Category: Government Failure

MLLG

Is Government Evil?

George Noga

Is Government Evil?

Government horrors in my lifetime

GEORGE NOGA
March 24, 2024

Previously, I referred to government as a malevolent force; now I call it evil. It is however a necessary evil because it’s better than the alternative, which is anarchy. Since government is an evil force, we should have as little of it as possible, only enough to protect us from foreign and domestic violence and to preserve our liberty.

a field full of white crosses in the grassAmerican cemetery in Normandy

Some readers have questioned my use of the term evil. Following is my lifetime of experiences with government. You judge if they qualify as evil.

  • I was born while my father was fighting in WWII; he also fought in Korea. Both wars (as well as WWI) resulted from government ineptitude. American WWII casualties were 407,000 killed and 671,000 wounded. Worldwide 60 million died, all preventable. My father was away at war during half of my first 10 years.
  • For 12 years I was the victim of an execrable education in wretched government schools. Any learning that took place was purely incidental.
  • I have been subject to a mind-numbing array of taxes, including at one time an income tax with a 94% bracket. Government at all levels takes 40% in taxes.
  • Government mismanagement of the economy unleashed numerous economic cycles, bubbles, busts, panics and meltdowns. The Federal Reserve once jacked up interest rates to over 20% to fix the 15% inflation it caused.
  • It costs $20,000 to buy what cost $1,000 when I was born: inflation of 2,000%.
  • The government-promulgated disaster that was the Vietnam War discombobulated my life and required me to serve in the armed forces.
  • I owned a highly regulated business for 35 years and was subject to a Kafkaesque wasteland of arcane and conflicting government regulations that helped no one.
  • Out of control government spending, debt and deficits will result in the greatest economic and social disaster in US history. Incredibly, government has managed to bankrupt the most prosperous nation in the history of this planet.
  • I only narrowly escaped the Obamacare death panels, but am still at risk for rationing and denial of care under a future single payer system.

Government has bankrupted the most prosperous nation in the history of Earth.

Private Sector Advances

Let’s contrast the above government horrors with the progress made by the private sector over the same time horizon.

  • Medical and dental treatment has improved immeasurably. When I was young there was little doctors could do except palliative care. President Coolidge’s son got a blister playing tennis; it became infected and he died within a week. There was nothing doctors could do. Going to the dentist was to be feared.
  • The progress in pharmaceuticals has been breathtaking. Most diseases are curable and gene therapy is a reality.
  • Computers did not exist in 1943. Today’s smartphones contain thousands of times the computing power used on lunar missions – and at ridiculously low prices.
  • Consumer electronics have made amazing progress. When I was young, there were only 3 channels of TV on a 9-inch screen with fuzzy reception and broadcasting limited hours. Today many hundreds of channels are available in high definition with over 125,000 movies available on demand 24/7.
  • We have advanced from propeller planes to walking on the moon .
  • The quality of all goods – particularly cars – has improved. Food now is but a small part of most family budgets. The cost of most goods in real terms has plummeted.
  • Capitalism has eliminated poverty, hunger and homelessness except for those with untreated mental illness. See my 2/18/24 post on my website: www.mllg.us.

Government Versus Markets

During my lifetime, government has brought mostly grief and failure, whereas free market capitalism has produced miracles. Government is not based on markets; it is top-down, highly coercive and ignores consumer preferences. It is antithetical to human nature. Waste, fraud, abuse and corruption are endemic. Government failure is systemic, structural, ingrained and incapable of reform.

Free market capitalism succeeds because it properly aligns personal rewards, risks and incentives with the goals of the business; it is in sync with (not opposed to) human nature. There also are immediate and consequential personal costs of failure. Capitalism attracts those who are hard working and receptive to risk, whereas government attracts those who are risk averse and value security over opportunity.

Is Government Evil?

Dictionaries define evil as: (1) something that brings sorrow, distress or calamity; (2) suffering, misfortune and wrongdoing; (3) wicked or dishonorable; (4) capable of harm and (5) having undesirable or negative qualities.

Government comports squarely with the above definition. The drafters of our Constitution understood government was capable of great harm; that’s why they created a republic with separation of powers and numerous checks and balances. However, as I wrote at the beginning of this post, you may judge for yourself.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

MLLG

Government Failure and Business Success

George Noga

This post explains why government always fails while business succeeds.

Government Failure and Business Success

By: George Noga – March 13, 2022

Have you ever wondered why government always fails, regardless of time and place, while business usually succeeds? There are many amazing business successes: Apple, Amazon, Disney, Walmart, Coca-Cola, Google and Facebook to name but a few. When we think of government, what comes to mind is public schools, the IRS, the USPS, immigration, the war on drugs, crime, pandemic mismanagement, huge deficits, TSA, Medicaid, mindless regulation, crumbling infrastructure, corruption, waste, fraud, abuse, climate madness and dysfunctional cities littered with human jetsam.

Why Business Succeeds

 

Business closely aligns its risks and rewards and its incentives and disincentives with human nature – which is unchanging. Business so closely aligns personal incentives with the goals of the business such that they are nearly indistinguishable. The need to make a profit creates a sense of urgency, focuses attention and summons great exertion because success confers wealth and status while failure has immediate and very unpleasant consequences. As a result, business attracts motivated, hard-working, talented, non risk–averse people with a strong bias for action over inertia.

Business is based on markets; highly specific knowledge constantly flows from the bottom up and confers valuable information about consumer preferences and prices. All transactions are voluntary, non-coercive and mutually beneficial, otherwise they would not take place; that explains why both parties to a market-based transaction always say “thank you“. In business, one person can improve the lives of a billion people as did Gates, Walton, Jobs, Disney, Zuckerberg and Bezos. Businesses routinely manage vast global enterprises with little waste, fraud, abuse or corruption.

 

Why Government Fails

 

Government is unalterably contrary to human nature. Not only are its incentives and disincentives not aligned, they are diametrically misaligned to encourage behavior contrary to the public interest. This problem is dissected and explained by the science of public sector economics, which explains, inter alia, why taxes are opaque, failed programs never end and why borrowing and spending is out of control. It also explains why all forms of collectivism never work outside of a small family, clan or tribe.

The risks and rewards of government do not attract talented, hard-working people; in fact, they appeal to the opposite cohort. Government is not based on markets and gets only the most generalized feedback every few years in elections. Government is top-down, highly coercive, ignores consumer preferences and artificially creates winners and losers; it is rife with waste, fraud, abuse and corruption. One person cannot make a difference; try to name one bureaucrat who transformed government for the better.

###############################

The causes of government failure are systemic and structural; they are deeply rooted, organic and incapable of reform. There is no way to fix government; it is futile to try. Voting different political parties into power, increasing oversight by Congress, forming elite study commissions or hiring gaggles of inspectors general will have no impact. Even bringing in top business executives fails; Robert McNamara comes to mind.

Government cannot be improved; but there is one way – and only one way – its many pathologies can be reduced. That answer is to drastically shrink the overall size and scope of government – nothing else will work. Even then, government still will be a failure – but at least it will be a smaller failure. We do not need more government, better government or even wiser government; we need less government!

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
In our next post on March 20th, we answer questions from readers.
More Liberty Less Government – mllg@cfl.rr.com – www.mllg.us

Why Business Succeeds

George Noga

Business succeeds because its risks, rewards and incentives are aligned with human nature.

 

Why Business Succeeds

By: George Noga – June 28, 2020

           This post is a companion to the one last week entitled “Why Government Fails“. If you missed it, go to our website www.mllg.us. In that post, we revealed seven reasons why government fails. This week we explain why business succeeds.

          Business succeeds because it excels at aligning risks, rewards and incentives with human nature – unchanged since men walked on two feet. The imperative to make a profit creates urgency, focuses attention and summons great exertion because success confers wealth and status while failure has immediate and unpleasant consequences. As a result, business attracts motivated, hard working, talented, non risk-averse people whose bias favors action over inertia. Business closely aligns personal incentives with the goals of the business such that they nearly are one and the same.

