylaw forbidding its residents to die at home. …In France, the state’s role in regulating people’s daily lives — including in matters of health — remains strong.
Forbidding residents to die at home?!? Maybe the death penalty could act as a deterrent?
Last but not least, here’s a mind-boggling story from the Daily News about Canada.
The College of Dental Hygienists of Ontario stripped a hygienist of his license and labeled him a sex offender because he had a sexual relationship with a client. It didn’t matter that the client was his wife.
Alexandru Tanase, of Guelph, confessed to cleaning the teeth of Sandi Mullins when on several occasions between April 2015 and August 2016, according to the Canada’s CTV news. They were engaged when the treatments started and are now married. …The Canadian hygienist, who said he’s been licensed since 2000, claimed he began booking his wife for cleanings in 2015 after erroneously believing a bill allowing dentists to perform dental work on their significant others also applied to hygienists. …Tanase…wants to change the 26-year-old statute forbidding hygienists from providing oral hygiene services to their spouses.
I can’t resist wondering why there is a decades-old statute prohibiting hygienists from servicing their spouses? Most laws are enacted because some interest group gets in bed with a politician in hopes of obtaining undeserved benefits.
But I can’t figure out the “public choice” angle in this case.
Way back in 2009, in the early days of writing this column, I shared an image that aptly summarizes the bad things that happen when politicians interfere with economic liberty.
The simple message is that more government is almost always the wrong answer.
Today, we’re going to look at an example of how government spending is the wrong answer.
Here are some excerpts from a story in the Washington Post, but the headline tells you everything you need to know.
The offer to military veterans left unemployed by the coronavirus pandemic was tantalizing: A year of online courses courtesy of the federal government. Graduates would be set up for good jobs in high-demand fields… Schedules were disorganized and courses did not follow a set syllabus. School-provided laptops couldn’t run critical software. And during long stretches of scheduled class time, students were left without instruction… The disarray…is the most painful example of broader problems with the $386 million Veteran Rapid Retraining Assistance Program, or VRRAP. …nearly 90 schools have had their approvals yanked, according to VA officials, including several that were actively serving about 100 veterans. …only about 6,800 veterans had enrolled in the program, far fewer than the 17,250 Congress created it to serve, the agency said; just 397 had landed new jobs.
Some of you may be tempted to conclude that the program was a success since it did result in 397 jobs.
Others will conclude it was a failure since the budget was $386 million, implying each job cost taxpayers nearly $1 million.
I sympathize with the second conclusion, of course, but here are two questions that need to be answered.
How many of those 6,800 veterans would have landed new jobs if they didn’t participate in the program?
How much economic activity would have been generated if the $386 million was left in the private sector?
Incidentally, the story, authored by Lisa Rein and Yeganeh Torbati, includes this depressing bit of information.
The troubles with VRRAP were achingly predictable: A similar program rolled out in 2012 — the Veterans Retraining Assistance Program, or VRAP — also failed to attract students and was widely regarded as a flop.
In other words, it was already known that this specific type of program would be a flop.
Unfortunately, the story only tells us that this program was part of Biden’s failed $1.9 trillion stimulus boondoggle, but it does not tell us which politicians on Capitol Hill pushed the plan.
I’m sure we would find those politicians got a lot of campaign contributions from that the interest groups that financially benefited the boondoggle.
Everyone likes the idea of “state capacity,” at least when it means competent, honest government rather than dysfunctional, corrupt government.
But the consensus disappears when some folks argue that you achieve this goal by making government bigger.
It’s especially disappointing when international bureaucracies such as the OECD and IMF argue that poor countries somehow can become richer by imposing higher taxes and increasing the burden of government spending.
But this is not just an issue in developing nations.
In his New York Timescolumn, Ezra Klein worries that his fellow leftists do not pay enough attention to what he perceives to be insufficient state capacity in the United States.
He starts by citing one of Biden’s top economists.
You can’t transform the economy without first transforming the government. …Brian Deese, the director of Biden’s National Economic Council, gave an important speech on the need for “a modern American industrial strategy.” …For decades, the idea has been disreputable, even among Democrats. You don’t want government “picking winners and losers,” as the adage goes. …But societies have richer, more complex goals. …So I won’t say markets failed. We failed. …Deese, in his speech to the Economic Club of New York., declared the debate over: “The question should move from ‘Why should we pursue an industrial strategy?’ to ‘How do we pursue one successfully?’”
He then describes how government fails.
…we need a liberalism that builds. Scratch the failures of modern Democratic governance, particularly in blue states, and you’ll typically find that the market didn’t provide what we needed, and government either didn’t step in, or made the problem worse through neglect or overregulation. …At the national level, much can be blamed on Republican obstruction and the filibuster. But that’s not always true in New York or California or Oregon. It is too slow and too costly to build even where Republicans are weak — perhaps especially where they are weak. …What we have is a government that is extremely good at making building difficult.
And he gives examples of government failure.
The Transit Costs Project tracks the price tags on rail projects in different countries. …the United States is notable for how much we spend and how little we get. It costs about $538 million to build a kilometer of rail here. Germany builds a kilometer of rail for $287 million. Canada gets it done for $254 million. Japan clocks in at $170 million. …The problem isn’t government. It’s our government. …When a government can’t…build the sign-up portal to its new health insurance plan or construct the high-speed rail it’s already spent billions of dollars on, that’s a failure of state capacity.
Klein quotes Nicholas Bagley, a law professor at the University of Michigan, about the “adversary legalism” that makes government slow and inefficient in the United States.
…a way that America differs from peer countries… “Inflexible procedural rules are a hallmark of the American state,” he writes. “The ubiquity of court challenges, the artificial rigors of notice-and-comment rule-making, zealous environmental review, pre-enforcement review of agency rules, picayune legal rules governing hiring and procurement, nationwide court injunctions — the list goes on and on.”
Klein concludes by stating that his side needs to focus not just on ideas, but also on how to reform government so that those ideas can be implemented.
When I go looking for ideas on how to build state capacity on the left, I don’t find much. …health, climate and education plans depend, crucially, on a state capable of designing and executing policy effectively. This is true at the federal level, and it is even truer, and harder, at the state and local level. So this is what I have become certain of: Democrats spend too much time and energy imagining the policies that a capable government could execute and not nearly enough time imagining how to make a government capable of executing them.
In the column, Klein does not offer any concrete solutions, but he does acknowledge that cutting back on “adversary legalism” will cause divisions on the left.
Which sound potentially amusing, but it’s important to acknowledge that libertarians are not united on this topic, either.
Before I embrace any trendy new idea, someone needs to show me the tiniest shred of evidence that further reducing economic liberty can lead to more prosperity.
I suppose that’s possible, just as it’s possible I might be playing for the Yankees in the World Series later this year. But neither of those outcomes is likely for those of us who care about real-worldevidence.
Now let’s augment our previous analysis exposing how coronavirus-related spending has been a windfall for criminals.
We’ll start with a report from the Washington Post , authored by Tony Romm and Yeganeh Torbati. It contains a headline that begins with a quote that could apply to just about anything the government does.
Testifying at a little-noticed congressional hearing this spring, a top watchdog for the Labor Department estimated there could have been “at least” $163 billion in unemployment-related “overpayments,” a projection that includes wrongly paid sums as well as “significant” benefits obtained by malicious actors. …In many cases, the criminals stole the unemployment funds using real Americans’ personal information. They bombarded states with applications filed in the names of actual workers or people in prison — sometimes to such a degree that, in the case of Maryland, fraudulent claims came to outnumber real requests for help..
You won’t be surprised to learn that some bureaucrats did not want to stop the fraud.
Some of the malicious actors potentially even avoided detection, at least for a time, after the Labor Department refused to supply information needed to assist federal fraud investigations.
In California, state officials acknowledged in October 2021 that they may have paid out more than $20 billion in undeserved unemployment payments to criminals. That included at least $810 million that had been wrongly paid to applicants whose information matched the names of people in prison.
The Wall Street Journal also opined on the topic of wasteful covid-related spending, but its editorial focused on the $1.9 trillion boondoggle that was pushed through by Biden.
…what happened to the $1.9 trillion for Covid Democrats passed last March? Most went to transfer payments, including child tax credits, enhanced unemployment benefits and stimulus checks. About a quarter subsidized state and local budgets and schools. Democrats appropriated a mere $80 billion for public health, only $16 billion of which was available for vaccines and therapies. …Democrats skimped on vaccine and therapies in order to ladle benefits to their political constituencies.
