The Myth of Government Dependence

One of the biggest reasons that our government is inefficient and unproductive can be explained in very few words: people think we need government for too many functions.

If you ask someone to list all of the civil services that the government should perform because no one else could be trusted to do them well or because all citizens had a right to free access, it would probably include many MANY entries…here are a few of the most common:

(Cut for length.)

  • Postal Service
  • Sanitation
  • Public Transit
  • Road Maintenance
  • Free Health Clinics
  • Social Security Safety Nets
  • Medicare
  • Disability Support Services
  • Weather Prediction and Threat Assessment
  • National Defense
  • Law Enforcement
  • Emergency Management
  • Public Broadcasting
  • Federal Reserve Banking and Capital Insurance
  • Environmental Protection and Conservation
  • Scientific Research Funding
  • Public Education
  • Immigration/Naturalization Services
  • Weapon Registration and Monitoring
  • Electrical Power Distribution
  • Consumer Protection
  • Diplomacy
  • Tariffs and Taxation
  • Low Income Housing Services
  • Job Placement Training
  • Unemployment Protection
  • Probate Legal Counsel (Public Defenders)
  • Child Welfare and Protective Services
  • Planned Parenthood / Female Reproductive Health Service
  • Credit Reporting and Monitoring
  • Tax Assistance
  • College Tuition Support
  • Occupational Safety (Regulatory efforts to protect workers from dangerous conditions)
  • Food Stamps
  • Food and Drug Safety
  • Agricultural Assistance (maintaining our food supply)
  • Space Exploration and Communication/Satellite Maintenance

There are probably others I’m missing…the point is that it becomes a GIANT laundry list.  We are now so institutionalized in our thinking as a society that when someone suggests privatizing any service currently run by the government there is a HUGE knee-jerk reaction that this person must not care about that service and want it to cease to exist.  The fact of the matter is, if you look down this list, and you ask “has this job been tried in the private sector at any point in our history or in any other nation?” the answer will almost always be yes, and the service in question will almost always have been just as well-performed (possibly even superior) and more cost-efficient.

Let’s give some examples:

POSTAL SERVICE: UPS, Federal Express and a few other start-ups have crowded the market with alternatives to regular post in this country and this is actually one of the few nations around the world to rely for a very long time exclusively on government run mail service.  A friend of mine routinely orders artwork and electronics from outside the US and has tried a number of ways to receive his merchandise.  He reports that the US Postal Service (USPS) takes three to five times as long to deliver his packages as FedEx and FedEx offers tracking information that’s actually helpful (rather than vague regional distribution addresses and estimates for arrival time) for about the same cost to him.  Of course, this means that in his case, FedEx is more cost efficient because it requires no government tax subsidy to keep prices that low.

You ever wonder why you get so much junk mail?  You know why millions and millions of us get ValPak coupons and credit card offers by the dozens?  The government actually gives snail-mail spammers very large subsidies in the form of bulk-rate postal service buying power.  They get to mail their tree-killing garbage around the country for cheaper, because the USPS desperately needs that paper circulating to stay anywhere close to solvent and to keep its’ standing army of 500,000 union workers busy.  Short of that, the spam industry would be far less profitable and they would shift their advertising burden to less wasteful video and radio media.

But I’m sure someone out there will say “but wait a minute…if the USPS has 500,000 people employed and you want to divest it to the private sector, wouldn’t you be putting 500,000 people out of work?  Another friend of mine had a father who used to work for the post office.  As circulation dropped in the late 2000s, he became superfluous, but union contracts prohibit him from being fired for lack of need, so he was paid $52,000 a year to sit on his ass in a break room for nearly three full years.  To be fair, the Post Office has actually reduced the amount they waste on inactive employment, but that number should be ZERO…not 5 million smackers per year (about 100 inactive employees at any given time…they get rotated if they’re lucky).  The world is changing…paper mail is obsolete in most cases and even if it weren’t, the private sector would more accurately determine how many postal workers we need and the rest would be gainfully employed elsewhere (in a market freed to expand employment with less costly government controls).

