Why Government Fails So Often: And How It Can Do Better (4 page)

What is clear, however, is that the federal and state governments have grown steadily (the former is now more than five times as large as it was in 1960, in real terms, and the latter’s growth during this period is even greater), that total government spending per capita in the United States is now greater than in France, Germany, and the United Kingdom, and that it grows in both good times and bad. Our debt-to-GDP ratio not only exceeds that of most European democracies but also the average for Latin America.
⁶²
This growth in the federal government is obscured somewhat because it has largely taken the form of private contractors, nonprofit grant recipients, and state and local government implementers rather than federal employees per se. (I discuss this obscuring phenomenon further in
chapter 10
.) This fact probably explains why so many people, including many who should know better, still believe the antiquated notion that the United States has a relatively small public sector. As DiIulio put it in an important 2012 article, “Big government is here, and it isn’t going away.”
⁶³
All the more reason, then, to demand that the giant become more effective.

The rest of this introductory chapter does five things: (1) it defines the scope of the analysis; (2) it presents general conclusions about government’s performance by leading social scientists; (3) it
distinguishes optimistic and realist stances toward this performance; (4) it introduces the central role of markets in policy effectiveness; and (5) it provides a road map to the rest of the book. I then conclude with a paragraph about my own policy background and political orientation.

THE SCOPE OF THE ANALYSIS

My analysis concerns only
federal domestic programs
. Thus, I do not discuss foreign, military, or national security policies. The criteria, measures, and expectations of effectiveness in these areas are simply too controversial and opaque.
⁶⁴
Nor do I consider state and local programs. This has nothing to do with their significance in American life. Indeed, as I discuss in
chapter 4
under the rubric of localism, state and local governments perform highly important functions, especially in education, criminal justice, and land use regulation. They constitute roughly half of the nation’s public sector, and have expanded their workforces far more than the federal government has. Federal policy vitally affects state and local governments in many ways—for example, through enforcement of federal laws against state and local police forces and other programs,
⁶⁵
or federal mandates (funded and unfunded). Including them here, however, would be an unmanageable undertaking. Even so, the analysis in the chapters that follow will shed considerable light on lower levels of government because many of the same systemic forces that shape federal performance also apply, mutatis mutandis, to them.

By the same token, the performance of foreign governments is outside my ken here.
*
Many of our government’s defects are also found elsewhere—see, for example,
The Blunders of Our Governments
, a 2013 book about British failures
⁶⁶
—but again, this book
does not analyze governments in general. The term
exceptionalism
points to many unique features of our public and private orderings;
⁶⁷
some are highlighted in
chapters 3
and
4
. Comparisons between our government’s effectiveness and that of other advanced liberal democracies might yield valuable insights, but they would suffer from severe data and comparability problems, which is why they are rare.
⁶⁸
In certain areas, however, foreign experiences may have much to teach us—for example, about bureaucratic organization (
chapter 10
) and the war on drugs (
chapter 8
). I shall draw upon them where they seem useful and reliable.

My analysis focuses on the
actual
performance of government programs that are already in place
. I do not discuss the more abstract theoretical, philosophical, or ideological claims about the nature, role, and scope of government under one or another political theory. Library shelves already groan with weighty tomes on the origins of government, the various forms that it may assume, the a priori arguments concerning its proper purposes, and the sources and nature of political obligation, legitimacy, and power. All societies have grappled with these fundamental questions, and every political philosopher since Aristotle has reflected on them, often brilliantly. But exploring them would distract from my narrower purpose here. Accordingly, I shall finesse them, with apologies to (and disagreement with) those who believe that one cannot assess and explain government performance without resolving these core philosophical and theoretical questions. Instead, I shall for the most part take the current configuration of government programs as a given and try to answer questions of the following sort: What kinds of programmatic tasks has the government set for itself, and how well does it perform them? Why does the government fail so often in discharging those tasks, and which factors best explain its occasional successes? How might we do better?

These questions are dauntingly difficult—even conceptually. This probably explains why no one has taken them on in
systematic
fashion. By
systematic
, I mean an analysis that (1) applies to a broad range of specific public policies; (2) focuses on the structural,
endemic forces that shape government performance rather than the contingent and partisan ones; (3) rests on empirical evidence of government performance rather than intuitions or deductions from political theory; (4) invokes economic analysis where relevant (as it often is) but goes beyond it; (5) has no partisan, ideological, or interest-based ax to grind and no programs to defend; and (6) is conducted in a pragmatic, moderate, meliorist spirit.
⁶⁹

SOCIAL SCIENCE EVIDENCE ON GOVERNMENT PERFORMANCE

Systematic studies of government performance exist, but they are rarer than one might think. Peter Orszag and John Bridgeland, top budget and policy officials in the administrations of presidents Barack Obama and George W. Bush, respectively, write, “Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely,” which is hardly surprising given that in the hugely costly health care area, “less than $1 out of every $1000 that the government spends … this year will go toward evaluating whether the other $999-plus actually works.”
⁷⁰
And those studies that are conducted are narrow in scope. Alan Gerber and Eric Patashnik report that political scientists—our most thoroughgoing students of government—publish four times as many works on distributive issues than on studies of government effectiveness.
⁷¹
(They imply here that if more studies were conducted, more failures would be documented.) Political scientist Terry Moe, reviewing the public choice scholarship that has dominated the field in recent years (more on this in
chapter 4
), observes, “The question that has traditionally been at the heart of public administration … the effectiveness of the bureaucracy—is given no serious attention.”
⁷²
(This is not quite true.
Chapter 5
shows that even flawed public choice theories can shed useful light.)

