4/23/13

Why Government Programs Almost Always Become Corrupt and Wasteful.

Obamacare, objective observers said, would be a financial disaster, and it looks like they were being optimistic.  It was an easy call. Government programs have a long history of being “sold” with cost projections far below what the actual costs turn out to be and, sure enough, Obamacare cost estimates have risen 40% from only two years ago.  There will be more to come.

There’s precedent. When Medicare was enacted in 1965, the 25 year cost projection was $9 billion. The actual 1990 cost was $67 billion. Are these cost underestimates intentional? I think so. Proponents know that once in place, such programs are almost impossible to eliminate.

This is because government programs quickly develop political constituencies and economic clout, ensuring their survival, often long after their purpose is fulfilled. The “war on poverty” for instance, now spends over $60,000 per year on every “poor” family.  Most of the spending, of course, is on the warriors, not the poor.

Because government programs are almost always monopolies, the discipline of competition is missing. There is no need to economize, innovate, or to be particularly concerned about putting customers first.  The Post Office would not exist if it faced open market competition.

On a personnel level, government bureaucracies always become overstaffed with highly paid, impossible to fire bureaucrats, whose number one job is to preserve their job, regardless of what the original mission was. The best way to do that is to make sure their “mission” gets bigger and more popular.

As Ronald Reagan, once observed, “Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!”

Many of our government programs have outlived their usefulness. Some are trivial, like the mohair subsidy started in WW I to ensure enough fiber for military uniforms. Others are not so trivial. The Environmental Protection Agency is a prime example of the latter.

Our environment is essentially cleaned up, and the EPA should be little more than a monitoring agency, but there’s always a few more parts-per-million of something to be removed from the air or water, cost benifets be damned, or there is an old problem to resolve with new regulations, such as storm water runoff. Or, joy of joys, along comes a brand new “pollutant’ that the EPA must regulate to save mankind, e.g. carbon dioxide.

As Captain Red Legs Terrill said in the movie, “The Outlaw Josey Wales“:  “Doin’ right ain’t got no end.”

Other agencies and programs that come to mind as no longer needed or that have proved to be downright toxic, are the EEOC, the entire Departments of Energy, Education, and HUD, the Farmers Home Administration, the Small Business Administration, and on and on. Of course, each of these programs has dedicated employees and ardent supporters.

Probably the biggest problem with government programs is that politicians can’t resist fooling with them. Social Security is a perfect example. In 1961, it was apparent that life expectancies had been steadily rising in the previous twenty years, and it looked like the trend would continue. Plus, the post WWII baby boom was going to put a lot of people onto the Social Security rolls in 50 years.  What to do?

By a vote of 399 to 14, the House voted to allow early retirement at age 62, precisely the opposite of what they should have done.  After all, the problem was fifty years down the road, let’s get reelected now!

Guess what?  It’s 50 years later.  Ironically, people often cite Social Security as an example of a SUCCESSFUL government program, which is like celebrating the Titanic at twenty-one minutes to midnight, April 14, 1912, right about the time the Officer of the Deck was saying, “What’s that?”

The GI Bill and Social Security Disability are two more programs often cited as being proof of the good things government can do. In spite of my Libertarian leanings, I tend to agree, BUT each of these programs also  illustrates the inevitability of  political meddling.  The GI Bill morphed into the student loan program, which has grown into a TRILLION dollar debt problem.  Lots of indebted history majors out there with NO job prospects

Similarly, Social Security Disability Insurance has turned into welfare-on-steroids, with the number of people in the program recently exploding way beyond any justifiable level. It’s a national disgrace. Furthermore, even at it’s best, the SSDI has its dark side.  I had a good friend, recently deceased,  who went on SSDI in his late forties because he suffered from severe narcolepsy.  I once asked him, if he could wake up tomorrow completely cured BUT no longer getting his government check, would he do it?  He said, “I’d have to think about it.”

There can certainly be “too much of a good thing.”