Saturday, November 13, 2010

Natural History of Government Intervention

Milton Friedman, in his book Free to Choose (don't we wish), writes about the government intervention life cycle. It goes something like this:

1. A real or imagined evil creates a demand for something to be done about it.
2. A political coalition forms. This is usually made up of high-minded reformers and sincere interested parties.
3. Their big ideas lead to incompatible objectives, such as low prices to consumers and high prices to producers at the same time. This incompatibility is glossed over by fine talk about the public interest, social justice, or these days, climate justice.
4. The coalition succeeds in getting government to pass a law that 'does something' about the perceived problem.
5. The preamble to the law pays lip service to the fine talk and the body of the law grants government the power to 'do something.'
6. The high-minded reformers bask in the warm glow of triumph and move on to new causes.
7. Interested parties go to work to ensure power is used to their benefit, and they are usually successful.
8. Success breeds problems and this creates the call for more intervention.
9. The bureaucracy takes its toll, so even the special interests may no longer benefit.
10. In the end, the effects are exactly the opposite of the goals of the reformers and may not even achieve the objectives of the special interests.

Once we get to this point, the activity is so firmly established and so many special interest groups are connected to it, that repeal is unthinkable. So, new government legislation is called for to 'do something' about the new problem and the cycle starts again.

This is the cycle we have to break. To do that, we must reject the mother of all fallacies - that government is the solution to all our problems. We need to remember -- we are the captains of our soul, the masters of our fate.