Organizations – public or private – can fail at things — because people fail at things. But if failures are inevitable, which do you want? Government failure? Or market failure? You may think of this as a “lesser-of-evils” question. But there’s really no contest here.
In a throwaway post, economist David Zetland reminds us that so-called “market failure” doesn’t hold a candle to government failure. Consider this list carefully:
> The U.S. Postal Service was established in 1775. You have had 234 years to get it right and it is broke.
> Social Security was established in 1935. You have had 74 years to get it right and it is broke.
> Fannie Mae was established in 1938. You have had 71 years to get it right and it is broke.
> War on Poverty started in 1964. You have had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and somehow the poor are still poor.
> Medicare and Medicaid were established in 1965. You have had 44 years to get it right and they are broke.
> Freddie Mac was established in 1970. You have had 39 years to get it right and it is broke.
> The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You had 32 years to get it right and it is an abysmal failure.
Government? Or markets? I don’t want to present a false dichotomy, but it’s time we put things in somewhat starker terms: Either you’re with the market or against it.
Why might a little economic Manichaeism go a long way right now? For one reason, because the forces of darkness seem to be running things right now–despite snow-white intentions. Government failure keeps the economy from growing as it should. People don’t prosper when the economy doesn’t grow. It’s that simple.
Whole Foods CEO John Mackey put things in such simple terms in the wake of a backlash against his WSJ health reform piece last year: “In that op-ed piece, I was trying to make the argument that health care is really not different from anything else we provide for ourselves”—he had mentioned food and shelter—“and that capitalism is better than socialism at providing those things.”
Of course, if you’re in the other tribe – the government-as-god tribe – corporate America looks like the forces of darkness. Mackey again: “To the people that really dislike us, … Whole Foods is a big corporation, so they think that we’ve crossed over to the dark side. Kind of the Darth Vader myth, that somehow or another we’ve become bad because we’ve become large.”
But for those who have embraced an anti-corporate, anti-market ethos, go back over David Zetland’s list again. These entities are neither small nor successful. So which ones could be private? (Or does perpetual insolvency mean nothing?)
More importantly, these failed bureaucracies/programs are built not on voluntary exchanges among consenting adults, but on continuous coercion by elites (and entrenched interests). The cornerstone of government action is forcing others to bend to your will. If that’s not a Darth Vader ethos, I don’t know what is. I’m not saying we should privatize everything under the sun. But I am saying we should consider it — one bureaucracy at a time; one program at a time. (Let’s start with the U.S. Postal Service. Germany did it and we can too.)
One side things it has a right to take from others. The other side thinks it has a right only to give or exchange with others. Maybe you’re still not impressed by the difference. But when organizations based on voluntary association fail, they fail because they didn’t serve people well. When organization based on coercion fail, they fail by continuing to exist. And, of course, they continue to exist against the will of those who might otherwise have voted them out with their dollars.
