government failure

Government Failure Comes as a Shock to Liberals

Richard Cohen of WaPo shares his disappointment in the god the failed:

Where is Casey Stengel when we need him? In 1962, as the manager of the brand new and determinedly hapless New York Mets — 40 wins, 120 losses — he looked up and down his bench one dismal day and wondered, “Can’t anybody here play this game?” That phrase kept coming at me recently as I watched the impressively inept performance of the Obama administration in both foreign and domestic policy. On a given day, this administration makes the ’62 Mets look good….

[Obama] has lately so mishandled both domestic and foreign policy that he is in mortal peril of altering his image. This unsettling and uncharacteristic incompetence became shockingly clear when Obama failed to come to grips with the Syrian civil war….

The debacle of the Affordable Care Act’s Web site raised similar questions about confidence….

Something went wrong. People could not sign up. Why? Not sure. Who’s at fault? Apparently no one. An act of God….

Poor Richard. He doesn’t get it. The problem isn’t just Barack Obama, it’s government. What Cohen is witnessing is government failure. It’s pervasive and inevitable — though its ill effects often go unremarked. (For example, the significant reduction of economic growth that has resulted from the growth of government spending and regulation.)

When government failure assumes spectacular proportions and can’t be ignored or explained away, it gets attention because it explodes the Nirvana fallacy about government that infects so many politicos, mediacrats, and real people (but not Americans on the whole).

What’s most striking about Cohen’s piece and similar outpourings from the media is that the target is a Democrat. I would say that a new dawn of realism is breaking, but that would be to indulge in the Nirvana fallacy.

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Related posts:
Undermining the Free Society
Government vs. Community
Government Failure: An Example
Bootleggers, Baptists, and Pornography
The Public-School Swindle
The Evil That Is Done with Good Intentions
Externalities and Statism
Society and the State
David Brooks, Useful Idiot for the Left
Don’t Use the “S” Word When the “F” Word Will Do
How Not to Cope with Government Failure
Well-Founded Pessimism
America: Past, Present, and Future
IQ, Political Correctness, and America’s Present Condition
The Barbarians Within and the State of the Union
Why Are Interest Rates So Low?
Vulgar Keynesianism and Capitalism
Estimating the Rahn Curve: Or, How Government Spending Inhibits Economic Growth
America’s Financial Crisis Is Now
The World Turned Upside Down
“We the People” and Big Government: Part I
“We the People” and Big Government: Part I (continued)
“We the People” and Big Government: Part 2 (first installment)

Where We Are, Economically

UPDATED (10/26/12)

The advance estimate of GDP for the third quarter of 2012 has been released. Real growth continues to slog along at about 2 percent. I have updated the graph, but the text needs no revision.

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It occurred to me that the trend line in the second graph of “The Economy Slogs Along” is misleading. It is linear, when it should be curvilinear. Here is a better version:


Derived from the October 26, 2012 release of GDP estimates by the Bureau of Economic Analysis. (Contrary to the position of the National Bureau of Economic Research, there was no recession in 2000-2001. For my definition of a recession, see “Economic Growth Since World War II.”)

The more descriptive regression line underscores the moral of “Obama’s Economic Record in Perspective,” which is this:

The claims by Obama and his retinue about O’s supposed “rescue” of the economy from the abyss of depression are ludicrous. (See, for example, “A Keynesian Fantasy Land,” “The Keynesian Fallacy and Regime Uncertainty,” “Why the “Stimulus” Failed to Stimulate,” “Regime Uncertainty and the Great Recession,” The Real Multiplier,” “The Real Multiplier (II),”The Economy Slogs Along,” and “The Obama Effect: Disguised Unemployment.”) Nevertheless our flannel-mouthed president his sycophants insist that he has done great things for the country, though the only great thing that he could do is to leave it alone.

Obama is not to blame for the Great Recession, but the sluggish recovery is due to his anti-business rhetoric and policies (including Obamacare, among others). All that Obama can rightly take “credit” for is an acceleration of the downward trend of economic growth.

