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Samizdata quote of the day

Government run operations tend to produce perverse incentives that have a habit of producing bad outcomes.

It depends on your definition of “bad”. If by “bad” you mean produces shitty products for hugely inflated prices, sure you are right. If by “bad” you mean “not corresponding to the thing that was promised” you’d also be mostly right. However, if by “bad” you mean “producing bad results for the people in charge” you’d be completely wrong. The goal of all government programs is twofold: get politicians re-elected, and grow and expand the budget and power of government departments. One need only look at the result over the past 100 years to see that it has, in those terms, been a roaring success.

The incentives are only “perverse” if you are not aligned with these two goals. Otherwise they are really quite effective in achieving their actual ends.

Fraser Orr

34 comments to Samizdata quote of the day

  • Stonyground

    So, the politicians are being subjected to perverse incentives that produce good outcomes for themselves at the expense of bad outcomes for everyone else.

  • Ted Treen

    Governments are always bureaucratic. Inevitably, Pournelle’s Iron Law applies:-

    Pournelle’s Iron Law of Bureaucracy:-
    In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.

  • George Atkisson

    Perhaps it’s time to establish Frank Herbert’s fictional ‘Bureau of Sabotage’ in the real world. Unofficially, of course, with the mission to monitor and cripple out of control and/or overly expansive government fiefdoms.

  • Gavin Longmuir

    Perhaps it is time for us to look in the mirror. The implication of Fraser O’s quote is that ‘Democracy has failed to control Bureaucracy’. Yet we are that Democracy.

    I am coming round to the point of view that the root of a lot of modern problems is universal suffrage democracy, which has permitted the growth of a permanent Political Class including rent-seekers and bureaucrats. Heinlein’s proposed solution in “Starship Troopers” has some attraction — but, as in the book, restricting the suffrage is not going to happen until after our current creaking political structures have gone well & truly pear-shaped.

  • staghounds

    Thirty years in the criminal justice system here.

    Yes and no. True, the people who CAN change things- in my system, the Judges- are more loyal to the system and its maintenance than to the goals of the system and to the people as a whole.

    And yet, they are popularly elected- as long as things aren’t too bad, no one in the general population cares enough to learn about the system’s failures and problems.

    Which means that the people who profit directly from the system, or who gain indirectly from its working a particular way, have a very disproportionate effect on how it runs.

    So in truth, it’s this way because the voters want it this way. If the voters wanted to change it- or the NHS, or any other government program- they could.

    They could even make Brexit happen. But they would have to mount a sustained effort.

  • Roué le Jour

    Gavin
    Yes, I came to that conclusion a few years ago. Universal Suffrage is a failed experiment, only taxpayers should vote. Nothing can be done about it though, we just have to sit and watch as the bloated bureaucracies crush western civilization. Nice while it lasted.

  • bobby b

    “Universal Suffrage is a failed experiment, only taxpayers should vote.”

    This is going to come off as someone playing devil’s advocate, but only because . . . well, because I’m playing devil’s advocate.

    It sounds as if you’re measuring human value by income.

    Mike Tyson (the boxer) earned somewhere north of $500 million.

    Norman Borlaug (the father of the green revolution, credited with saving billions of lives) earned much, much, much less.

    Voting, in part, helps determine taxation and spending. But it also helps determine social mores, laws regulating behavior, and liberty interests.

    Would you give Tyson more votes than Borlaug? If Borlaug had years in which his income was near zero, would you deny him the voting power that you would grant to Tyson?

  • Stephen Houghton

    It is not messuring human value by income if taxs are voluntary but a precondition for sufferage. My own proposal is a system that rewards civic virtue, with increased political authority. An example that has been floating around in the back of my head for more than ten years is:

    One vote for president and representatives for all those over 16 who aren’t crazy.

    A second vote for president, representatives, and senators for all those over 18 who take an oath of citizenship to the republic, pay a nominal (one ounce of silver) head tax, register for conscription, and volunteer for jury service.

    Additional votes for president, representatives and senators for every 2 year term of service in the active duty armed forces or 10 year term of service in the militia, up to a total of three added votes.

