Free Markets, Free People

Mercatus Center

The newest oxymoron? “Government efficiency”

I’m always surprised by people that think government can run something better and more efficiently than a private entity.  Oh sure, there are things that are best left to government – like national defense – because it simply makes more sense when it comes to that.  But the fact that we charge them with that duty doesn’t mean they run it efficiently.

Governments have no incentive to be efficient.  We’ve talked about how, in private concerns, the profit motive provides incentive to be efficient.  In government there is no such motive.  So waste, fraud and abuse are rampant.

How rampant?  Take a look at this chart:

We’ve all been told by the Democrats that the government can help lower costs in health care.  But when you look at the 4 health care items on the chart (Medicare fee for svc, Medicaid, Medicare part C and D), you are looking at $63.5 billion … that’s with a “b” … dollars a year in “improper payment rates”.  Also look at the percentage of error.  In the EITC program, 22.7% or 12.6 billion of what they pay out is in error. (Don’t forget, the chart looks only at programs of $750 million or more a year – and we all know there are literally thousands of government programs below that threshold doing the same thing.)

Add all these up and government is making about $100 billion dollars a year in improper payments.  So if anyone wonders why I snort derisively when I hear Congress talk about a $10 billion savings over 10 years (not to mention that usually means not spending as much as they now spend) you can understand why. We’re not bleeding money at a federal level, we’re hemorrhaging it. What in the world is a 10 year $10 billion dollar “savings” worth when government is blowing a trillion dollars in 10 years via waste, fraud and abuse?

But do they actually address the problem?  No.  We’ve known about this level of waste, fraud and abuse for years … decades even.  And absolutely nothing of worth has been done to correct it.  In fact, given the amount of expansion the federal government has seen in the last decades, it’s gotten worse.  As the Mercatus Center says:

While people of good conscience on both sides of the political aisle can debate the merits of whether or not government should be involved in certain activities, none should tolerate the high levels of improper payments currently associated with government spending on social welfare programs. Federal spending has grown too massive to be adequately overseen. Waste, fraud, and abuse squanders public resources and undermines trust in government.

Indeed.  But there is one sure fire way to at least reduce this waste, given the apparent fact that government hasn’t a clue about how to reduce it.  Get government out of areas it has no business and cut spending.  Simplistic?  Not really.  That is a solution, or at least a partial solution.  I certainly understand there will be argument about the areas where government should be involved or not, but hey, crazy me, I’ve always found the Constitution provides some pretty good guidelines.  And, of course, then you have to elect legislators with both balls and a charter to do that (and who won’t succumb to “Potomac fever” when they arrive on the scene) and stay on them until they do what is necessary to accomplish the task.

Yeah, I know, not going to happen anytime soon.  People like their government cheese too much and most don’t mind at all that someone else is paying the freight.

Meanwhile this atrocious and unacceptable waste of your tax dollars will continue unabated (and likely get worse) – a victim of “government efficiency”.

~McQ

Regulation tends to cost lower income people more

I know that’ll come as an absolute stunner, huh? Not really. Regulation costs money. It costs money for compliance enforcement, which comes from taxes, and it costs companies money for compliance in the form of higher costs – costs that are passed on to consumers.

So? So – from the Mercatus Center at George Mason University, find out:

Low-income households benefit the most when they act to reduce their exposure to the greatest risks they face, such as relatively common events and activities that cause illness, injury, and death, many of which can be traced to living in unsafe neighborhoods. In contrast, high-income households generally focus more on small risks—for example, tiny environmental risks that are far less likely to occur and generally affect fewer people at the expo- sure levels regulations address.

LOWER INCOME HOUSEHOLDS BEAR MORE OF THE COSTS OF REGULATION

Regulation focused on small risks delivers benefits to a limited group but spreads the costs across everyone. As a result, regulation effectively transfers money from low income households, who need to prevent larger risks, to high income households, who are concerned about small risks. Low income households are, in a sense, paying for the lifestyle preferences of the wealthy.

Such regulation increases consumer prices and lowers worker wages.

• Regulations act like a regressive sales tax, with middle and lower income households bearing much of the cost of rules that focus on the risk preferences of wealthier households, since they all pay the same, higher prices.

• Cost of regulation as a share of income is estimated to be as much as six to eight times higher for low-income households than for high-income households.

• [Diana] Thomas estimates that households can mitigate the same level of mortality risks privately for about one fifth of the cost of public risk-reduction strategies.

Well, imagine that, the laws of economics at work in a very predictable way.  And, of course, completely opposite of the professed claim of the left to be on the side of the poor. Because it is that very group that continually push more and more regulation because, one assumes, they believe if some regulation is good, more has to be better. But, as a group, being mostly economically illiterate combined with unaccountable faith in government power, they end up with these sorts of ‘unintended consequences’ all of the time.

~McQ