The bottom line is that Biden used the pandemic as an excuse to squander $1.9 trillion, even though at most only $80 billion of the money was for anything that was even vaguely related to vaccines and treatments.
I wonder whether we’ll ever learn how much of the remaining $1.82 trillion was wasted?
I’m guessing the answer is $1.82 trillion, but we won’t know how much was lost to run-of-the-mill waste and how much was lost to outright fraud.
P.S. Don’t forget that all government spending, even the small fraction that is spent wisely and efficiently, imposes economic costs. For more information, click here, here, here, here, here, and here.
But it’s possible to have a system that is even worse. Americans can look across the ocean at the United Kingdom’s National Health Service.
Our British friends are burdened with something akin to “Medicare for All.”
But it’s even worse because doctors and nurses are directly employed by government, which means they have been turned into government bureaucrats.
And government bureaucrats generally don’t have a track record of good performance. That seems to apply to health bureaucrats, as captured by this Alys Denby column for CapX.
Numbers are no way to express a human tragedy, but those in the Ockenden Report into maternity services at Shrewsbury and Telford Hospital NHS Trust are nonetheless devastating. The inquiry examined 1,592 incidents since 2000. It found that poor care led to the deaths of 201 babies and nine mothers; 94 babies suffered avoidable brain damage; and one in four cases of stillbirth could have had a different outcome. That’s hundreds of lives lost, and hundreds of families suffering unimaginable pain, all on the watch of ‘Our NHS’. …the report is strewn with examples of individual cruelty and incompetence. Bereaved parents…were given excuses, false information and even blamed for their own child’s death. The Health Secretary has said that vital clinical information was written on post-it notes that were swept into the bin by cleaners. …The NHS has a culture of arrogance, sanctimony and impunity.
And here are some excerpts from a 2021 article in National Review by Cameron Hilditch.
The NHS has proven itself comprehensively and consistently incapable of dealing with a regular flu season, something that crops up at the same predictable time of year in every country north of the equator. It has long been obvious that Britain’s single-payer health-care system isn’t fit for purpose even in normal times, much less during a global pandemic. Yet the NHS’s failures are systematically ignored. …age-standardized survival rates in the U.K. for the most common kinds of cancer are well below those of other developed countries, which translates into thousands of needless deaths… The excess deaths that the U.K. is suffering…along with the crushing physical and mental burdens borne by British doctors and nurses ultimately redound to this long-term failure of British culture. By transforming a medical institution into a cultural institution for the sake of forging a new, progressive national identity, Britons have underwritten decades of deadly failure.
This is damning information.
To be sure, mistakes will happen in any type of health system. But when government runs the show, the odds of appropriate feedback are much lower.
Normally, the private sector does a better job then government because of competition. More specifically, profit-seeking companies fight for our dollars by offering goods and services based on quality and/or price.
But even when competition isn’t a big factor – such as the operation of a park, we can see how the private sector produces superior outcomes.
The surrounding businesses benefit if there is a clean and safe park. So when they actually got the authority to run the park, they put in place effective policies.
People in government are not opposed to clean and safe parks, of course, but they often make decisions on the basis of political factors (rewarding certain contractors, providing patronage jobs, etc).
P.S. The superiority of the private sector is a big reason to reject industrial policy. As shown in this video, we get better results when businesses focus on attracting customers, not attracting subsidies.
If we want more prosperity, what’s the ideal size of government? Anarcho-capitalists would say it shouldn’t exist at all, while some hard-core leftists want something like North Korea, where the state is everything.
The rest of us want something between those extremes, but that still leaves plenty of room for disagreement.
Others believe that government should be bigger, in some cases much bigger, with international bureaucracies often advocating this view.
There are even some libertarians who believe that more government spending can lead to economic growth by boosting “state capacity.”
What is state capacity, in case you’re wondering? It’s the notion that the private economy is more likely to flourish if government is sufficiently large that it can competently fulfill certain functions.
Writing for Econlib, Professor Bryan Caplan explains one of the problems with the literature on state capacity.
In the last few years, social scientists have started heavily appealing to “state capacity” to explain the wealth of nations. Why do some countries prosper? Because they have great state capacity. Why do others flounder? Because they have crummy state capacity. What do floundering countries need to do in order to prosper? Build state capacity, naturally. …Weak and question-begging empirics aside, the whole literature is conceptually confused. …the coronavirus crisis plainly shows that Western democracies have overwhelming state capacity. …What’s going wrong? Simple: Despite fantastic state capacity, the U.S. government has absurd state priorities! Instead of squandering trillions on poorly-targeted relief, the U.S. government could have spent a few hundred billion on testing and vaccine research. Better yet, it could have offered hundreds of billions in prizes for progress in these areas – prizes open to anyone on Earth to win. So why didn’t this happen? Simple: Because the people in charge in virtually every country are irresponsible, disorganized, innumerate, impulsive, and emotional.
Professor Caplan points out that supporters of bigger government don’t have a coherent response to this problem.
I don’t think I’ve ever heard a fan of state capacity research acknowledge this obvious point, much less try to fairly adjudicate it. …I’m tempted to say that appeals to state capacity are tautological, but even the tautologies are half-baked.
If you want an example of how proponents go awry, check out a new study on this topic from Brink Lindsey of the Niskanen Center.
It certainly seems like he wants readers to blindly accept the notion that bigger government means competent government means more prosperity.
The concept of state capacity – “the ability of a state to collect taxes, enforce law and order, and provide public goods” – was developed by political scientists, economic historians, and development economists to illuminate the strong institutional contrast that parallels the economic contrast between rich and poor countries. Rich countries are all distinguished by having large, strong, and relatively capable states; poor countries, by contrast, are generally characterized by weak and frequently ineffective states.
This is a remarkable anti-empirical excerpt. Let’s look at two reason why Lindsey’s argument doesn’t hold water.
First and most important, it ignores the fact that today’s rich countries in the North American and Western Europe got rich – and achieved high levels of state capacity – when they had very small governments (and no redistribution programs) back in the 1800s and early 1900s.
This is a very inconvenient fact for who argue bigger government is needed to boost state capacity.
Second, it also ignores the fact that there are countries today with very high levels of state capacity and very modest-sized governments. Consider, for example, the “Asian Tigers” of Singapore, Hong Kong, and Taiwan. These jurisdictions rank very highly for public goods, yet the burden of government is very small by modern standards.
This is a very inconvenient fact for those who argue bigger government is needed to boost state capacity.
Here’s the bottom line: Does anyone actually believe more government spending will make Washington more competent and effective?
For instance, is there any reason to think Biden’s tax-and-spend policies will improve the federal government’s performance?
Or let’s shift to the developing world, places that don’t do a good job providing actual “public goods.”
These are place that would benefit from (properly defined) state capacity, but who thinks bigger government will lead to better government in Honduras? Or Pakistan? Or Malawi?
Simply stated, it is highly unlikely that bigger government leads to more competent government. Indeed, all the evidence points in the other direction (with the pandemic response being a painful example of how bloated governments do a bad job of responding to genuine problems).
For the simple reason that I went to the Atlanta Airport yesterday after watching my #1 Georgia Bulldogs win another game.
Yet when I exited the highway to the airport, traffic ground to a halt. It took me about 30 minutes to get to parking (a trip that normally takes about three minutes).
And then, when I got in the airport, the “Clear” line for accelerated screening was shut down, which required me to instead get in the slower “Pre-check” line (but still faster than the regular line).
But that line was much longer than normal, and moved much slower than normal, because the bureaucrats required us to take off shoes and remove laptops (things that normally are not required for flyers that have received Pre-check clearance).
So why did I have to endure and extra hour-plus of wasted time, risking my ability to make my flight?
Because some idiot earlier in the day accidentally packed a gun in his carry-on bag and then apparently panicked and grabbed the gun when it was (surprisingly enough) detected by screeners, causing an accidental discharge.
I don’t blame the TSA for engaging in a brief period of heightened security following this incident.
But it was utterly pointless to have a huge police presence on the airport roads hours later (thus slowing traffic to a crawl), along with shutting down the Clear line and eliminating the (comparative) efficiency of the Pre-check line (making it a slow slog).
This is empty “security theater,” particularly since there have already been nearly 5,000 cases this year of passengers forgetting about guns in carry-on bags. So it’s not as if finding a gun is unusual.
What is unusual, of course, is the accidental discharge – and the subsequent TSA over-reaction.
Which gives me an excuse to write about the TSA and the need for reform for only the third time since 2015 (I had one column about the TSA in 2019 and another one in 2016).