    Additional votes for president, representatives and senators for paying a voluntary assessment on income of 10% as long as the assessment is payed, up to three added votes for those who pay twice or three times the assessment.

    Additional votes for president, representatives and senators for siring, baring, or adopting a child and raising it to adulthood when said child meets the conditions for a second vote above, up to a total of three votes for three children.

    Also one additional vote for each of the following: volunteer trash collecting, volunteer firefighting, volunteer emergency rescue work, (term as yet undetermined) etc.

    I admit that is a very rough outline, but it is the idea that I have been thinking about.

  • bobby b

    “My own proposal is a system that rewards civic virtue, with increased political authority.”

    In the USA, we do a very simplified version of what you recommend now.

    – One vote for president and representatives for all those over 18 who avoid committing a felony. (Yeah, it’s a low bar, but it’s a bar.)

    So we’re already sort of merit-based.

    “It is not messuring human value by income if taxs are voluntary but a precondition for sufferage.”

    I’ll return to my “Norman Borlaug” example. If he had no income in some year, and so was unable to pay any tax, would you deny him a voice in the direction of our society while allowing Tyson (the wretch) a voice, simply because Tyson paid a tax?

    I could buy into a system that tied the ability to vote for tax expenditure to tax contribution, but we vote for far more than just tax level and expenditure. I’d rather we got the input of all legal citizens for non-expenditure issues.

  • Ellen

    Nevil Shute had a similar voting system in his 1953 novel In The Wet. The idea has been around forever, but his is reasonably-well put together.

    https://en.wikipedia.org/wiki/In_the_Wet

  • Gavin Longmuir

    Bobby — I did not understand what Roue said to mean that votes should be proportional to income. Personally, I don’t favor the idea of individuals having the potential for multiple votes, as Stephen H suggests — it makes things too complicated, and we know that whenever the rules get complicated, the Lefties twist them to their benefit.

    I lean more to the idea that people who vote should have skin in the game. In Ancient Greek democracies, if the men voted for war, the men then had to get into the ships and go to war. It is ok to hand out (non-citizen) residency in a country to everyone born to legal residents of that country — but citizenship (including voting rights) should be earned. Rights always come with Responsibilities, and people should demonstrate that they are bearing their share of the responsibilities before they get citizenship and voting rights.

    The old truism is that anything which is given away for nothing is not valued. We give voting rights away for nothing.

  • Fraser Orr

    Where I live in Chicago, people have been having multiple votes for forever. You know Bernie Sanders has been proposing that even felons in the pokey should get the vote. Pah! That’s nothing. Here in Chicago you get to vote even after you are dead. That is how advanced a democracy we are.

    You guys really need to catch up with us. After all, look at the results we are producing.

  • Roué le Jour

    I favour the simplest possible system. You contribute, you vote. If you live at public expense, you don’t. If you want to say only taxpayers vote on financial issues I’m fine with that, but I think it’s a complication that will lead to “interpretation”.

    It is just fundamentally wrong that people who consume wealth should be able to out vote those who produce it.

  • bobby b

    “I lean more to the idea that people who vote should have skin in the game.”

    We vote to decide how we treat women in the workplace. We vote to decide whether transsexuals can participate in sports. We vote to decide the penalties for heroin distribution. We vote to decide who can be a federal employee. We vote to get the right Justices on the USSC so they decide property rights in a way that pleases us. We vote . . .

    Who DOESN’T have skin in the game? Taxation and expenditure are part of what we’re voting for, but certainly not all of it.

  • bobby b

    “It is just fundamentally wrong that people who consume wealth should be able to out vote those who produce it.”

    I think the fundamental wrong is that we keep on producing it in the face of such theft.

    Maybe Rand’s Dr. Ferris was right – we’ll keep on doing it because we’re wired that way, so the thieves need never fear losing their golden geese. Or maybe we’re wrong – taxation levels obviously aren’t high enough to kill off the productive impulse, so we’re complaining about something that fundamentally isn’t going to affect our behavior. When taxation gets high enough, production will drastically slow down. Hasn’t happened yet.