Related posts:
Are We Mortgaging Our Children’s Future?
In the Long Run We Are All Poorer
Mr. Greenspan Doth Protest Too Much
The Price of Government
Fascism and the Future of America
The Indivisibility of Economic and Social Liberty
Rationing and Health Care
The Fed and Business Cycles
The Commandeered Economy
The Perils of Nannyism: The Case of Obamacare
The Price of Government Redux
As Goes Greece
The State of the Union: 2010
The Shape of Things to Come
Ricardian Equivalence Reconsidered
The Real Burden of Government
Toward a Risk-Free Economy
The Rahn Curve at Work
The Illusion of Prosperity and Stability
More about the Perils of Obamacare
Health Care “Reform”: The Short of It
The Mega-Depression
I Want My Country Back
The “Forthcoming Financial Collapse”
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
The Deficit Commission’s Deficit of Understanding
The Bowles-Simpson Report
The Bowles-Simpson Band-Aid
The Stagnation Thesis
America’s Financial Crisis Is Now
Understanding Hayek
Money, Credit, and Economic Fluctuations
A Keynesian Fantasy Land
The Keynesian Fallacy and Regime Uncertainty
Why the “Stimulus” Failed to Stimulate
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
Vulgar Keynesianism and Capitalism
Why Are Interest Rates So Low?
Don’t Just Stand There, “Do Something”
The Commandeered Economy
Stocks for the Long Run?
We Owe It to Ourselves
Stocks for the Long Run? (Part II)
Bonds for the Long Run?
The Real Multiplier (II)
The Burden of Government
Economic Growth Since World War II
More Evidence for the Rahn Curve
The Economy Slogs Along
The Obama Effect: Disguised Unemployment
Obama’s Economic Record in Perspective

How Not to Cope with Government Failure

A member of a Google Group to which I belong has posted an article from the Dayton Daily News of September 9. It says, in part, that

The Air Force Institute of Technology has launched an “acquisition center of excellence” to reduce costs and better manage the test and evaluation of U.S. military weapons and programs from the KC-46 aerial refueling tanker to anti-missile defenses, a program leader said.

The Defense Department initiative will partner with 20 acquisition programs worth more than $150 billion across each branch of the military to outline plans to more rigorously test weapon systems and other programs in development….

Loren B. Thompson, a defense analyst with the Lexington Institute in Arlington, Va., said the addition will be “a definite plus” for the Air Force, which has been plagued with acquisition issues such as the recent cancellation and rebidding of an estimated $350 million program to equip the Afghan air force with 20 light attack turboprop aircraft.

The Air Force also has dealt with hypoxia-related issues to the F- 22 stealth fighter program that temporarily grounded the high-tech fighters and later forced the Pentagon to impose flying restrictions for the safety of pilots.

“This (center) will not help the F-22 situation because that is a … very unusual challenge where normal procedures have not uncovered what the problem is,” Thompson said. “But it will certainly help the Air Force get better at obtaining the performance it wants for a lower price.”…

My reaction?  The establishment of the “acquisition center of excellence” is from the standard repertoire of responses to bureaucratic failure: appoint a “blue ribbon” panel, appoint a “watchdog” agency or “czar,” and/or reorganize. Bureaucratic failure is a systemic problem because bureaucracies are not self-correcting. The particular response to a particular bureaucratic failure might rectify that failure, but it is unlikely to prevent or correct the next bureaucratic failure, which will be of a different kind and will crop up in an entirely different bureaucracy.

Markets “fail,” in that individual firms make mistakes, but free markets are self-correcting. Even if a mistake is not fatal to a particular firm, its customers (almost always) will have the option of getting what they need (or a good substitute) elsewhere. And, unlike government agencies, bad mistakes result in the elimination of the entities that make them — unless those entities are bailed out by government, of course.

In sum, the best way to cope with government failure is to have less government in the first place. There is no other preventative or cure for government failure. At the same time, less government interference in markets is bound to make markets more efficient and effective in providing what people want.

If you disagree with me, I advise you to think of a counter-example other than the financial crisis that sparked the Great Recession. That crisis was deeply rooted in government failure. For chapter and verse, see Arnold Kling’s monograph, Not What They Had in Mind.

Economic Growth Since World War II

As we await (probably in vain) the resumption of robust economic growth, let us see what we can learn from the record since World War II (from 1947, to be precise). The  Bureau of Economic Analysis (BEA) provides  in spreadsheet form (here) quarterly and annual estimates of current- and constant-dollar (year 2005) GDP from 1947 to the present. BEA’s numbers yield several insights about the course of economic growth in the U.S.

I begin with this graph:

The exponential trend line indicates a constant-dollar (real) growth rate for the entire period of 0.81 percent quarterly, or 3.3 percent annually. The actual beginning-to-end annual growth rate is 3.2 percent.