Microeconomic studies provide the best evidence on programs’ effectiveness, and I shall rely heavily upon them in the chapters that
follow. As Wilson explains, social science is at its most rigorous when conducting retrospective studies of existing policies that can “tell people in power that something they tried did not work as expected.”
⁷³
In this introduction, I merely canvass more general evaluations of programs’ performance by leading social scientists.

Noted sociologist Peter Rossi, writing in 1987 after many years of experience in evaluating government programs, formulated the following “metallic laws” of program effectiveness:

The Iron Law of Evaluation
: The expected value of any net impact assessment of any large scale social program is zero. The Iron Law arises from the experience that few impact assessments of large scale social programs have found that the programs in question had any net impact. The law also means that, based on the evaluation efforts of the last twenty years, the best a priori estimate of the net impact assessment of any program is zero, i.e., that the program will have no effect.

The Stainless Steel Law of Evaluation
: The better designed the impact assessment of a social program, the more likely is the resulting estimate of net impact to be zero. This law means that the more technically rigorous the net impact assessment, the more likely are its results to be zero—or no effect. Specifically, this law implies that estimating net impacts through randomized controlled experiments, the avowedly best approach to estimating net impacts, is more likely to show zero effects than other less rigorous approaches.

The Brass Law of Evaluation
: The more social programs are designed to change individuals, the more likely the net impact of the program will be zero. This law means that social programs designed to rehabilitate individuals by changing them in some way or another are more likely to fail. The Brass Law may appear to be redundant since all programs, including those designed to deal with individuals, are covered by the Iron Law. This redundancy is intended to emphasize the especially difficult task faced in designing and implementing effective programs that are designed to rehabilitate individuals.

The Zinc Law of Evaluation
: Only those programs that are likely to fail are evaluated. Of the several metallic laws of evaluation, the zinc law has the most optimistic slant since it implies that there are effective programs but that such effective programs are never evaluated. It also implies that if a social program is effective, that characteristic is obvious enough and hence policy makers and others who sponsor and fund evaluations decide against evaluation.
⁷⁴

Rossi, a highly sophisticated analyst with a tart tongue in his cheek, surely did not mean that his “laws,” iron or otherwise, are certainties, only that they are exceptionally strong tendencies. And while his reference to “expected value” of zero implies that some assessments might be more positive, it also implies that at least many will be negative rather than simply have “no effect.”

Two books published in 2006 by the predominantly government-friendly Brookings Institution tend to support and extend Rossi’s iron laws. One is a collection of articles whose authors analyzed the effectiveness of four large, costly, and important federal policy undertakings.
⁷⁵
In a case study of a particular arthroscopic surgery undergone by millions of Americans at federal expense, the authors find this procedure often unnecessary, usually no more valuable than a placebo, and subsidized by the government without any good evidence of effectiveness.
⁷⁶
The vast majority of federal spending on urban mass transit goes to transit workers (at above-market wages) or equipment suppliers, with just 25 percent used to improve transit and to lower fares.
⁷⁷
Federal rental housing programs are dominated by unit-based assistance when recipient-based assistance would be far more cost-effective: “Even the smallest estimates of the excess costs of unit-based assistance imply that shifting ten families from unit-based to recipient-based assistance would enable us to serve two additional families.”
⁷⁸
And the federal special education program both creates incentives to include many students who are not truly disabled and underserves those who are.
⁷⁹

The second Brookings book, authored by regulatory economist Clifford Winston, reviewed
every published scholarly study he could find
of the actual microeconomic policy effects of federal programs designed to correct three types of conventional market failure: market power, information inequalities and externalities, and
public goods.
*
(In
chapter 2
, I explain the notion of market failure;
chapter 5
discusses nonmarket or government failure.) I detail many of Winston’s specific program evaluations in
chapter 8
, but here I simply present his conclusion that “policymakers have attempted to correct market failures with policies designed to affect either consumer or firm behavior, or both, or to allocate resources. Some policies have forced the U.S. economy to incur costs in situations where no serious market failure exists, while others, in situations where costly market failures do exist, could have improved resource allocation in a much more efficient manner.”
⁸⁰

These scholarly critiques of government performance are echoed in program-specific studies by government agencies and think tanks, and in peer-reviewed academic analyses. In 2012, I and two research assistants canvassed all of the assessments published since 2000 by the Government Accountability Office, the Office of Management and Budget, the center-left Brookings Institution, the center-right American Enterprise Institute, and two conservative think tanks, the Cato Institute and the Heritage Foundation. (The Congressional Budget Office conducts only prospective, predictive assessments of proposed policies, so its reports were not useful for my purposes.) The results were stunning. We found more than 270 such assessments, some of which will be cited in later chapters. Only a small number of these assessments could be considered positive; the vast majority were either clearly negative or showed mixed results.