Political Problems Are Policy Problems
A king wanted to audition a new court singer, so his underlings crossed the land, listening to everyone who wanted the job. Finally, they brought two finalists to perform for the king. When the first finished, his majesty said “That’s the worst singing I’ve ever heard” and immediately gave the job to the second singer.
What was his mistake?
He hired someone who might be even worse.
There’s an economic lesson here. The market’s failure to produce an ideal outcome cannot alone justify activist policy, because governments can, and usually do, also fail to produce the ideal. Since perfection isn’t possible, in market processes or in political processes, we need to ask which approach is likely to be better. The case for government intervention must always be comparative.
As I write, Congress is debating a second COVID-19 relief bill. As with the first pandemic bill, both the Democratic and the Republican versions of the legislation contain provisions whose relationship to COVID-19 relief is not clear. The original Republican bill in the Senate contained around $29 billion in military spending, with $8 billion for weapons procurement, including attack helicopters and hypersonic weapon defense. The Democratic version passed by the House in May repeals the $10,000 limit on state and local income tax deductions, and other Democrats have said that a stimulus bill could be combined with spending on climate change and infrastructure after President Joe Biden takes office. Whatever the merits of these proposals, their connection to COVID-19 is minimal at best.
Such spending shows how even well-intended programs end up looking very different after they make their way through the political process. (Each year, state, federal, and local governments combined spend about $1.2 trillion on assistance for the poor, not counting Medicaid. It would take about $200 billion, or one-sixth of what we actually spend, to pull every American family out of poverty.) Whatever the estimated cost of a new long-term program might be when it’s being debated, the eventual cost will be much greater, as we’ve seen with everything from Social Security to Medicaid. By its very nature, the political process transfor
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