           Business is based on markets, in which knowledge flows from the bottom up and confers valuable information about consumer choices and preferences along with prices. All transactions are voluntary, non-coercive and mutually beneficial; that explains why both parties to a market-based transaction always say “thank you“.

          In business, one solitary person can literally improve the daily lives of billions of people as did Bill Gates, Steve Jobs, Sam Walton and Walt Disney to name a few. One driven entrepreneur can change the whole world. Moreover, businesses are able to tightly manage world-wide trillion dollar enterprises and prevent most waste, fraud, abuse and corruption through strong governance and independent audits.

Why Government Fails While Business Succeeds

       At all its levels, always and everywhere, government fails for many reasons; foremost among them is that its risks, rewards and incentives are misaligned with, and often even diametrically opposed to, human nature. Politicians and bureaucrats respond to incentives that reward them even when they are contrary to the public interest.

         Government is top down, command and control and coercive; it ignores consumer preferences. Rather than forming mutually beneficial relationships, it creates winners and losers. It divides people by race, age, income and gender.

        Government brings us TSA, Madoff, USPS, failed public schools, OSHA, Medicaid, IRS and public sector unions. People are fleeing as fast as they can from dysfunctional states like Illinois, New York, Connecticut, California and New Jersey and from cities such as Baltimore, Newark, Cleveland, Detroit and Chicago.

        Government failure is systemic, structural and incapable of reform; nonetheless,  some government is necessary because it is preferable to anarchy. The only possible remedy is to reduce its overall size and scope to the absolute minimum.

Our next post is on July 4th and celebrates Independence Day.
More Liberty Less Government  –  mllg@mllg.us  –  www.mllg.us

Why Government Always Fails

George Noga

Government failure is structural and systemic; it is utterly incapable of reform.

 

Why Government Always Fails

By: George Noga – June 21, 2020

          This post explains why government at all levels invariably fails. Next week, our companion posting shows why business succeeds. Sentient people know government fails at everything it attempts, but they often don’t understand why.

          We provide many reasons infra for government failure, but first we must explain the nature of its failure. The causes of government failure are systemic and structural; they are deeply rooted and incapable of reform. Its most common symptoms, waste, fraud, abuse and corruption are organic and cannot be eliminated; it is futile to try.

         Changing political parties, appointing different bureaucrats, increasing oversight by Congress, forming elite study commissions or hiring more inspectors general will have no effect. Government failure can’t be eliminated, but there is one, and only one, way it can be reduced. That solution is revealed at the end of this post – stay tuned.

Reasons for Government Failure

Opposed to Human Nature: A principal reason for its failure is that government is unalterably opposed to human nature, which is unchanged since we lived in trees. Humans are hardwired to advance their self interest and to respond to incentives. All the incentives in government are misaligned and contrary to the public interest. This also explains why socialism never has worked outside of a family, clan or tribe.

Public Sector Economics: This is more an explanation than a reason. It explains, inter alia, why government prefers borrowing over taxation, why taxes are opaque and why failed government programs continue to exist – and even to expand. Politicians and bureaucrats are responding to incentives, but ones that reward them, not the public. And politicians’ biggest (and likely only) incentive is to get reelected.

Failure to Attract Talented, Motivated People: Risks and rewards of government work do not attract highly talented, motivated and hard-working people. Government work tends to attract those who are risk averse and prefer inertia over action. Why would being a bureaucrat appeal to anyone who is capable of succeeding in business?

Not Market Based: Markets gather knowledge from the bottom up based on consumer choices and preferences; all transactions are non-coercive and benefit both parties. Instead of mutually beneficial relationships created by markets, government is top down, highly coercive, ignores consumer preferences and creates winners and losers.

One Person Can’t Make a Difference: Try to name one bureaucrat who transformed government for the better. You can’t because none exists. There are no bureaucratic equivalents of Steve Jobs or Jeff Bezos and there never can be. Such people would never go into government and if they did, they would soon quit in frustration.

