All Government Policies in the Long Run

I've often told people, if you don't understand why a government policy (or corporate policy) doesn't work, its because you don't understand what the actual purpose is. Robert Higgs expands on this idea here.

A crazy claim you are probably thinking after reading my title. After all, “failed policies” are a staple of discussions and debates about government actions in the United States. Everybody, regardless of political preferences, has a list of what he regards as the most glaringly failed policies. This way of looking at the matter, however, is all wrong.

People label a policy as a failure because it does not bring about its declared objective. For example, drug policies do not reduce drug use; educational policies do not educate children better; national-security policies do not make Americans more secure; and so forth. The mistake is to take seriously the announced policy objectives, to forget that virtually everything the government does is a fraud. The best way to document the government’s nearly unblemished record of policy success is to follow the money. With very little trouble, you will be able to follow the trail to the individuals and groups who benefit from the policy. Occasionally the true beneficiaries do not benefit in the form of augmented income or wealth, but in other forms of reward, yet the principle remains the same.

When I first studied economics and began to practice as an economist, back in the sixties and seventies, I learned how markets and the market system as a whole operate. With this understanding in mind, I was able to identify a number of reasons why a particular policy might fail: it might be based on insufficient or incorrect information; it might give rise to unintended consequences; it might receive inadequate funding for its implementation; it might be based on unsound theory or mistaken interpretation of historical experience; and so forth.

Analysts who approach the question of failed policies along these avenues can rest assured that they will never lack for new studies to perform and new measures to propose to legislators, regulators, administrators, and judges. For example, if government fiscal or monetary policy fails to stabilize the economy’s growth because it derives from unsound macroeconomic theory, then the analyst attempts to identify the ways in which the received theory is unsound and to formulate a sounder theory, on the basis of which a more successful policy may be carried out. This sort of back and forth between theoretical tinkering and policy appraisal fills many pages in mainstream economics journals.

But it’s all a waste of time insofar as the attainment of the ostensible policy objectives is concerned, because these objectives are not the policy-makers’ real objectives, but only the public rationales they use to disguise their true objective, which invariably is to bring about the enrichment, aggrandizement, and other benefit of the politically potent individuals and interest groups that pack the decisive punch in the policy-making process—for example, those who can most effectively threaten legislators with affirmative punishments or the withdrawal of financial support for the legislators’ reelection if the string pullers’ interests are not served.

Almost twenty years ago, I wrote an article on this subject called “The Myth of ‘Failed’ Policies,”commenting briefly on how seven different areas of important, obvious policy failure illustrate my thesis. Looking back at my 1995 article, I can say now that in each case the apparent “failure” and the actual success have only grown. In each case, much more money is being poured down the rat hole of a failed policy now than was being poured down it then—which is only to say that the American political process is at least as corrupt now as it was then, and probably even more so. Despite various surface changes in policy details, none of the ostensible “failures” has been repaired in the least, even though the apparent failure has become only more blatant and undeniable.

Many people, for good reason, have concluded that the surest test of whether a politician or public official is lying is to ask, Are his lips moving? An equally simple test may be proposed to determine whether a seemingly failed policy is actually a success for the movers and shakers of the political class. This test requires only that we ask, Does the policy remain in effect? If it does, we can be sure that it continues to serve the interests of those who are actually decisive in determining the sorts of policy the government establishes and implements. Now, as before, “failed” policies are a myth in regard to all policies that persist beyond the short run. The people who effectively run the government, whether from inside or outside the beast, do not run it for the purpose of hampering the attainment of their own interests; on the contrary. Everything else in the policy process is, as Macbeth would put it, “a tale told by an idiot [augmented by economists, lawyers, and public-relations flacks], full of sound and fury signifying nothing.”