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Government Stupidity:

Former Treasury Department officials Ernest Christian and Gary Robbins write:

Last August, the government lost track of six nuclear warheads that ended up in cruise missiles affixed to the wings of B-52 bombers flying over American cities. The Federal Emergency Management Agency recently spent $2.7 billion to purchase 145,000 formaldehyde-soaked house trailers. They were for use by people who'd lost their homes when levees designed by the Army Corps of Engineers broke and flooded New Orleans. The FBI is currently forcing its most skilled and experienced antiterrorism field supervisors to accept "promotions" to paper-shuffling jobs in Washington.

But the millions of inanities that occur daily throughout the government's world-wide empire are mere trifles compared to its big-ticket failures.

What kind of government forces people to make gasoline out of food, artificially boosts the price of corn to $6 a bushel, guarantees that inflated price as the "base" for higher federal subsidies to corn farmers in the future, and then tries to hide its own depredations by excluding high food prices from its measure of "core" inflation?

Washington never learns from its mistakes.

Mistake:
Jonathae,have you seen a "documentary" propaganda series on "Nimitz" crew shown recently on PBS? Nothing should surprise you.
6.8.2008 10:43am
Glenn W. Bowen (mail):

The Federal Emergency Management Agency recently spent $2.7 billion to purchase 145,000 formaldehyde-soaked house trailers


"retail"...
6.8.2008 10:55am
cboldt (mail):
-- Washington never learns from its mistakes. --
.
It's the public that is the slow learner. Many of these "mistakes" are in reaction to public outcry for "more help from the government."
.
As for Congress, it just takes facts on the ground as fodder to blame the other party for cause. IOW, mistakes are GOOD, when they can be spun as the other party's fault.
6.8.2008 10:59am
Redlands (mail):
Give me an "Amen." Can I get an "AMEN, BROTHER!?" Think of the Representatives and Senators from your home state. Have you listened to them talk? After hearing about ten words from the majority of them you understand why, as a group, what they do comes as absolutely no surprise. How many of them are actually up to the task? Would it be too much to ask that they at least surround themselves with aides and advisers who can think, and then have the courage to make the tough decisions?
Rant out.
6.8.2008 11:07am
Flash Gordon (mail):
What kind of government forces people to make gasoline out of food, artificially boosts the price of corn to $6 a bushel, guarantees that inflated price as the "base" for higher federal subsidies to corn farmers in the future, and then tries to hide its own depredations by excluding high food prices from its measure of "core" inflation?

A government run by liberal Democrats and RINO Republicans.
6.8.2008 11:19am
Mogden:
What kind of government forces people to make gasoline out of food, artificially boosts the price of corn to $6 a bushel, guarantees that inflated price as the "base" for higher federal subsidies to corn farmers in the future, and then tries to hide its own depredations by excluding high food prices from its measure of "core" inflation?

A government with weak incentives to address long term problems and lots of incentives for taking money from the general public and lavishing it on political pressure points.
6.8.2008 11:24am
JosephSlater (mail):
So this is all the fault of "government" and not in any sense the Bush administration? Again, Republican-oriented libertarians (as many on this blog are) have it good: when Republicans implement successful politices, it's because conservative-Republicanism makes for good policies. When we get a string of poor decisions/policies with bad results from said Republicans, it's the fault of "government."
6.8.2008 11:32am
JosephSlater (mail):
"policies," not "politicies."
6.8.2008 11:33am
MGoBlue (mail):
Mr. Christian, an attorney, was a deputy assistant secretary of the Treasury in the Ford administration. Mr. Robbins, an economist, served at the Treasury Department in the Reagan administration.

Just one economist there.

[Fixed. - JHA]
6.8.2008 11:49am
TMac (mail):
"So this is all the fault of "government" and not in any sense the Bush administration?"

Of course not! Thank There was no malfeasance, greed or corruption in the government before Bushitler stole the presidency!
6.8.2008 11:56am
genob:
The bipartisan efforts to solve global warming will top them all.
6.8.2008 12:14pm
PC:
What, no mention of Iraq?
6.8.2008 12:23pm
J. F. Thomas (mail):
Gee, Remember New Coke, The Chevy Vega, The Ford Edsel, Thalidomide, or Sprint Ion (I bet almost nobody except those of us who worked for Sprint remembers the last one because Sprint spent over $2 billion on it, signed up just 10,000 customers and shut it down after less than a year)?

And then of course you have COBOL (still going strong after more than fifty years), nuclear weapons and power (for good or bad), satellites and the space program (whatever did happen to all those private launches), the interstate highway system, sewage and water treatment systems, rural electrification, and almost the entire infrastructure.

And btw, it was not the design, but the construction of the levees that was flawed. You might also wanted to point out that the river levees below New Orleans were overtopped from both directions (both land and river side) and did not fail.
6.8.2008 12:29pm
pireader (mail):
Professor Adler --

You're dodging the real issue, perhaps because it's too painful.

Problems of this sort are not unique to "government". We've seen comparable displays of incompetence recently from industrial companies, banks, universities, churches, charities, etc. We don't ascribe those failures to generic "business" or "education" or whatever. We ascribe them to incompetent managers/boards and (hopefully) change them out.

So why do you put this down to generic "government" rather than to "bad government" from an incompetent Administration and its enablers?

After all, we know it's possible to conduct the government's affairs much better than the current Bush Administration has done. Just compare its bungling to what we got from the Reagan, Bush I and Clinton Administrations. Truthfully, they gave us 20 years of pretty good government.

So if you think things are bad, then step up to the real problem, instead of ranting about generic "government". Call for accountability.

This year, that means calling for the Republican party to be voted out. With trivial exceptions, the Republicans have endorsed, enabled, advocated for, excused, covered up after, etc. the worst collection of screw ups in recent memory. They have to pay a bitter price in loss of power and busted careers; or they (and the Democrats) will learn that there are no consequences for abject fecklessness.

(And, by the way, this is not a Left/Right argument. It's the exact same reasoning that I used in urging my liberal acquaintances to vote for Ronald Reagan over Jimmy Carter in 1980.)
6.8.2008 12:37pm
HLSbertarian (mail):

Again, Republican-oriented libertarians (as many on this blog are) have it good: when Republicans implement successful politices, it's because conservative-Republicanism makes for good policies. When we get a string of poor decisions/policies with bad results from said Republicans, it's the fault of "government."


