It is accepted as a matter of course on the Left that the federal government is better suited to running large segments of the economy because it is disinterested in profit and therefore more likely to make decisions for the good of "the people." Historically, this is nonsense; after all, corruption thrives in situations where the government has control over the economy. However, even if we believe that the Obama administration, by dint of their superior ethics and morals, will be more careful in their management of the economy, there is a fundamental aspect of human nature that condemns them (and us) to failure in terms of risk management. The problem derives from how risks are assessed and determined and how such risks are managed.
The Left is fond of disparaging the profit motive. Corporations are not to be trusted since they depend on profit, whereas government is more trustworthy since they have no such base interest. (Which raises the question of how so many of our public servants and their friends become so wealthy while preforming such public service but that is apparently no longer a concern of the traditional watchdogs of the government.) What this confuses is the difference between intentions and outcomes.
Since government officials, including elected officials, intend to help the people in a disinterested way (without any possible conflict of interest since their goal is wholly to make the peoples' lot improved) they must be more moral actors than those business people whose goal is to make a profit. However, the salient pivot point occurs when outcomes are poor. Almost everyone has a tendency to attempt to avoid responsibility for bad outcomes. We are highly adept at finding ways to deny or diminish our responsibility for bad results. We start this process at a young age. (I got a "C" because the teacher doesn't like me. I failed the test because the teacher is a bad teacher and no one likes her.) The beauty of the government is that our elected officials can simply declare that they were innocent of any wrong doing and can write the laws in ways which support their claims. This is at work in the disaster over the sub-prime housing meltdown in which government policies and mandates were as much involved as Wall Street greed yet thus far there has been minimal responsibility taken by such luminaries as Barney Frank and Chris Dodd. (Not to mention they also share a remarkable lack of humility. One would think that those who were up to their eyeballs in the sub-prime mess would at least have the decency to keep silent and stay out of the spotlight.)
While the bureaucracy has perfected ways to avoid responsibility for any and all decisions, it is the exact opposite in the free market. In the market, a poor outcome leads to the loss of money. There are few things more salutary for assigning responsibility than losing money. If I give my money to someone claiming he will make me a fortune and he absconds with the money or invests it poorly (or not at all, a la Bernie Madoff) I may feel like I am a completely innocent victim and may feel that I deserve recompense but the markets are unforgiving and that money is gone. Whether I like it or not, I am forced to take responsibility for my decisions in the most basic way. On the other hand, if a government bureaucrat or an elected politician loses a billion dollars of tax payer money, he can, often in league with his ideological allies in the press, hide the "error", blame it on others, and avoid responsibility for his actions if he is a skillful enough politician or bureaucrat. The responsibility evaporates and the taxpayers are left holding the bag, out their billion dollars.
By now there is really no excuse for most people being so ignorant of such basic realities, but our education system and people's inherent limitations (of curiosity, intellect, mathematical or other illiteracy) have left us with a large population of voters who do not understand where money comes from (it does not grow on trees or arise magically de novo in the bank accounts of the wealthy) and have no other metric by which to assign responsibility for untoward events.
In a brief conversation this morning, a very liberal social worker expressed disdain for the company which was supplying free medication to one of her patients. The patient has Bipolar Disorder and has found stability only with a pair of very expensive brand name medicines not yet available as generics (ie, still on patent.) When I remarked that it costs well in excess of a billion dollars to bring a new drug to market and that the companies would stop doing so if there was no profit to be made, she sneered and remarked that she didn't feel bad for the drug companies. The reality, that if we beggar the drug companies we will forfeit the innovations and advances in medicine that promise to enhance our lives and extend our longevity, is simply inconceivable to her. The bureaucrats who increase regulation and thereby increase costs of new medical advances (whether drugs or other innovations) will never be identified, let alone held responsible for increasing sickness and death in the name of preventing bad effects of innovation. The politicians who increase taxes on the wealthy, including rich corporations, will rarely be held responsible for the lost growth and the inhibition of progress that their policies engender. Since they have the best of intentions and few understand basic economics, we will all end up poorer for trading our chaotic freedoms for an illusory safety from risk.
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