Lowest Common Denominator: Politicians succeed most often when they appeal to our basest instincts, or lowest common denominator – instead of to the better angels of our nature. That explains why they divide people by race, gender, age and income and pursue policies they know are detrimental to those whom they represent.

Too Big to Manage: There is no way 537 politicians can manage a $4 trillion budget. Few of them have the necessary private sector experience; most serve only a few years and they have wildly different ideas about what should be done. Moreover, they are not held accountable for their (mis)management of government spending.

         Government failure, with its embedded waste, fraud, abuse and corruption, has been with us since George Washington’s administration. It never can be eliminated. There is only one way it can be reduced and that is to shrink the overall size and scope of government. That’s one reason our mantra is: more liberty and less government!

Our next post on June 28th explains why business succeeds.
More Liberty Less Government  –  mllg@mllg.us  –  www.mllg.us

The American Dream – Strangled by Government

George Noga

Two worker households are a Faustian Bargain, the second income pays only for government. 

The American Dream – Strangled by Government

By: George Noga – May 31, 2020

        I graduated from high school in 1961 and went on to college. Most of my high school friends remained in Orlando, began work, married, had children and bought homes. The wives stayed home; a second income wasn’t necessary to buy a house and to raise a family. I kept in touch with many of my classmates. Following is the true story of two such people, Steve and Sandy – their real names.

       High school sweethearts, Steve and Sandy married soon after graduation. Steve started work in the paint shop of the Martin Company (today Lockheed Martin) at $2.00 per hour, soon increasing to $2.25. With a little overtime, their income was $5,000 per year. A year after their marriage, they bought a new home and were blessed with a daughter. Sandy did not work and stayed home to care for the baby.

         I visited Steve and Sandy often. They bought and furnished a median-price home, accumulating enough for a down payment and furniture in one year with both working. Once the baby was born, Sandy quit work as they could live solely on Steve’s income. Their home cost the equivalent of 2 years of Steve’s income and their monthly house payment including principal, interest, taxes and insurance (“PITI”) was under $100, or 22% of his income. Sandy never returned to work; it simply wasn’t necessary.

        Fast forward to 2020 and see how a modern day Steve and Sandy would fare. We begin with the generous assumption that a high school graduate earns $15 per hour, or $30,000 per year. The median home price in Orlando is $260,000; assuming a 10% down payment and low interest rate, the monthly PITI payment is $1,167, or $14,000 per year. The house costs 9 years of income and requires 47% of monthly income to pay PITI. Many years are needed to save for a down payment and furniture.

       What could account for such a sea change in the course of a few generations? Why did these changes happen? Why is it necessary today for a family to have two wage earners merely to live as well as their grandparents lived on one income? The answer in one word: government. The causes are many but all have a nexus to government.

     Housing costs skyrocketed due to government diktats including, zoning, growth management, building codes, greenbelts, bureaucracy, anti-leapfrogging, concurrency, infill and regulatory delay. All taxes were increased, especially the payroll tax and many new ones added. The Florida sales tax Steve and Sandy paid was 3%; today it is 7% – an increase of 133%. Steve and Sandy’s real estate tax was $100; today it would be $2,600, a 2,500% increase. Government drove up the cost of many other things such as health care, tuition and child care. The more government got involved, the more costs increased over time, less intervention meant lower prices.

       At first, as the second family wage earner entered the workforce, there was a sense of faux prosperity; they could afford an extra TV and some other accoutrements. But higher taxes and government-imposed costs devoured the second income. By the time they realized they were hoodwinked, it was too late for a volte-face. Two income families are a Faustian Bargain, the second income pays only for more government. Families doubled the number of workers but have nothing to show for it.

       A modern day Steve and Sandy can’t afford to buy a house or to start a family and they often live lives of quiet desperation. The American dream didn’t just die; it was murdered. The cause of death was strangulation by government!