The red bands parallel to the trend line delineate the 99.7% (3-sigma) confidence interval around the trend. GDP has been running at the lower edge of the confidence interval since the first quarter of 2009, that is, since the ascendancy of Barack Obama.

The vertical gray bars represent recessions, which do not correspond precisely to the periods defined as such by the National Bureau of Economic Research (NBER). I define a recession as:

  • two or more consecutive quarters in which real GDP (annualized) is below real GDP (annualized) for an earlier quarter, during which
  • the annual (year-over-year) change in real GDP is negative, in at least one quarter.

For example:

Annualized real GDP in the second quarter of 1953 was $2,366.2 billion (i.e., about $2.4 trillion in year 2005 dollars). Annualized GDP for the next  five quarters: $2,358.1, $2,314.6, $2,303.5, $2,306.4, and $2,332.4 billion, respectively. The U.S. was still in recession (by my definition) even as GDP began to rise from $2,303.5 billion because GDP remained below $2,366.2 billion. The recession (i.e., drop in output) did not end until the fourth quarter of 1954, when annualized GDP reached $2,379.1 billion, thus surpassing the value for the second quarter of 1953. Moreover, the year-over-year change in GDP was negative in the first three quarters of the recession.

Unlike the NBER, I do not locate a recession in 2001. Real GDP, measured quarterly, dropped in the first and third quarters of 2001, but each decline lasted only a quarter. But, whereas the NBER places the Great Recession from December 2007 to June 2009, I date it from the first quarter of 2008 through the third quarter of 2011 (at least).

My method of identifying a recession is more objective and consistent than the NBER’s method, which one economist describes as “The NBER will know it when it sees it.” Moreover, unlike the NBER, I would not presume to pinpoint the first and last months of a recession, given the volatility of GDP estimates:

This graph suggests three things: (1) the uncertainty of quarterly estimates, (2) a declining rate of growth since 1947, and (3) some degree of periodicity in economic growth.

The periodicity, though irregular, can be seen more clearly in the following graph, where the vertical gray bars indicate quarters in which growth is below the declining trend line shown in the preceding graph.

The two preceding graphs lead to two observations:

The following statistics underscore the first point:

Inter-recessionary period Annual  growth rate
1947q4 – 1948q4 4.6%
1950q1 – 1953q2 7.5%
1954q4 – 1957q3 3.9%
1958q4 – 1960q1 3.7%
1961q2 – 1969q3 5.1%
1970q3 – 1973q4 4.4%
1975q4 – 1980q1 4.2%
1981q1 – 1981q3 3.3%
1983q2 – 1990q3 4.2%
1991q4 – 2007q4 3.1%

To put a point on it, here are the rates of growth during the three longest periods of above-trend growth since World War II:

  • 1963q1 – 1966q1 — 6.6%
  • 1983q1 – 1986q1 — 5.1%
  • 1995q3 – 1999q4 — 4.5%

It is hard to deny the almost-constant deceleration of growth in the post-war era — especially the sharper deceleration after 1970 — a deceleration that is embedded in the longer downward trend that began in the early 1900s.

In this connection, I note that the “Clinton boom“ — 3.4 percent real growth from 1993 to 2001 — was nothing to write home about, being mainly the product of Clinton’s self-promotion and the average citizen’s ahistorical (if not anti-historical) perspective. The boomlet of the 1990s, whatever its causes, was less impressive than several earlier post-war expansions. In fact, the overall rate of growth from the first quarter of 1947 to the first quarter of 1993 — recessions and all — was 3.4 percent.

What about the lingering Great Recession? It lingers mainly because it has been used — first by Bush, then by Obama — as an excuse for eve more disastrous expansions of the cost and reach of government.