Or, Republican-leaning libertarians choose sides on these policies BEFORE they succeed or fail. Would you like to provide an example of a Republican policy favored by libertarians before it failed and disavowed after?
6.8.2008 12:42pm
HLSbertarian (mail):

Gee, Remember New Coke, The Chevy Vega, The Ford Edsel, Thalidomide, or Sprint Ion (I bet almost nobody except those of us who worked for Sprint remembers the last one because Sprint spent over $2 billion on it, signed up just 10,000 customers and shut it down after less than a year)?


But, for the most part, these companies fail on their own dimes and those of willing contracting parties. To the extent that they don't, we have a system of tort law. In what court can I sue the gov't for breach of contract or conversion for its screwups with my money?
6.8.2008 12:44pm
Ken Arromdee:
After all, we know it's possible to conduct the government's affairs much better than the current Bush Administration has done.

Claiming that the government we have now is a bungler seems to me like claiming that the youth of today won't listen to their parents. It's always been like that, but the problems of today are just more prominent in our minds.
6.8.2008 12:50pm
J. F. Thomas (mail):
In what court can I sue the gov't for breach of contract or conversion for its screwups with my money?

Well of course the government generally operates much more openly and transparently than corporations and is subject to popular elections--just try and vote the CEO of GM out, even if you are a major stockholder.

Of course you can always leave the country. One of our hosts had a post a few months ago about what a libertarian paradise Somalia is. Funny, I haven't noticed any of the Volokh Conspirators making plans to emigrate there. I guess a fat paycheck from a state agency, clean water and a flush toilet makes all that government stupidity bearable.
6.8.2008 12:56pm
David M. Nieporent (www):
Gee, Remember New Coke, The Chevy Vega, The Ford Edsel, Thalidomide, or Sprint Ion (I bet almost nobody except those of us who worked for Sprint remembers the last one because Sprint spent over $2 billion on it, signed up just 10,000 customers and shut it down after less than a year)?
Of the federal government, Coca-Cola, Chevrolet, Ford, Richardson-Merrell, and Sprint, exactly one of them has the power to force itself on you.

If Sprint introduces the Ion, or Coke introduces New Coke, and customers don't want it, nobody is harmed. If Congress introduces ethanol, everyone is harmed.

---

So why do you put this down to generic "government" rather than to "bad government" from an incompetent Administration and its enablers?
Because that's the left-wing misunderstanding of economics. The problem has nothing to do with this Administration; hell, half of the things he listed either came from a Democratic Congress (ethanol, the farm bill) or from decades of incompetence (the levees -- contrary to popular Democratic opinion, Bush did not build them). The problem is incentives. Liberals never understand this. Incentives matter. Government has the wrong incentives, whereas the private sector has the right ones.
6.8.2008 1:01pm
theobromophile (www):
Um... I would just like to point out that Congress, for the last two years, has been dominated by Democrats. Why vote out the Republicans?

Administrative agencies take several years (the better part of a decade) to change over from liberal to conservative or vice versa. What was the composition of FEMA when Katrina hit? Was it entirely the job of the federal government to help out Louisiana - or was it possibly the job of the government of that particular state to take care of its own as well? (Note that San Diego and Los Angeles did an excellent job of fighting those forest fires last year - while they did have some help from the government, Mexico, and Arizona, most of the efforts were internal.)

Not saying that the Republicans - or Bush in particular - are perfect, but, IMHO, there is something wrong with the "witch doctor" theory of government (when disaster strikes, throw the witch doctor into the volcano and appoint a new witch doctor, who gets thrown into the volcano if things don't change).
6.8.2008 1:03pm
ithaqua (mail):
"Or, Republican-leaning libertarians choose sides on these policies BEFORE they succeed or fail. Would you like to provide an example of a Republican policy favored by libertarians before it failed and disavowed after?"

Libertarians are the Austrian School of politics. Empirical evidence is completely ignored with regard to the policies they support.
6.8.2008 1:04pm
ithaqua (mail):
"Um... I would just like to point out that Congress, for the last two years, has been dominated by Democrats. Why vote out the Republicans?

Administrative agencies take several years (the better part of a decade) to change over from liberal to conservative or vice versa."

Did you just answer your own question? :)
6.8.2008 1:05pm
David M. Nieporent (www):
Well of course the government generally operates much more openly and transparently than corporations and is subject to popular elections--just try and vote the CEO of GM out, even if you are a major stockholder.
First, the statement is loony; shareholders have a much bigger influence over corporate management than they do over politicians. It's much easier to oust incompetent CEOs than incompetent congressmen. Second, you don't even need to. Hint: just sell your stock. (If only you could do the same with the government.)
6.8.2008 1:05pm
PC:

Note that San Diego and Los Angeles did an excellent job of fighting those forest fires last year


California has the 10th largest economy in the world. Your point would be impressive if the forest fires had been fought by private agencies, paid for directly by the land owners for "forest fire protection services." Which, if in place, would set up some interesting incentives of their own.
6.8.2008 1:10pm
HLSbertarian (mail):

In what court can I sue the gov't for breach of contract or conversion for its screwups with my money?

Well of course the government generally operates much more openly and transparently than corporations and is subject to popular elections--just try and vote the CEO of GM out, even if you are a major stockholder.

Of course you can always leave the country. One of our hosts had a post a few months ago about what a libertarian paradise Somalia is. Funny, I haven't noticed any of the Volokh Conspirators making plans to emigrate there. I guess a fat paycheck from a state agency, clean water and a flush toilet makes all that government stupidity bearable.


I don't see what any of this has to do with my question, which you quoted. And, like David, I (of course) take issue with your "of course."
6.8.2008 1:12pm
Bill Poser (mail) (www):
Redlands,

think of the Representatives and Senators from your home state. Have you listened to them talk?

I grew up in Vermont and I would say that Vermont has now, and has had for many years, an outstanding congressional delegation. The senior senator from Vermont is Patrick Leahy, who, though I disagree strongly with his position on copyright, has been an excellent senator. Before he was elected to the Senate, he was our district attorney, in which capacity he was the speaker at my high school graduation. I worked on his first campaign for the Senate. So, yes, I have a pretty good idea of what he is like.

The junior senator from Vermont is Bernie Sanders. He's too far to the left for many people here, but I like him and consider him highly competent. Vermonters know him and have repeatedly elected him. He was elected mayor of Burlington four times, then spent quite a few years in the House before succeeding Jim Jeffords, himself a fine Senator.

Politicians need not be corrupt nitwits. Vermonters have had consistently good congressional delegations for decades because Vermonters, as a group, are smart and reasonable and have a sense of civic responsibility. You get what you vote for.
6.8.2008 1:13pm
Smokey:
HLSbertarian has it right. If private industry misrepresented, blundered, and committed outright fraud like the government does, those companies' officers would be in the state penitentiary.

As just one typical example, NYC rent control -- instituted during WWII as a "temporary" emergency measure to handle the influx of defense workers -- 60+ years later is a prime example of government screwing up the economy. Fraud, misrepresentation, violation of fiduciary duty and waste of assets are the direct result. It has become a hereditary entitlement, with residents paying $275 a month next door to new residents in identical apartments paying $3,000 a month. And the rent control mindset/entitlement is nothing compared to the proposed government-run doctor business taking over 17% of the economy, eliminating that pesky cost-reducing competition, and constructing a giant new medical bureaucracy in the process.

The big enchiladas are coming down the pike: tens of $TRILLIONS proposed to "fix" a non-existent global warming problem scam. Government run health care that will make the DMV look like a paragon of efficiency, to name only two. And they are just the tip of the iceberg.

Word.
6.8.2008 1:16pm
J. F. Thomas (mail):
First, the statement is loony; shareholders have a much bigger influence over corporate management than they do over politicians.

Nonsense. Have you ever even bothered to read your proxy statements when you get them in the mail? Even if the majority of the shareholders votes against the board's suggested vote (which almost never happens), the board can simply can ignore the proxy vote. It takes almost complete unanimity of shareholders (or a single shareholder who manages to gain control of a very large chunk of the voting stock) to force the board to do anything. Why do you think CEO salaries are so out of control?
6.8.2008 1:17pm
J. F. Thomas (mail):
Was it entirely the job of the federal government to help out Louisiana - or was it possibly the job of the government of that particular state to take care of its own as well?

The answer to this question was that it is both a state and federal responsibility. FEMA, after all, is an acronym for the Federal Emergency Management Agency. Its job is right there in its name.
6.8.2008 1:24pm
Jmaie (mail):
"So this is all the fault of "government" and not in any sense the Bush administration?"

Bah. Blaming this on any one administration is like remembering how great the music was in the '60's. There was a whole lotta crap on the radio back then, but we remember the good stuff.
6.8.2008 1:30pm
Fat Man (mail):
And they want to be your doctor too.
6.8.2008 1:35pm
Jmaie (mail):
The answer to this question was that it is both a state and federal responsibility. FEMA, after all, is an acronym for the Federal Emergency Management Agency. Its job is right there in its name.

I for one would question whether flooding in LA is a federal responsibility.
****

On another note, "formaldehyde-soaked house trailers" is certainly over the top. Formaldehyde is used to manufacture pressboard, which is used in cheap cabinets. Perfectly safe in most circumstances, not so good in confined spaces.

I would guess the choice was based solely on price when the trailers were spec'd, and no-one actually said, "don't worry about the formaldehyde, it's only poor people's health."
6.8.2008 1:43pm
JB:
Smokey,
NYC rent control is not hereditary. Once the current renter dies/moves out, the apartment reverts to market rate.
6.8.2008 1:43pm
pireader (mail):
Ken Arromdee -- Claiming that the government we have now is a bungler seems to me like claiming that the youth of today won't listen to their parents. It's always been like that, but the problems of today are just more prominent in our minds.

Jmaie-- Bah. Blaming this on any one administration is like remembering how great the music was in the '60's. There was a whole lotta crap on the radio back then, but we remember the good stuff.

But I'm not claiming that matters were better back in the old days. Specifically, the 1960s and 1970s saw a lot of very bad government [Vietnam, inflation, riots, war on poverty, etc.], due to specific decisions and policies taken by the Johnson, Nixon, Ford, and Carter administrations. Then matters got better under Reagan, Bush I and Clinton, again due to identifiable actions taken. Since 2000, worse government again.

Frankly, I didn't think the history was controversial. But can provide data, if needed.
6.8.2008 1:45pm
Smokey:
J.F. Thomas:
...FEMA, after all, is an acronym for the Federal Emergency Management Agency. Its job is right there in its name.
Which is why FEMA should stay out of a state's business, and concentrate on disasters that directly affect all states. It's not FEMA's job to shovel federal taxpayers' dollars into one particular city -- a city so riddled with incompetence and corruption that its non-efforts at relief looked like the Three Stooges hanging wallpaper. Why should the taxpayers of Ohio, or Montana, or Alaska bail out a relatively tiny speck of North America that won't take care of itself?

In this case, I do blame George Bush. The first thing he did was to promise $200 billion for unspecified disaster relief, which is the responsibility of the City of New Orleans and the State of Louisiana. The predictable result was that those residents and their elected representatives folded their arms, stood aside while imported Mexicans did the work -- and complained about the federal government non-stop, to this day.
6.8.2008 1:51pm
Laura S.:
pireader,

Problems of this sort are not unique to "government". We've seen comparable displays of incompetence recently from industrial companies, banks, universities, churches, charities, etc. We don't ascribe those failures to generic "business" or "education" or whatever. We ascribe them to incompetent managers/boards and (hopefully) change them out.

So why do you put this down to generic "government" rather than to "bad government" from an incompetent Administration and its enablers?

Uh because changing the elected officials rarely changes the result unless that issue was run in the election with a specific solution. Meanwhile people get sacked in business (and companies too) all the time to good effect. So rarely do we live with a specific problem persistently from the private sector.

Politics is an institutional system, prone to agitation by interested majorities--"special interests"--regardless of who is in office. e.g., liberal opinion has been against ethanol subsidies for quite some time, but miraculously Democrats seem to vote for them in large numbers especially around events like that Iowa Caucus. (Yes, Obama I'm looking at you--thanks for selling the country out to leverage your surprise win).
6.8.2008 1:51pm
byomtov (mail):
The trouble with generic condemnations of "government" is that they let the actual culprits off the hook. Sure, there was incompetent government before Bush and there will be after he's gone.

