Government Efficiency

I recently criticized the idea that policymakers should focus their attention on making government more “efficient.” Instead, I argued that policymakers should focus their reform efforts on reducing government’s size.

Government efficiency proponents make the mistake of viewing the cost of government in the same light as the cost of operating a private business. However, government cannot operate like a business because it isn’t a business.

Private businesses obtain their revenue through voluntary exchange: consumers willingly give a business their money in return for a product. Businesses must control the cost of providing a product in order to maximize profits. A business that does not adequately control its costs can find itself undercut by a competitor offering a like product at a lower price. In the private sector, the market sets the price of a product through the interaction of supply and demand.

Government is unconcerned with “profit.” The “cost” of government is equal to the taxes extracted from the private sector to pay for government activities, plus the economic damage caused by extracting resources from the private sector. Taxes are involuntarily obtained through compulsion and force. Regardless of the value a citizen assigns to the services provided by government, a citizen must pay for those services, and at a price set by government. The price one pays for government is primarily a function of political factors, which are only indirectly influenced by economic considerations.

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A Government-Made Recession

By mid 2008 almost everybody knew that we were in deep financial trouble. But the forces that brought it about actually began decades ago with The Community Reinvestment Act in 1977. This legislation “forced lending institutions to grant mortgages to people whose income, credit histories, and net worth would previously have disqualified them from getting such loans.”

An old adage suggests that in getting a loan from a bank the recipient must first prove that he does not need one by listing his assets. The bank uses this list to retrieve all or a portion of what is owed should the recipient default on the loan. The less invested or potentially lost the easier it is for the recipient to walk or default. Such is long standing wisdom and favors the more industrious individuals, as it should. What this means in real life is that high crime or impoverished areas of town do not attract investors as readily.

Socialists (share the wealth advocates) saw a race connection, thus injustice, when it was realized that “only 72 percent of minority applicants were approved for mortgages, versus 89 percent of white applicants.” Moral outrage followed which was resolved by legislation ”forcing lending institutions to loan money to people they would otherwise not lend to and in places where they would otherwise not put their money” (“Government Bailout,” The New American, Sept. 29, 2008, pp.11-15).

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They Will Never Pay Off This Government Debt

From an article by Vin Suprynowicz: If I invoke the phrase “Greek debt crisis,” do your eyelids start to grow heavy? Do you somehow find it difficult to summon up a fresh wave of outrage if someone mentions that when Barack Obama’s National Commission on Fiscal Responsibility and Reform (better known as the Democratic Tax-Hike…

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Should the Government Promote Fishing?

A Cato essay on special-interest spending explains how many federal programs deliver subsidies to particular groups of individuals and businesses while harming taxpayers and damaging the overall economy. A major reason why spending has spun out of control in Washington is that thousands of special interest groups have secured a slice of the spending pie,…

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Bubble Mentality: Rinse and Repeat

I read both of these stories back-to-back in recent editions of The Detroit News. Story #1 on the theft of electricity: On a recent sunny morning, Mark Johnson, head of DTE’s (Detroit Energy) revenue protection unit, drove through east-side Detroit neighborhoods pointing out illegal electric hookups. At a complex of 12 apartments on Whittier in…

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Centralizers vs Tenthers on the Economy

“If only D.C. were more like Bejing!” In an article that could have easily been entitled “Abolish the States,” Harold Meyerson of The American Prospect, laments the ways the states have prevented the bureaucrats in D.C. from centralizing even more power. Why? Because the states aren’t draining wealth from their citizens fast enough as the…

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No Liberty with Negative Equity

Individual liberty cannot exist in a country where un-funded obligations, plus its current debt, surpass the total value of all private assets. This is an immutable law of nature and is the condition that exists today in our country. Approximately 12 trillion debt (source U.S treasury), 14 trillion Social Security obligation, 18 trillion (Rx Drugs)…

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