moneyFYI
Financial Freedom Is Merely Organized Common Sense
Can Governments Solve The Problems of Society?
If we listen to election promises and the rhetoric of those elected, the answer is never stated that way, but the clear implication is they can.
If you listen to people who pay attention to what governments have accomplished in the past, There is not a chance they can.
Both positions are incorrect. That’s a fundamental disconnect that we should try to understand.
What governments can do well
Governments should create infrastructure where it is large, involves intersecting interests, is costly, and has not been done previously. In these cases private interests cannot because of overlapping jurisdictions, or will not, because the project is too risky, or too large to finance and be sure of recovering the investment.
Examples:
The St. Lawrence Seaway. The cost was enormous for the time. It involved the governments of Canada, the United States, several states and provinces. The cost recovery was unclear, and interest of private entities was limited to those who wanted to export their products.
The U.S. Interstate highway system. Without governments to do this, there was no practical way to proceed. How could a developer acquire the land needed? How would the interstate rules be addressed? Add to that the cost. About $500 Billion in current dollars. The value added was and remains immense, but difficult for a private developer to reap.
The military. Again an advantage, but costly, hard to finance, and difficult to attach a revenue stream
The system of laws and law enforcement People value predictability. Systems of law and order add to that. There is no clear revenue collecting method.
The exceptions
The Railroads in the late 1800s were costly, involved many jurisdictions, and emerging technologies. Revenue streams were clearly available though, because the need was large and both shippers and their customers wanted it. In their territory they were a permitted monopoly. Entrepreneurs could use their reputation to raise the money needed and could use their resources to acquire the necessary political influence.
The telephone and telegraph system in the late 1880s followed essentially the same pattern as the railroads.
Pipelines again are very similar to the others, but the large ones developed later.
Some airports. Dallas — Fort Worth development was lead by the Perot family in partnership with local governments, and others.
The key variables.
- Is it of great value to most of the citizens?
- If yes, can the developer capture a share of the value as revenue to pay for their investment. If not then it may be a worthy government problem.
Where the problem arises with government
Urgency, overreach, and impatience
“A mere enumeration of government activity is evidence — often the sole evidence offered — of “inadequate” nongovernment institutions, whose “inability” to cope with problems “obviously” required state intervention.
Government is depicted as acting not in response to its own political incentives and constraints but because it is compelled to do so by concern for the public interest: it “cannot keep its hands off” when so “much is at stake,” when emergency “compels” it to supersede other decision making processes.
Such a tableau-simple ignores the possibility that there are political incentives for the production and distribution of “emergencies” to justify expansions of power as well as to use episodic emergencies as a reason for creating enduring government institutions.” Thomas Sowell
Politicians, governments, and bureaucracies crave power for its own sake. They sometimes use hyperbolic rhetoric to frame the need for their services. They will use real emergencies to permanently enlarge their power. They often don’t let the market fix problems it could solve better. Impatience is the enemy. Needing to be at the front of a problem induces weak solutions.
Can you see any good in that?
What governments shouldn’t do
They shouldn’t do much because they cannot do so many things well enough or cheap enough.
Governments frequently make situations worse by attempting to provide value. Examine President Johnson’s War on Poverty comparing costs and benefits. Objectively, it didn’t work, but cost trillions.
There is a conflict of purpose between the government and the people. Usually governments want to expand their powers. We see that every day now. Beyond the obvious — systems of laws, national security, and some infrastructure, government power is not something the people value. When governments involve themselves with decisions outside their natural environment they tend towards inefficiency and error.
- Governments who think they are the answer to every problem tend to think from an ideological viewing point. That is antithetical to good problem solving. When you start with an answer and work towards a solution that encompasses that answer, resources tend not to flow towards the optimal solution.
- Government need money to do what they do. That money comes from the private sector and reduces the ability of that sector to solve problems.
- Governments can tip the scales in their favour by regulating alternatives they don’t like and subsidizing ones they do. Economies work on incentives and disincentives. Governments distort reality.
- Bureaucracies tend to do what increases their power and the likelihood of their survival. Creating the illusion that only they can solve a given problem does that, but at the expense of better solutions.
- Governments who want power instead of performance distort the messaging. That seems to be the key to covering up their inability to perform. When we look back at the USSR, if it had worked would they have needed the “Iron Curtain?” Of course not, they would have had open access so people could see their wonders.
Do governments create problems or amplify tiny ones, so they can appear to be necessary? As the real problems are solved, that is their only reasonable approach that makes them appear important.
Understand “gaslighting”
It is the stock in trade of governments who are more interested in power than the well-being of the people. Politics as opposed to governing.
From Wikipedia “Gaslighting is a colloquialism that is defined as making someone question their reality. The term is also used informally to describe someone who persistently puts forth a false narrative which leads another person to doubt their own perceptions to the extent that they become disorientated and distressed.”
You won’t have to look hard for examples.
On the other hand, some problems need more attention. Governments could adopt that role so long as they didn’t attempt to prescribe an solution. Slow moving problems, by definition, don’t settle with instant solutions, but they need attention. Climate change is one of those.
What we know
Governments everywhere never confess to error in either judgement or execution. Is that realistic? Hiding their inability is easier than doing things properly and learning as they go.
Governments are needlessly, even irrationally, costly.
Given the historical incompetence of governments to solve identifiable problems, why do people clamour for the government to do something?
Governments today only look for solutions that support their prejudices and biases about how the world should work.
Ronald Reagan, “Government is not the solution to our problem, government is the problem.”
Moving on
As a beginning, each new program or initiative should be assessed against three questions proposed by Thomas Sowell.
“I’ve often said there are three questions that would destroy most of the arguments on the left.
The first is: ‘Compared to what?’
The second is: ‘At what cost?’
And the third is: ‘What hard evidence do you have?’ “
Compared to what? There is no problem that is solvable in just one way. What else did you consider, and why were others dismissed. You don’t see much of that.
At what cost? Costs come in many forms. Money is one. The effects other than money are seldom discussed. For example, were the non-monetary costs of covid lockdowns adequately addressed? Even now, with 20 months of experience they are not. Why not?
What evidence do you have? Most of the evidence is hearsay, taken third hand from often dubious experts. If they had objective, real-world evidence at hand they would use it. If they do not, it is because no real supporting evidence exists or the evidence that does exist contradicts their preferred position.
The takeaway
Stop believing government hysteria. It is their idea of a reason for their action. Be smarter.
Stop ignoring common sense. Take a look at what government programs have done historically. Assess how well they have met reasonable goals for the project. Assess compared to the rhetoric at introduction.
Stop asking governments to do things that could be done in other ways. The results might not be universal and they might take longer, but they will evolve to a working state and cost a small fraction.
Ask why evidence is so hard to find. Is it hidden for a reason? If a project worked at all, would not the evidence be front and center? Hidden evidence is evidence of failure.
Look for voids and contradictions. What are you prevented from seeing? You can see the contradictions without much trouble. Try these: 1) Assuming the Covid vaccines work, why is an unvaccinated person without symptoms a threat to a vaccinated person? 2) Will taxing the rich work? If you took all of the wealth of all the billionaires in the United States, it would pay about eight months of spending by the federal government. In 2020 they spent $6.55 trillion. Bezos, Musk, and Gates together could not have paid 30 days worth. 3) The border of the US with Canada is tightly controlled. The one with Mexico not at all. What’s up with that?
Governing and playing politics are not the same thing. Why do politicians want to play politics? What’s in it for them?
I help people have more retirement income and larger, more liquid estates.
Call in Canada 705-927-4770, or email don@moneyfyi.com
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