But that doesn't mean we shouldn't hold FEMA accountable for its Katrina blunders, including those trailers, or other officials accountable for their failures. Do that and you give the Browns and Chertoffs a free pass. They were helpless. It was "government" that made them screw up.

This goes to David Nieporent's point about incentives. While I don't wholly agree with him, I will say that the tendency to forgive the guys on your side their failures because "it's government" certainly does tend to create the wrong incentives.
6.8.2008 1:52pm
J. F. Thomas (mail):
Which is why FEMA should stay out of a state's business, and concentrate on disasters that directly affect all states.

Hey Smokey, you ever wonder how most of the grain produced in the midwest that is exported gets out of the country? Or where most of the major pipelines that transport oil from the Gulf of Mexico pass through? Or where the only port for off loading supertankers in the entire country is? Or where the strategic oil reserve is?
6.8.2008 1:59pm
Smokey:
JB:
NYC rent control is not hereditary...
Apparently you haven't heard the stories of people actually adopting other adults and claiming to be close relatives in order to get an apartment at 1/10th the going rent.

Anyway, if that's the extent of your rebuttal of arguments against the government's proposed takeover of large swaths of the U.S. economy, it's pretty weak tea.
6.8.2008 2:00pm
Smokey:
J.F. Thomas:
Hey Smokey, you ever wonder how most of the grain produced in the midwest that is exported gets out of the country? Or where most of the major pipelines that transport oil from the Gulf of Mexico pass through? Or where the only port for off loading supertankers in the entire country is? Or where the strategic oil reserve is?
Thank you for making my point. Any FEMA assistance should have been strictly limited to that particular infrastructure.
6.8.2008 2:03pm
Jmaie (mail):
I was responding to Joseph Slater's original comment blaming this on the Bush administration. I will agree we have seen some magnificent screw ups lately, but such things are not unique to the current administration.
6.8.2008 2:09pm
theobromophile (www):
California has the 10th largest economy in the world. Your point would be impressive if the forest fires had been fought by private agencies, paid for directly by the land owners for "forest fire protection services." Which, if in place, would set up some interesting incentives of their own.

I'm really not following your train of thought here. I'm especially losing you towards the end. In no way did I argue for an anarchist approach; I simply pointed out that these issues would seem to be a responsibility of the state government. Privitizing military, police, or fire protection is like privitizing the printing of money - there are a few functions of government, and that is one of them. Also, note the free-rider effects of your proposal.

Anyway... either I'm missing something or you set up the straw man of the century.

Ithaqua - no, I didn't. Katrina happened in 2005; the levee problem had been an issue for years under the Clinton Administration. My point is that simply looking at the person in the Oval Office is between moderately and completely irrational.
6.8.2008 2:10pm
byomtov (mail):
On another note, "formaldehyde-soaked house trailers" is certainly over the top. Formaldehyde is used to manufacture pressboard, which is used in cheap cabinets. Perfectly safe in most circumstances, not so good in confined spaces.

As I understand it, stuff made with formaldehyde is OK if you give the formaldehyde time to evaporate before exposing people to it. Once the vapors are gone, which takes a while, it's OK.

Normally the time between the manufacture of a trailer and its use is long enough to allow this. Here the issue was ignored.
6.8.2008 2:14pm
JosephSlater (mail):
HLS Libertarian: Well, at least most of the libertarians here at the VC were pretty much on-board with the Iraq war in its first year or two. Now, it's a fair question whether that war was or was not consistent with libertarian values in some abstract sense, but the Republican/conservative pro-war side won out with most here. Indeed, I first thought of the idea I originally posted in this thread when reading David Bernstein's post (I'm too lazy to find and link it) in which he basically argued, "well yeah, I was for the Iraq war, but I guess I forgot how generally incompetent GOVERNMENT is."

Theobromophile: Congress has been "dominated" by Democrats for the past two years? For the last 18 months, the Dems have had a ONE VOTE majority in the Senate, and a slim majority in the House. Much of what they have tried to do has died because of real or threatened vetos.

TMac: Greed, corruption, and general incompetence is, of course, in no way the exclusive province of one party or the other. But as Piereader says, some administrations are more generally competent than others, and the Bush administration, in most matters other than "getting elected," has been pretty far over on the "incompetent" side.

Oh, and good luck getting out of the first round of the NBA playoffs next year.
6.8.2008 2:22pm
JosephSlater (mail):
"Greed, corruption, and general incompetence ARE, of course, in no way the exclusive province of one party. . . ."

I really need to proof more before posting.
6.8.2008 2:25pm
PC:
I simply pointed out that these issues would seem to be a responsibility of the state government. Privitizing military, police, or fire protection is like privitizing the printing of money - there are a few functions of government, and that is one of them.


You compared the ability of a state that has the 10th largest economy in the world to a state that is 1/10th its size economically. Besides, iirc, Katrina did not just hit the NOLA basin. It wiped out a major section of the Gulf coast.
6.8.2008 2:52pm
FantasiaWHT:

then tries to hide its own depredations by excluding high food prices from its measure of "core" inflation?


And excluding high energy prices as well.
6.8.2008 2:59pm
Ken Arromdee:
"Or, Republican-leaning libertarians choose sides on these policies BEFORE they succeed or fail. Would you like to provide an example of a Republican policy favored by libertarians before it failed and disavowed after?"

Libertarians are the Austrian School of politics. Empirical evidence is completely ignored with regard to the policies they support.


This seems like a catch-22. If libertarians change their opinions when a policy fails, then they're in the wrong because they're trying to deny their association with such policies (JosephSlater). If they don't change their opinions, they're in the wrong because they're ignoring empirical evidence (ithaqua).

I guess there's nothing libertarians could possibly do to satisfy critics, other than never supporting anything that fails. (A criterion that no political group of any ideology has ever met.)
6.8.2008 3:03pm
A. Zarkov (mail):
I think the problems lies more with large bureaucracies as opposed to government alone. A big company can make some pretty stupid decisions just like a government. Of course as people have pointed out, the companies usually (but not always) do it on their own dime. But there is an inherent problem with a government making capital allocation decisions: politics. A DARPA (Defense Research Projects Agency) manager told me he has to "spread the wealth." Meaning every state has to get a piece of the pie even if the proposals coming out of some state are less meritorious.
6.8.2008 3:07pm
Jim at FSU (mail):

Problems of this sort are not unique to "government". We've seen comparable displays of incompetence recently from industrial companies, banks, universities, churches, charities, etc. We don't ascribe those failures to generic "business" or "education" or whatever. We ascribe them to incompetent managers/boards and (hopefully) change them out.