…the TSA has proven itself skilled at harassing travelers and freaking out over pocketknives and water bottles while steadfastly failing at its assigned task of making air transportation any safer. The TSA, in short, is an awful example of government in action. …It’s not clear why anybody saw a need for the TSA, since it’s unlikely that a federal agency would have been any more successful than private contractors at predicting terrorists’ unprecedented use of aircraft as kamikaze weapons. It’s especially unlikely that the federal agency we actually got would have successfully diverted itself from confiscating play-doh to thwarting homicidal fanatics. …What the TSA is good at is high-visibility groping, scanning, and confiscating. Making people drop their pants, take off their shoes, and surrender their shampoo annoys people in a way that says “we’re doing something” without actually accomplishing anything.
Wow, I would suspect he also traveled through Atlanta yesterday, but his article was published Friday.
Next, we have an overall indictment of the TSA. Here are some excerpts from a column by Kevin Williamson for National Review.
The catalogue of the TSA’s sins reads like the diary of the Marquis de Sade, from the sexual abuse of children to the production of child pornography, beside which such workaday offenses as looting travelers’ property and smuggling drugs seem quaint. This is not a few bad apples — this is a crime syndicate pretending to be a federal agency. …The TSA’s record for providing actual security is practically nonexistent; security testers sneaking mock explosives and weapons past TSA screeners achieved an astonishing success rate of 95 percent. …Amsterdam’s Schiphol airport processes more passengers than does New York’s JFK, and its security process, including something like an El Al pre-board interview in which a well-trained security officer gives passengers the hairy Dutch eyeball, generally takes only a few minutes, whereas traversing JFK can take hours. …We need choice, competition, and accountability. And we also need to fire a few tens of thousands of people, starting with TSA administrator.
So what’s the solution?
David Inserra of the Heritage Foundation explains for FEE that the private sector is a better option.
A private model would allow for strengthened accountability, a decrease in operation costs, enhanced management of labor, and better focus on security threats and problems. …The TSA model is quite uncommon worldwide. The more common models utilize the government as a security regulator while a contractor or the airport itself provides security. This automatically pushes accountability and competition higher than the current U.S. model. …By looking to examples in Canada and Europe, we can observe how governments spend drastically less yet still manage to meet international aviation standards. These countries show that privately-hired scanning teams can manage personnel far more efficiently than the government and still make a profit. They also cost significantly less—Canada spent about 40 percent less per capita on aviation security than the U.S. in 2014, for example.
And if that’s not enough, here’s what NBC reported about bomb-sniffing dogs.
Bomb-sniffing K-9 teams at 10 major U.S. airports have failed tests that check how accurately they can detect explosives… New records obtained by KXAS through a Freedom of Information Act request call into question whether those dog teams are training enough to stay sharp and keep bombs out of airports and off planes… K-9 teams funded by the Transportation Security Administration have failed annual certification tests at 10 large airports 52 times between Jan. 1, 2013, and June 15, 2015, the most recent detailed numbers TSA provided. Some teams failed to find explosives, while others had too many false alarms that could cause unnecessary airport evacuations.
Humans are probably even worse, as Judd Gregg explained in a piece for the Hill.
The TSA failed to detect ninety percent of the bombs and weapons that were passed through its passenger screening system in its last test. Were the test also applied to baggage placed on planes, it is likely that their failure rate in detecting bombs specifically would be even higher. Thus, an agency that costs the taxpayer $7.5 billion a year, has 40,000-plus screeners and 15,000-plus administrators does not seem to be doing a very good job of protecting passengers on airplanes.
I have other pieces I can cite, but I’ll save them for another day.
Let’s close with an outrageous example of TSA foolishness, as captured by this tweet from Amy Alkon.
P.S. Here are other examples of bone-headed TSA actions.
Most people say the key feature of capitalism is competition. Hard to argue with that characterization, but I would go one step further and say that it is one of the consequences of competition – “creative destruction” – that best captures why free markets make it possible for entrepreneurs to deliver mass prosperity.
I wasn’t aware, however, that businesses resorted to big concrete edifices to get around Vermont’s billboard ban (though I have read, in a classic case of baptists and bootleggers, that big companies such as hotel chains sometimes try to thwart competition from small businesses by teaming up with environmentalists to ban billboards).
In the world of fiscal policy, there are many example of unintended consequences.
Back in 2009 and 2010, when I had less gray hair, I narrated a four-part series on the economic burden of government spending.
Here’s Part II, which discusses the theoretical reasons why big government reduces prosperity.
I provide eight examples to illustrate how and why government spending can hinder economic growth.
The last item is what I called the “stagnation cost,” which is the tendency of politicians and bureaucrats to throw good money after bad because there is no incentive to adapt.
When giving speeches, I usually refer to this as the “inertia cost.”
But, regardless of what I call it, I explain that every government program has a group of beneficiaries that are strongly motivated to keep their gravy train moving even if money is being wasted.
In an article for National Review, Sean-Michael Pigeon offers one very plausible explanation for why this happens.
He says politicians fall victim to the fallacy of sunk costs.
…we need an understanding of government inefficiency… One reason government spending is so needlessly costly is somewhat paradoxical: The state is wasteful precisely because people are so concerned about wasting money. …This is a classic sunk-cost fallacy: Costs that can’t be recovered are “sunk,” and therefore irrelevant for future decision-making. But while this fallacy is well known in economics, sunk costs are a big deal in the practical world of politics. Nobody wants to waste money, and politicians don’t want to cause waste directly. No member of Congress wants to be publicly responsible for a half-built bridge, especially when they have to tell taxpayers they still have to foot the bill for it. …Congress’s unwillingness to cut the funding of poorly run projects is a significant reason government projects always spend too much. …Politicians are nervous about cutting ongoing projects because they don’t want to leave taxpayers empty-handed, but stomaching sunk costs is worth it. Not only is it economically sound to stop government agencies from bleeding money, but it also sets the precedent that shoddy work will be held accountable. …to save money, sometimes you have to lose money.
In other words, it would be good to stop the bleeding.
But that’s not politically easy. Mr. Pigeon has examples in his column, but he should have included California’s (supposed) high-speed rail project.
That boondoggle has been draining money from state and federal coffers for about a decade. Cost estimates have exploded (something that almost always happens with government projects), yet construction has barely started.
And you won’t be surprised that a big argument from supporters is that we’ve already wasted billions and billions of dollars on the project, so therefore we should continue to waste even more money (sort of like hitting yourself on the head with a hammer because it feels good when you stop).
The big-picture bottom line is that the burden of federal spending should be reduced so that politicians have less ability to waste money.
Between March 2020 and January 2021, I authored a five-part series (see here, here, here, here, and here) on how big government hindered a quick and effective response to the coronavirus pandemic.
In this discussion with Brad Polumbo, I summarize some of my key points.
While I criticized the dismal performance of the FDA, CDC, and WHO, I also explained that there are costs and benefits to any approach.
I largely focus on the deleterious impact of government regulation and intervention, but I mentioned in the discussion that a laissez-faire approach has potential downsides.
My argument is simply that markets, on balance, will produce better outcomes.
For instance, Brad and I discussed how government regulators at the Food and Drug Administration did something good many decades ago by prohibiting thalidomide (which led to birth defects), but we also mentioned that academic research shows that our regulatory apparatus – on net – leads to bad outcomes because of lengthy delays in life-saving and live-improving drugs.
And we shouldn’t forget that the current system makes drugs far more expensive.
There are two other parts of the interview that merit special attention.
First, I mention that private companies should be allowed to require “vaccine passports.” I’m not saying they should, but I believe in property rights so it’s not the role of politicians to interfere in that choice.
Second, politicians should have adopted a more hands-off approach to mandatory lockdowns. This is not an argument against social distancing, masking, and other prudent behaviors, but mandates were largely unnecessary (and, in the case of what stores were allowed to operate, pointlessly discriminatory).
P.P.S. Actually, there’s a second silver lining. There’s been a lot of progress on school choice this year, which is partly a response to the self-serving actions of the government school monopoly during the pandemic.
P.P.P.S. There may even be a third silver lining. As mentioned in the discussion, I’m slightly hopeful that politicians and bureaucrats have learned that we need to set aside regulations and red tape, at least during emergencies. Heck, maybe they’ll even apply that lesson more broadly!
Whenever I’m asked to give an example of a powerful and persuasive visual, I always have an easy answer.
The late Andrew Coulson created a very compelling chart showing that huge increases in money and staff for government schools have not led to improvements in educational outcomes.
All rational people who look at that image surely will understand that we’re doing something wrong.
The international data, by the way, tells the same story. Which is especially disheartening since Americans taxpayers spend much more on education than their counterparts in other developed nations.
Let’s further investigate this issue.
I came across a 2017 tweet from Mark Perry that gives us another way of looking at the numbers.
He reviewed 64 years of data and found that government spending on education soared by 368 percent. And that’s after adjusting for inflation.
We got more teachers with all that money, but the main outcome was a massive expansion in the number of education administrators and other bureaucrats.
In other words, most of the additional money isn’t being used for classroom instruction.
And the numbers seems to get worse every year. In a recent article for Education Next, Ira Stoll uses two different data sets to document the growth of bureaucracy.
Here is some of the data he got from the Department of Labor.
Are schools really spending more on administration than they used to? The short answer is yes. …information to corroborate the idea of skyrocketing administrative spending may be obtained from a different source: the U.S. Bureau of Labor Statistics. …The category of “education administrators, kindergarten through secondary” in May 2019 included 271,020 people earning a mean annual wage of $100,340. In 1999, there were 186,220 people in this category, earning a mean annual wage of $65,480. That is 45.5 percent growth in the number of administrators. …The math works out to nearly three $100,000-a-year administrators for every school.
Here’s his table based on numbers from the Department of Education.
In each case, we see bureaucrats have been the biggest winners. There are a lot more of them than there used to be, and they enjoy lavish compensation packages.
Cory DeAngelis of Reason summarized Stoll’s findings in a pair of tweets.
Frederick Hess of the American Enterprise Institute explains that all this additional funding and additional bureaucracy is not yielding worthwhile results.
…the U.S. spends more than $700 billion on K–12 education a year, or about $14,000 per student. That’s 39 percent more than the average OECD nation. And many big-city districts spend considerably more, with per-pupil outlays of more than $20,000 per year in places such as Washington, D.C., and Boston. …But it’s not clear that we’re spending all of this money in effective ways. For instance, …the ranks of non-instructional staff have grown more than twice as fast as student enrollment over the past 30 years. …in public bureaucracies, new dollars often double as a convenient excuse to avoid hard choices.
So what’s the moral of the story?
I don’t need to write anything because this article in National Review by Cameron Hilditch has a very apt summary.
American taxpayers have been hoodwinked by the whole idea of “public schools.” …We’ve been putting more and more money into the system for decades without reaping more returns for the nation’s children. …schools are advertised to taxpayers as institutions that serve every child in the nation. In reality, they serve the interests of no one other than the small group of Americans who work in these schools as teachers and administrators. …Since the teachers unions can shield their own avarice with claims of “public service” to children, they can manipulate the actual public into thinking that more money, job security, or political power for themselves is in everyone’s interest instead of their own. …a look at graduation rates, test scores, and graduate employability calls this into question.
P.S. While this column has mostly focused on the ever-expanding number of administrators and other education bureaucrats, as well as their lavish salaries, it’s worth noting that compensation for teachers also has been going up.
P.P.S. Though the real problem is not teacher pay. Some deserve more pay, some deserve less pay, and some deserve to be fired, but we can’t separate the wheat from the chaff because teacher unions and local politicians have created an inefficient system that delivers mediocrity.
P.P.P.S. We need school choice so that competitive pressure rewards the best teachers as part of a system that focuses on better results for students.
And, given the federal government’s incompetent response to the pandemic, I’m an even bigger fan of federalism today.
Though that doesn’t mean states are paragons of efficiency and competence. Here’s a map from the New York Times showing the percent of each state’s population that has receive at least one shot of the vaccine.
Why is Oklahoma doing so much better than Kansas? Why is West Virginia so far ahead of Pennsylvania?
Part of the answer is whether the states were willing to let Washington micro-manage their delivery.
The Wall Street Journal editorialized a few days ago about lessons we should learn.
The gap continues to grow between states that are getting shots into arms, and those arguing over who gets what and when. North Dakota had administered some 84% of its supply as of Jan. 23, and West Virginia about 83%—far better than states like California (45%) or Alabama (47%). Federalism is showing what works—and what doesn’t. …The risk is that Team Biden tries to micromanage state administration of the vaccine, especially now that the media, Democrats and some public-health officials are blaming slow state rollouts on a “vacuum” of federal leadership. But vaccine administration was always intended to be state-led, and too many jurisdictions squandered the ample time they had for preparation. …the biggest state mistakes so far have been adhering too much to the federal government’s initial guidance… The states with the highest per capita vaccination rates are all rule-breakers—Alaska (12,885 per 100,000), West Virginia (11,321), and North Dakota (9,602) as of Jan. 23. Top performers also thought creatively about how best to distribute and administer the vaccine, even if that meant departing from federal advice. …Mr. Biden is under pressure from the left to infuse the vaccine rollout with “equity” politics. As California (5,568 per 100,000) and New York (5,816 per 100,000) show, such bickering is a recipe for fewer vaccines and more deaths.
George Will, opining in today’s Washington Post, adds his two cents to the discussion, citing Philip Howard’s work on inflexible bureaucracy.
The covid-19 tragedy teaches this: Government is more apt to achieve adequacy when it does not try to achieve purity. …the benefits of federalism: Among 50 governors, at least a few are apt to be wiser and nimbler than the federal bureaucracy. …there are too many lawyers and too much law, and that both surpluses are encouraged by misbegotten ideas about ideal governance. “…This is not an unavoidable side-effect of big government, but a deliberate precept of its operating philosophy. Law will not only set goals and governing principles, but it will also dictate exactly how to implement those goals correctly.” …Then the pandemic arrived. Red tape prevented public health officials from using tests they possessed or buying tests overseas. To function, hospitals had to jettison myriad dictates about restrictions on telemedicine, ambulance equipment and many other matters. …The Progressive Era project that began 120 years ago got its second wind 60 years ago. …A virulent, fast-moving and mutating virus is teaching the cost of this.
Normally, I would argue against any government involvement.
In this case, however, taxpayers financed a big chunk of the development, so I’ll begrudgingly acknowledge that this gives politicians and bureaucrats the right to make allocation decisions.
But that doesn’t mean we can’t criticize those decisions when they result in mistakes. Especially since delayed vaccine rollout literally can result in needless deaths.
There are no perfect answers in this kind of situation, but surely we would be in better shape if Washington simply distributed the vaccines to the states, with the assumption that they would immunize as many people as possible, as quickly as possible.
Yes, some states would bungle the process (as we’re seeing in poorly governed jurisdictions such as New York and California), but a big advantage of federalism is that residents might learn from the superior performance of other states that they need better-quality elected officials.
P.S. In his column, George Will cites Philip Howard, who thinks bureaucratic rules from Washington are too rigid. I certainly agree that a prescriptive, one-size-fits-all approach is misguided, but regulatory flexibility can be a recipe for corruption and cronyism. The right approach is to end federal involvement whenever possible.
I wrote a four-part series last year about coronavirus and big government (here, here, here, and here), so it goes without saying that the first two lines of this tweet deserve some sort of accuracy award for hitting the nail on the head.
But the sentiment expressed in the last line of the tweet also deserves some sort of award.
I don’t know if the award should be for false hope or naive expectation, but I am sadly confident that everything will stay the same. Or perhaps get even worse.
Simply stated, instead of the deregulation that’s needed, here are some more likely outcomes.
The World Health Organization will get rewarded with a bigger budget and more power, notwithstanding its failures.
The Centers for Disease Control will get rewarded with a bigger budget and more power, notwithstanding its failures.
The Food and Drug Administration will get rewarded with a bigger budget and more power, notwithstanding its failures.
Why am I so pessimistic? Because I understand “public choice,” which is the application of micro-economic analysis (things like incentives) to the behavior of politicians and bureaucrats. In other words, people in Washington act in ways to advance their own interests.
Just in case all this isn’t clear, here are a few headlines and tweets to drive the point home.
Starting with a column in the Wall Street Journal.
And this tweet.
FDA officials wanted to engage private sector in February and were told to stand down. For many weeks, admin didn't get private sector involved as virus spread. It's a mistake now seen by many in the administration as one of the biggest response flaws. https://t.co/MxFXCFe3wehttps://t.co/JlmVmkGhqf
"The fact that these inflexible regulations can easily be discarded in times of crisis demonstrates the absurdity of those policies in the first place. If throwing out the regulations leads to good outcomes now, they should stay off the books later." https://t.co/AyUSqx3zfF
Don’t forget that bureaucracy and big government also caused problems in other nations.
Such as the United Kingdom.
Public Health England—in response to The Sun—have confirmed by omission that they:
1. Rebuffed help from commercial labs; 2. Did not pursue a mass testing strategy. 3. Are too incompetent to be put in charge of a mass testing strategy.