Related posts:
Are We Mortgaging Our Children’s Future?
In the Long Run We Are All Poorer
Mr. Greenspan Doth Protest Too Much
The Price of Government
Fascism and the Future of America
The Indivisibility of Economic and Social Liberty
Rationing and Health Care
The Fed and Business Cycles
The Commandeered Economy
The Perils of Nannyism: The Case of Obamacare
The Price of Government Redux
As Goes Greece
The State of the Union: 2010
The Shape of Things to Come
Ricardian Equivalence Reconsidered
The Real Burden of Government
Toward a Risk-Free Economy
The Rahn Curve at Work
The Illusion of Prosperity and Stability
More about the Perils of Obamacare
Health Care “Reform”: The Short of It
The Mega-Depression
I Want My Country Back
The “Forthcoming Financial Collapse”
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
The Deficit Commission’s Deficit of Understanding
The Bowles-Simpson Report
The Bowles-Simpson Band-Aid
The Stagnation Thesis
America’s Financial Crisis Is Now
Understanding Hayek
Money, Credit, and Economic Fluctuations
A Keynesian Fantasy Land
The Keynesian Fallacy and Regime Uncertainty
Why the “Stimulus” Failed to Stimulate
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
Vulgar Keynesianism and Capitalism
Why Are Interest Rates So Low?
Don’t Just Stand There, “Do Something”
The Commandeered Economy
Stocks for the Long Run?
We Owe It to Ourselves
Stocks for the Long Run? (Part II)
Bonds for the Long Run?
The Real Multiplier (II)
The Burden of Government

Don’t Just Stand There, “Do Something”

“Activists” try my patience, and exhaust it. Their message — no matter the particulars of content or phrasing — boils down to this: Government should “do something” about “something.” This is a formula that has been invoked since the beginning of the Republic, though increasingly more often since the onset of the Progressive Era in the late 1800s. The exhortation betrays three beliefs, unconscious as they may be on the part of those who do the exhorting.

The first belief is that a particular phenomenon is so important — in the view of the exhorting person or group — that government should contrive to impose a particular outcome with respect to that phenomenon — regardless of the costs of that imposition, in treasure or liberty.

The second belief is a kind of prediction that proponents of government action usually cannot be bothered to test. This kind of prediction is known as the Nirvana fallacy: the logical error of comparing actual things with unrealistic, idealized alternatives. The actual things are the “somethings” about which government is supposed to “do something.” The unrealistic, idealized alternatives are the outcomes sought by the proponents of a particular course of government action. Thus legislation and regulation by mere mortals is taken as the functional equivalent of fiat lux.

This points to the third belief, which is that government — a mere creation of fallible, squabbling, power-lusting humans — is a kind of omniscient, single-minded, benevolent being that can overcome the forces of nature and human nature which gave rise, in the first place, to the “something” about which “something must be done.”

The evidence against these beliefs is so overwhelming that their persistence must be attributed to the psychological phenomenon summarized by Samuel Johnson as “the triumph of hope over experience.”

Proponents of government action will counter with the excuse that “something must be done” because of  “market failure,” which is the failure of markets to produce outcomes preferred by the proponents. And yet they overlook government failure, and often seek to rectify it by exhorting more government action, which leads to more government failure, and so on.

Here are some salient examples of government failure — and its correlate, misfeasance — that ought to (but will not) give pause to the “do something” crowd:

“Entitlements” (Social Security, Medicare, Medicaid, and their expansion through Obamacare) — These programs grew from an understandable (but ill-advised) urge to provide for the elderly who were seen as unable to provide for themselves. Through the predictable processes of constituency-mongering, the “social safety net” has acquired almost-inviolable status as a subsidy for millions of persons who could well provide for themselves. This dependency has discouraged thrift and, in the process, stripped away a key source of funds for investments in economic growth. The looming burden of taxation promises to cripple an already hobbled economy.

Welfare, the Minimum Wage, and Affirmative Action — Altogether, these programs have succeeded in breaking up black families, denying to many young blacks an opportunity to join the ranks of the economically productive (and to advance on their own merit), fomented crime, caused racial resentment, and positioned aspiring black students and professionals for failure.

The Great Depression and the Great Recession — These two devastating economic downturns, one of which became an excuse for the enactment of Social Security and the other of which still lingers, are quintessential examples of government failure. In the case of the Great Depression, the Federal Reserve’s monetary policies (first too loose, then too tight) caused a recession to deepen into a depression. That depression lingered for almost a decade (and ended largely because of a catastrophic war) because of interventionist, anti-business policies that began under Hoover and continued, with a vengeance, under Roosevelt. We owe the Great Recession to a combination of too-loose credit (the Fed again) and too-loose mortgage lending: a policy insisted upon by the Federal Reserve and influential members of Congress, and reinforced by their minions at Fannie and Freddie. “Wall Street” — as a willing maker of credit — deserves blame for the resulting financial meltdown and recession only in the way that a prostitute deserves blame for serving her clients.

