On government efficiency
I used to believe that the goal of the government should be efficiency. If the government was more efficient (waves hands broadly in the air), you could get rid of waste (again, waiving hands) and you’d need less taxes, and that would trickle down (more hands) as more money in people’s pockets, and you’d need less welfare (again, hands), less red tape (hands), and less bureaucracy (hands, hands, hands), et cetera.
I’ve changed my thinking on the subject. I now think the goal of the government should be to absorb inefficiencies.
As efficient as the fabled invisible hand of the market might be at lowering the costs of goods and services 1 and creating jobs2 … there are often non-economic inefficiencies that arise from rapidly scaling to produce cheaper goods in the infinite money machine. Rather than ignore those inefficiencies, I think the government should understand the ways the system breaks and invest in longer term ideas than making the stock market go up during the next quarter.
Here’s a short list of market inefficiencies where I think a government helps:
Social Security and Medicare. Unpopular opinion, but I sort of do see social security as a Ponzi scheme; younger people at the bottom fund older people at the top who “got in first”. But you know what’s a bigger problem? Elderly adults retiring with no retirement plan. In our “Buy the latest iPhone” society, people are statistically bad at planning for their own future.
The Environment. The free market doesn’t nudge companies towards making responsible environmental decisions. Even though electrification is 3× more efficient than carbon, the invisible hand is taking its sweet time moving over to it. Probably because the invisible hand gave too much money to the oil companies. We spend billions in aid for “once in a lifetime” acts of God that happen every year now. The “more efficient” act would be to kill carbon. We need a government to protect the non-monetizable resources that give us life like oceans, lakes, rivers, underground reservoirs, the air we breathe, and our forests.
Healthcare. I hate the American healthcare system. We pay too much for too little. We don’t pay for healthcare, we pay for insurance company lawyers to haggle about medical codes. Doctors hate it. Patients hate it. Insurance companies reek of greed and corruption. And each of us “doing our own research” isn’t a great because you end up with people turning themselves blue from colloidal silver. We probably need real doctors. And because most folks don’t need a doctor all the time, we probably need health insurance. The current system is a handful of state-by-state monopolies. But we know (according to Metcalfe’s law) that the value of a network is proportional to the number of connected users on the system. It would seem the best way to dodge insurance marketplace inefficiencies like rising costs and low quality care would be to have the biggest network possible (say, 330 million people?) to create the best safety net. The market is not getting us the best price.
Defense. Every American owning their own personal tank and missile system would be an inefficient stupid way to defend our country. It’s probably best to centralize the cost of Defense and hire trained armed service members for that purpose. I’m not advocating for more military –I’d personally prefer less– but security is a core need and it manifests at a nation-state level.
Transportation. I don’t think individuals should plan and build their own highways. I’d like a government to do that. I also think every American owning their own car that sits parked 95% of the time is a waste of money and space, even if it does make the GDP chart go up. You need a big extra room to store cars at home and a downtown filled with concrete ramps to store cars at work. Or an enormous parking lot to store cars at the store. Is this not a form of waste? There’s no way a train makes money and is a profitable business… but more trains equals less traffic. We know adding new ten million dollar a mile lanes to an already impossibly wide interstate creates more traffic, more road rage, and more traffic deaths. That is folly and an inefficiency governments can step in and solve.
Education. Education is a big expense. But you know what’s more expensive? Everyone being stupid. That’s a joke… partially. What is more expensive is everyone sourcing and paying for private schools; most parents would not do it. You’d end up with a future labor force with a lot less education. I think my biggest takeaway from school closures during COVID was how glad I am the public education system exists. Parents can work jobs, do commerce, and it allows kids to learn and play with other kids from a cross-section of incomes, ethnic groups, and special needs. The 1:20+ teacher-student ratio couldn’t be more efficient in regards to childcare. If anything we need more teachers and classrooms to keep that ratio as low as possible so education quality goes up. Oh, and school breakfasts and lunches are super efficient too. You can feed kids for like $1/kid, there’s no way I can hit those numbers at home. I can’t believe this is contentious. Let kids eat.
Scientific Research. Space is expensive to get to, only billionaires can afford it. Isn’t it nice that the government sometimes foots the bill for scientists to also go? Beyond space, efforts like curing cancer, computer research, or finding a new species of spider… these are not an ultra-efficient use of funds but those discoveries power innovation. The market doesn’t fund Science unless it makes money in an A/B test. We’d end up with more patent-pending boner pills instead of understanding of our universe. Real science is a bunch of inefficient question and answer seeking that changes the course of human history.
Human Rights. One way to drive down costs under Capitalism is to hire labor at the cheapest rate possible. Historically, our great nation has relied on slaves (yikes!) and children (yikes!) for cheap sources of labor. You’d have to work long hours for low pay and then a machine would cut off your arm and your employer would say “Well, you can’t work here anymore” and kick you out. Isn’t it great to have a government to correct this moral inefficiency? It didn’t happen overnight, of course. Countless churches and patriotic do-gooders were fine with justifying and upholding the old system. Even fought a war about it.
I could keep going, but there’s a billion and one jobs a government can do to improve the life and well-being of its citizens. Old habits die hard, I guess, because I’m still thinking about efficiency… but from the opposite angle. A government is perhaps best-situated to absorb inefficiencies at scale. Will there be inefficiency and waste and kingdom-building within a super-system like a government? For sure. Systems should always seek to improve. To begin fixing those problems you need data and transparency.
The more you understand Capitalism, the more you understand it’s a game. It’s a game with an enormous exploit. I’m talking Blanka in the corner levels of bullshit. The government should exist to fix those systems and curb those bad actors. But the system continues to reward them and heap tax break after tax break as a reward to their fellow co-conspirators in exchange for campaign contributions and lavish trips. Talk about inefficiency. Dumping piles of money into the hands of people who already have money. Sheesh.