Today is income tax day, but it should be known as Government Planning Day as it is partly thanks to government planners that we have to pay so much taxes. Since I have mostly been self employed, I rarely get tax refunds. So I usually wait until the last day to file so I can hold onto my money as long as possible.
When I talk with my left-leaning friends, most of whom are politically active, I notice that most of the political battles they are involved in are against some government agency or another. While they may rhetorically rail against corporations, the entities they actually fight are such things as the Bureau of Land Management, state agencies, or city governments. They know that government isn’t working for them, but they have a childish faith that, if only the right people were in charge, government would do everything they expect of it.
Most activists learned at some point in their educations about market failure — that public goods, the commons, monopolies, and externalities cause markets to perform poorly. But few have learned, except through direct experience, about government failure — how bureaucracies maximize their budgets, elected officials compromise their principles to get reelected, and special interest groups influence the process. While they know these are problems with the agencies they are fighting, they can’t generalize to government in general. So they support programs that will simply create more opportunities for bureaucracies and special interest groups to rip off the taxpayers.
Most government employees — planners included — have good intentions and believe they are doing the best possible job with the resources they have available. But everyone believes that, if only they had a little more money, they could do an even better job. So every government agency acts as if its real goal is to maximize its budget, and any officials who actually proposed to reduce their budgets would be regarded as crazy or even failures.
Meanwhile, the elected officials at the top of the multi-trillion-dollar federal government or the multi-billion-dollar state governments really have almost no control over the bureaucracies, and most haven’t the faintest idea of how government agencies really work. In times of crisis, executives and legislators focus on rearranging deck chairs. The rest of the time, they merely oversee the transfer of resources from taxpayers through the bureaucracies (which naturally take a share of the take) to the special interest groups — from whom, of course, the elected officials get their reward in due course.
Just before Bill Clinton was elected president, some left-leaning political consultants wrote a book titled Reinventing Government, which was supposed to show how to make government “work better and cost less.” “This book gives us the blueprint,” said Clinton, who put Al Gore in charge of a reinvention program that examined every federal agency.
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Gore’s reinvention staff ended up fighting among themselves over whether they should focus on making government work better or cost less. The work-better crowd proposed lots of ideas (many taken from the book) that would give government agencies incentives to be more effective and more efficient. But these ideas were too complicated to impose from the White House, and their benefits were too distant in the future. So the cost-less crowd won out with a very simple proposal: require all government agencies to reduce their staffs by 10 percent.
The agencies all did so, but when they let people go, they did not eliminate the positions. Over the next four or five years, they quietly hired people back into those positions. By the end of the Clinton administration, most agency budgets and staffs had completely recovered. Yet Al Gore repeatedly bragged that his reinvention program had saved taxpayers billions of dollars.
By going for the short-term fix without changing the long-term incentives, Clinton and Gore made the mistake that so many executives make when taking office: that of thinking they can control things from the top. Effective leaders rely on incentives, not commands, but when you face re-election in just four years, you don’t want to risk the possibility that incentives won’t have immediate measurable effects.
Almost every government disaster today is based on some well-intentioned crusade of the past: the war on poverty, the war on drugs, the war on terrorism. Last I heard, there is still lots of poverty, but if that one didn’t work, why did we embark on the later wars and crusades?
In short, government is too big and the people at the top are clueless. The last thing we want to do is make government bigger by creating health-care mandates or global climate programs. Yet the same people who object to the war in Iraq imagine that government control of health care and greenhouse gas emissions will somehow work fine.
So when you pay your taxes this year, whether income, sales, property, or any other kind, think about where your money is going. Think about all the wasteful programs you hear about and imagine all the ones you never hear about. And before you support any proposals for new government programs, ask yourself why you think that programs would work any better than the ones you know have failed.
JK: Here is a nice little failed government program in smart Portland. Our latest, greatest smart growth, billions for developers, experiment is in trouble. Here is the video and the transcript:
On April 10, 2008, I asked Portland city councillor, Sam Adams, if the city had enough urban renewal money to carry out the promised projects in Portland’s South Waterfront urban renewal district.
His answer: NO.
His proposal: more sources of money. (See full transcript below)
(The real name of the district is North Macadam, but the planners like South Waterfront better, some of us disrespectful people call it the SoWhat.)
