Why Government Fails So Often: And How It Can Do Better (2 page)

Why, then, do most members of such a successful society so disparage their government? (Interestingly, Europeans’ faith in
their
governments appears to be even lower!)
²⁴
This is an urgent, complex question, to which I offer five answers that are consistent with the social science evidence.
²⁵

The most straightforward answer is that
the federal government does in fact perform poorly in a vast range of domestic programs
. (As explained below, this book focuses exclusively on
federal domestic
programs.) This is amply demonstrated by the large body of evidence compiled by the nation’s leading social science analysts and
public administration scholars,
²⁶
evidence that I prefigure later in this chapter and in detail in
part 2
. A competitive party system and an attentive, critical media get the word out on these failures, and the public naturally takes notice.

Second, and equally conspicuous,
our legislative process is highly dysfunctional by almost any standard
. “Even in some of the worst years of partisan gridlock,”
New York Times
reporter Jonathan Weisman reports, “a deadline has meant something to Congress—until 2013.”
²⁷
The title of a recent book by two leading scholars of Congress is telling:
It’s Even Worse Than It Looks
.
²⁸
And as with the survey evidence just discussed, these professional judgments were rendered
before
both the latest government shutdown, the Obamacare website fiasco, and the impending debt limit crisis.

Third,
Americans perceive a gap between “the democracy of everyday life” and democracy as practiced in Washington
,
²⁹
between how well their neighborhoods and religious communities generally function, and the federal government’s often dismaying performance.
*

Fourth,
prosperity may have raised public expectations and demands
.
†
This could explain why voters from wealthier countries like the United States tend to criticize their governments more than those from poorer ones do, and also why they direct their discontent not at democracy per se, which still enjoys very strong support in all industrialized countries, but instead at their governing institutions and leaders. Some analysts ascribe this discontent to “postmodern” attitudes that erode respect for authority;
³⁰
people want to know, “What have you done for me lately?”

Finally,
Americans harbor the conceit that we the people are not responsible for the government’s failures, which are instead caused by
alien forces in Washington
. In this self-justifying view, those politicians are shortsighted, selfish, partisan, lazy, and hypocritical, but we citizens are not. We do not acknowledge the role played by our inattention, apathy, cynicism, ignorance, and demand for many more government services than we are willing to pay for.
*
Failure produces more finger-pointing than blame acceptance, as president John F. Kennedy noted after his own failure at the Bay of Pigs: “Victory has a thousand fathers; defeat is an orphan.” Walt Kelly’s cartoon character Pogo uttered another version of this truth: “We have met the enemy and he is us.”
³¹

DEFINING FAILURE AND SUCCESS

Assessments of policy or program effectiveness necessarily depend on how I (and the analysts whose work I synthesize) define and measure failure and success. Because these judgments are contestable, I use
chapter 2
to explore these definitions and measures, answering questions like: Failure and success compared with what—an unregulated market? What about programs that are successful in some respects but not in others? How can one assess a program’s performance? Since even ineffective ones create
some
benefits for at least
some
people, how can we assess them
overall
?
Chapter 2
presents my answers to such questions. I note there that the main index of a program’s performance should not be its durability or its enthusiastic defenders,
†
which may reflect political inertia protected by
strategically positioned beneficiaries, but instead its
cost-effectiveness
. I explain there what this means, how it can be assessed, and why many such assessments are controversial. We shall see that it is much harder to assess government failure than market failure, and to conclude that particular public programs do or do not “work.”

As the analysis proceeds, readers should keep in mind several points that subsequent chapters will exemplify. Even the most successful programs (see
chapter 11
) exhibit flaws, some of them serious, and even failed policies confer some benefits. Sometimes the benefits are immense, but they are delivered at much higher costs than necessary. (This is why I do not count Medicare a success, as I explain in
chapter 11
.) All such assessments are
relative
—both to the criteria of success presented in
chapter 2
and to how effective the program might be if its shortcomings could somehow be remedied. And although people often blame government failure on powerful interest groups, campaign contributions, and partisan polarization, the causes are almost always much deeper—and most of them, as we shall see, originate in Congress! In fact, interest groups (discussed throughout, especially in
chapters 4
,
5
,
7
,
8
, and
11
) are the lifeblood of a vibrant democracy like ours; their effects are large but widely misunderstood. Campaign contributions play a smaller role than most people think, as we shall see in
chapter 7
. And political polarization merely shows that the country is deeply divided; indeed, it has been from the very beginning and at times even more than now. But it does not explain policy failure.

Understanding government failure, then, presents complex challenges. Its funders, consumers, and ultimate appraisers—“We the People”—are more disgruntled than ever, and the social scientists who assess the evidence most rigorously find that these appraisers’ disapproval is amply warranted. In a consent-based polity, so
damning a verdict by both generalist citizens and policy specialists should be a cause for grave concern.

THE SOCIAL STAKES IN IMPROVING GOVERNMENT PERFORMANCE

Advocates of federal regulation can point to many social gains in recent decades—declining auto and airline accident rates, public health advances, legal rights for minorities and women, environmental protection, and the like—that they ascribe to public policy. Many policy analysts applaud the gains but are skeptical that the government is responsible for most of them. They argue that market and other factors produced most of the gains, and that more effective policies could have yielded gains that were larger, less costly, or both. I present evidence bearing on the competing claims in
chapters 5
–
8
. Skeptics concede that entitlements like Medicare and Social Security—where the big money is—have succeeded in redistributing wealth progressively, but think that much of the redistribution is unfair (to young people) and poorly targeted (to well-off Americans), and that some entitlement programs like food stamps and unemployment compensation create too much moral hazard (discussed in
chapter 5
). No serious analyst denies that the projected growth path, if unchanged, is unsustainable and eventually ruinous, but no one expects future policy makers to let that happen.