So why do you put this down to generic "government" rather than to "bad government" from an incompetent Administration and its enablers?

Because when private industry fails, it quickly ceases to be a burden on society. Customers and creditors give their money to more worth recipients and employees seek employment elsewhere.

When government fails, the typical response is to raise taxes and try harder. No matter how poorly the government meets your needs, you cannot opt of giving them your money and you can rarely get them alter their programs to suit the demands of the market. There are only the most indirect incentives to provide useful services or operate efficiently.

The failing of government is that it can take money from people without giving them anything in return. Ironically, private industry is far better at providing services to the public because they go out of business if they do not do so. Keep government in the law enforcement and defense business and kick them out of everything else. There are uses for the government's coercive power, but judging and satisfying the needs of the market are not one of them.
6.8.2008 3:12pm
tarheel:

Because when private industry fails, it quickly ceases to be a burden on society.

In what universe?

Banks go belly up, government backs them up (Bear Sterns). Airlines go belly up, government bails them out (see $15 billion bailout immediately after 9/11). Auto companies go bankrupt, government backs their pension plans. The list goes on . . .
6.8.2008 3:17pm
ReaderY:
I find myself in complete agreement that human incompetence is not limited to government. The brainy magic by which subprime mortgages with limited verification became AAA-grade investments (with the particularly brilliant assumption that defaults are completely independent of each other), or for that matter investor's tendency to belief that every one of dozens of similar start-up dot-com companies offering little more than business plans would capture 100% of a vast projected market are examples of vast stupidity in the private sector.

Human folly simply isn't limited to government, and frankly government folly doesn't strike me as much worse than anyone else's.
6.8.2008 3:38pm
PC:
And let's not forget the wonders of deregulation that led to the S&L bailout -- thanks Sen. McCain! -- and the Enron energy debacle -- thanks Sen. Gramm!

I'm not sure we'll ever know the real story behind the JPMorgan/Fed bailout of Bear Sterns, but I have a suspicion that the unregulated derivatives market ($96.2 trillion notional value as of 3Q 2005) had something to do with it.
6.8.2008 3:47pm
Laura S.:
Most things that seem fixing don't need it. Take the student loan industry, Congress stuck its finger in that one last year and nearly caused the whole business to collapse... leading to an intrusive bailout this year, just in time. Ooops.

Take the minimum wage, minimum wage bumped up last summer, leading to a measurable displacement (down) in middle-class household income (minimum wage employment is dominated by middle-class youths) which in turn caused a small spike in the delinquency rate in the sub-prime mortgage market... and then a panic in the financial markets. Ooops, I'm not saying the pump was primed on this one, but geez. People just cannot seem to grasp secondary effect consequences.
6.8.2008 4:08pm
ChrisIowa (mail):

I'm not sure we'll ever know the real story behind the JPMorgan/Fed bailout of Bear Sterns,


I don't think what happened to Bear-Sterns qualifies to be called a bailout. I would guess that few Bear-Stern stockholders would think so.
6.8.2008 4:14pm
J. F. Thomas (mail):
Take the minimum wage, minimum wage bumped up last summer, leading to a measurable displacement (down) in middle-class household income (minimum wage employment is dominated by middle-class youths) which in turn caused a small spike in the delinquency rate in the sub-prime mortgage market... and then a panic in the financial markets.

Get serious. The sub-prime crisis was caused by an unsustainable and ahistorical inflation in housing caused by speculation in the market. It was a bubble and a PONZI scheme that was bound to collapse. To blame it on a modest bump in the minimum wage and to assume that middle class high school kids were using their wages from McDonalds to help their parents pay the mortgage (which of course means their parents should have never qualified for the mortgage in the first place) is absolutely ridiculous.

All this assumes, of course, that you didn't pull these facts out of your ass.
6.8.2008 4:39pm
J. F. Thomas (mail):
I don't think what happened to Bear-Sterns qualifies to be called a bailout.

If it wasn't a bailout, then what was it. The federal government stepped in and guaranteed Bear-Stearns bad debt, supposedly at the harsh penalty of a $2 stock price. As it turned out, the stockholders got almost $10 for their stock, a much better deal.

The worst part about it is nobody has been indicted yet.
6.8.2008 4:42pm
Jim at FSU (mail):

In what universe?

Banks go belly up, government backs them up (Bear Sterns). Airlines go belly up, government bails them out (see $15 billion bailout immediately after 9/11). Auto companies go bankrupt, government backs their pension plans. The list goes on . . .


Well the superiority of private enterprise is completely moot if you insist upon funding failed businesses from the treasury. Obviously bailouts will have to stop to realize any gains from privatization.

And I'd remind you that the failure once again belongs to government. The problems from these industries all arise from the fact that they can screw things up horribly and then wait for the government to rescue them every time. Let them a few of them fail and the others would soon learn caution and frugality.
6.8.2008 5:04pm
JosephSlater (mail):
Ken A.:

My point isn't that libertarians don't have the right to change their minds when evidence comes in that contradicts their theories. They should and sometimes do, just like conservatives and liberals should and sometimes do.

My point is that some libertarians, some times, try to have it both ways. If certain policies (Republican/conservative ones, in the case of this blog) seem to work, these folks will take credit for that; if they don't work, they will revert to the old, "well, government just can't do anything right, I guess" backstop, without giving enough serious thought to whether there could have been a better government policy.
6.8.2008 5:07pm
AnonLawStudent:

And let's not forget the wonders of deregulation that led to the S&L bailout -- thanks Sen. McCain! -- and the Enron energy debacle -- thanks Sen. Gramm!

Poor choice of examples if you are trying to show that the private market isn't as competent as government regulation - both the S&L collapse and Enron resulted from ham-fisted government regulatory actions. One of the biggest conceptual errors with government regulation is that proponents assume - incorrectly - that the system is understood, then undertake massive equilibrium-shifting regulatory operations; the market, in contrast, doesn't require human understanding of the underlying factors in order to properly allocate resources. For the biggest example to date, see the Great Depression, the economic causes of which weren't even conceptualized until publication of the Monetary History in the 1960s.
6.8.2008 5:12pm
AnonLawStudent:

If it wasn't a bailout, then what was it. The federal government stepped in and guaranteed Bear-Stearns bad debt, supposedly at the harsh penalty of a $2 stock price. As it turned out, the stockholders got almost $10 for their stock, a much better deal.

