The Problem With Government Intervention

October 28, 2009

A nice summary of why the burden of persuasion ought to rest against governmental involvement in private business:

The essential problem is that very few people spend other people’s money with anything close to the same degree of care and efficiency that they spend their own. This is particularly true of the sort of narcissistic, superficial individuals who are drawn to careers in politics. In the immortal words of PJ O’Rourke, giving money and power to politicians is like giving car keys and whiskey to teenage boys.

Couldn’t have put it better myself.

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3 Responses to “The Problem With Government Intervention”

  1. padraic2112 Says:

    You’re missing the previous line, “The government is an economic actor, it’s just a crude and extraordinarily inefficient one.”

    But it’s definitely true that in particular scenarios, the government is neither crude nor inefficient. These cases have a marked tendency to overlap with the conditions when people spend their own money with a lack of care and efficiency.

    I grant you that often times top-down designs can be wasteful, as they can be overengineered. However, bottom up designs can lack coverage and are subject to the irrationality of the market, where people would rather buy a new Care Bear for their 5 year old because it’s the “hot new toy” instead of buying a suitably equipped disaster response kit.

    I’m all for private business models whenever they work well. I think far too many people who promote private business models ignore the drawbacks of the approach.

    There is no perfect solution to all societal problems. The belief that this is the case is a persistent problem on both the left and the right.


  2. I’m actually not a defender of corporations like the Republican Party is, so this isn’t really a left/right issue for me. My political/social beliefs stem from my confidence that human beings are fallen. Each of us is prone to dispicable evil. Corporations are no exception, and just as I want strong criminal punishments on individuals (for behavior deserving of public punishment), I want tough punishments on corporations where they deserve it, and that of course will require governmental regulation (which, I think, is different than “intervention”). So I’m not speaking on behalf of corporations as though I like them (more often than not, I don’t).

    In fact, I was recently toying with a post on whether we should have corporations *at all*. Corporations are a fiction created by government. If we took them away, businessmen would be resigned to partnerships, which would mean somebody has personal liability for the actions of the partnership. No more corporate veil. That might curb some of the abuses we see by corporations, but it would have other implications that are worth exploring.

    Sorry for the tangent, but I say that as a way to introduce the crux of the issue: power should be diluted. If government must own, let it be local government whenever possible. If people are irresponsible with their own money, are they going to be careful with another person’s? Or all society’s money? Or will they be selfish? I think the latter.

    You may note examples of the government spending money for people more wisely than they would spend for themselves, but that’s no justification. In fact, it’s a bad precedent.

    I, personally, could steal a homeless man’s money and buy food and shelter for him, but (setting aside the issue of theft) that’s really his responsibility. I might make a better decision than him, but there may come a day where I make a mistake (I could unknowingly send him to a dangerous shelter, or worse, I could be tempted to buy unhealthy food on his behalf from my friend’s local food store). Eventually, I could make him my servant so I can “take care of him”, and then later my slave (what choice does he have? I took his money…). The temptation to take advantage of him, combined with the power, will likely one day overpower me in one way or another.

    Sure, if we severely limit government ownership, it means some people will end up worse off because they can no longer live on the government’s “favors,” but that’s better than putting everyone at risk of an irrepairable disaster. History provides us no shortage of examples.

  3. Pat Cahalan Says:

    > In fact, I was recently toying with
    > a post on whether we should have
    > corporations *at all*. Corporations
    > are a fiction created by government.

    I’d love to read this. For the record, I also agree that the current incarnation of “corporation” unnecessarily abstracts responsibility from power, and in a way that enables poor consequences.

    I agree, as well, that this can be the case for government.

    That doesn’t mean, however, that I ultimately agree that either is in and of itself a broken model from a foundational standpoint, as both have advantages as well. Any analysis of the value of abstracted responsibility has to take into account positive cases as well as negative ones.

    > If people are irresponsible with their
    > own money, are they going to be careful
    > with another person’s? Or all society’s
    > money? Or will they be selfish? I
    > think the latter.

    I honestly don’t know if this is generally the case (witness the outpouring of donations from the private sector to the tsunami flood victims a couple of years ago, which is certainly unselfish behavior)… but there are a number of factors here.

    I grant you that government waste is an inherent property of government, just like corporate waste is an inherent property of corporations. For a real cost/benefit analysis, we’d have to compare the wastefulness of the waste with the benefits of the abstraction of responsibility.

    Individuals can be wasteful. If society is truly built upon individual responsibility, wasteful individuals carry the burden of responsibility for their waste directly, which provides a serious disincentive for the behavior. This may be a self-correcting problem.

    However, we (humans on the whole) don’t build societies this way, from the first tribal nations on up. In addition to individual responsibility, we have family responsibility, clan responsibility, tribe responsibility, civic responsibility, and so on. And as such, *any* successful family protects some of its members from bad consequences, *any* tribe does the same, and so on.

    Any of those meta-constructs can in turn be irresponsible and/or wasteful. There are various checks and balances on this depending upon the society in question. These work to a greater or lesser degree depending upon the society in question.

    > I, personally, could steal a homeless
    > man’s money and buy food and shelter
    > for him, but (setting aside the issue
    > of theft) that’s really his
    > responsibility.

    I can only accept this characterization if it is shown that all people begin with the same opportunity, and that’s clearly not the case (and usually we’re not collecting money from the homeless man to help him out, we’re collecting money from non-homeless people). Otherwise, we have institutionalized advantages, where the only difference in “institutionalized advantages” is in the particular abstraction layer (you were born to rich parents who feel an obligation to help provide for you, vs you were born into a rich society which feels an obligation to help provide for you, or a rich tribe, or whathaveyou).

    I don’t necessarily have a problem with “try to focus these meta constructs as close to the individual in question” as a general approach, but I do think that there are certain problems (regional-wide disaster preparation and national military, for two examples) that don’t warrant this approach, for similar reasons.


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