Why Government Fails So Often: And How It Can Do Better (5 page)

This scorecard, of course, is not decisive. Critics might raise three objections—selection effect, unrepresentative examples, and “success is in the eye of the beholder”—which I have endeavored to meet.

A selection effect could occur in two ways—either if assessors were more likely to evaluate programs of doubtful effectiveness, perhaps in order to help policy makers improve them or replace them with better ones, or if assessors were motivated by an antigovernment bias. A selection effect under which putatively weak programs are more likely to be assessed is plausible, but it is also plausible that those who support particular programs will want them assessed in order to demonstrate their merit to skeptics and to the public. A priori, it is hard to know which tendency dominates in any particular situation.
*
As for ideological bias, it is not confined to conservative opponents of public programs but can also be found among liberal-progressive defenders of more active government. The only practicable way to assure analytical balance is to rely on studies published in peer-reviewed academic journals by professionally qualified researchers from mainstream institutions. My own approach to these questions is summarized in the final paragraph of this chapter.

A representativeness critique would argue that the policies whose assessments I report here constitute but a small fraction of those that fill the pages of the United States Code and the
Federal Register
, and that they are not representative of the much larger set that I do not discuss. Without assessing all programs, no one can say for sure whether the ones I do discuss are representative, and because programs differ from one another across so many dimensions—substantive content, animating theory, legal requirements, leadership talent, bureaucratic talent, public and congressional support, interest group dynamics, market conditions, implementation obstacles, funding, and many others—no sampling technique could possibly meet rigorous social science standards. What I can say is that the programs I do discuss are particularly important by reason of their budgetary size, prominence, durability, and political support. Because the structural
factors analyzed in
part 2
evidently impair the performance of so many important programs, and because these factors are present in one form or another in virtually all other programs, I can think of no reason why the patterns that I shall describe would not also apply to them. Accordingly, the burden of proof should now shift to those who deny the accuracy or representativeness of the evidence that I shall adduce, or the inferences that I shall draw from it concerning the policy effectiveness of particular programs.

The “eye of the beholder” critique—the notion that a program’s effectiveness is nothing more than a subjective judgment on the assessor’s part—assumes that more objective assessment criteria of success and failure are unavailable. This critique is discussed and refuted in
chapter 2
.

OPTIMISTS AND REALISTS

Policy analysts can be broadly grouped into two camps: optimists and realists. Optimists look at the many national achievements that I listed early in this chapter and insist that the government had a lot to do with these gains. In one variant of this optimism, political journalist E. J. Dionne thinks, contrary to what I argue below, that government would succeed more often if public expectations were higher, not lower.
⁸¹
Kelman is another prominent optimist, noting, “Government performs better than its reputation, but not well enough…. Government organizations take millions of young children every year and teach them to read…. A government organization gets millions of old people a pension check every month. Government organizations enforce environmental laws, and the air gets cleaner. The wilder tales of government waste and incompetence generally turn out to be grossly exaggerated upon closer examination. Furthermore, just as new government programs can fail, so too can new products from private firms fail because of the inability to create organizational capacity to make them succeed.”
⁸²

Part 2
will show that Kelman’s optimism is excessive and misguided. He vastly underestimates the barriers to more effective
government; some are remediable (see
chapter 12
), but many are too structural for significant improvement. He assumes that government is responsible for producing environmental and other social gains; we shall see, however, that the government’s causal role in producing some gains—relative to other factors—is often debatable, and that some outcomes are not gains at all but have made matters worse (see examples in
chapters 5
,
8
, and elsewhere). His assertion that both government and markets can fail is true but misleading as it implies a false equivalence: failed products quickly exit the market; failed programs, like diamonds, are forever.
*
To cite but one of countless examples: the Davis-Bacon Act, a perennial target of policy reformers because of its wastefulness, was passed in 1931 and shows no sign of departing.
⁸³
Were Kelman to review—as a hard-eyed analyst, not a dewy-eyed idealist—the mountain of empirical evidence presented in
part 2
on the ineffectiveness of program after program, he would probably have to abandon his optimism; there simply is too little basis for it, except perhaps for straightforward redistributions like Social Security and a few other areas like voting rights (see
chapter 11
).

Realists believe that optimists are, well, unrealistic. One group—call them the
stoic
realists—holds that government failure is an inevitable product of the human condition in a fallen world populated by Immanuel Kant’s “crooked timber of humanity,”
⁸⁴
where politics and self-interest, narrowly conceived, contaminate everything. The stoic would point out that the “good enough for government work” indictment is equally true of flawed families, religions, markets, popular culture, universities, friendship, sex, sports, and everything else that matters to us. In this world-weary, tragic view, the best advice to the disappointed citizen is “get over it.”

As will become clear, I am a different breed—call me a
melioristic
realist. I emphasize the deep, recurrent reasons for widespread
government failure analyzed in this book, believe that most of them are endemic to our system, and note that policy makers can have at best a severely limited knowledge of the opaque, complex social world that they seek to change, and meager tools for changing it—a point to which I return in the book’s final pages. Nevertheless, as
chapter 12
demonstrates, I am convinced that important policymaking improvements are possible in many areas if demanded by a public that is better informed about how human nature operates in the political realm, about how government works and doesn’t work, and about what it can and cannot realistically deliver. I return to this melioristic realism in
chapter 13
.