Sounds like the bureaucrats in the U.K. want to compete with the FDA and CDC for some sort of incompetence award.
NEW | "If Public Health England refuses to cut through the red tape and allow testing to take place in facilities outside of its direct control extremely soon, countless lives will be needlessly lost. Let’s get on with it.” – @JasonReed624https://t.co/fJt2SaN3Yg
— Free Market Conservatives (@FMConservatives) April 9, 2020
There was a better response in Germany because the private sector played a much bigger role.
And the German approach was better than the United States as well.
In a column for the Foundation for Economic Education, Professor Alexander William Salter of Texas Tech University explains that the key takeaway from 2020 is that government doesn’t work very well, especially compared to the private sector.
The disaster that was 2020 is finally over. Now it’s time for the inevitable post-mortems. …the diagnosis is straightforward. COVID-19 was going to be bad, no matter what. But the failures of big government made it much, much worse. …In particular, the Centers for Disease Control, Food and Drug Administration, and public teachers’ unions are the great American villains of 2020. Meanwhile, the heroes of this year are almost entirely in the private sector. From Zoom to vaccine development, Big Pharma and Big Tech—yes, you read that right—made this horrible year bearable. …For progressives and so-called “national” conservatives who support big government, 2020 represented the ultimate test for their philosophies. …Both want a big, energetic state promoting what (they believe to be) the good of the nation. Well, here was their chance for the government to shine. The result was shameful failure. The COVID-19 crisis put left-wing and right-wing statism on trial—and both were found guilty of ill-intent and gross incompetence.
Amen.
Professor Salter’s message is basically an expanded version of the “tweet of the year” I wrote about last month.
He also explains more about the villains of 2020, starting with the Centers for Disease Control.
…the CDC is the reason America lagged behind other nations for so long in terms of COVID-19 testing. We had the virus genome fully mapped in January, which enabled the rapid production of private testing kits. But the CDC forced these operations to shut down, coming up with its own test—which was flawed, and even contaminated! …On this issue alone, CDC ineptitude is likely responsible for tens of thousands of deaths. …
He then turns his rhetorical fire on the Food and Drug Administration.
How about the FDA? It is no secret that the vaccine was delayed because it needed FDA approval. Indeed, several working vaccines could have come much earlier, were it not for our bungling bureaucrat gatekeepers.
Last but not least, he castigates the government’s school monopoly.
…largely due to pressure from public teachers’ unions, many schools remained closed in the fall. In fact, the US was pretty much the only country to pursue the alarmist policy of keeping schools closed. The toll on school-aged children is immense, from psychological trauma to impeded learning. Low-income families were hit especially hard.
The bottom line is that government failed us in 2020. Over and over and over and over again.
As you might expect, though, the crowd in Washington has reached the opposite conclusion.
They mostly used the pandemic as an excuse to expand the burden of government.
Hopefully, much of the new spending will be temporary, but it goes without saying that there will be considerable pressure in Washington to extend and expand various “temporary” programs.
P.S. The secondary lesson from 2020 is that a smaller government works better than a bigger government. And the tertiary lesson is that a decentralized smaller government is best of all.
The tweet is from Matthew Lesh of the Adam Smith Institute in London and it shows the big difference between private sector results and government incompetence.
Some readers may wonder if he is being unfair? Is the tweet merely libertarian-style grousing?
Well, consider this recent story from the Washington Post, which details how government incompetence at the Centers for Disease Control (CDC) greatly delayed testing capacity.
On Jan. 13, the World Health Organization had made public a recipe for how to configure such a test, and several countries wasted no time getting started: Within hours, scientists in Thailand used the instructions to deploy a new test. The CDC would not roll out one that worked for 46 more days. …The agency squandered weeks as it pursued a test design far more complicated than the WHO version and as its scientists wrestled with failures… The CDC’s response to what became the nation’s deadliest pandemic in a century marked a low point in its 74-year history. …Without tests to identify the early cases, health authorities nationwide were unable to isolate the infected and trace the rapid spread among their close contacts. …120 public health labs were without a government-approved test of their own and, with few exceptions, depended wholly on getting the CDC’s kits. …companies had no incentive to navigate regulatory hurdles and mass-produce kits.
The above story describes how the CDC screwed up at the start of the pandemic.
In her December 27 column for the Washington Post, Megan McArdle highlights a new example of CDC incompetence.
…the now-infamous November meeting of the CDC’s Advisory Committee on Immunization Practices…unanimously agreed that essential workers should get vaccinated ahead of the elderly, even though they’d been told this would mean up to 6 percent more deaths. This decision was supported in part by noting that America’s essential workers are more racially diverse than its senior citizens. …the discussion of whether to prioritize essential workers was anything but robust. …not one of those 14 intelligent and dedicated health professionals suggested adopting the plan that kills the fewest people. …for the past nine months, public health experts have insisted that minimizing deaths should override other concerns, even quite important ones. So how, in this case, did equity conquer death?
Let’s close with some excerpts from Aaron Sibarium’s article on the same issue for the Washington Free Beacon.
The committee openly acknowledged that its initial plan would result in more deaths than “vaccinating older adults first.” But, the panel said, the plan would reduce racial disparities—something they deemed more important than saving lives… The result was an explicitly race-conscious plan that would have prioritized shrinking the case gap between races over saving the most lives. …All of this—the exclusions, the contradictions, the moral redundancies—helped disguise the agenda that it justified, giving unscientific value judgments an air of scientific assuredness.
The really amazing aspect of this story is that there almost surely would be more minority deaths if this this approach was implemented.
But the “woke” bureaucrats though that would have been okay since there would have been an even-greater increase in white deaths.
Anyhow, I guess we should “congratulate” the CDC for showing it can compete with the WHO in the contest to see which bureaucracy had the worst response to the coronavirus (we already had plenty of evidence that the FDA is incompetent).
We can add this column to my series (here, here, here, and here) on how government blundering magnified the coronavirus pandemic.
P.S. If I had the flair for self-promotion that you often find in D.C., I would have been tempted to claim that my tweet from earlier today deserves some sort of recognition.
But I don’t need attention and affirmation. I simply want people to understand that it’s reprehensible that we have cossetted international bureaucrats (who get lavish, tax-free salaries!) pushing sloppy and ideological nonsense that will make the world less prosperous.
Last year, I shared this video from the Competitive Enterprise Institute to help explain how government bureaucrats are making it harder for Americans to clean their plates, bowls, and silverware.
Washington’s dishwasher mandate is just one example of how red tape diminishes the quality of life.
Bureaucrats have concocted other ways of spreading misery and frustration.
Call me crazy, but I don’t like spending extra time in the shower, flushing more than once, and risking self-immolation when I refill my lawnmower.
But there is a bit of good news. The Trump Administration wants to make it easier for us to clean up after dinner.
The Wall Street Journal’s editorial is a good summary of the issue.
For years American homes have been stuck with dishwashers that take forever and still don’t get the job done. A new Department of Energy rule…will help change that. …Regulations on energy and water usage—tightened in 2013 by the Obama Administration—mean that dishwashers now take at least two hours to complete a full wash cycle. Dishes may still emerge with pieces of last night’s lasagna baked on. …CEI petitioned the Energy Department to allow dishwashers that would reduce the average cycle to one hour from two, while also giving better performance. CEI argued that if the aim of the regulation was to conserve water and energy, it’s unlikely they achieved their purpose. People responded to poor dishwasher performance by pre-rinsing each dish before putting it through their washers, wasting more water… The revised DOE rule is…an example of how common-sense deregulation can deliver real benefits for the public.
And Sam Rutzick of Reason explains this latest development in the battle for clean dishes.
Trump’s Department of Energy finalized a rule establishing a new product class for residential dishwashers that will have a normal cycle time of up to one hour and that can use five gallons of water per cycle. Those rules effectively roll back an Obama-era rule limiting standard dishwashers to use no more than 3.1 gallons of water per cycle. That limit forced dishwasher companies to adjust their products’ cycle lengths. And the supposedly more efficient but less useful dishwashers have been a punchline…the average dishwasher cycle time has jumped from the one-hour cycle that was common a decade ago to more than two hours today. The tighter rules didn’t lead to energy savings for customers. …they actually increased water consumption by 63 billion gallons, as households would have to run their dishwashers multiple cycles, or pre-rinse their dishes by hand, in order to get dishes actually clean.
But Rutzick’s column contains a very important caveat.
Joe Biden may reverse this important bit of deregulation.