  • Fraser Orr

    @bobby b
    We vote to decide how we treat women in the workplace. We vote to decide whether transsexuals can participate in sports…

    And therein lies the problem. Honestly, I don’t agree with what people are talking about in terms of making voting more “fair”. Voting is a fundamentally unfair thing. It is the process whereby a group of people take away the freedom and rights of others. It is a process to legitimize the use of force. Now, of course there are some matters on which that is necessary — for example we do want to take away people’s right to kill other people.

    So the solution is not to make voting more fair, but to remove as much as possible out of the domain over which voting reigns. And, moreover, in such cases as voting is necessary, provide people with a choice of which group they wish to associate with, and the opportunity to leave if they want to. These ideas are enshrined in the US constitution under the theory of enumerated rights and the theory of federalism.

    However, the nature of voting is that over time these restrictions are eaten away at the edges. The scope of voting expands and the scope of “applies everywhere regardless of your zip code” expands too.
    And eventually a tipping point is reached, and it is time to head on over to Galt’s Gultch.

    Or maybe we’re wrong – taxation levels obviously aren’t high enough to kill off the productive impulse, so we’re complaining about something that fundamentally isn’t going to affect our behavior. When taxation gets high enough, production will drastically slow down. Hasn’t happened yet.

    Hasn’t it? My marginal tax rate is approximately 50%. It definitely gives me pause and makes me wonder if it is worth making more, creating more jobs, producing more products. So it isn’t a black and white thing. I don’t think we have any idea how bad an effect our sky high tax rates have on this.

    And when I write the huge check I am about to write for my quarterly tax payment, I don’t know whether to laugh or cry when I hear people talk about the rich not paying their fair share. They are right. The rich pay vastly more than their fair share, but somehow I don’t think that is what they are talking about.

    I also want to say to those who sit on the right that they are just as much to blame for the situation as those on the left. When you consider the US national debt of 20 trillion dollars, you have to remember that more than a third of that was money spent on pointless military interventions in the middle east that did little more than make us more hated.

  • bobby b

    “Voting is a fundamentally unfair thing. It is the process whereby a group of people take away the freedom and rights of others.”

    Do you consider yourself to be libertarian, or anarchist?

    I’ve assumed you to be more the former than the latter. If I’m correct, don’t you acknowledge that government does have SOME proper place in the world? Whether you limit it to police and fire and roads and water and sewer (or some smaller or larger combination), aren’t there some things that we do better together than separately?

    And, if that’s true, isn’t voting the most fair and expedient way to decide how to run those functions?

    I’m just wondering if you’re rejecting the overall idea of a vote as a fair way to arrive at a group decision, or if you’re disenchanted with how the vote has been used in wrongful ways to, as you put it, “take away the freedom and rights of others.”

    You almost sound as if you’re rejecting the idea that voting has a proper place in society, rather than saying that we’ve prostituted an otherwise good idea.

  • Julie near Chicago

    bobby is absolutely right: Everybody who lives under any given regime has skin in the game.

    .

    Fraser, thus (my boldface):

    “Voting is a fundamentally unfair thing. It is the process whereby a group of people take away the freedom and rights of others. It is a process to legitimize the use of force. Now, of course there are some matters on which that is necessary — for example we do want to take away people’s right to kill other people.

    No. No one has a right (a moral right, a “natural right”) to kill other people, except in self-defence or the defence of others being aggressed against.

    Government cannot “take away” a such moral or “natural” right. It can only wrongly transgress such a right.

    That has nothing to do with how government personnel (lawmakers) are chosen — whether by election, direct or representational, or by some other means.

  • llamas

    I see where Ellen beat me to the recommendation to ‘In the Wet’. The suggested system of multiple voting has its defects, to be sure, but it’s a place to start.

    Regarding Pournelle’s Law – as it happens, I am in UK right now, to be with my dear old Mum. She’s getting a lot of NHS care right now, which means I’m talking to a lot of NHS coalface staff. And the universal depth of their contempt for their management is something to behold. But also their resignation to the fact that this is how big agencies like the NHS operate, and always will. The care is excellent, the people universally kind and competent. The organization is a laughable shambles, bloated with ‘team leaders’ and ‘program managers’ and ‘executives’, but nobody who can arrange an appointment or schedule an action. It’s too bad.

    llater,

    llamas

  • Itellyounothing

    The fix for all the moans is both simple and difficult.

