from the book: Shadow Dancing on the Grave of Hope:
Number one (from the last post) is obviously the best situation. This occurs when the customer pays for the service or material with his own money and economic benefits go directly to the provider of the program. The provider must work efficiently or the customer will go elsewhere. Number two would represent a situation where the provider scams the payer, the payer has a mistaken belief or the payer is compelled to give him money for unsatisfactory service or product. This situation would not last long nor occur often. The Prozac “epidemic” is an example of a customer paying for an outcome of dubious value. Number three represents a situation in private enterprise where the person works for someone else who receives the economic benefits when results are good. Efficiency is filtered through the employer who sees that the work produces results. Number four represents a government worker, someone who works for someone else and from whom results are not required. If you want something done, the first situation is the best, the fourth the worst.
Reform can only happen by changing the incentive system. It cannot occur by changing who belongs to which committee, who reports to whom, budgetary allocations, action plans, mission statements, new models, quality control procedures, or any of the other cosmetics that government agencies use to produce the illusion of change leading to progress.These procedures are based on this type of logic: If the lifeboats on the Titanic had been a different color, the great ship would still be afloat. This is tried, but still, the ship sinks. New hypothesis: It was the varnish on the railing of Second Class. This is the kind of reform for which public service is justly famous. Reform is necessary: Change something. In case you missed the movie, it was the collision with the iceberg that caused the mischief. The color of the lifeboats, or the kind of varnish, had no bearing.
“When action is divorced from consequences, no one is happy with the ultimate outcome. If individuals can take from a common pot regardless of how much they put in it, each person has an incentive to be a free rider, to do as little as possible and take as much as possible because what one fails to take will be taken by someone else.” John Stossel. And that’s also government for you.
All interests allied to, and of, the government engage constantly in what economists, with somewhat obscure language call “rent-seeking”. The origin of this term is presumably from the landed gentry whose lifestyle is supported by “rents” from land. The rent, in the case of rent-seeking, refers to economic advantages conferred by legislation or direct grant above, and usually far above, anything a free market would bestow. Given that these benefits exist in perpetuity and are independent of behavior, none of the favored groups ever willingly gives them up. Thence, the chance of reforming any system run by government workers or reforming handouts to any favored group by introducing earned incentives is zero. The incentives are earned by lobbying, not production. Tremendous effort goes into lobbying because once obtained, the benefits last forever. If you give a man a fish, he will feed himself for a day. If you teach a man to fish and expect him to feed himself, he will get really angry because you stopped giving him fish. And that’s government for you.
Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies
