March 5, 2006

The Role of Government In Our Society, Revisited

Cafe Hayek has a very good posting entitled Government Ain't Us, which says:

The idea is prevalent that little or nothing beneficial happens for people generally unless it is done by government. Things people do individually -- for their own purposes, using their own gumption, own wits, and own resources, neither incited by nor directed by government -- too often are not counted as things that "we" do. The assumption seems to be that unless certain things are done by government, they aren't done -- even if they are done!

...I first encountered this comment in this Business Week Online article by Michael Mandel:

I'm not an economist, but it seems to me that one problem with Mandel's argument is that we're not investing in human capital. Government spending on universities has been slashed, leading to huge increases in tuition and much greater burdens on individuals and families. --Rebecca Allen, commenting on

"We're not investing in human capital" laments Ms. Allen -- who then immediately says that tuition is rising and that "individuals and families" apparently are paying this higher tuition despite the fact that doing so is a great burden. So, individuals and families are investing in human capital. But in Ms. Allen's view, we're not investing.

Why not?

Why reserve the "we" for actions taken by government? As a shorthand, it's perfectly appropriate to say about ourselves as Americans that, for example, "we drive a lot" or "we like NFL football." Not everyone drives, and some Americans can't tell a football from a foosball. Nevertheless, these statements make sense, we (!) know what they mean, and I dare say that they're correct.

No one would reply "Oh no Boudreaux, you're mistaken!" and then explain that, because most driving is done privately and because football fans buy their tickets to NFL games with their own resources, we don't drive a lot or like NFL football.

So why say say that "we're not investing in human capital" simply because (assuming that it's true) "government spending on universities has been slashed"?

It's just not true that government'r'us -- or that us'r'government.

Should government be the driver of these so-called investment ideas? If it were the driver, would the investments be successful?

An earlier posting on this site, entitled A Call to Action: Responding to Government Being Neither Well-Meaning Nor Focused on the Public Interest, brings clarity to the core issue about the proper role of our government, given the frequently misguided incentives that exist within the public sector which are rarely discussed publicly:

...the question arises regarding whether American citizens should continue to assume the actions of government are well-meaning and focused primarily on the public interest. The answer is no.

Why this claim? Just think about it. Most American citizens have personal stories about how various public sector players (politicians, bureaucrats, lobbyists, and other parties with an economic stake in government actions like corporations and unions) act in their own self interest and not in the public interest. In fact, the bottom of this posting contains numerous previous postings which provide examples of such behavior.

The balance of this posting will elaborate on public choice theory, which explains why we cannot assume government is either well-meaning or focused primarily on the public interest. The posting then concludes with specific recommendations in a Call to Action.

Read the entire posting for further information.