Tuesday, September 21, 2010

Why government programs don't work very well

There is a very illustrative post of congressional testimony by David Colander at Coordination Problem.

What it illustrates is why federal government programs don't work well.

Facts as presented:
Economics today isn't very useful for policy decisions.
Economic research funding is driven by National Science Foundation government grants.
Government funding is driven by wake-driven, rear view mirror analysis by government anointed folks in the 'economics community' and bureaucracy deciding awards.
The awards go to like-minded thinkers studying topics that are known and can produce information for bureaucrats to use to gain additional funding for productive programs that help inform policy decisions - even if they don't, in fact, inform policy decisions because the research is wrong (for the purpose).
Economic researchers respond to the money and produce what is funded - even if it is wrong.
Therefore, economics today isn't very useful for policy decisions.

You could draw the same map for why healthcare doesn't work, why higher education doesn't work, why energy policy doesn't work.

Accurate reality: without real price signaling where people -even if they are bureaucrats with a budget to get something done (other than give away money) - have to pay with their own money for what they want - be a consumer rather than a third party creator of supply, they get what someone who doesn't have the same motivational stake to be right decides is good for them.

Ergo, federal government programs don't work very well.

The answer is to have as few as possible. This doesn't mean no federal government research, it means limited government research directed at research for those that really need something done on a particular topic - like the military in communication. This doesn't mean no federal government involvement in transportation, but it means that they should only be involved up to the point of national defense. Beyond that, they do not have the needs of a consumer, but are a disinterested third party striving for 'goals' and don't have the proper motivation to make good decisions.

For every complex problem there is an answer that is clear, simple, and wrong.
H. L. Mencken

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