See the video and comments at:
http://bojack.org/2008/04/its_official_sowhat_is_broke.html
the video only:
http://www.youtube.com/watch?v=96W5DLfXIiM
A transcript:
Me:
I’ve heard that the city has a lot of obligations to build things in this neighborhood, the green way is one, the pedestrian bridge is another, and those same people are telling me that the city is, in essence, out of money to build those. Can you gimme insight into how financially secure the city’s promises to do additional things in this neighborhood are. Do they they have the money to do what they promised.
Commissioner Adams:
No.
The short answer is no. And that’s well known and well documented. We’re in the process, on the transportation side, we’re in the process of looking at a self funding approach for South Waterfront based on system development charges for transportation that would be raised here in the neighborhood and spent here in the neighborhood. But that’s not going to be enough, and no one should try to tell you otherwise, they would be so high you would find them intolerable. The fact of the matter is, is this neighborhood, when fully built, protects existing single family Portland neighborhoods, by taking our fair share, which we’ve agreed to under the Metro 2040 plan within the region. I believe in keeping the urban growth boundary where its at, protecting farm and forest land, dense neighborhoods like this help us do that. Help’s protect single family neighborhoods like Laurlhurst and Kenton, where I live in North Portland, and so we do have a commitment to you but we’re gonna need help from the state and we’re gonna need help from the Federal government. I worked hard with Trimet to lobby for the 250 million dollars contribution to the light rail. That kind of lobbying is gonna have to continue and hopefully we’ll have more of it with the new administration in Washington D.C.
Thanks
JK
Seems to me the question is not, “Is there government failure?”, but rather, “Do to benefits of government outweigh the costs of inevitable government failures?” Perhaps the Antiplanner could address this question rather than just focusing on the costs of government, as he is wont to do.
The private sector has inefficiencies, corruption, etc. as well, but I don’t see the Antiplanner arguing that the private sector should be discontinued.
D4P,
There may be places where the private sector has inefficiencies, but the main difference between the private sector and government is that if private actors get out of hand with their inefficiences, wrong decisions, or just plain lazyness, they are usually punished by being forced to shut down and that is a good thing. On the other hand, once created, government agencies and bureaucracies usually last until, well, whenever the governments that created them are overthrown.
There seems to be a big problem amongst the body public in discerning between “capitalism” and competitive free markets. They are not the same thing. It is quite possible to have markets where the main players are firms who are capitalized via selling shares. However, just because firms gain access to capital that way does not guarantee that the markets in which they compete are necessarily going to be all that competitive. Frequently, factor markets (for land, labor, and capital) are much more competitive than product or service markets.
I would argue that what we are after are to try to make sure that markets are as competitive and contested as possible. That drives economic profits towards zero, helps to push innovation, and inspires people to come up with new ideas in order to chase after new profits. The other thing we have to watch for is whether there is an inelastic (or somewhat inelastic) demand curve for products or services in particular markets. A market which has relatively little competitve pressure, along with an inelastic demand curve is what can causes problems – or it does in the short run until someone comes up with new ways of doing things. For example, this is what happened to railroads when automobiles were invented.
As for markets with elastic demand curves, we don’t have to worry about them so much because lazy firms which try to raise prices in such markets turn off their would be customers who simply don’t buy their stuff.
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“They know that government isn’t working for them, but they have a childish faith that, if only the right people were in charge, government would do everything they expect of it.â€Â
I have lived surrounded by this doctrine throughout my past life, in Europe that is.
This has become the predominant public doctrine in virtually every one of the roughly 200 countries of this world. America has been, and to some extent still is, the exception.
America had the unique fortune of being a country founded from scratch by people who had the chance to correct the collectivist trap of the old world which they had left behind. But, in the long term,
What makes anyone believe that America will, or can, escape the collectivist fate that has befallen virtually every other country in the world?
…In order to avvoid this inescapable fate Americans would have to be very very vigilant of not succumbing to collectivism. They are not. So they too will meet the inescapable fate.
So rest of the world rejoice! Election by election, law by law, ordinance by ordinance and regulation by regulation America is on a steady course to join you in mediocrity.
The whole highway system is a collectivist enterprise too, even more than mass transit. Welcome to the 4th world!