Some people may not know it yet, but with most of our social and economic problems government is too often the culprit. Twenty years ago the late, great American economist, Milton Friedman, wrote an essay titled, “Why Government is the Problem” published by the Hoover Institution at Sanford University (www.hooverpress.org). Dr. Friedman, a distinguished academic economic scientist, also wrote on the applied politics of public policy. Friedman’s primary philosophical principle focused on individual freedom (his little blue book, “Capitalism and Freedom,” University of Chicago Press, 1962 is one of my favorites).
The text of his government problem essay, he says, left him with the easy task of demonstrating that “government is the problem,” and the difficult one of explaining why. He describes a great political dilemma: If a random group of people outside the Capital were to replace those currently in power, “our policies would very likely not be improved.”
I’ve come to that cynical conclusion after working for more than 50 years within local, state and federal governments, and studying the failings from without; although hopeful signs appear with the election of true conservatives to state and federal offices. North Carolina now has that opportunity to reform and reduce excessive government; a result of recent elections.
Many citizens have been frustrated with what Friedman describes as activities that “provide substantial benefits to a few while imposing small costs on many.” George Bernard Shaw (a Socialist) said it more pointedly: “A government which robs Peter to pay Paul can always depend on the support of Paul.” Examples used by Dr. Friedman have expanded since his essay.
In the first five or six pages of his essay Friedman shows how government has created problems in every sector of our society: Education (the largest “socialist industry” in the U. S.); crime (too many laws); homelessness (emptying mental institutions and creating public housing); family values (mistaken and misdirected government policies); housing (rent control, building regulations and zoning laws); medical care (accelerating costs in Medicare and Medicaid); financial system (inflation and poor regulation); highway congestion (government not able to create a highway system to keep up with the auto industry production of vehicles people want to drive); airports (bottlenecks caused by government-run facilities).
Dr. Friedman also mentions “botched economic policies,” over-regulated industries, tariffs and quotas, affirmative action, agricultural subsidies and wage and hour laws.
Friedman says it’s tragic that “government is doing so many things it ought not to be doing.” He challenges statists to “name any corresponding set of major problems that afflict our society that derive from private industry”—even pollution. For example, he cites the Clean Air Act. “It will clean the pockets of industry far more effectively than it will clean the air.”
So, why does government cause all these problems?
Dr. Friedman believes it’s rooted in the influence of special interests. He cites an example of taxicab regulation in New York City. Existing taxi companies lobby to keep government permission to drive cabs limited and expensive. Although customers would probably have better service without city restrictions, none of them would spend time lobbying to eliminate the arbitrary limitation on “medallions” that signify permission to operate a cab; at that time worth $100,000 and $125,000 each.
But there are other reasons why government has the inevitable problem of being much less efficient than private enterprise. We all have strong self-interest; a good thing because it’s what motives us to protect ourselves and to improve our lives. Obviously, it’s irrational to act against one’s personal interest.
Further, as Friedman explains, there is no difference between people who work in government and those who work outside in private—all have the same incentive: “to promote their own interest.” This truth dispels the notion that “public servants” act altruistic compared to the rest of us. Recent public employee reaction (sometimes violent) to news of legislative reductions in benefits and curtailing union coercion illustrates this characteristic.
Friedman explains that “self-interest is served by different actions in the private sphere than in the public sphere.” I cringe when people say government should be run like business. It can’t because the “bottom line is different,” says Dr. Friedman. If a private business fails, the people that own it lose their money. Except for government-subsidized enterprises (mass transit and ethanol production are expensive examples), private business owners must make their ventures financially succeed or go out of business.
In government activities that fail, employees aren’t accountable for mistakes. They blame failure on not having enough money. Further, they have seemingly limitless amounts of revenue that can be taken from other people. Friedman states the “general rule”: “If a private enterprise is a failure, it closes down—unless it can get a government subsidy to keep it going; if a government enterprise fails, it is expanded.” He challenges us to find exceptions.
To the average American citizen I suppose this sounds silly. For those who haven’t worked with government it’s probably even unbelievable. How could responsible people let this happen? Well, believe it or not, that’s the way it is. Worse, this is the way government at all levels, local, state and federal works. It explains why government is the problem.