An orderly liquidation of assets without an automatic stay. Cf. bankruptcy. The difference between J.F. Thomas filing bankruptcy and Bear Stearns filing bankruptcy is that the latter has the potential to bring the financial system to a screeching halt.
6.8.2008 5:14pm
J. F. Thomas (mail):
The problems from these industries all arise from the fact that they can screw things up horribly and then wait for the government to rescue them every time. Let them a few of them fail and the others would soon learn caution and frugality.

Actually, history has proved again and again that this is not true from tulip bulbs in Holland to the PONZI scheme that collapsed the economy of Albania in the mid-90's, greed and "irrational exuberance" will lead supposedly sophisticated investors to invest in unsustainable bubbles even without the promise of government bailout.

The current problems in the financial markets come not from the regulated deposit banks, but from the unregulated investment banking sector, where the promise of a bailout is less certain.
6.8.2008 5:28pm
J. F. Thomas (mail):
both the S&L collapse and Enron resulted from ham-fisted government regulatory actions.

Enron was the result of accounting fraud. Unless you are claiming that hiding losses in dummy companies hoping that one day your PONZI scheme won't collapse, and being amazed when it does is "ham-fist government regulatory action", I don't know what the hell you are talking about.

Next you will tell me that the collapse of Worldcom (where Bernie Ebbers just used ever larger transactions to pretend he was making profits) was caused by government regulation. The pyramid would have eventually collapsed because at some point somebody would have realized that the whole corporation was just a huge shell game.
6.8.2008 5:36pm
byomtov (mail):
An orderly liquidation of assets without an automatic stay. Cf. bankruptcy. The difference between J.F. Thomas filing bankruptcy and Bear Stearns filing bankruptcy is that the latter has the potential to bring the financial system to a screeching halt.

I think you left out the part about the $30 billion guarantee from the Fed.

OTOH, it's true that a Bear Stearns bankruptcy might have had dire consequences for the financial system. But isn't that an argument for regulation? Without it, we allow firms like Bear to profit by imposing risks on the economy as a whole, not just their investors and lenders.
6.8.2008 5:49pm
zippypinhead:
You get what you vote for.

Yup, that about sums it up. If you don't like the government, there are several things you can do.

(1) vote.

(2) don't like your choice of candidates on the ballot? Get involved in the political party of your choice to influence candidate selection.

(3) run for political office yourself. About the only sometimes-comment poster on Volokh I know of with the gumption to put his money where his mouth is and do just that is Clayton Cramer, in Idaho. Whether I agree with his policies or not, at least he's jumping in to try to make a difference.

(4) get out of the ivory tower and join the government. Convinced you're smarter than the bureaucrats? Maybe it's time for you to go make a change in the bureaucracy, or at least give it the old college (law school?) try.

But whining and criticizing without trying to make things better is just silly. Didn't Winston Churchill once remark that "no one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government, except for all those other forms that have been tried from time to time."

Just one pinhead's opinion...
6.8.2008 6:45pm
theobromophile (www):
You compared the ability of a state that has the 10th largest economy in the world to a state that is 1/10th its size economically. Besides, iirc, Katrina did not just hit the NOLA basin. It wiped out a major section of the Gulf coast

Sigh. No one has demonstated why Silicon Valley helped California to anticipate its own natural disasters and to prepare for them. Californians know that their state is vulnerable to earthquakes and forest fires. It prepares for them, instead of waiting for the federal government to do it. Note that California also has a much larger population and land mass than does Louisiana, which exacerbates rescue efforts and increases the amount of land and population that their government must protect.

Finally - yeah, Katrina hit the entire Gulf Coast. So what? It was NOLA that was flooded when the levees broke; my sister's condo on the Atlantic Coast of Florida wasn't trashed by Katrina-related flooding after the non-existant S. Fl. levees broke.

FYI - L.A. and S.D. have a population of almost 13 million (which counts just those two counties, not affected outlying areas). I fail to see how it's somehow easier to provide for the safety of 13 million people than it is of 1.5 million people... it's pretty stupid to scream "the economy! the economy!" while ignoring differentials in population, land mass, and the like.

Anyway, the bickering over the economy of California is totally beside the point, which is what lawyers are good at. Whomever nitpicks the most, wins!
6.8.2008 6:59pm
EPluribusMoney (mail):
For those of you who think the government should be doing something about CO2, here's what we're talking about (from American Thinker).

In his must-read eco-thriller, State of Fear, Michael Crichton creates a brilliant visual to assist us in wrapping our minds around the components of Earth's atmosphere. On page 387, he likens the atmosphere to a football field. The goal line to the 78 yard-line contains nothing but nitrogen. Oxygen fills the
next 21 yards to the 99 yard-line. The final yard, except for four inches, is argon, a wonderfully mysterious inert gas useful for putting out electronic fires. Three of the remaining four inches is crammed with a variety of minor, but essential, gases like neon, helium, hydrogen and methane. And the last inch? Carbon dioxide. One inch out of a hundred-yard field! At this point I like to add, if you were in the stands looking down on the action, you would need binoculars to see the width of that line. And the most important point- how much of that last inch is contributed by man-made activities? Envision a line about as thin as a dime standing on edge.
6.8.2008 7:05pm
JoeB:
Yes, but WorldCom is no longer. Enron does not exist. Their shareholders lost their money, and the executes are standing trial. What needs to happen before Fema, the FBI or the DMV get disbanded? When will the Congressman who steered $10 million towards the client of a lobbying firm which donated to his campaign be run out of Washington in shame?

How can you even claim that government is more accountable that private businesses?
6.8.2008 7:13pm
byomtov (mail):
EPluribusMoney,

What's so brilliant about that? So CO2 is a small component of the atmosphere on a percentage basis. Most people can understand that without thinking about football fields. But why is that relevant to whether it's a problem? It's the effect of something, not its relative size, that matters.

Would you give a thirsty child a beer, because after all it's only 5% alcohol or so?
6.8.2008 7:29pm
ChrisIowa (mail):

Yes, but WorldCom is no longer. Enron does not exist. Their shareholders lost their money, and the executes are standing trial.