SANITATION: It’s actually a bit of a misnomer that government directly provides sanitation services.  What they do is contract those services out to the private sector (and they generally do not base their decision on which company to hire for the job on the company’s cost efficiency and quality of service, but rather on which company is most useful to the politicians in charge).  Do we really imagine that if the government simply refused to write checks for public sanitation starting tomorrow, the private sector wouldn’t step out of the middle-man shadow and directly offer their services to individual customers for a fair price?  I think the average American – if his city did not contract out sanitation services – would cut out the middle man and hire a company to pick up his garbage…and hey, guess what?  If the service sucked, he’d have the ability to choose someone else!  Right now, we have government-enforced regional monopolies…each city hires the trash-men it chooses based on political expediency and we have no choice but to pay for that service through city taxes, property taxes, and local sales taxes.

SOCIAL SECURITY: This may come as a shock to some, but…with the market as poor as it has been the last few years and the Fed lowering interest rates to practically nothing (which means investing in government bonds is less profitable now than it was a decade ago)…the base (the rate of a treasury bond) STILL got outperformed by the Dow Jones Industrial over the last decade – look it up.  Our Social Security account – the one all of the financial gurus say will be empty in less than thirty years if we do not act to strengthen the solvency of the program – gains in value at the government bond rate.  If you don’t get tunnel vision and look only at the most recent few fiscal years, you realize that…following what is nearly a worst-case scenario for market investment, we would still have been better off in the long run investing social security funds in the generic stock market portfolio than we would have been trusting the government.  All the grandiose fear mongering regarding the dangers of entrusting our elders’ future safety to the private sector is nonsense.  If we privatized social security…handed the maintenance of that system to an accounting firm, they would probably beat the Dow Jones Industrial’s growth rate anyway…if you fail to do that, you fold in the world of investing.  Don’t believe this is true…look at Argentina.  A smaller population with less of an age skew to be fair (we’re very old…as are most western societies), but Argentina privately invested its’ retirement security mechanism some time ago and they’re in much better shape than we are.

WEATHER PREDICTION: Although I maintain that everyone has a right to unlimited access to atmospheric data (because you can’t own the sky, nor the data that describes the sky…that’s a bit like selling all land to the highest bidder…and that has come with all kinds of impediments to freedom), and that, therefore, the government should indeed maintain a network of observing equipment and a data collection that is free to access, I don’t believe that weather forecasts benefit in quality by making the forecasters accountable to no one.  AccuWeather and other private weather consulting and forecasting firms get ridiculed in the public sector, but the fact is that AccuWeather produces forecasts of at least equal skill to the National Weather Service and costs the taxpayers not one red cent unless they want access to those forecasts in detail.  They don’t even charge for your basic point and click information…you can get that for free.

They are not allowed (U.S. law forbids it) to issue warnings about severe or dangerous weather situations under the theory that if multiple outlets issued warnings, the public would be confused about how to respond, but you can bet that if they had that power, they would be DEEPLY incentivized to give accurate warnings or fail as a business, giving way to someone more skillful, and you have better believe that they would be driven to make forecasting their priority, rather than public relations.  Currently, at the NWS, each shift has about 7 hours to make a forecast, of which 3 are taken up with equipment maintenance and support, 3 are taken up with either training or phone conversations with media sources (this is particularly problematic during a weather disaster when we most need the forecaster’s eyes to be on…um…the weather) and ONE…is actual forecasting.  They are instructed to look at as few sources of information as they can while still getting a clear picture of what’s happening in their minds.  They are often forced to quickly glance at the models and choose some blend of the model gridded output statistics as their forecast even if they know there is good reason to doubt model consensus because there isn’t time to make a proper forecast.