Defense and Police Services  — These are public goods, but not for the reason advanced by believers in public goods, namely, that they would not be provided voluntarily because too many of their beneficiaries would try to take a “free ride” on paying customers, which would drive the prices of defense and police services too high to attract enough customers to pay for them. That is an unproved assertion, which runs counter to everyday experience (e.g., charitable giving and voluntarism) and ignores the very high stakes that could drive major corporations and very-high income earners to combine in a joint defense of their considerable interests in the U.S. and abroad — a defense that would unavoidably benefit free-riders. In this regard, it is noteworthy that in 2007 the combined pre-tax income of households in the top quintile was $2.5 trillion and pre-tax corporate profits came to $1.7 trillion. It is arguable that a consortium of taxpayers and corporations could underwrite the cost of defense and police forces (including courts, prosecutors, etc.), which in 2007 came to about $900 billion ($662 billion for defense and $230 billion for justice). In 2007, for example, taxpayers in the top 10 percent of adjusted gross incomes paid more than 70 percent of federal income taxes collected from filers of individual and joint returns. Who do you think pays the lion’s share of the costs of defense and police forces? The answer, of course, is high-income taxpayers, directly and through taxes on corporate income.

Defense and police services are tax-funded not because they must be, but because there is something menacing about the thought of privately owned defense and police forces that could be employed in coups and oppressions. A main consequence of the “publicization” of America’s defense and police forces is that they afford a lucrative opportunity for various kinds of pork-barrel legislation (e.g., the location of military bases, the awarding of defense contracts, and patronage for political supporters), as well as the usual (and unavoidable) instances of waste, fraud, and abuse. Even worse are the fluctuations in political attitudes toward defense and policing, which in the ebb invite aggression and crime, and in the flow invite vast over-spending — though over-spending can be defended on the ground that it deters aggression and crime and thus the human and monetary costs that accompany them.

In any event, not even defense is a sacrosanct function of government, and its provision by government is far from an unmitigated blessing. If you think that I overstate the case against government-owned defense forces, consider that

  • They fought only one “popular” war in the past 100 years — a war that became “popular” only after the surprise attack on Pearl Harbor.
  • The thesis that Reagan’s defense build-up won the Cold War remains controversial.
  • The size of the defense budget rides on political whims more than on hard-to-come-by cold facts. Would it be worse if those with the most to lose took a direct hand in the provision of defense forces and in decisions about when to employ them? I doubt it.

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Perhaps there are examples of “government success,” but these are hard to identify because the intervention of government usually forecloses the alternatives to which the “do something” crowd is blind:

  • voluntary, cooperative solutions through the actions of markets, private charities, and other private institutions (family, church, club, close-knit neighborhood, etc.)
  • benign neglect, where persons with a “problem” choose not to act on it because the cost of action is greater than its likely benefits.

Anyone who says that government can be “managed” by limiting it to certain kinds of activities (e.g., defense or welfare) while eschewing others (e.g., welfare or defense), merely deludes himself; “democratic” governments cannot and will not function without throwing money in all directions, in an effort to placate all constituencies. As a minarchist, I must admit to sharing this delusion, but I am beginning to think that anarcho-capitalism has merit, if only the right kind of anarcho-capitalists could be in charge of police and defense forces.

Anyone who says that such-and-such a government program will succeed in accomplishing a certain goal at a certain cost — and that the cost will justify the accomplishment — proves himself a presumptuous fool. I cannot truthfully say that government-provided police and defense forces are worth their cost in money and liberty, and I scorn anyone who believes that any other type of governmental endeavor is remotely worth its cost in money and liberty.
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For more posts related generally and specifically to this one, go to “Favorite Posts” and browse at will.

Government Failure: An Example

John Goodman’s post about “Government Failure” is chock-full of wisdom. Among other things, Goodman nails the model of “market failure” used by some economists and many politicians:

When economists talk about “market failure” they begin with a model in which consumer welfare is maximized. “Market failure” arises when imperfections cause outcomes that fall short of the ideal.  If we were to do the same thing in politics, we would begin with a model in which the political system produced ideal outcomes and then consider factors that take us away from the ideal.

The model “in which consumer welfare is maximized” — perfect competition — is unattainable in most of the real world, given constant shifts in tastes, preferences, technologies, the availability of factors of production. “Market failure” is nothing more than a label that a left-wing economist or politician pins out market a outcome of which he or his constituents (e.g., labor unions) happen to disapprove. (The long version of my case against “market failure” is here.)