    Our “representatives” operate poorly with the current level of supervision.

    Voting once every five years is not enough.

    The Swiss have binding citizen initiated referendums. Their ministers are much less important.

    We need to force one party or the other to offer that policy, above all others.

    The perceived failure of Westminster on both remain and independence sides could be a lever to force that.

  • Ted Schuerzinger

    I favour the simplest possible system. You contribute, you vote. If you live at public expense, you don’t.

    The latter better include the military.

  • Fraser Orr

    @bobby b
    Do you consider yourself to be libertarian, or anarchist?

    I certainly think there are some functions that perhaps only the government can do.

    If I’m correct, don’t you acknowledge that government does have SOME proper place in the world?

    Yes, in fact I said so, there are some freedoms that should be taken away, such as the freedom to kill someone.

    And, if that’s true, isn’t voting the most fair and expedient way to decide how to run those functions?

    Yes, I think so, though perhaps in a different manner. As I said, the problem is not the manner of the vote, it is the removal of two very important protections — the limitation of the scope of what voting can do, and the availability of competing jurisdictions, which is the say the enumeration of powers and federalism. Of course both these things still exist de jure, but they are so grossly abused as to not exist de facto.

    That, rather than the manner of voting or how many votes one person or another has, is far and away the most pressing issue. The purpose of voting is to force some people to do what they would not have done voluntarily. A tool which is so powerful and dangerous that it desperately needs some chains to weigh it down.

  • Gavin Longmuir

    “Everybody who lives under any given regime has skin in the game.”

    Depends what one means by “skin in the game”. The unmarried teenage girl pumping out babies in the UK (and benefitting remarkably from the UK’s generous benefit system) could be said to have “skin in the game”. So does the poor schlub who is paying for all those benefits. By “skin in the game”, I am thinking of those people who are taking care of themselves and constructively contributing to the well-being of society in general — working at a productive job, serving in the military, obeying the laws, not being a burden to their fellow citizens. I do not include those who are living off the efforts of others, or of the bureaucrats who serve them. Maybe we need a better expression.

    It is true that government does a lot more than rob Peter to pay Paul. But this is another failure of the kind of democracy we have now. We get to vote occasionally for a representative who may have some ideas we support but also has some ideas we oppose. And then the representative once elected can turn around and do something quite different. (Does the name John McCain ring a bell?).

    Federalism with clearly limited government powers was a great idea. It is unfortunate we threw it away. And it is tough to see how we can ever change the current system without first having a collapse and a revolution.

  • Fraser Orr

    @Itellyounothing
    The Swiss have binding citizen initiated referendums. Their ministers are much less important.

    Part of the strength of the Swiss system is their version of federalism, where cantons compete for citizens. The cantons are far more powerful that the federal government. That is the way it used to be in the USA, but it was destroyed firstly by the civil war, secondly by a series of constitutional amendments (the 16th, 17th, and arguably 18th, which was later repealed but still had a lasting effect), and ultimately by the New Deal.

    I have been thinking about this recently, trying to come up with some examples of where a substantial amount of freedom and self determination has been returned to the people without a violent precipitating action. They are few and far between. The only example I can really think of is the fall of the USSR, the Berlin wall and so forth. The people of Poland, for example, experienced a dramatic improvement in their freedom with very little bloodshed. You might also argue that the Glorious Revolution in Britain was a similar act, a change that disempowered the monarchy and also introduced the Bill of Rights. (they had to get rid of a rightful British King and replace him with a foreigner because the only thing worse than being a foreigner was being a Catholic.) Though I suppose the people of Drogheda may well disagree with the bloodless part.

    Examples of horrible violent revolutions are replete. And the real irony is that that, despite their intentions, they often led to more bondage rather than less. There are far more French Revolutions than there are American ones.

