23 January 2010

When intentions and self-interest conflict

Frederick Barthelme describes a genial shift manager at the Paradise Casino, in his novel Bob the Gambler:
Phil Post was always pleasant, always commiserating, urging us to leave when we were ahead or when we got even after a bad run of cards. He seemed genuinely friendly, but he worked for the Paradise, so who knew. He was paid to grease the skids, to shill, so it didn't matter whether he was friendly or not, because even if he was, even if everything he said to us and everybody else he dealt with was as genuine as the day was long, it still amounted to coaxing more money out of our pockets. (page 123)
It's unfortunate that, as with the well-intentioned but necessarily compromised casino employee, policymakers have no real interest in downsizing or efficiency. From the current Economist:
Periodic attempts to build “bonfires of regulations” have got nowhere. Under [George W] Bush the number of pages of federal regulations increased by 7,000, and eight of Britain’s ten biggest regulatory bodies were set up under the current government. The power of these regulators is growing all the time. Policymakers are drawing up new rules on everything from the amount of capital that banks have to set aside to what to do about them when they fail. Britain is imposing additional taxes on bankers’ bonuses, America is imposing extra taxes on banks’ liabilities, and central bankers are pondering ingenious ways to intervene in overheated markets. Worries about climate change have already led to a swathe of new regulations, for example on carbon emissions from factories and power plants and on the energy efficiency of cars and light-bulbs. But, since emissions are continuing to grow, such regulations are likely to proliferate and, at the same time, get tighter. The Kerry-Boxer bill on carbon emissions, which is now in the Senate, runs to 821 pages.

Fear of terrorism and worries about rising crime have also inflated the state. Governments have expanded their ability to police and supervise their populations. Britain has more than 4m CCTV cameras, one for every 14 people. In Liverpool the police have taken to using unmanned aerial drones, similar to those used in Afghanistan, to supervise the population. The Bush administration engaged in a massive programme of telephone tapping before the Supreme Court slapped it down. Leviathan stirs again, 'The Economist' (subscription), 23 January
I don't see big government as necessarily a problem, but I do see remote, inefficient government as a problem, and one that's getting worse. Government is now so big it alone determines its size and rate of growth. In my view, the size of government should be a by-product of the social and environmental outcomes we want to achieve. There are some things that only government can do, two of which are articulating society's goals and raising the revenue for their achievement. Where government tends to be inefficient is in actually achieving these goals. Contracting out such achievement, as would be done under a Social Policy Bond regime, would bring competition to many services that are currently delivered by government agencies. Competition is not an end in itself, of course; it is a means to the end of greater efficiency. Unfortunately, our current system is not efficient. Some of its achievements have been impressive, but much of their cost has been deferred as far as politically possible. That's the financial cost. There have been other costs, as the Economist points out, including ever-growing state intrusion into our lives. Social Policy Bonds, or something like them, could be the answer.

No comments: