On the (Inevitable) Failures of Government

This post is a formal response to Benjamin Greschler's "Middle Ground" blog - middlegroundblog.blogspot.com. I'd encourage you to follow the link and read what he has to say, though I'll be frequently referring to the text in my critique.

Ben starts, after a quick analysis of the Reagan administration, with:

"In turn, we lost a government that worked for the people and gained a government that simply worked for profit."

Tell me, when has a government, in the history of the world, ever been truly - in anything other than rhetoric - "for the people?" Or, for that matter, "for profit?" Government actors seek to stay popular and in office, and if that means pretending to help, that's a very different thing than the altruistic motive so ascribed.

Public choice theory - applying economics to government - making the same assumptions about people in office as to people outside of it - that they're self-interested and limited, rather than all-knowing white knights - has been so immensely accurate a tool for predicting government action that it cannot be denied. We don't have tariffs on steel because some virtuous, enlightened group of people sat around a table and decided it was "for the people." We have them - to the detriment of the entire industry and market - because somebody in some very large steel company paid a very large sum of money or otherwise complained to the government. This is common knowledge. We don't have agricultural subsidies and tariffs on sugar because there's some economic externality that the government is cleverly accounting for - we have them, and for no good reason - it is perhaps the single most universally-agreeable waste among all economists, from Krugman to Rothbard - because the firms of that industry are willing to stick their boots in the hind of politicians to get what they want; and the dispersed harm inspires not one regular old soul - who pays an extra .50 for his soda to get that American corn syrup over cheaper Brazilian sugar - to stop them.

There is not one solution for this problem. It will plague us until the government is gone.

He later acknowledges:

"The lobbyists endorsed their candidates through large donations, and in turn, when they were in office, they repaid them through legislation that benefited them and continued turning in profits."

Bingo. Welcome to how the government is and has always been working. This is the vicious government process that cannot be stopped - interest groups with concentrated wealth will inevitably overrule the interests of society at large through the political arm - unless we cut it off. But there's no pretending that this is some newfound happenstance thanks to Reagan. This is always and forever, amen.

"So while it benefits the average American and world citizen to support research into alternative energies that can be sustainable and efficient, our country at least is brought down by these lobbyists who cap our knowledge for their profit. While these lobbyists remain in charge of our government, there is little doubt that our system will remain as it has, for it isn’t in the benefit of those with the lobbying power to change the system at all."

Like the words came right out of my mouth - but when is it ever not like this?

"The government (in turn, us as a nation) can’t afford to leave the market to its own devices like they have the last 40 years"

The market was left to its own devices? looks left, looks right Where?

"But what line should they draw? Where should they create legislation, and where should they let the market work its usually effective devices? Well, while just about every economist has a different perspective about that"

The government does not care what the economists think. What line they should draw, and what line they will draw are forever separate things. The former is not even worth our consideration - it will never ever manifest. The only thing the government should is be very not there.

"there are two places that I would argue require the attention of the government. I’ll start off with the need for price of a product to factor in larger amounts of costs that are currently being ignored. When a tree is chopped down and sold, the person who chops down the tree doesn’t charge for the damage to the ecosystem that the lost tree influences. In large part that is because the damage has no visible effect on our lives. . . So the market would naturally not factor this into a price, as it has no short-term impact."

Again, this is the type of scalpel-reasoning that the government is entirely unresponsive to. The options are: government, and no government - give a bunch of guys guns, badges and ultimate uncheckable authority, or don't. There is no "government that Ben directs" option. There is no "government that is kind, patient and caring for the needs of the forest" option.

Fortunately, the problem is solvable through market forces, whose adequacy betrays the shortsightedness Ben ascribes. The market doesn't fail to account for the ecosystem damage of felling trees because it has 'no short-term impact' and there is no 'visible effect on our lives' - it's just because there is barely any impact to that particular lumberjack. He doesn't care about our lives - he cares about his life. Externalities 101. You solve an externality with law, that's true - but that law can come from the private sector, and doesn't (evidently) come from the government.

Make the forest someone's property, make them care about that ecosystem, and presto - externality abolished. Now, he's not going to care specially for the critters or the tree-spirits, but he's going to care about its value (yes, long-term - when it's no longer his it's because he sold it) to human beings, which may include those things.

"it would be difficult to even quantify a price that the chopping of a tree had for the ecosystem, especially if you had to calculate the future cost to the ecosystem. It was impossible to put a number on that."

It is difficult, but it is possible. That's what makes the market so complicated, and the government such an abominable substitute.

"The second role government should play in our economy is another controversial one, but in my opinion more immediately important, being the redistribution of wealth. The rich are enjoying a period of wealth unlike what has ever been seen or conceived, and the poor and unfortunate will only continue to be worse off without policies that redistribute wealth back into their hands"

Once again, to beat a dead horse, Benjamin Greschler does not decide where the government distributes wealth. The people who do decide that are not white knights, nor can we ever count on them to be as such. The government hands tax breaks to people who lobby, subsidies people who lobby, tariffs against competitors in favor of firms that lobby, and gives really, really awful schools to poor people. If you can't afford servants to be in bed with politicians, and you're simultaneously part of an income group vastly outnumbered by middle-class voters, this system dooms you to the stick's short end.

What the poor need, who spend a much larger percentage of their money on food and gasoline, who are constantly out of work, is no more food and gas tax, and no more minimum wage. Is everyone in the room aware that excluding the possibility of a voluntary transaction between a worker of low skill and his employer makes both of them worse off?

I hope so.

Why do we have minimum wage laws? Why were they originally conceived? Because people with jobs don't like competing with people willing to work for less, so they kick the government. Plain and simple. And if all you can do is work for less on your journey up the corporate ladder - guess you're not working! Better not educate yourself among your terrible public school options either, since you need to get on the job right away to get anything at all.

But you can't live on minimum wage or less! I'm sorry, did you know that people lived 200 years ago? Like, before the hydraulic press? If America wants to build a damn wooden shack and there's someone willing to buy it, it's done. The reason you don't see them is because there's not even a market for them. The "living cost" of society is itself conceived by the richness of society - it costs that much to live here because there does not even exist a substantial market of people poorer. Why does that market not exist? Why is everyone richer than they were? Capitalism. Face it or squint your eyes at history, on pain of your intellectual integrity.

What's more, this is entirely predictable by economic theory. Why do the rich get richer and the poor get richer when the government doesn't stick a gun in the way? Because competition demands that an increased output of labor be accompanied by an increased wage, which wage is constantly itself improved by the profit-driven advances in technology that increased the labor output, vastly multiplying its value. 

All of this is digression, of course, since the government, one way or another, is not helping the poor as Ben proposes. You may stick up for that government or see it gone - there is no third route.

Let me explain that another way: suppose Ben Greschler becomes president someday. Ben only wins by signing his soul to the will of a forever uninformed public, and he only stays by confirming that signature, and he only gets anything done by acting the same as everyone else with that signature, and he only gets favorable press by scribbling that signature onto everything he writes. His predecessor will have done the same, and he will be predecessor to one who does the same. The institution excludes all other possibilities - which is why we dismantle the institution.

Why is the public forever uninformed? For the basic reason that none has incentive to become informed! They get one vote to make one say that is guaranteed to have no effect on the ultimate outcome. It is, from the cost-benefit perspective of any regular Joe, a total waste of time. If economics predicts anything, it is that Democracy is total idiocy.

"In the end, our actions and will to change as a nation will boil down to if we can represent more than the lobbyists"

And in the end, you lose.

Anarchy, please and thanks.