Matters of Truth

So NOW you are upset with government spending!? Seems like only a few years ago when people could care less that the GAO was writing “… it seems clear that our nation is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time.”

Ok, so now that people are starting to get upset about government spending the inevitable conservation on government efficiency comes up. You hear arguments against pork spending, wasteful spending, and excessive spending for certain projects. Arguments will call for cutting programs, cutting taxes, or raising taxes in order to make the government more efficient. I must say, all of this misses the point. Government cannot EVER be efficient.

Awhile back I read an article on “The Myth of Efficient Government Service” by Murray N. Rothbard who is a somewhat well known economist and libertarian thinker. While I’m not a huge fan of all his work this article makes a number of great points. Murray argues that efficiency only comes from a scenario where you have a risk of losing something. In government, unlike the free-market, you have no risk and almost unlimited resources. The effect of this is that the government has no rational way of allocating resources and no measure of success or failure that would create efficiency of money.

One point the article does not cover well is the fact that government has no “at risk” investors. You could argue that anyone holding a t-bill is an investor but whether or not they get paid is not dependent on the profit of the USA for that year as the US is not going out of business (yet). So when you pay taxes you basically become a customer. As such you want the most for your money. Since our system permits unlimited borrowing you can always get more for your money which keeps you electing the people giving out the services. Thus we have an inherent incentive to not be efficient in terms of dollars but rather be efficient in giving citizens anything they want.

I could go on but I want to get to my final point. Government will always be inefficient because of its inherent nature. The only way to solve this is NOT to have less inefficiency or attempts at running government like a business but to have less government in general.