It should not be left out that in the case of WorldCom it was the Board of Directors that called an end to it, not the regulators.
6.8.2008 7:46pm
Smokey:
EPluribusMoney: Your lucid comparison of the teeny, tiny trace of CO2 in the atmosphere would convince any normal, rational person that the whole "carbon is ee-e-evil" scam is created only to angle for money.

Only 2.75 percent of all atmospheric CO2 is anthropogenic [human produced]. Human activity is responsible for just 0.001 percent of the atmosphere [ie: 0.00001]. If the atmosphere was a 100-story building, humans' anthropogenic CO2 contribution today would be equivalent to the linoleum on the first floor. Yet the Party line remains that this 0.00001 of the atmosphere will bring about a planetary catastrophe within ten years -- unless American taxpayers agree to fork over tens of TRILLIONS of dollars -- to stop a completely non-existent problem.

But the True Believers in a coming human-induced global warming catastrophe have made up their minds, and shut them tight. They are now Believers, not thinkers. Otherwise, they would acknowledge that the basis for the UN/IPCC's always wrong predictions are always-inaccurate climate models. See, if we simply accept the empirical [real-world] record, we see this, and this, and a thousand other real-world proofs that AGW is globaloney.
6.8.2008 7:55pm
Jim at FSU (mail):
Well put, JoeB.
6.8.2008 8:03pm
EPluribusMoney (mail):
Would you give a thirsty child a beer, because after all it's only 5% alcohol or so?

If the beer had the same alcohol as the atmosphere has CO2 (3/10000), yes I'd give beer to all the thirsty children. And the religionists couldn't even prosecute me because such an miniscule amount doesn't even register.
6.8.2008 8:12pm
ChrisIowa (mail):

Would you give a thirsty child a beer, because after all it's only 5% alcohol or so?


Maybe if he's German?

One test of a theory of global warming is that it must have a component that could account for the shrinking of the polar caps of Mars and the additional red spots on Jupiter. Both phenomena have been attributed to global warming of their respective planets. They are a natural control group; they should be used as such. Any model of global warming that does not consider them is bunk.
6.8.2008 8:17pm
byomtov (mail):
Smokey,

Yeah. That's a tiny percentage. Can't possibly matter. Sure is a convincing argument. I guess you wouldn't mind breathing in some air that had a 600 ppm (.0006) concentration of hydrogen cyanide gas. That's tiny. Can't matter.

Look here to see how insignificant it is.
6.8.2008 8:23pm
Dr. T (mail) (www):
I agree with cboldt: The government does not consider any of the listed items to be mistakes. None of the listed items were due to which party holds the presidency or the majority in Congress. They are just bureaucracy and politicking as usual. The only way to eliminate these types of mistakes is to minimize the size and scope of government. Over the past 50 years, Republicans and Democrats have been equally as bad at enlarging government. We need politicians with libertarian views instead of pro-large government and/or vote-buying views.
6.8.2008 8:34pm
Kazinski:
When the Federal government goes in a bails out a corporation, 98% of the time all the shareholders are wiped out. When the assets of the corporation still have some net value, then the shareholders can get a pittance. Some banks and corporations may be "too big to fail" but their shareholders never are. Its the customers, creditors and to some minor extent the employees that are sheltered in a bailout, it is never the shareholders.
6.8.2008 8:48pm
Kazinski:
Would you give a thirsty child a beer, because after all it's only 5% alcohol or so?

Damn right, the pilgrims did, because it was much safer than water or milk. Same with wine and children in France.
6.8.2008 9:00pm
Smokey:
byomtov:

You were kidding us, weren't you? You weren't seriously comparing the toxicology of cyanide [used in the gas chamber] with the carbon dioxide we routinely exhale, and which plants -- and thus animals -- need to thrive on.

C'mon, you were kidding us. Right?
6.8.2008 9:06pm
byomtov (mail):
Smokey,

No claim that CO2 is toxic.

I was just pointing out that sometimes a very small component can make a big difference, so that saying, "It's a small percentage, so it can't have a major effect," is a really stupid argument.
6.8.2008 9:28pm
Oren:
What kind of government forces people to make gasoline out of food, artificially boosts the price of corn to $6 a bushel, guarantees that inflated price as the "base" for higher federal subsidies to corn farmers in the future, and then tries to hide its own depredations by excluding high food prices from its measure of "core" inflation?
A government that grants substantial legislative powers to states with very few citizens but with a lot of agriculture?
6.8.2008 11:22pm
Richard Aubrey (mail):
Since candidates have to promise stuff to win, and since they have to produce on the (mostly) least laudable of the promises, we see this stuff.
The politicians have guaranteed to take care of so many things that they need huge budgets and enormous power to do so.
If the voters didn't demand so much, this wouldn't be happening.
But a substantial number--just enough to swing every election--are selling their votes and they're not even smart enough to know they're being paid WITH THEIR OWN MONEY.
In the old days, pols had to use family money to buy votes. Now they have figured out a way for the chumps to do the paying.
It's all good.
6.8.2008 11:39pm
Oren:
"It's a small percentage, so it can't have a major effect," is a really stupid argument.
Actually, for a chaotic non-linear system, it's an entirely meaningless statement -- much worse than merely being a stupid argument.
6.8.2008 11:58pm
A. Zarkov (mail):
Oren:

The global warming advocates say the earth's climate system is not chaotic over long time horizons. Short time is a different story. Indeed Lorentz's original papers that started the whole business discussed the unpredictability of weather (as opposed to climate) over short horizons because of sensitive dependence on initial conditions.

Let's also note that CO2 by itself does cause only a small increase in surface temperature. Global warming only becomes significant because of positive water vapor feedback. So those who claim the CO2 concentrations are too small to matter are correct, but only for an open loop system. But they are wrong once you close the loop. But if you want to close loops then close it again for the cloud cover feedback from the water vapor feedback. If this feedback is negative then the climate sensitivity factor could be much smaller than the median of the IPCC range.
6.9.2008 2:43am
Richard Aubrey (mail):
A. Zarkov.

Sort of makes sense. Can you connect that with the fact that CO2 increases have lagged temp increases?
6.9.2008 6:32am
J. F. Thomas (mail):
Since this thread has degraded to a bunch of incredibly ignorant and inaccurate beliefs about CO2 I will set you straight.