A PREFACE TO MARKETS

Markets cast long shadows across
all
policy making. Although they receive separate and lengthy analytical treatment in
chapter 7
, their effect on government performance is so great that I introduce them briefly here by way of introduction. Markets protected by property rights and the rule of law advance many precious human values: liberty, decentralization of power, competition, individual choice, productive incentives, prosperity, a robust civil society, and crucial information about costs, benefits, and desires that cannot be obtained as quickly, cheaply, and accurately in any other way. Markets have improved the standard of living of billions of people, particularly during the last few decades with the rise of China, India, and many other developing economies. In that vital sense, markets have also reduced inequality in those countries and strengthened many other civil society institutions on which the quality of community life ultimately depends.

At the same time, any particular market can exhibit defects (“market failures,” schematized in
chapter 2
) that reduce efficiency in that market and may also yield distributive outcomes that society deems unacceptably unfair. As detailed in
chapter 8
, much policy making seeks to ameliorate these market failures, whether real, exaggerated, or imagined. It is hard to know whether a particular market’s failure
is large enough to warrant policy change, and whether government interventions of one kind or another can improve matters over the market baseline. These questions are partly theoretical, partly empirical, and partly normative; reasonable policy makers and citizens tend to disagree about them. But as
chapter 2
will show, they are the
right
questions. Later chapters offer two types of convincing answers: general, systemic analyses identifying the conditions that presage policy failure or success, and specific policy assessments marshaling empirical evidence that reveals how effective those policies actually are.

Markets are fueled by self-interest, which is one reason why many Americans mistrust them.
⁸⁵
For centuries, critics have viewed this as a moral problem, identifying self-interest with materialistic excess, exploitation, and absence of the gentler virtues. Many public intellectuals and religious people claim that market-driven commercialism crowds out more communitarian, moral, and aesthetic values.
⁸⁶
On the other side, many have argued, at least since Charles de Secondat Montesquieu and Adam Smith, that the values that markets esteem and reward—liberty, attention to others’ needs and preferences, risk taking, cooperation, gains from trade—underlie and promote conventional morality and generate valuable forms of solidarity.
⁸⁷
Markets also facilitate environmentalism, cultural preservation, philanthropy, and other desirable practices—even religion, whose vitality in the United States has been stoked by fierce market competition for congregants.
⁸⁸

What is incontrovertible is that American society, more than perhaps any other on earth, favors markets as the strong default condition. The United States defers entirely or partly to market actors to perform many of the functions that in other advanced societies are reserved almost exclusively for government—for example, health care, pensions, low-income housing, education, social services, and bail bonding. We are far more likely than others to believe that market outcomes reflect hard work and talent rather than luck; one-third of Americans think that our fate is determined by outside forces, not personal behavior, while nearly two-thirds of Europeans think this.
⁸⁹
Americans, to be sure, often support regulation to reform markets,
producing far more of it today than even a decade ago, especially in health care and financial services. But even in the “new system” described above by Wilson and DiIulio, we also demand special justification to overcome the promarket and civil society defaults for solving perceived problems. Indeed, when Congress does intervene to reform markets, it often relies on private entities or public-private hybrids like Fannie Mae and Freddie Mac to get the job done rather than solely public administration. Such preferences dovetail with some other aspects of our political culture (see
chapter 4
).

This promarket default, which the New System has weakened, reflects three sturdy national values and a common misconception. The values are a highly individualistic, capitalism-friendly ideology, materialistic consumerism, and a chronic mistrust of centralized governmental power. It is striking indeed that even corporate power, which has aroused populist movements and popular indignation throughout our history—the public protests against the post-2007 economic meltdown, scandals, and officials’ solicitude for large financial interests are only the most recent example—tends to arouse less suspicion than governmental power. The misconception is that our political economy is divided into two separate spheres—government and civil society (which includes markets)—whereas in reality they are hybrid, highly interactive forms fundamentally shaped by each other.

Although
chapter 7
focuses on markets, their complex relationship to public policy plays an important role in
every
chapter’s analysis. In each case, I shall approach markets pragmatically: markets tend to work well compared both with the government’s own performance and with much of the regulation that tries to control them, but they are not sacrosanct. If a strong case can be made for improving on markets in the interests of greater fairness or efficiency, reformist politicians will eagerly take up the gauntlet and many voters will support them; otherwise, not. But this public philosophy still leaves us with the two questions that this book seeks to answer: how effective are government policies (including those that hope to improve or use markets), and why is failure so common?

In this introduction, I have presented enough preliminary evidence of widespread government failure and public dissatisfaction to support (only provisionally, to be sure) the two general hypotheses advanced earlier: first, the public’s dissatisfaction is well-founded, amply justified by the government’s record of poor performance; and second, the root causes of this endemic policy failure are structural and thus largely inescapable under present policymaking conditions. A corollary is that government failures do not merely reflect poor implementation of sound policies—although implementation obstacles are indeed a major cause of failure, as we shall see in
chapter 8
—but are built into the system and thus that much harder to rectify. In
chapter 12
, I propose remedies for this endemic failure with this caution clearly in mind.

Hopefully, this introduction will induce readers to hang in there to consider the more substantial evidence, both theoretical and empirical, presented in the rest of the book. In lawyers’ jargon, I want at this point merely to survive an early motion to dismiss by readers who assume that government usually succeeds in achieving what it sets out to do. If so, I can then proceed to the “discovery” stage, where I present the existing evidence about its
actual
performance. By book’s end, I hope to persuade you, the jury, that I have proved my case. As the saying goes, everyone is entitled to his own opinion, but not to his own facts.
⁹⁰
And the facts about government performance are damning—and vital to our efforts to do better in the future.