Goodman continues:

[W]hereas in economics, “market failure” is considered an exception to the norm, in politics, “government failure” is the norm.  In general, there is no model of political decision making that can reliably produce ideal outcomes.

I offer an example of a not-unusual kind of government failure: the scam perpetrated by Dennis Montgomery on intelligence officials, and the subsequent effort to cover up the gullibility of those officials. This is from “Hiding Details of Dubious Deal, U.S. Invokes National Security” (The New York Times, February 19, 2011):

For eight years, government officials turned to Dennis Montgomery, a California computer programmer, for eye-popping technology that he said could catch terrorists. Now, federal officials want nothing to do with him and are going to extraordinary lengths to ensure that his dealings with Washington stay secret.

The Justice Department, which in the last few months has gotten protective orders from two federal judges keeping details of the technology out of court, says it is guarding state secrets that would threaten national security if disclosed. But others involved in the case say that what the government is trying to avoid is public embarrassment over evidence that Mr. Montgomery bamboozled federal officials….

Interviews with more than two dozen current and former officials and business associates and a review of documents show that Mr. Montgomery and his associates received more than $20 million in government contracts by claiming that software he had developed could help stop Al Qaeda’s next attack on the United States. But the technology appears to have been a hoax, and a series of government agencies, including the Central Intelligence Agency and the Air Force, repeatedly missed the warning signs, the records and interviews show.

Mr. Montgomery’s former lawyer, Michael Flynn — who now describes Mr. Montgomery as a “con man” — says he believes that the administration has been shutting off scrutiny of Mr. Montgomery’s business for fear of revealing that the government has been duped.

“The Justice Department is trying to cover this up,” Mr. Flynn said. “If this unravels, all of the evidence, all of the phony terror alerts and all the embarrassment comes up publicly, too. The government knew this technology was bogus, but these guys got paid millions for it.”

Similar cases abound in the unrecorded history of government contracting. Most of them don’t involve outright scams, but they do involve vain, gullible, and pressured government officials who tolerate — and even encourage — shoddy work on the part of contractors. Why? Because (a) they have money to spend, (b) they’re expected to spend it, and (c) there’s no bottom-line accountability.

If the flaws in government programs and systems are detected, it’s usually years or decades after their inception, by which time the responsible individuals have gone on (usually) to better jobs or cushy pensions. And when the flaws are detected, the usual response of the politicians, officials, and bureaucrats with a stake in a program is to throw more money at it. It’s not their money, so what do they care?

I offer an illustrative example from my long-ago days as a defense analyst. There was an ambitious rear admiral (as they all are) whose “shop” in the Pentagon was responsible for preparing the Navy’s long-range plan for the development and acquisition of new ships, aircraft, long-range detections systems, missiles, and so on.

The admiral — like many of his contemporaries in the officer corps of the armed forces — had been indoctrinated in the RAND-McNamara tradition of quantitative analysis. Which is to say that most of them were either naïve or opportunistic believers in the reductionism of cost-effectiveness analysis.

By that time (this was in the early 1980s) I had long outgrown my own naïveté about the power of quantification. (An account of my conversion is here.) But I was still naïve about admirals and their motivations. Having been asked by the admiral for a simple, quantitative model with which he could compare the effectiveness of alternative future weapon systems, I marched into his office with a presentation that was meant to convince him of his folly. (This post contains the essence of my presentation.)

For my pains, I was banished forever from the admiral’s presence and given a new assignment. (I was working for a non-profit advisory organization with fixed funding, so my employment wasn’t at stake.) The admiral wanted to know how to do what he had made up his mind to do, not why he had chosen to do something that couldn’t be done except by committing intellectual fraud.

Multiply this kind of government-contractor relationship by a million, throw in the usual kind of contractor who is willing to sell the client what the client wants — feasible or not — and you have a general picture of the kind of failure that pervades government contracting. Adapt that picture to inter-governmental relationships, where the primary job of each bureaucracy (and its political patrons) is to preserve its funding, without regard for the (questionable) value of its services to taxpayers, and you have a general picture of what drives government spending.

In sum, what drives government spending is not the welfare of the American public. It is cupidity, ego, power-lust, ignorance, stupidity, and — above all — lack of real accountability. Private enterprises pay for their mistakes because, in the end, they are held accountable by consumers. Governments, by contrast, hold consumers accountable (as taxpayers).

Perhaps — just perhaps — the era of governmental non-accountability is coming to an end. We shall see.