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Government Failure

Just like Poverty, it's Impossible to Eliminate

Politicians want to be elected, which means they have a big incentive to mislead you for your vote. So many of them make great sounding promises which, however, are logically impossible to carry out.

To enable the Federal Government to implement Prohibition, they passed the 18th Amendment. It was not only an unmitigated disaster, it also stopped individual States implementing their own solutions for challenges such as alcohol rehab. But without comparing results - the evidence - how can you ever find out how well different approaches really work?

In the USA, poverty is now redefined as relative to other people's income. But the bottom 20% of income earners are simply those with the lowest income. No matter how much you redistribute income, it's mathematically impossible to eliminate those with the least income, there's always a bottom 20%.

So the political promise of fairness and equality in the misguided War on Poverty is seriously misleading. Could it be just a cynical attempt to mislead you for your vote? And what is poverty anyway?

Despite the enormous tax increases implemented by politicians, they all insist they need more money. They've discovered how easily voters can be seduced with impossible promises, a problem caused by the government education system teaching what to think rather than how to think. Education is yet another egregious and very prominent example of government failure.

Government run Businesses

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How successful are governments at running any business? For any enterprise, there are only two possible outcomes: make a profit or make a loss. Most businesses run by government run at a loss, because there are no incentives to make a profit. Their ideas for innovation can only be called bizarre. The tax-payer - you - pays for all the losses from your pocket.

The specious argument that the government needs to be involved because of the supposed free rider problem - lighthouses and bees, for example - has been long discredited. If it's a viable business - even lighthouses or bees with real value - then the secret of success is to let business handle business.

If it's an "essential service", then relying on one single provider - run by the government - is a recipe for disaster. Different companies have different approaches, some naturally better than others. The best ones prosper, the worse ones fail. The competition among them ensures the tax-payer has a choice and so you win in the long run. Government failure comes from lack of competition.

Waste and corruption? Although governments often promise to eliminate it, that's impossible! The inbuilt incentives ensure that virtually no-one is held responsible or fired while both waste and corruption continue. Such as the safety issue at the Washing DC transit system... Open Page in a new Tab

An entrepreneur with a great idea and the desire to produce wealth will do a far better job than any number of government employees who can neither make a fortune nor go bankrupt. You'll change your life when you realize that since a government employee has no significant stake in the outcome, customer satisfaction is largely irrelevant. You've probably had experience of such government failure.

The War on Drugs

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The US government along with the rest of the world have a long-running war on drugs, but is it working? No. Alcohol and tobacco are also drugs, and they're not illegal. In fact, evidence shows that marijuana is no more addictive than alcohol. The US has the world's highest incarceration rate, largely due to the war on drugs. Yet far fewer people are incarcerated because of alcohol.

It's therefore clear to those who can think clearly that the US alcohol laws produce better results than their marijuana laws - except to those "being right." Despite all the denials, the evidence shows that drug legalization works well in countries like Holland and Portugal. The USA needs to stop doing what doesn't work, and do what works instead! Are those against legalization actually profiting in some way?

Like alcohol, marijuana should be legal with sensible safeguards to stop underage use by children. Yes, such regulation is not perfect, but it would remove the financial incentive for drug lords to hire children to persuade your children to get hooked. There would be no money driving such behavior. There'd also be less criminal activity to fund a drug habit.

Why is the Government involved at all?

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Governments not only regulate unnecessarily, they run businesses ineffectively, nationalize viable businesses while mendaciously pretending some services can only be supplied by governments, and have even gotten involved in charitable activities. Why? I wonder if there’s any reason?

Look at the long-term endemic lack of government success in more or less any activity. Government failure in business and essential services is obvious, but how about in charity and other such socially essential activities?


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Charities have provided for those in need for centuries, but how can the politician buy votes in quantity here? He cannot. Worse, the increase in the government tax take obviously decreases disposable income which reduces the amount any individual has to give to charity. So charities feel the pinch, and large donations by wealthy individuals become more and more scarce.

Are bureaucrats motivated to solve the problem or do they have other incentives? The lack of progress in the government's various wars - such as the War on Poverty provides convincing proof of wasted money and government failure.

Charities have done an outstanding job for centuries, and nowadays their effectiveness is monitored by worthy organizations such as Charity Navigator. A charity's mission is focussed and, because they have no guaranteed income, they have an enormous incentive to be effective.

The ever increasing government tax take naturally means you and the private sector have less money to spend and invest. Charitable donations as well as economic growth and your prosperity are therefore negatively affected by EACH and EVERY INCREASE in both government spending and taxation.

The 1986 Nobel prize - Public Choice

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But don't people suddenly become selfless guardians of the public interest the moment they're appointed or elected? No. Definitely not! The 1986 Nobel Prize in Economics was awarded to Dr. James Buchanan for his Public Choice analysis. Professor Buchanan proved that both politicians and bureaucrats behave just as selfishly as the rest of the population in looking after their own interests first.

This gives the lie to the curious notion - promoted by politicians and bureaucrats alike - that once appointed or elected, they change their primary focus overnight to become the citizens' best interests. Yet they all fight so tenaciously - and spend so much money - to keep their positions. And incompetent and even corrupt employees are amazingly difficult to fire.

When a employee's income depends on satisfying you, the customer in front of them, they're motivated to serve you well. The less they get directly from you - the more remote the source of their income - the less the motivation. Government employees and bureaucrats therefore have little reward - or sanction - for quality service. Given the incentives, government failure seems to be both natural and unavoidable!

Can Government be All Things to All Men?

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Politicians pretend that governments can provide everything for everybody. This makes government failure entirely natural. All organizations know that focus is important: a good way to improve effectiveness is to let non-core activities go and concentrate on areas of genuine expertise. Doing everything is an impossible task in the long run.

Lack of choice - relying on one single provider is a recipe for disaster: That's why governments endorse competition and have laws against price-fixing and anti-competitive activities. So how can any activity by a single provider - government - suddenly work? It doesn't, it just leads to evermore government failure.

Is it self sabotage - or just realistic - to look at government failure as a natural outcome of government activity? As Lord Action astutely observed:

"Power corrupts, and absolute power corrupts absolutely."

Food for Thought

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"Life in general has never been even close to fair, so the pretense that the government can make it fair is a valuable and inexhaustible asset to politicians who want to expand government."

- Dr. Thomas Sowell, African-American economist, University Professor, syndicated columnist, prolific academic author

"Politicians don’t want any type of constraint on their ability to buy votes with other people’s money."

- Dr. Dan Mitchell, highly esteemed free-market economist at the Cato Institute

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