Government Has A Role

Yes government does have a role, but I think the bigger question is how we make government do what it is supposed to? How do we change an inefficient and incompetent government or a government that has been co-opted by corporations, unions, and special interests for their benefit? What is the mechanism to make government better?

Elections only replace the top level of government, it doesn't do anything to change the bureaucrats and lower level employees, what if they are incompetent and fail consistently to do their jobs? The SEC and their counterparts like the Commodities and Futures Commission (CFC) are good examples. We're told they were at MF Global overlooking the company weeks before they went bankrupt and stole over a billion in customer funds. How do we get these regulators to actually do their jobs? Unsurprisingly, no one has been fired from the regulators, how do we make them accountable? What is the incentive for these agencies to do better?

How do we determine if a government service is a good value? The TSA is a good example. How do we figure out if the benefits of their service outweigh the costs, both in dollar terms and time spent?

People are frustrated because we don't seem to be able to change government and make it better. With a private enterprise, we would just stop being customers and they would either have to shape up or go bankrupt solving the problem and another, better company would rise in its place. We have no such mechanism for government. Mark Thoma and others here make too many assumptions, especially about the efficiency of government and that government will operate as it's supposed to. What happens if it doesn't?

Government Today Incapable of Wise Spending

Government today is simply incapable of good spending, that is spending on projects that will produce a positive net benefit in the future. Projects are approved and denied for political reasons, not economic reasons, here's a good example...

http://mjperry.blogspot.com/2011/06/federal-governments-solution-to-non.html

Megabus provides low-cost, non-stop express bus service twice daily between Iowa City and Chicago for fares as low as $10 each way for service on some days, and $18 and $23 on other days. The single and double decker luxury buses offer free wireless Internet, convenient power outlets for laptops and cell phones, and panoramic windows (see photo above), and the one-way trip takes less than four hours. To provide this affordable, convenient, dependable and low-cost daily bus service between Iowa City and Chicago, Megabus receives no taxpayer funding, federal or state subsidies, loan guarantees, support payments, etc.

So what's the federal government's response to the "non-problem" of affordable public transportation between Iowa City and Chicago? At New Geography, Wendell Cox writes:

"The federal government is again offering money it does not have to entice a state (Iowa) to spend money that it does not have on something it does not need. The state of Iowa is being asked to provide funds to match federal funding for a so-called "high speed rail" line from Chicago to Iowa City. The new rail line would simply duplicate service that is already available (Megabus).

Perhaps most surprisingly, the luxury buses make the trip faster than the so-called high speed rail line, at 3:50 hours. The trains would take more than an hour longer (5:00 hours). No one would be able to get to Chicago quicker than now. Only in America does anyone call a train that averages 45 miles per hour "high speed rail."

The state would be required to provide $20 million in subsidies to buy trains and then more to operate the trains, making up the substantial difference between costs and passenger fares. This is despite a fare much higher than the bus fare, likely to be at least $50 (based upon current fares for similar distances). By contrast, the luxury bus service charges a fare of $18.00 (or less, see above), and does not require a penny of taxpayer subsidy.

Here in Los Angeles, we have the worst subway system in the world yet it was the most costly to build per mile. I have used the Shanghai, Paris, Hong Kong, Beijing, New York, and Bay Area subway systems more than I have used the LA one even though I have lived in LA for more than 30 years. The system could be made better if it went to more areas. Right now, the entire West Side and beaches are uncovered. Instead of spending money on projects that would reduce traffic and increase living standards, we have ridiculous projects like the one above along with another "high speed" rail project that proposes to link LA with San Francisco at some point. Yet this project will begin by linking two communities I've never heard of in the Central Valley. This is only the tip of the iceberg though.

http://articles.latimes.com/2011/may/16/opinion/la-ed-bullettrain-20110516

The train's biggest problems can be laid at the feet of the High Speed Rail Authority, which is overseeing its construction. Inexperienced board members appointed by the governor and Legislature on the basis of political patronage rather than expertise have made a host of poor decisions. Not the least boneheaded of these is the board's plan to take a circuitous route from Los Angeles to Bakersfield by veering through Palmdale and Lancaster. Compared with the more direct route along Interstate 5 through the Grapevine, this would add 30 miles to the trip plus $1 billion in construction costs, and make it all but impossible for the train to meet its promised travel time of 2 hours and 40 minutes from L.A. to San Francisco.

Instead of these stupid projects that will produce ongoing legacy costs forever, a better idea might be just to give people money to spend in the form of debit cards. These projects not only do not produce a positive net future benefit, they produce a NEGATIVE benefit as they will be in the red and cost government resources to maintain for as long as they operate. These are only some of the reasons why more government spending is so opposed at this time.