Even my more conservative friends in atmospheric science fall into the government trap.  They believe that only the government can speak with a clear enough voice that the average American will understand their warnings and take the appropriate actions.  They believe that private sector meteorology is beset by alarmist hyperventilating and sensationalism just as the mainstream media is because sexy weather sells.  They even believe that the only way to improve the communication of weather forecasts to the public is to actively ban private sector forecasts (because they feel those forecasts contribute to the impression that meteorologists are often wrong and can’t agree with each other about the right forecast in a crunch).  To this, I would say that the UKMet office is privatized and following the privatization of the UKMet office, their forecasts (at least on the weather front, if not on the seasonal climate front) have greatly improved and at much reduced cost.  The public still has free access to the forecast because it is sold to media outlets (because if the media outlets don’t buy it, they lose ratings) and because the Met Office still feels it important to provide basic weather information to the public via their website.  Competition has improved even the NWS.  Early in its’ history, the Weather Bureau (as it was then called) was utterly under siege by corruption and laziness.  The advent of public media forecasts (the news media began employing weather forecasters who were independent of the bureau) forced the NWB to reform and improve.  They are now an unquestionably impressive operation, though there are still large inefficiencies in their approach that do not exist in the private sector.

And as for the claim that severe weather warnings would be confusing if different outlets issued different warnings, I would submit that the public would have a MUCH better understanding of the uncertainty associated with weather prediction if they could actually see a variety of forecasts.  We are constantly complaining in my field that John Q. Public expects a precise and accurate forecast and doesn’t understand that the atmosphere is chaotic, making such things impossible at longer forecast time scales.  Don’t you think the average citizen would start noticing if there were seven private companies, all issuing independent forecasts and most of the time, they started to look similar about two days before the forecast time?  Don’t you think they’d begin to appreciate that some events are more predictable than others (if, for example, all seven of the forecasts out there for public consumption were similar much earlier than normal…they might naturally have more confidence in that forecast)?

FOOD AND DRUG ADMINISTRATION: This one kills me…often, a potentially wonderful drug is kept from the market for fifteen years because 1% of lab rats had something bad happen to them.  Yet we know that like 25% of cigarette smokers have something bad happen to them eventually (maybe the rate is higher) and we accept that people have the right to make a choice about whether to take a risk and must live with the consequences if it bites them in the lung.  Part of the reason drugs cost so much is that development costs include a RIDICULOUSLY laborious testing procedure…all because the public sector decided that one person dying because they took a drug that might be dangerous was intolerable as compared to the cost of making everything about healthcare ten times more expensive than it should be.

I can certainly respect an honest desire to save lives from dangerous food and drugs…and I do think there is a need to make sure our food and water supplies are safe…but I believe that millions of people around the world are suffering and dying while the FDA works ery hard to make sure that drugs cost a gazillion dollars and take twenty years to pass all its’ tests in defense of a handful of lives that could be lost if the drug is approved for use too quickly.  There’s something wrong with that picture.  And I don’t think a private corporation’s quality assurance policy would be as expensive to implement or any less effective at screening out dangerous drugs or tainted food.  The Q/A at Ford’s assembly plant was fantastic as early as a few years after mass production began on that Model A (and later…Model T).  If you make a product that kills people, your business fails.  There is ENORMOUS pressure to make sure your product is safe and effective.  That would apply to drug companies with or without the FDA.  Perhaps moreso without.  Because WITH the FDA, we have drug companies intentionally puffing up the products that they know aren’t any better than previous products because they’re safe enough to pass inspection by the FDA and are the only things that will make them enough money to fund their real drug research.

UNEMPLOYMENT INSURANCE: What if, rather than handing out free money to people who needed time to find a job…we asked them to buy insurance to cover them in a crisis?  That would do two things.  First…it would make the length of support subject to market forces, rather than arbitrary decisions in Washington.  If the massive insurance tables told a company that it couldn’t afford to promise more than 12 weeks of benefits to its’ subscribers, then that would be the limit.  If the statistics provided by the actuaries concluded that people between ages 20 and 30 were bad investments, their premiums while employed would be higher, forcing the burden of paying for youthful unemployment to their parents (because parents wouldn’t be ignoring the needs of their children) or to emergency fall-backs by the government for children without legal guardians.   The government could even require that all children over the age of 18 be covered for unemployment insurance by their families if they have the means.  Either way, making the people who need the insurance pay for the coverage would drastically shrink the tax burden on the rest of Americans.  Second…such a model would put a lot of pressure on kids to grow up when they went off to college…force them to stop living like bohemians, get the credentials they need to get a job, and then get jobs, rather than tooling around Europe for a year “finding themselves”.  It might even incentivize parents to take an active role in fostering the interests and education of their children and turning those interests into productivity.  Because if their kids grow up to be flunkies…they have to foot the bill, either by paying huge insurance premiums to keep their kids covered or by having those kids return home when they haven’t gotten a job.

