Kevin Corcoran on Government Capacities versus Government Priorities
Kevin Corcoran, a regular reader, has yet again sent me an interesting basis for a blog post. Here’s Kevin:
Senator Bernie Sanders once tweeted:
Say Bill Gates was actually taxed $100 billion. We could end homelessness and provide safe drinking water to everyone in this country. Bill would still be a multibillionaire. Our message: the billionaire class cannot have it all when so many have so little.
Advocates of government programs have a history of excessive optimism about the costs of their initiatives. When Richard Heffner interviewed Milton Friedman in 1975, Friedman stated, “John Kenneth Galbraith, in an article he wrote in The New York Times Magazine Section, said there are no problems in New York City that would not be solved if the New York City budget were twice what it is now. Now, the New York City budget has since then something like tripled. And all the problems are worse.”
Let’s assume Senator Sanders is correct: that for a one-time cost of $100 billion, the federal government could not merely reduce or relieve homelessness, but actually end it outright, with the added bonus of clean drinking water for all.
But if that is so, there’s an obvious question to answer: why hasn’t the government done so already?
It’s not as though the government is insufficiently funded. In FY 2022, the federal government will take in revenues of about $4.4 trillion and will spend about $5.9 trillion. So, if Sanders is right about the cost of ending homelessness, the federal government could completely end all homelessness in America with just 1.7% of what the federal government already spends in a single year. Accepting Senator Sanders’ claim would significantly strengthen Bryan Caplan’s argument that priorities, not capacity, is paramount to explaining poor government performance.
I’m sure Senator Sanders would agree that the federal government has demonstrated terrible priorities in how it directs the vast resources at its disposal. I can think of various reasons for these terrible priorities. Regulatory capture leads to the government using resources defending the wealthy and well-established against upstarts. Special interest groups and lobbyists exercise significant influence in the legislative process. In general, the powerful tend to favor the interest of the powerful, and the political process does little to improve that.
But for some reason, Bernie Sanders seems to think that if he can just get his hands on another $100 billion from Bill Gates, then the money will finally be wisely spent in the pursuit of worthy goals. But why? The same incentive structure that created the existing terrible government priorities hasn’t changed, so why should we think the extra $100 billion will actually be put to better use? There is no reason that I can see.
If you believe that the political system has been hijacked by powerful special interests to favor the rich and the politically powerful [DRH note: although there is strong overlap, these are not the same] over the masses, the last thing you should want is for even more resources to be funneled into that system, at least until after those structural issues have been addressed. If you had a wealthy friend who was financially struggling while extravagantly spending on frivolities, the appropriate response isn’t to give him even more money. Your priority should be on making sure he gets his act together and use his already immense resources more responsibly.
So why is the Senator so fixated on putting even more resources into a system he also believes uses those resources so poorly? Lacking mind reading skills, I can only speculate. But I suspect it’s at least partly to do with the fact that “raise taxes on the billionaire class!” is an easy applause line, particularly among the people who will vote Sanders into power. By contrast, imagine a politician who says “Look, there are serious structural issues affecting how the government is using the taxes it already has, which results in the money being used in a way that’s contrary to everything we believe in. Unfortunately, until those issues are fixed, nothing will be solved by bringing in even more money: it will keep being put to the same poor use.” That’s not going to fire up a crowd, or drive people to the polls to tick his name on the ballot. The only thing it has going for it is that it’s the truth. But the currency of elected officials isn’t truth; it’s applause lines for their base.