Watch for our special D-Day posting on June 6th.
More Liberty Less Government  –  mllg@mllg.us  –  www.mllg.us

MLLG High School Graduation Address

George Noga

 
There are many excellent teachers in America, unlike those brutally described in this post. The problem however is not limited to a few bad apples; there are not enough good apples. 
MLLG High School Graduation Address
By: George Noga – June 4, 2017
       Congratulations on your graduation from this failed government high school. Now you enter the real world and must confront hard truths beginning with your teachers. They attended a college of education which attracts the poorest students mired in the bottom deciles of their class; nevertheless, they harbor illusions of adequacy. Teachers can’t be fired no matter how inept or dangerous. Some taught you; others are assigned to rubber rooms where they can do no harm. The problem is not just a few bad apples, but too few good apples. Teachers are anti-competitive government workers who oppose pay based on merit or results. They are overpaid for what they produce.
      Your unionized teachers bargain for salary and work rules at your expense; that’s why your school day begins at zero dark thirty. Public schools are a jobs program for adults; you are afterthoughts. You were indoctrinated in pro-government, anti-business, politically correct conformity with an entitlement mentality. They scared the bejesus out of you about climate change and the environment with myth and misinformation.
       School choice is the civil rights issue of our age; yet, you had no choice where to matriculate, unlike affluent families – none of whose kids attended your school. Your teachers and administrators stood blocking your schoolhouse door to stop you from escaping. Principals and administrators are unaccountable to students, parents or anyone but  the government blob – which never has closed a failed school. They are in constant fear that if armed with a free choice, the most potent force on earth, you will escape their government monopoly. Minority students were thrown under the school bus by the NAACP and your elected leaders because they choose to support public sector unions over you – knowing full well the great harm this inflicts on you.
      Although your learning was far beneath grade level, your school spent nearly as much per student as the most elite private schools. The education  budget is wasted on administrators; barely half ever found its way into your classroom. Your government school with police presence and metal detectors resembled a prison. Sports were more important than education. Your school was a Petri dish for every dysfunction and social pathology. Your graduation is a testament to your perseverance – not to learning. You have been badly defrauded by those you innocently trusted.
      You can’t attend college without much remedial work and community college is mostly a chimera. Any honors or awards you may have received are cruel hoaxes. You are not prepared for good jobs; practice asking “Do you want any fries with that burger?” Every tattoo and piercing reduces your lifetime income by $100,000. You can expect a life of quiet desperation with little or no social or economic mobility.
      In a final ignominy, you are victims of intergenerational theft; you inherit $600,000 as your share of unfunded future U.S. government liabilities. This does not include your share of unfunded future state liabilities for teacher retirement, health care and benefits which vastly outstrip benefits for comparable private sector jobs. You inherit the equivalent of a mortgage on a million dollar home – only without the home.
     There is no way to sugarcoat your predicament. Nonetheless, you are young and there is a narrow path that can led to success – but only for a precious few of you. The first step is to eschew all myth and political correctness, to embrace truth and to see and to understand the world as it is – not how you would like it to be. Understanding the reality of your high school experience as described herein is a good beginning.
      Learning must be a lifetime pursuit; never stop. Find something you are good at which isn’t necessarily something you like. Work incredibly hard; save money; and consider starting a business. Above all, make sure your children have educational choices and are not forced, like you, to attend failed government schools.
The next post on June 11th is MLLG’s college commencement address.

Why Government Fails While Business Succeeds

George Noga

Government fails while business succeeds because of immutable human nature. At root, it is exactly the same reason socialism fails while capitalism succeeds.

By: George Noga – August 14, 2016

    Business succeeds because its risks, rewards and incentives are properly aligned with human nature. The need to make a profit focuses attention and demands great effort because success confers wealth and status while failure has immediate and unpleasant consequences. Thus, business attracts motivated, talented and hard working people. Why would anyone be a bureaucrat if he/she could succeed in business?

    All that is well understood; however, there are more compelling explanations for spectacular corporate successes like Apple, Walmart, Disney, Berkshire Hathaway, FedEx and Coca-Cola. Juxtapose these against abject government failures such as public schools, terrorism, Madoff, economic growth, jobs, disaster relief, health care, IRS, USPS and most major cities (Newark, Detroit, Chicago), states and nations.

    It all comes down to human nature which is unchanged since man walked on two feet. Humans are hard wired to further their self interest and to respond to incentives. This explains why socialism has never worked outside a small group like a family, clan or tribe. Socialist or Utopian schemes never have worked for more than 50 people – probably it is more like 25. We need look no further than Jamestown and Plymouth to see how socialism resulted in starvation and every form of privation; it was only when the settlers instituted private property that hunger and suffering were alleviated.

    The same principle that dooms socialism also casts its pall on government – even in capitalist countries. Both are contrary to the most basic laws of human nature – self interest and incentives. Public sector economics explains the inner workings of government; it proves,inter alia, why government prefers debt over taxes, why taxes are opaque and why failed public programs continue to exist and even to expand.

    In  business, all it takes is one driven entrepreneur such as a Jobs, Gates, Buffet, Fred Smith, Sam Walton or Walt Disney to change the world. By its very nature government must appeal to the lowest common denominator (“LCD”) of the populace to win elections. Politicians behave rationally when they do whatever is necessary to win elections. That explains why they divide people by race, gender, age and income and pursue policies they know to be detrimental to those they represent.

    A great paradox lies at the heart of government and human nature. Some limited government is necessary but there is no practical way to make it respond to the people’s long term best interests. The only possible solution is to reduce the size and scope of government to the absolute minimum, i.e. more liberty and less government.

    Business structures its incentives to appeal to the best and brightest among us and, as a consequence, one talented and motivated business person can change the world and make life better for everyone. In contrast, government always descends to the LCD or to the level of the least of us. Socialism and government always fail because they are, at the most elemental level, diametrically opposed to abiding human nature.

Next: The timeless struggle between personal freedom and government power.

Profiles in Cowardice: Trayvon Martin Debacle

George Noga

Government Failure at Every Level and in Every Branch

By: George Noga – July 15, 2013

     Since I live in Seminole County, I couldn’t escape the media frenzy over the Trayvon Martin case. Mercifully, it ended this weekend but not before it became the poster child for government malfunction in all three branches and at each and every level from the City of Sanford all the way up to the the President of the United States of America.

   The Sanford police initially investigated and concluded not to charge George Zimmerman with a crime – in hindsight clearly the correct decision. For this act of competence the Sanford police chief was unceremoniously sacked. Government failure at the city level – check!

“The media bought into a counterfactual fantasia.”

   Then came the massive media paroxysm. The media bought into a counterfactual fantasia sans independent checking. The media malpractice, combined with outside agitators with prior agendas, caused Governor Scott to appoint a special prosecutor, Angela Corey. I feel certain that, whether implicit or explicit (wink, wink, nod, nod), Scott and Corey understood what was to happen. This was not Rick Scott’s finest hour. Government failure at the state level- check!

   Dante has a special place reserved for Angela Corey. The fix was in from the outset. Corey skipped taking the case to a grand jury because she knew she couldn’t get an indictment. She then charged Zimmerman with a crime that couldn’t be proven, all for political expediency and correctness. Moreover, she and the prosecutorial team withheld evidence from the defense. She deserves severe sanctions for her lese majeste conduct. State level government failure – check!

   Next congress got into the act. The Congressional Black Caucus insisted this should be a civil rights case and demanded the Justice Department (“DOJ”) open an investigation. Government failure at the federal legislative level – check! The DOJ then sent its “community affairs” team to Sanford to stir up the pot and foment trouble. They initiated a civil rights investigation which remains open today. Government failure at the federal executive level – check! Not to be outdone, Barack Obama gratuitously opined that if he had a son, he probably would look a lot like Trayvon Martin. Government failure at the highest level in the land – check!

“All levels and branches of government failed – city, state and federal as well as the executive, legislative and judicial branches.”