Of course, even this plan requires a government safety net for those who fall through the cracks…but it makes the cracks a hell of a lot smaller, creates a HUGE insurance industry, and puts the burden on us to do something with our lives or pay the price.  I’m all for that.

Now…not all of the things on my list are unnecessary government spending.  But there is a simple “first principle” that can be used to test whether a government service is needed.  We must ask ourselves whether the service in question serves our interest better if run competitively for profit or if run as a non-profit entity.  Non-profits don’t benefit from competition…they serve a demand that is not best met through competition and capitalism.  A few examples:

There is a HUGE danger if you privatize the military – national defense done for profit would greatly risk the country’s diplomatic efforts, compromise the trust the world places in our political leaders to be speaking for our armies (i.e. you need to know that when the President and Congress say we’re not going to war…our Army will obey).  And there is a cultural threat as well.  If people from the normal citizenry don’t routinely serve in the military, their respect for that service will falter (as it is beginning to do here in the US where even with a public army, there is a growing trend toward career warriors…people who see the military as a career opportunity, not as a sacred civil responsibility).  Or worse…there is the threat that the Military itself might come to think of itself as a class of people with their own interests separate from the will of the remaining public (this is how military coups start).  This is the most powerful argument in favor of the draft being reinstated.  I am not certain we need to go that far, but I know I don’t want to see us contract out our warfare.  Diplomacy falls under this banner as well.

Law Enforcement absolutely must be as impartial as possible and accountable to the people.  I have no problem with contracting for basic security and even prison maintenance, but the thin blue line must remain public domain and immune to capitalism.  Competitive practices in law enforcement threaten to place a corporation in charge of the Mafia…can you imagine how ugly that would be?  If any Batman movie.  Or…just go to Columbia, where the cops are private employees and the corruption is enormous.

You might think I am about to argue that science cannot be swayed by capitalism.  You would be wrong.  I think the enormous arm-twisting and biasing of the research that goes on in the public sector to produce answers that are politically convenient is just as dangerous as the arm-twisting that occurs in the private sector to produce answers that are profitable.  Climate science is a particularly egregious example of this, but it’s far from the only example.  Tying science to politics is just as dangerous as tying it to the almighty dollar…except that when it’s tied to money, at least if it turns out to be wrong, the company sponsoring it will lose money.  If the government is wrong (like they are about salt as a bad thing to have in your diet or the virtues of birth control on demand), it can simply hand wave…”oh well whatever nevermind” and move on…never paying for the damage they’ve done in the process of being wrong for political and financial gains.

Environmental protection – within reason – is a public good and we have a responsibility to do it where it makes sense.  The EPA has gone absolutely BONKERS lately and it’s costing millions of American jobs and billions of dollars.  But turning over environmental protection to the private sector didn’t work much better for us a hundred years ago.  Many environmental hazards are subtle…they don’t jump right out and smack you.  The public cannot be expected to drive market forces that back a clean atmosphere and clean water and biodiversity.  Some amount of oversight is needed to push those interests forward.  But that oversight should be audited regularly to make sure the regulators don’t lose perspective.

See…all you need to do is ask yourself…would competition make this service better?  And if you’re honest with yourself and you answer “yes”…then the government shouldn’t be doing it.

That does NOT make me anti-science, uncharitable, mean or racist…the charges often leveled on proponents of privatization of a government service.  I want almost all of those listed services to exist…but I happen to believe that many of them would be better suited to the private sector than the public sector.  Let the market decide wherever doing so doesn’t put the good of the people behind the quarterly balance sheet in priority.  Following that logic would MASSIVELY shrink the government and in very short order.


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