Reasonable people differ intensely over the proper
scope
and
size
of the federal government—that is, the areas of activity in which it should intervene, the projects it should undertake, and the means it should employ. Historically, the federal government’s size—and, more importantly, its responsibilities—have been hotly, sometimes violently, contested issues from the earliest days of our republic. Its role has waxed and waned in the wake of various crises or national emergencies. Notably, however, its expansion in the last half century—quite apart from national defense and other public goods—has been strikingly steady, ratcheting ever upward, with only the
rate
of increase varying.
³²
Public administration scholar Paul Light has
distilled from the federal statutes enacted between 1943 and 2000 a list of the government’s most important missions. The list demonstrates the remarkable growth in its programmatic ambitions during this period, a growth that even president Ronald Reagan could only slow, not reverse. Light also shows that various techniques that
every
modern president has instituted in order to eliminate bad programs, reduce wasteful spending, narrow the agenda by devolving authority to the states, and “starve the beast” (a phrase often used by small-government conservatives) through deep tax cuts have failed to turn the tide.
³³
Historian Niall Ferguson notes that the
Federal Register
has grown two and a half times faster than the economy over a long period of time, and that the ratio of final rules issued by federal agencies to laws passed by Congress in the last decade has been 223 to 1,
³⁴
not counting “Obamacare” (and many Dodd-Frank Act) regulations still to be promulgated. Political scientist John DiIulio shows that the expansionary dynamic is largely irreversible.
³⁵
And other leading political scientists concluded in 1997 that “the realm of policy knows no conceptual bounds.”
³⁶
And this was
before
the government embarked on No Child Left Behind, expanded Medicare to cover prescription drugs, adopted vast new regulation of the financial system, and enacted the remarkably ambitious Affordable Care Act (not to mention waging two wars).

Today, federal domestic spending is at the highest share of gross domestic product (GDP) since the end of World War II (albeit still well below European levels). A larger share of Americans receive entitlements than ever before; the federal government now backs 90 percent of new mortgages (up from half before the financial crisis), and 93 percent of student loans (a share that will approach 100 percent, with private lenders now excluded from the market). The number of regulatory agency staff members has ballooned, and these staffers churn out more and costlier rules than ever before.
³⁷
Much of this increased spending since 2008 was due to the Great Recession, but its link to the business cycle has attenuated as administrations propose more spending even in a growing economy. Reasonable people differ, of course, on the merits of a more interventionist
government. My point for present purposes is that its growth increases the urgency of understanding its endemic failures.

Policies that don’t work pose many risks to social well-being, but in this introduction I shall mention only four: (1) wasting scarce social resources; (2) suffering on the part of those Americans who most depend on government; (3) reducing future economic growth; and (4) threatening the government’s legitimacy.

Wasting social resources.
In 2011, the federal government spent approximately $3.8 trillion. Even if we set aside the $768 billion in defense spending as sacrosanct (which it isn’t, as was evident in the budget decisions negotiated at the end of 2011), this leaves more than $3 trillion of annual nondefense federal expenditure (almost 95 percent of total outlays) whose value depends on how well the government spends it.
³⁸
Politics and ideology aside, the conventional justification for this immense expenditure is that the money is better spent by the government than by the private taxpayers from whom it is exacted. If and to the extent that this justification is false—if the government in fact spends it less wisely and generates less social value than taxpayers spending the same amount would—then the difference in that value represents sheer waste to society (what economists, usually when referring to certain market inefficiencies, call a deadweight loss).

This waste could occur for several reasons. First, taxpayers could derive more value from spending the same amount of money than even a perfectly executed government program (whatever that might mean) would generate. Second, the government program may perform less effectively (i.e., produces less social value) than it should—most obviously in waste due to duplication, overlap, and fragmentation of programs. (I discuss this problem in
chapter 6
.)
³⁹
Although the first reason is no doubt important with respect to many government programs (I shall provide examples later on), my argument in subsequent chapters will focus primarily on the second.

Those who depend most on government.
Every American is affected by federal programs; they are simply too ubiquitous to avoid. Even the wealthiest citizens, for example, benefit from public goods
such as clean air, the Centers for Disease Control and Prevention, national parks, and the federal courts. But taxpayers also support a host of subsidy programs that seek to extend access to education, housing, nutrition, and a host of other “merit goods.”
*

In contrast, tens of millions of Americans, especially those who are permanently disabled, and unemployable, are now utterly dependent on the government for the essentials of life: food, shelter, basic health care, and other protection against hazards for which they are not responsible and which they cannot absorb without great suffering. (For the purposes of the present discussion, the normative value and design of these programs and their effects on recipients and society are beside the point; I will discuss them later.) Precisely because such public provision is life sustaining, it is immensely valuable to the recipients—and also to those better-off citizens, evidently a majority, who want the government to provide for the indigent. For that reason, poor government performance—inefficiency, unjust distribution, mistargeting
⁴⁰
—harms the putative recipients and dismays their public-spirited fellow citizens.