First of all, just because we exhale CO2 doesn't mean it isn't toxic. I bet you guys don't wash your hands after you use the toilet. "Hey, its coming out of my body, how can it be bad?"

CO2 is toxic to humans. Haven't you ever seen a submarine movie? It is not the lack of oxygen, but the buildup of CO2 that kills. At about .5--1% CO2 people will develop headaches and drowsiness. At 5% it is lethal (even though there is still plenty, 19% or so, of breathable O2).

Richard,

Why on earth does the fact that CO2 increases have apparently lagged temp increases in the past have to do with the fact that in this round of increases they appear to be a leading factor? That is exactly why this time it is different.
6.9.2008 10:07am
Bob from Ohio (mail):
Before you accept JF Thomas on the science of CO2, have him explain the principal of conservation of energy. I read that his alter ego is an expert!
6.9.2008 10:55am
Aultimer:

A. ZarkovI think the problems lies more with large bureaucracies as opposed to government alone. []. But there is an inherent problem with a government making capital allocation decisions: politics. A DARPA (Defense Research Projects Agency) manager told me he has to "spread the wealth." Meaning every state has to get a piece of the pie even if the proposals coming out of some state are less meritorious.

How are the politics of DARPA's "spread the weath" any different from a business' decision to use the less meritorious products or services of suppliers who happen to be customers? In some private organizations, there may be an entirely rational cost/benefit analysis in such situations, but in my experience it's not so.
6.9.2008 11:49am
Curious Passerby (mail):
I bet you guys don't wash your hands after you use the toilet. "Hey, its coming out of my body, how can it be bad?"

When I use the toilet I usually do not get urine on my hands. My body is well washed each day. Touching it does not impart anything unclean on my hands.

You must be one of those religious fanatics who thinks every time you touch yourself you have to wash your hands, regardless of whether any soiling occurred.
6.9.2008 12:01pm
A. Zarkov (mail):
"How are the politics of DARPA's "spread the weath" any different from a business' decision to use the less meritorious products..."

As a general principle it isn't, and there's lots of internal corruption in business such as hiring relatives and favorite customers. It's chiefly a matter of degree.
6.9.2008 12:15pm
A. Zarkov (mail):
CO2 is of course toxic in high does. The Cameroon Lake disaster in 1986 clearly shows that. A large cloud of CO2 bubbled up from the lake bottom and suffocated the nearby residents.
6.9.2008 12:30pm
eddiehaskel (mail):
When you have ideologues who openly detest government being hired to fulfill its duties, is it really surprising how badly things are run.
6.9.2008 1:25pm
A. Zarkov (mail):
"Why on earth does the fact that CO2 increases have apparently lagged temp increases in the past have to do with the fact that in this round of increases they appear to be a leading factor? That is exactly why this time it is different."

Pretty much everyone agrees that global warming increases with latitude. Therefore the Artctic is a good place to look for the relation between CO2 and temperature. If you look at Figure 2 in this report you will see that Arctic temperatures were decreasing from 1940 through 1970 while the global average temperature was approximately flat and fossil fuel use was soaring. Note we only have direct measurements of atmospheric CO2 concentration since 1958. After 1970 both Arctic temperatures, global average temperature show an increase.

The whole subject of the correlation between the CO2 time series and the global temperature time series is fraught with uncertainty because we have no direct data and must use proxies, like ice cores and tree rings for long time scales.

A critical assessment appears here and many other places. Also see the Wegman report on the hockey stik. Zbigniew Jaworowski has published on the problems with ice core data, a summary appears here.

For the other side see the IPCC reports, realclimate, and the noted climate scientist Al Gore.
6.9.2008 1:25pm
luagha:
Curious Passerby:

As far as washing your hands goes, any time you touch your genital area (front or back) you should wash your hands because your genital area has a much higher incidence of coliform bacteria. It also has the mechanisms in place to properly cope with it, but your hands routinely touch your nose, lips, and eyes which do not.

And actually, getting urine on your hands would be a positive thing comparatively (except for the odor). Urine is very close to sterile (unless you are near death from certain diseases) and urea/uric acid is harmful to and naturally washes away a large quantity of harmful bacteria.
6.9.2008 1:43pm
FWB (mail):
Back to the REAL topic about how government function:

If the government were to manufacture wheels, they manufacture square wheels. At least they'd be "safe" wheels.
6.9.2008 5:00pm
Smokey:
J.F. Thomas:
CO2 is toxic to humans.
So is dihydrogen monoxide.

Forget the silly toxicity comparisons between completely different molecules. Only a scientific illiterate would assign such comparisons any credibility.

From A. Zarkov's first [peer-reviewed] link:
The fact that an almost linear change has been progressing, without a distinct change of slope, from as early as 1800 or even earlier (about 1660, even before the Industrial Revolution), suggests that the linear change is natural change. As shown at the top diagram of Figure 1, a rapid increase of CO2 began only after 1940. As far as the gradient of the linear change is concerned, it can roughly be estimated to be about 0.5°C/100 years based on Figures 3, 4, 5, 6, and 7. It is very interesting to recognize that this gradient is almost comparable with the IPCC’s estimate of 0.6°C/100 years. [authors' emphasis]
In other words, the Earth has been warming at essentially the same rate since well before the Industrial Revolution. That fact alone destroys the claim that human activity has any measurable effect on the climate.

When a hypothesis [in this case, AGW] has been decisively falsified, then that hypothesis is no good, and must be entirely rejected. As Einstein said in response to a letter signed by 100 scientists who claimed that his theory of relativity was wrong: ''To defeat relativity one did not need the word of 100 scientists, just one fact.''

The fact that the planet has been warming at the same rate over the past 100 years as it has since the 1600's is an astonishingly effective falsification of anthropogenic global warming. The AGW hypothesis will never recover from that fact alone.
6.9.2008 5:16pm
markm (mail):
byomtov: Yes, but there's a huge difference between adding a trace of cyanide where there was none before and adding 2 or 3% or what's already there.
6.9.2008 6:53pm
Ryan Waxx (mail):
J. F. Thomas, since you are such an expert on Ponzi schemes, please tell us how the Ponzi scheme that is social security is going to be resolved, since it can't be driven out of business like the ones you decry.

Or doesn't it count when the government does it?
6.9.2008 10:09pm