   Nor does Judge Nelson come out of this smelling like a rose. It was apparent to any scient person the state could not prove second degree murder. Judge Nelson should have dismissed that charge – although that would have required a heavy dose of courage. No one from any government involved in the case qualified for a profile in courage; instead, they could fill many chapters in a book titled Profiles in Cowardice. Government failure at the judicial level – check! Note: The book Profiles in Courage was not written by John Kennedy even though he received the Pulitzer Prize; the real author was Ted Sorensen. How’s that for a profile in courage?

   Government failure was massive and endemic throughout the Trayvon Martin debacle; indeed, it is difficult to find one instance of a government official who acted properly. There was failure at the city, state and federal levels as well as in the executive, legislative and judicial branches. This case should become the poster child for government run amok. As I point out time and again, government is inherently a malevolent force; this is just one more example.

Public Choice Economics Explains Government Failure

George Noga
 By: George Noga – July 1, 2013
       The science of economics, far from being dismal, can be truly exciting; it offers much more than arcane supply and demand curves. In recent years economists have captured the public imagination with books such as Freakonomics, Super Freakonomics, More Guns – Less Crime and More Sex is Safer Sex. They are popular because they use the tools of economics, including rigorous logic and analysis, to reach what often are counter intuitive, but valid, conclusions.
     So it is with public choice economics. In the private sector, theoretically correct economic solutions usually are positively correlated with real world decisions In the public sector however, there is a huge chasm between the correct theoretical (economic) solutions and the choices made by decision makers, i.e. politicians. Public choice economics explains this chasm.
      Many citizens, particularly young people and liberals, have an infatuation with government. They see elected officials as benevolent, dispassionate planners looking out for ideal social outcomes as contrasted with self-interested actors in the private sector. Yet we constantly are bumfuzzled by political decisions contrary to all logic and national self interest.
“We constantly are bumfuzzled by politicians acting illogically.”
     Why is private sector decision making far superior to government? Business ownership and governance do a much better job of aligning business and personal objectives and incentives so that decision makers choose the economically (theoretically) correct decision. In government there is a wide gulf between self interest and public interest.
      In both government and business, decision makers usually decide on the basis of personal risks, rewards and incentives; this is embedded in human nature and is immutable. The private sector understands this. The founders of our country understood this, hence our constitutional system of federalism, limited government and checks and balances. Public choice economics explains why government fails us; consider five tenets from public choice economics.

  1. This comes as no surprise but politicians are far more interested in winning the next election than in doing the right thing. Their desire to win elections far outstrips their duty to the country. Their personal incentives are grossly misaligned with the public interest.

  2. Politics is extremely shortsighted, favoring debt financing over taxes; that explains why we have had deficits in 47 of the last 52 years. Politicians love to make unfunded  promises such as unsustainable pensions and benefits. They want to provide immediate benefits while borrowing, hiding or deferring the costs as far into the future as possible.

  3. Special interest groups and rent seekers (those who extract value from government without giving value in return – such as public sector unions) dominate the process. Politicians always favor highly concentrated and organized groups (that return the favor in various ways) at the public expense and contrary to the public interest. A great example is sugar subsidies where a few growers share nearly $1 billion a year in added profits while all 310 million of us Americans pay $30 too much for sugar each year.

  4. There is a myth that central planning leads to good decisions. This ignores the real world preferences of real people, creates perverse incentives and disincentives and inevitably creates a myriad of unintended consequences. The real world is far more complex and dynamic than any central planner or computer model can ever simulate.

  5. Whereas in business the culture is to quickly recognize and to cut losses, the incentive in government is to deny anything is a blunder and continue to throw more money at it.
      Public choice economics can lead to better decisions if we give it heed. We must recognize  economic science is just as applicable to government as it is to business. We must understand  human nature has not changed since the dawn of time. People are people and they do not suddenly become benighted when they enter public service. We need to return to the system  envisioned by the founders where government is so limited as to minimize the harm it wreaks. Failing that, we must closely align the risks, rewards and incentives of public officials with the long-term public interest – just as the private sector has done so successfully.