Thursday, May 07, 2009

Policy success and failure

Yesterday I wrote about the future of libertarianism and the need to demonstrate successful examples of such policies in order to foster support for them. In addition to highlighting successes, however, libertarians also need to illustrate the folly and consistent failures of government. Such examples are legion, running the gamut from sugar tariffs to John Murtha.

Here are but a few examples:

Social Security: In the popular narrative Social Security has been a god send to the elderly, rescuing them from an old age spent living in poverty and dining on cans of dog food. Indeed, when the legislation was first enacted poverty in this age bracket was in excess of 50 percent. Two points need to be made, however. First, let's recall that Social Security was enacted during the Great Depression, a time when living in poverty was pretty normal. Second, we are a much richer country than 75 years ago and so it should come as no surprise that poverty has been reduced. Indeed, poverty reduction has taken place across all age groups.

To properly evaluate Social Security we have to think in the alternative and ask how it compares to letting people keep more of their own money and invest it themselves for retirement. While the impact of Social Security depends on your particular circumstances such as whether you are married it appears to be a net loser for most people:
Generally, people who work for more than 35 years get a lower net benefit - all other factors being equal. People who don't live long after retirement age get a much lower net benefit. (These people include men, the obese, and people with health problems related to environment or heredity.) Finally, people who derive a high percentage of income from non-wage sources get high Social Security net benefits because they appear to be "poor," when they are not. The progressive benefit formula for Social Security is blind to the income a worker may have from non-wage sources, such as spousal support, dividends and interest, or rental income.
Perhaps worst of all is the fact that the program is headed for a fiscal meltdown:
If you count the $17 billion in income taxes expected to be paid on Social Security benefits, the system will still manage to provide a slight surplus for federal coffers in fiscal 2009. But from 2010 through 2012, there are small projected deficits, and after heading back into the black from 2013 to 2015, the program will then become a growing drain on federal finances, projects the [Congressional Budget Office].
Ineffectual, often-times counter-productive and headed for bankruptcy -- the definition of failure. Social Security, however, is the bright spot when compared to Medicare.

Medicare: Leaving aside its alleged virtues, it is becoming rapidly apparent that Medicare is simply unaffordable:
Social Security, which Bush has hoisted atop his domestic agenda, is $3.7 trillion short of what it will need for benefits over the next 75 years, under the latest federal projections. Medicare, the health care program for the elderly, must find an estimated $27.8 trillion.

By 2018, Social Security is on track to start paying more annually to recipients than it collects in payroll taxes — an ominous tipping point that Medicare reached last year.

While Social Security is expected to exhaust its reserves in 2042, Medicare should deplete the trust fund financing its hospital benefits in 2019, the latest forecasts show.
Even the billions that the program currently consumes aren't enough, with doctors turning away new Medicare patients because the compensation is too low and some actually lose money. If you can't afford something it doesn't do you much good. This program is a failure.

Public housing: Meant to rescue the poor from substandard housing, public housing is now synonymous with concentrated poverty, crime and all types of social ills. Indeed, the latest movement by many city government on this front is destroying such properties. Even the move to disperse families that receive public housing doesn't appear to be working. More failure.

Education: Rising federal spending has corresponded with stagnation and/or decline with public education performance. The Washington DC voucher program for children to attend private schools has something like 3 or 4 applicants for every available slot. Private schools achieve equal or better performance than public schools at lower cost. Head Start appears to make no long term difference. Verdict? I'll defer to President Obama:
Despite resources that are unmatched anywhere in the world, we've let our grades slip, our schools crumble, our teacher quality fall short, and other nations outpace us. ... We've accepted failure for far too long.
Self-esteem be damned, I give public schools an F.

Alternative energy: Government has been spending money on alternative energy at least since the time President Jimmy Carter had solar panels installed on the White House roof. Despite all of the attention lavished on it renewable energy only accounts for 7 percent of total energy use. Politicians have also embraced the use of ethanol as an alternative fuel and convenient payoff to corn farmers. Even environmentalists now seen it as both an environmental and fiscal failure. Germany is abandoning its usage. Rampant failure.

Amtrak: Consumes billions while offering up bad service. Failure.

Agriculture: Congress dishes out tens of billions in subsidies to farmers even when crop prices rise. Meanwhile the number of farms continues to decline as agribusiness dominates, ensuring that the federal handouts go disproportionately to corporations with good lobbyists on the payroll. Epic failure.

US Postal Service: Loses billions even while Fedex and UPS continue to post profits. They can't even maintain the stamp vending machines. Definite fail.

These are just off the top of my head. It's uncanny, almost like the opposite of the Midas touch. That is not to say that government fails at everything. Here are a few successes:

Welfare reform: Benefits scaled back and employment has gone up. A success by just about any measure.

NAFTA: Growth and increased wealth among all participants and a doubling of exports. Absolute success.

Airline deregulation: Lower fares and more choices. More people traveling now than ever before. The only black mark is that the government run infrastructure has not been able to keep up with the success.

Trucking deregulation: Cheaper prices and more companies competing. Absolute success.

The common thread, of course, is that all of the successes are a result of government stepping back and reducing its role. Freedom is the father of success. It would seem to make sense to limit government involvement to those services that the private sector simply can't provide such as police, or natural monopolies such as city roads. Unfortunately more government with its attendant rules and restrictions appears to be the order of the day.

Update: And one more epic failure I somehow forgot to mention -- Freddie Mac and Fannie Mae. Lost billions and helped foment the housing bubble. Plagued by scandal. Failures of massive proportion.

1 comment:

Anonymous said...

I'll vote for you. Wonder why these examples aren't cited more often?