Unfortunately, the new rules may not last. While the incoming administration has been vague about which deregulatory efforts they intend to undo, they have spoken in favor of tightening environmental regulations—and the new dishwasher rules could be a casualty. If so, that’ll be bad news for consumers.
But I fear environmentalism is an area where he will push policy significantly to the left.
So I’m not overly optimistic that we’ll have better dishwashers in the future.
The only good news is that Americans, every time they do the dishes, will have an irritating reminder that government is the problem rather than the solution.
P.S. Yes, I realize better dishwashers are not as important as better tax policy (or as important as worse trade policy), but I don’t think politicians should be undermining our quality of life.
Way before we had a pandemic, I wasn’t a fan of the government school monopoly.
To paraphrase Winston Churchill, never have so many taxpayers paid so much money into a system that produced such mediocre results for so many people.
Now that we have a pandemic, the argument against government-run schools is even stronger. Simply stated the government monopoly is too politicized and too inflexible – and that means the the gap between government schools and private schools (and homeschooling) will be larger than ever.
Today, I want to show how the system is driven by bad ideology and bad incentives.
Let’s look at a recent announcement from the government schools where I live in Fairfax, VA. The bureaucrats don’t like when parents utilize private tutors because they would rather have all students fall behind than have some succeed.
Across the country, many parents are joining together to engage private tutors (who are often school teachers) to provide tutoring or home instruction for small groups of children. While there is no systematic way to track these private efforts, it’s clear that a number of “pandemic pods” or tutoring pods are being established in Fairfax County. …these instructional efforts are not supported by or in any way controlled by FCPS… While FCPS doesn’t and can’t control these private tutoring groups, we do have concerns that they may widen the gap in educational access and equity for all students.
Mike Gonzalez had the same reaction. He, too, was surprised that the bureaucrats would openly state their ideological desire for universal mediocrity.
Fairfax Co. Public Schools wants you to know it is not happy that any children are learning through pods. While FCPS "can’t control these private tutoring groups, we do have concerns that they may widen the gap in educational access and equity." https://t.co/SPxPgtf7qA
There are similar problems in other communities surrounding Washington, DC.
In his column for the Washington Examiner, Tim Carney explains how government school bureaucracies – including where he lives in Montgomery County, Maryland – care more about preserving the flow of tax dollars than educational success for kids.
Because public schools will be offering a vastly inferior service this year (remote-only learning), the allies of public schools and their teachers’ unions worry about parents pulling their children into private schools — and so they are trying to take away some of the private schools’ advantage. …after Gov. Larry Hogan struck down a county order barring private schools, one public school teacher wrote a public Facebook post nearly admitting as much: “MCPS parents… Please keep your kids enrolled in MCPS! Loss of funding will be devastating, not only this school year, but in the years to come, when we need to try to increase funding again.” …The public school superintendent in Falls Church City, a small, wealthy municipality just outside of D.C., wrote a similar note warning against “Pandemic Flight.” …Peter Noonan..warned parents that “disenrolling from FCCPS [will] have consequences. FCCPS receives funding from the local Government, the State Government, and the Federal Government based on the numbers of students we have enrolled. If there is an exodus of students from FCCPS, the funding of our schools will decrease.” Notice what’s missing in this letter? Any suggestion that your children will learn just fine through the public schools’ online learning system. …public school administrators know that they are offering an inferior product… Sadly, rather than wanting what’s best for their students, they ask parents to do what will bring more taxpayer money for their schools.
For what it’s worth, I also think teacher unions and school bureaucrats also don’t want parents to experience even a year of private schooling or homeschooling, lest they learn that there are better long-run options for their kids.
P.S. My criticism of the government school monopoly does not in any way imply that teachers are bad people (like all professions and groups, some will be good and some will be bad). It simply means they are in a bad system. Indeed, one of the benefits of school choice is that good teachers will flourish thanks to competition and innovation.
P.P.S. Yes, we have strong evidence from some states and localities in America that school choice produces better educational outcomes. But I always remind people that there’s also global evidence fromSweden, Chile, Canada, and the Netherlands showing good results when competition replaces government education monopolies.
The Democratic National Committee sent out a tweet back in April that seems like it should have been issued instead by the Libertarian National Committee.
My answer to the DNC’s question is “never.” That’s why I’m a libertarian.
Even when I grudgingly acknowledge that something is a legitimate function of government, I’m never tempted to say or think that “things seem to be going smoothly.”
Needless to say, the DNC wasn’t trying to recruit libertarians. The goal was to condemn Trump’s governing style, specifically with reference to a story about the administration’s chaotic approach to the coronavirus.
And I certainly agree that Trump gives critics plenty of ammunition.
But there are plenty of similar episodes of malfeasance and incompetence during the Obama years. And the Bush years. And in every preceding White House.
The bottom line (as suggested by my collection of “Government in Cartoons“) is that Washington at best is a clumsy oaf. And quite often is a bloated bully.
When I write enough columns with the same underlying point, I sometimes create a special page to highlight the theme, such as the “Bureaucrat Hall of Fame” and “Poverty Hucksters.”
I may have to do something similar for people who assert that America’s response to the coronavirus has been hampered because the federal government is too small.
For instance, Dana Milbank wrote in the Washington Post last month that “anti-government conservatism…caused the current debacle with a deliberate strategy to sabotage government.”
Ironically, the nations he cited for their successful approach – Singapore, South Korea, and Taiwan – all have a much smaller burden of government spending than the United States.
Which actually supports my argument that bigger governments are less effective and competent.
But evidence doesn’t seem to matter to some journalists.
One of Milbank’s colleagues, Dan Balz, has just authored a long article that regurgitates the assertion that there’s been “underinvestment” in the federal government.
The government’s halting response to the coronavirus pandemic represents the culmination of chronic structural weaknesses, years of underinvestment and political rhetoric that has undermined the public trust… The nation is reaping the effects of decades of denigration of government and also from a steady squeeze on the resources needed to shore up the domestic parts of the executive branch. This hollowing out has been going on for years as a gridlocked Congress preferred continuing resolutions and budgetary caps… The question is whether the weaknesses and vulnerabilities exposed by the current crisis will generate a newfound interest among the nation’s elected officials — and the public — in repairing the infrastructure of government. …“We don’t want to invest in the capacity of government to get the job done,” Kettl said. …said David E. Lewis, a political science professor at Vanderbilt University…“We’re seeing a government that is suffering now from a long period of neglect that began well before this administration. And that neglect has accelerated during this administration.”
What’s especially remarkable is that the article cites the government’s lack of testing capacity as evidence of “underinvestment.”
Over these years, there have been a series of major government breakdowns that helped shake confidence in government’s competence. …The pandemic has forced another critical look at government’s competence. …more tests might have helped contain the spread. It is the case now as businesses look to reopen but cannot assure safety for workers or their communities without the widespread availability of tests, which so far does not exist.
Yet the bureaucracies with responsibility for testing – the FDA and CDC – have received big budget increases.
Notwithstanding all this evidence, Balz wants readers to believe that people don’t have faith in government because of hostile rhetoric from politicians.
Marc Hetherington, a professor at the University of North Carolina, said the public conversation about government began to shift with the election of Ronald Reagan in 1980. …“What changed with Reagan and the decades since is that the conversation moves away from what government ought to do to government is incompetent to do things,” he said. …Democratic politicians have engaged in some of the same kind of thing. “Every candidate has campaigned on a bureaucracy-bashing theme,” Nabatchi said. “That message has gotten through to affect people’s confidence in government.”
The alternative explanation, needless to say, is that people don’t have confidence in the public sector because government has a long track record of mistakes and incompetence.
But I guess that’s merely my opinion.
So let’s instead close today’s column with some hard data.
Here’s a chart I shared last month while debunking an article by George Packer for the Atlantic (he claimed we have “a federal government crippled by years of…steady defunding”).
It shows that federal spending has tripled since 1980. And that’s after adjusting for inflation!
Which led me to observe that, “The bottom line is that I can’t figure out whether to be more dismayed that journalists are innumerate or that major publications apparently don’t have fact checkers.”
That same sentiment obviously applies to Dan Balz and the Washington Post.
I’ve written four columns (here, here, here, and here) on the general failure of government health bureaucracies to effectively respond to the coronavirus.
I’m not surprised at this outcome, of course, given the poor overall track record of the public sector.
But I was negatively surprised to learn how red tape from these bureaucracies prevented the private sector from quickly reacting to the crisis.
Today, let’s take a closer look at one of those bureaucracies, the Atlanta-based Centers for Disease Control (CDC).
Eric Boehm, writing for Reason, has a nice summary of the CDC’s failures.
Over the past three decades, the Centers for Disease Control (CDC) has seen its taxpayer-funded budget doubled. Then doubled again. Then doubled again. And then nearly doubled once more. But spending nearly 14 times as much as we did in 1987 on the agency whose mission statement says it “saves lives and protects people from health threats” did not, apparently, help the CDC combat the emergence of the biggest disease threat America has faced in a century. In fact, …inflating the CDC’s budget may have weakened the agency’s ability to handle its core responsibility by giving rise to mission creep and bureaucratic malaise. …the CDC’s budget has ballooned from $590 million in 1987 to more than $8 billion last year. If the agency had grown with inflation since 1987, it would have a budget of about $1.3 billion today. …Has all that extra funding made America safer? …hindsight now suggests that the CDC should have spent more time and money researching emergent influenza-like infectious diseases, a project that received just $185 million in funding… Instead, the CDC was doing things like spending $1.75 million on the creation of a “Hollywood liaison”.
A big problem with bureaucracies is that they engage in mission creep. They concoct new roles and responsibilities in hopes of justifying bigger budgets and more staff.
The CDC certainly is no exception. In its early years, the bureaucracy had a targeted mission, focusing on diseases posing a major threat to public health, such as malaria, plague, and tuberculosis.
Over the years, though, it has lost focus and become involved with social issues.
Daniel Greenfield opines on the CDC’s foolish diversions on issues such as obesity.
The Centers for Disease Control has…one job which it messes up every time. The last time the CDC had a serious workout was six years ago during the Ebola crisis. Back then CDC guidelines allowed medical personnel infected with Ebola to avoid a quarantine and interact with Americans… There were no protocols in place for treating the potentially infected resulting in the further spread of the disease inside the United States. …Meanwhile, CDC personnel had managed to mishandle Ebola virus samples, accidentally sending samples of the live virus to CDC labs. …During the Ebola crisis, the CDC had been spending…$2.6 million on gun violence studies. But the CDC has a history of wasting money on everything from a $106 million visitor’s center with Japanese gardens, a $200K gym, a transgender beauty pageant, not to mention promoting bike paths. …the CDC’s general incompetence…, like that of other government agencies, just ticks along wasting money. In 1999, the CDC announced a plan to end syphilis in 5 years…an unserious social welfare proposal that wanted to battle racism and was such a success that by 2018, syphilis rates had hit a new record high. … The CDC’s fight against the “obesity epidemic” is even sillier. That includes…giving LSU over a million bucks to work with farmers’ markets. Obesity obviously can kill people, but it’s not something that the CDC can or should be trying to fix. …Unfortunately, the CDC, like every federal agency, has drifted from its core mission into social welfare. …No one thinks about the CDC until we need it and discover it doesn’t work. And then the same story repeats itself a few years later while the CDC goes back to battling obesity and racism. …We don’t need a CDC that changes people’s minds about eating chocolate or engaging in unprotected sex. There are already multiple redundant parts of the government that are trying and failing there.
In a column for Forbes, Larry Bell reviewed the history of the CDC’s politicized campaigning against gun ownership.
In 1996, the Congress axed $2.6 million allocated for gun research from the CDC out of its $2.2 billion budget, charging that its studies were being driven by anti-gun prejudice. …There was a very good reason for the gun violence research funding ban. Virtually all of the scores of CDC-funded firearms studies conducted since 1985 had reached conclusions favoring stricter gun control. This should have come as no surprise, given that ever since 1979, the official goal of the CDC’s parent agency, the U.S. Public Health Service, had been “…to reduce the number of handguns in private ownership”… Sociologist David Bordura and epidemiologist David Cowan characterized the public health literature on guns at that time as “advocacy based upon political beliefs rather than scientific fact”. …Dr. Katherine Christoffel, head of the “Handgun Epidemic Lowering Plan”, a CDC-funded organization…said: “guns are a virus that must be eradicated…”
Michelle Minton of the Competitive Enterprise Institute wrote for Inside Sources about the CDC’s senseless efforts to restrict vaping.
Our health agencies had the information and the resources, so they should have been planning for this, but they weren’t. The problem isn’t because they’re underfunded, it’s that they are bloated and mismanaged. …a close look at how CDC spends its budget reveals it has strayed from this mission of protecting Americans from communicable diseases, turning more toward influencing people’s lifestyle choices. …Indeed, prior to the COVID-19 pandemic, CDC and other agencies were busy sounding the alarm about the nonexistent “epidemic” of youth vaping. Collectively, they spent billions on anti-vaping advertisements, biased research and lobbying, wasted countless hours of congressional hearing time, and squandering public trust. Had they remained focused on infectious disease, might have been prepared to fight real epidemics, like the COVID-19. …there’s nothing new about exploiting a crisis to expand budgets and score political points. Similar claims of inadequate funding were made during the 2014 outbreak of Ebola, for which various health agencies got an additional $5.4 billion. And what do we have to show for it now?
Let’s wrap up by noting that squandering money should be viewed as the CDC’s indirect failure.
The direct failure was how the bureaucracy bungled its one legitimate function of fighting infectious disease.
Jacob Sullum, writing for the New York Post, explains what happened.
The grand failure of federal health bureaucrats foreclosed the possibility of a more proactive and targeted approach… At first, the Centers for Disease Control and Prevention monopolized COVID-19 tests. When the CDC began shipping test kits to state laboratories in early February, they turned out to be defective. The CDC and the Food and Drug Administration initially blocked efforts by universities and businesses to develop and conduct tests… The CDC still insists that “not everyone needs to be tested for COVID-19.” But without testing everyone — or at least representative samples — for both the virus itself and the antibodies to it, we can do little better than guess its prevalence, its lethality and the extent of immunity among the general public. …Our ignorance about COVID-19 will have profound consequences, potentially leading to an overreaction that wrecks the economy while saving relatively few lives… You can thank the same agencies on which we are relying to guide us through this crisis.
Veronique de Rugy of the Mercatus Center summarizes the issue, noting that the CDC is a monumental failure.
The lack of preparedness at every level of government (federal, state, and local) has nothing to do with a lack of funding or inadequate staffing. Instead, it has everything to do with governments’ bloat, mismanagement, cronyism, and poor focus. That’s particularly true of the Centers for Disease Control (CDC). …it is no secret how much the CDC is to blame for the country’s lack of preparedness to take on the coronavirus (followed very closely in ineptitude by the Food and Drug Administration). …By now, every major newspaper has reported on the incredible failure of the CDC during this crisis. …Messing up is not a new thing for the CDC. However, unlike what its employees and political allies like to claim, the agency’s poor record and its lack of preparedness has nothing to do with a lack of funding. …For instance, funding for its National Center for Emerging and Zoonotic Infectious Diseases—which aims to prevent diseases like Ebola—received only $514 million in 2018, a tiny sliver (less than 5%) of total CDC funding. And less than half of that $514 million went to emerging diseases like COVID-19. The rest of that budget is spent on stuff like chronic fatigue. Meanwhile, funding…to prevent smoking, alcohol consumption, and poor diets…received nearly $1 billion over that same time, almost double the funding for infectious-disease prevention.
Here’s a look (courtesy of Chris Edwards) at what’s happened to the CDC budget over time.
As you can see, the bureaucrats got more and more funding. Yet when America needed competence, they didn’t deliver.
P.S. The bureaucrats are not the only ones to blame. A big reason for the CDC’s lack of focus is that headline-seeking and vote-buying politicians created new roles and responsibilities. The CDC was happy to get more power, staff, and money, of course (just as it will be happy to get more power, staff, and money as a reward for its failure to deal with the coronavirus).
Many people in the D.C. bubble obviously disagree.
In his Washington Postcolumn, Dana Milbank tries to make the argument that the fight against coronavirus has been hampered by inadequate government.
…then came the tea party, the anti-government conservatism that infected the Republican Party in 2010 and triumphed with President Trump’s election. …What you see today is your government…a government that couldn’t produce a rudimentary test for coronavirus, that couldn’t contain the pandemic as other countries have done… Now it is time to drown this disastrous philosophy in the bathtub — and with it the poisonous attitude that the government is a harmful “beast” that must be “starved.” It is not an exaggeration to say that this ideology caused the current debacle with a deliberate strategy to sabotage government. …Americans are paying for this with their lives — and their livelihoods.
More relevant, he wants readers to believe that anti-government activism somehow blocked the production of a “rudimentary test” for the virus, yet I’ve repeatedly documented that the actual problem has been mindless red tape from bureaucracies such as the Food and Drug Administration and the Centers for Disease Control.
Speaking of which, Chris Edwards has rigorously debunked the notion that those bureaucracies, along with the National Institutes of Health, somehow have been starved of resources.
And here’s his chart showing the number of bureaucrats at the NIH, FDA, and CDC.
And what have we gotten in exchange for more bureaucrats and bigger budgets?
As already noted, we got inefficient bureaucracies that have put Americans at risk by hindering and delaying tests, equipment, and treatments.
Now let’s address the part of Milbank’s column that is a classic example of what’s called an “own goal” in soccer. He wants to make the case that bigger government is more effective government, but look at the examples he cites.
If the United States had more public health capacity, it “absolutely” would have been on par with Singapore, South Korea and Taiwan, which have far fewer cases, Auerbach said. South Korea has had 4 deaths per 1 million people, Singapore 1 death per million, and Taiwan 0.2 deaths per million. The United States: 39 per million — and rising fast.
What do we know about Singapore, South Korea, and Taiwan?
Well, as I noted in November of 2018, they all have a smaller burden of government spending than the United States.
Significantly smaller.
I’m embarrassed for Mr. Milbank, for the obvious reason that it is personally humiliating to score an “own goal.”
But I’m also embarrassed for myself. I repeatedly try to make the argument for limited government, but Milbank’s accidental case for libertarianism may be more persuasive than anything I’ve ever written.
Before providing a comprehensive collection of headlines and tweets, please read these excerpts from a searing indictment of the federal government’s incompetence, written by Stephen Pimentel for Palladium.
The FDA’s poor performance has little to do with insufficient budgets… The countries with the most effective responses… Taiwan, for example, has relied on a decentralized set of quickly developed digital tools, coordinated by its DIGI+ digital ministry but developed on the fly by private citizens. ….None of these countries allowed their equivalents of the Food and Drug Administration (FDA) to block virus-testing and the production of masks. In the U.S., the FDA possesses exclusive authority to approve tests once the Department of Health and Human Services declares a Public Health Emergency, which it did on January 31, 2020. The FDA proceeded to grant such approval only to the Centers for Disease Control and Prevention (CDC). In February, the CDC developed a test on its own and distributed it to state labs. But the test kits had a bad reagent and did not work. During the entire month of February, as the virus continued to spread, the FDA granted no private lab approval to test. The first approval for a private lab was only issued on March 2, 2020. …Why have common surgical masks (and not only the higher-grade N95 masks) run short during the pandemic? Surely they are easy to produce. The answer is that, while they are physically easy to produce, the FDA treats them as regulated medical devices and requires extensive risk analysis and testing before they can be legally sold, making them difficult and time-consuming for a company to legally bring to market. …The American institutions charged with protecting public health are embedded in a bureaucratic culture that values turf-centered gatekeeping and control over effectiveness and outcome.
Now for our collection of headlines and tweets.
And we’ll start with the one that carries the main message of today’s column.
And why are people needlessly suffering? And even dying?
Well, feel free to click on any of these stories and tweets to access the underlying information.
FDA finally allows use of KN95 masks. They should have done this a month ago.https://t.co/Y0bmfiQSWB
The federal government 1) blocks distillers from bulk production of non-retail sanitizer, so "approved" products aren't there for the public, and 2) blocks import of perfectly good masks because bureaucratic boxes haven't been checked. Please fix this, @realDonaldTrump.
With Trump's trade war tariffs of 25%, the American health care system was forced to reduce by 16% its purchases of critical medical supplies and stockpiles from China in 2019. https://t.co/ZpGwEuAGQA
While the FDA and CDC deserve plenty of scorn and criticism, Let’s not forget that states augment the damage of big government thanks to misguided “certificate of need” laws that restrict the capacity of the health sector, as well as laws against so-called price gouging.
Certificate of Need laws have restricted the proliferation of hospitals and surgicenters in many states. This Coronavirus crisis has showed us that central planning can be deadly. End CON laws. @SurgeryCenterOK@AAPSonline @HConomics @StephenMoore@marklevinshow@JediPD
This is the strongest statistical association I've seen w/ respect to the virus. Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent.
– The WHO said the coronavirus couldn't be transmitted from person to person. – The WHO says masks don't protect anyone or prevent the spread of the coronavirus. – The WHO advised against shutting borders and canceling flights.
NEW REPORT: 'Testing Times: The urgent need to decentralise COVID-19 diagnostic testing in the United Kingdom' by our @matthewlesh makes the case for allowing private, university and charity labs to test for COVID-19. pic.twitter.com/lvXPDepzIu
Here’s John Stossel’s video with another lesson, explaining that we need more capitalism rather than more government.
This seems like a no-brainer, especially given the wretched economic performance of countries where the government owns or controls the means of production.
But not everyone agrees. The appropriately named Paris Marx wants government to have more power, making the case for nationalization of Amazon in an article for Jacobin.
The government needs to…respond to the needs of people across the country as the pandemic situation deteriorates. The response should be to nationalize Amazon and integrate it with the USPS. …Nationalizing the company would also allow Amazon workers to get covered by the same union as postal workers… Amazon isn’t just an online e-commerce marketplace. …Amazon Web Services (AWS) is a cloud computing platform…the cloud should be placed under public ownership. Taking control of AWS would allow the government to…ensure the cloud platform is serving the public good… We have a rare opportunity to fundamentally alter the economy to serve the needs of people instead of private profit, and it’s time to seize it.
Call me crazy, but if the government takes over Amazon and merges it with the Postal Service, I’m guessing that what emerges will have the inefficiency of the latter rather than the nimbleness of the former.
Just imagine a giant Department of Motor Vehicles (or, on a related note, the government’s track record on teaching kids to drive).
Which is why the U.K.-based Economist warned back in 2017 about the dangers of government-run companies.
Expanded state ownership is a poor way to cure economic ailments. For much of the 20th century, economists were open to a bit of dirigisme. …But in the 1970s economists came to see state ownership as a costly fix to such problems. Owners of private firms benefit directly when innovation reduces costs and boosts profits; bureaucrats usually lack such a clear financial incentive to improve performance. Firms with the backing of the state are less vulnerable to competition; as they lumber on they hoard resources that could be better used elsewhere. …economists saw in the productivity slowdown of the 1970s evidence that an overreaching state was throttling economic dynamism. …State-owned firms pose risks beyond that to dynamism. Government-run companies may prioritise swollen payrolls over customer satisfaction. More worryingly, state firms can become vehicles for corruption, used to dole out the largesse of the state to favoured backers or to funnel social wealth into the pockets of the powerful. As state control over the economy grows, political connections become a surer route to business success than entrepreneurialism.
The good news is that very few politicians are supporting explicit nationalization.
The bad news is that there’s plenty of support for intermediate steps involving cronyism, industrial policy, and various types of direct and indirect subsidies.
Professor Amit Seru from Stanford and Professor Luigi Zingales from the University of Chicago warn, in a column for the Wall Street Journal, that the U.S. has take a dangerous step on the road to central planning.
The need to help individuals and small firms has provided cover to the largest corporate subsidy program in U.S. history. Under intense pressure from lobbyists, the Cares Act allocates $510 billion to support loans for large businesses. A small chunk of this money ($56 billion) will be used directly by the Treasury to grant loans to airlines and other “strategic” firms (read: Boeing). The Treasury will then confer the rest ($454 billion) to the Federal Reserve to absorb losses the Fed might incur in lending to firms in the private sector. The expectation is that the central bank will leverage this money… This is the largest step toward a centrally planned economy the U.S. has ever taken. And it socializes only losses. Profits, when they come, remain private. …The urgency of the moment facilitated a giveaway to vested interests. Now that the Cares Act is law, policy makers need to find ways to impose restrictions on how the money is deployed. It isn’t only a question of fiscal prudence; the nature of American capitalism is at stake.
The key unanswered question is whether the government’s new powers will be temporary or permanent.
There’s a legitimate argument for some form of intervention while the crisis in ongoing. But what happens once things go back to normal? Will politicians allow the “creative destruction” of capitalism, or will they use their expanded power to permanently interfere with market forces?
the tax treatment of saving, and privatization of air traffic control.another financial setback for a project beset by spiralling expenses and years of delays. …That brings the total cost to about $34 billion, more than six times the original estimate of $5.4 billion in 2013. …another setback for a project that Prime Minister Justin Trudeau has expended significant political capital on. …The expansion, years behind schedule, is set to go into operation in the second quarter, a delay from the previous first quarter start date, according to Trans Mountain.
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