Wednesday, July 7, 2010

Expecting Too Much From Government?

We live in a complex world, but for some reason we expect our government to be able to keep up with and respond to every new issue or disaster that comes along with the speed and efficiency of a quantum computer on hyperdrive. 

Richard Posner a lecturer at the University of Chicago Law School who writes for the Becker-Posner Blog points this out very eloquently.
The reaction to the latest accident has been surprising. Oil spills and underwater drilling accidents are common, and despite the media hype it is too soon to tell whether this one will prove to be the biggest yet. The amount of oil leaked so far is substantially less than the amount spilled or leaked in previous accidents, including at least one in the Gulf of Mexico.
It is also surprising that so much criticism has been directed at the Obama Administration, and indeed against Obama personally. Most of the criticism is absurd—his failure to react emotionally, and his inability to “just plug the hole,” are not personal or professional failings. The Minerals Management Service in the Department of Interior does seem to have been asleep at the switch, but Obama unlike his immediate predecessor cannot be criticized as being hostile to regulation—if anything, he has too much faith in it. MMS is a small and obscure agency far below the horizon of a president’s supervision. No president can eliminate all pockets of incompetence in the vast federal government.

It is possible that the number of recent disasters has created a public sense that something is wrong with government: that it ought to be able to prevent all disasters. But this is an unrealistic expectation. Everything conspires against a government’s being able to protect its people against disasters, whether natural or man-made. A factor that retards prevention of man-made disasters is the rapid and relentless advance of technology. Regulation lags innovation. The Federal Reserve, Treasury Department, and SEC were no more able to keep abreast of advances in financial engineering than MMS was to keep abreast of advances in drilling for oil at very great depths under water. Slack regulation encourages private companies to adopt a high-risk business model. Risk and return tend to be positively correlated, in finance because risky loans command higher interest rates and in underwater drilling because risk abatement is costly. Business is particularly reluctant to take preventive measures against unlikely disasters because they do not pose a serious near-term threat. If there is a 1 percent annual probability of a disastrous drilling accident or financial collapse, the probability that the disaster will occur any time in the next 10 years is only 10 percent. Business managers have finite planning horizons just like politicians.
T.R. Ferenbach, columnist for the San Antonio Express-News thinks there is plenty of blame to go around.  In his article Overly Demanding Voters Share Blame for Government Budget Disasters says
Sure, governments have spent too much and borrowed too much to do it [offer generous pensions and entitlement programs], deranging national and world financial structures. But why? Is this a run of collective insanity, or a case of simpletons in government screwing up that elusive concept, money?

I believe that the underlying problem is voting by people who do not understand democracy. They rush from dreams of omnipotence to the dregs of apathy. Democratic government cannot supply people with everything they want simply because they vote for it. The ballot does not create either wealth or jobs. Democratic government requires working out reasonable compromises between classes, regions, factions, which means no one is likely to get everything he thinks he deserves, all within what is possible, which means within a polity's means.
 Now in Texas many of us don't want our governments borrowing lots of money and spending it on entitlements.  We hate it so much we only allow balanced budgets.  But at the same time we also expect an awful lot of our local governments, or as the saying goes, we expect juice from a turnip.

As far as most Texans are concerned, we pay way too much money in taxes.  But wait a minute, Texas is 43rd in the nation in tax burden.  The states that have lower tax burdens than we do have no state sales tax.  We actually have a pretty good deal when it come to taxes.  The tax rate in San Antonio actually dropped between 1991 and 2008.  So not only are we paying less money based on the tax rate, we are also paying less based on inflation ($1.00 in 1991 cost $1.56 in 2008).  San Antonio is a growing city (over 600,000 new residents from 1991 to 2008) which adds to the tax base, but also adds to the number of roads that have to be maintained, the amount of fresh water that needs to be supplied, the changes to the landscape that effect flooding, the snarled traffic that needs to be addressed, etc, etc. A tight budget means that the city does what it can, so we have to be reasonable, the city is playing catch up, it may not be running as fast as we wished it would, but it's running as fast as it can.

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