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Government failure



Quote 607

There is a bias toward policies with immediate, highly visible benefits, and deferred hidden costs, myopic policies for myopic voters. Special interests induce coalition building politicians to impose small costs on the many to achieve large benefits for the few.


Government failure is the brother of market failure, and the reason we have a market at all. There are some things Government cannot do well.

Government provides solutions for things that are not problems.
Informal organisation is important in societies . State control destroys this.


Quote 1040

“As Public Choice scholars pointed out, the people who make public decisions are, in fact, just as self-interested as anyone else.”

   --  Dr Eamonn Butler


I do see a perception from a few here that government must somehow be a part of a solution. "How insidious the detrimental parasite that convinces the host of its necessity".


Quote 1057-8

“Market transactions are voluntary: either side can walk away from the bargain if they do not like the terms on offer. But politics has to be coercive: once the collective decision has been taken, everyone must abide by it, even if they are unhappy about it.”

“Force and the threat of force are never desirable, even if the cause is just.”

   --  Dr Eamonn Butler


We have a ponzi economy, like Madoffs company, seems fine for a long time, but really the forces of destruction are building.

Quote 1036

“This self-interest operating in the political system will lead to ‘government failure’, which can be far more serious than ‘market failure’ because of the coercive power that government exercises and because government is not subject to a direct competitive process.”

   --  Dr Eamonn Butler



Governments and govt departments traffic in human misery


  • Government creates moral Hazard
  • Socialises losses
  • No one cares about the risks taken
  • Politicians are unlikely to do what would make them feel unnecessary.
  • Governments put costs on the credit card
  • Government sometimes rules by fear
  • When government fails to provide quality services, letting them define what quality is, is laughable.
  • Government interference quite often stifles competition and creates a one size fits all solution
  • People see problems in terms of lack of regulations
  • The government commits fraud, just think of all the lies they tell us about social security and the lies the politicians tell us at election time.
  • The government can't run the banking system, they can't even run the post office.
  • You will go broke if you take your advice from any government. (Jim Rogers)
  • State diminishes human beings.
  • Trust has broken down between state and public. 
  • Risk adverse government based on no evidence. 

Government underplay their involvement in crisis's

  • If something goes wrong and its the governments role to make the regulations. The government blame the thing that went wrong, but don't admit they didn't make the regulation they should have.
  • If something goes wrong and it is regulated, the government say they need more regulations and blame what went wrong. They don't admit they were incompetent to make the regulations properly the first time.
  • If government make a regulation that causes things that go wrong, they still blame the people that carry out those regulations and say more regulation is necessary to stop the bad effects of the first regulation.
Then they expect us to trust them when they make regulation.

We need more humility in government and political systems that are better designed.

Interference in contracts


The right to contract is the foundation of the economic system. If we knew that the the other party in the contract would not comply because of government intervention, the contract would be useless.

Why it can't work


They can't pave the roads, they can't stop drug use, they can't wrap up Afghanistan or Iraq, they can't control the climate of the Earth and cow farts, they can't check every home for efficient light-bulbs and proper fixtures, they can't make sure everyone is healthy, they cannot manage the economy, but this is what they are attempting to do all at the same time

From EA magazine

Those in government suffer a knowledge problem and an incentive problem when it comes to designing intervention. Even if  the intentions behind general well-being policies are benevolent, how will the government know what aspects of well being to    maximise and by how much? In addition Government officials face perverse incentives in both designing and implementing policies
It means narrowly focused special interests can successfully have their agendas passed and legislators garner support for these groups in exchange for supporting future votes benefiting other narrow interests.

Rent Seeking


Quote 1069-74

“far from the public policy process being superior to the market, rent seeking massively distorts public decisions, and in turn distorts markets and reduces competition in ways that benefit certain groups but substantially injure the general community” “Rent seeking is the attempt by particular groups to persuade governments to grant them these sorts of valuable monopolies or legal privileges. If their rent seeking is successful, such benefits could add up to a substantial transfer of wealth to these privileged groups from the general public. Consumers and taxpayers lose financially as a result of the monopoly prices, but also lose in terms of the reduced choice and lower quality that they have to endure too” “And the larger the size of the public sector, or the more complicated the tax or regulatory structure, the greater the opportunities for rent seeking – so the larger this potential loss becomes. Companies, individuals and groups are likely to be prepared to invest almost as much in rent seeking as the ‘rent’ that they will get if they succeed.” “public have another corrosive effect too. If people figure that their earnings, savings and capital earned through their own hard work can be prised from them (in taxes or monopoly prices) by rent seekers, they will be less willing to work hard and save in the first place.” “Rent seeking also corrupts the political process. The prospect of extracting large benefits through rent seeking encourages groups to trade votes and support in order to make it happen.” “But the best-paying customers will be small groups with concentrated interests, rather than the uninformed and diffused mass of the public. For that reason, politicians focus on the demands of well-organised, loud interest groups, and often give in to them – perhaps calculating that they can persuade the apathetic and uninformed public to go along with the decision.”

   --  Dr Eamonn Butler


Also see bureaucracy

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