    So I often have said that tyrany is like the grass. It inexorably grows, slowly over time, and only may controlled by being cut by by a scythe. The tree of liberty, Jefferson assured us must be refreshed from time time with the blood of patriots and tyrants. And that cost is so high that minor impositions of tyranny are not sufficient to provoke it. Have you ever played Jenga? When you are sliding that wooden block into a hole you must do it slowly or else you will bring down the whole structure.

    To be clear I am not proposing a violent revolution, really just making an observation from history.

    Having said that, and this is something I don’t really fully grasp, there is a countervailing trend against the constant battery of oppression created by the political system, and that is a kind of social liberalization. It is a fact that in some ways people are much freer today than they were in the past, despite the growing burden of government. For example, traditionally oppressed groups like blacks, homosexuals and women are in some ways much better off. I’m not sure how these two opposite trends really work, but it is a curious contradiction for sure.

  • neonsnake

    The unmarried teenage girl pumping out babies in the UK (and benefitting remarkably from the UK’s generous benefit system)

    Outlier, and non representative, although the Daily Mail will attempt to convince us otherwise

    🙂

  • Snorri Godhi

    WRT the debate here over “no representation without taxation”, it seems to me that there is an obvious solution: give all citizens a vote for the Lower Chamber/House, and give citizens voting power for the Upper Chamber/Senate related* to their NET tax contributions. (This solution is arguably implicit already in Aristotle’s Politics.)

    (* What the relationship should be, is up for debate. A logarithmic relationship between tax paid and voting power seems reasonable to me, but i fear that the concept would be too difficult for the political class to grasp.)

    I probably do not need to explain the benefits of having an Upper Chamber representing “the rich”. Suffice it to say that people who pay taxes have a moral right to decide how their tax money is spent. (Not that i hope to convince many people who do not read Samizdata!)

    As for the need for a Lower Chamber representing all people, i’ll explain it with a thought experiment.
    Suppose that there is only one Chamber, elected by taxpayers only. Suppose that this Chamber introduces a law according to which people paying VAT do not count as taxpayers, and then proceeds to raise VAT rates so that most of the tax revenue comes from it. Isn’t that almost the same as reducing people to serfdom?
    In fact, the Chamber could outright introduce serfdom (corvée labor for public works) and declare that it does not count as a tax.

  • neonsnake

    uffice it to say that people who pay taxes have a moral right to decide how their tax money is spent

    Agreed.

    We should also give serious thought to allowing “criminals” to vote.

    Elsewise, we are encouraging our governments to imprison those who do not agree with them, so as to remove their right to vote against them.

  • Fraser Orr

    @Snorri Godhi
    Suffice it to say that people who pay taxes have a moral right to decide how their tax money is spent.

    Honestly, I’m a not convinced I agree with that. Any “moral” argument makes a lot of assumptions about a shared moral code that often aren’t true. Most people think their “moral code” is self evident. But that can’t be true since other people think their code is self evident too, yet deeply disagree with each other.

    At its core it seems the question is this: is it moral to tax taxes by force? If you concede this, it is not at all apparent that those taxes having been taken are still under the control of the payer.

    It seems to me though there are different approaches than the ones suggested here. One, for example, is to set up government departments like charities. If they think their services are valuable, let them convince people to contribute voluntarily.

    Another approach I favor is this. At the end of your annual tax return there is a list of all government programs costing more than, for example, $10M. Or perhaps an item could be added to the list by a petition signed by 100,000 people. Next to it is a “yes” or “no” box. If you check “no” then the funding for that government department would be decreased pro rata. It doesn’t decrease your tax burden, but it would allow people to opt out of paying for things they find morally repugnant — the Hyde amendment for example, or “illegal wars in Iraq”. Really both sides get to play in that arena very well.

    My final suggestion is the elimination of withholding. I’m a business owner, I have to actually write a check for my taxes. It is amazing how clarifying an event it is to realize that you spend more on government than you do on literally anything else, or when you realize how much better that money could be put to in your own hands.

    Of course none of these ideas can be or will be implemented (as with all the other suggestions here) quite simply because turkeys do not vote for thanksgiving.

  • Gavin Longmuir

    Fraser O: “Of course none of these ideas can be or will be implemented …”

    Sadly, so true! But the Gods of the Copybook Headings will have their day, and it is worthwhile to think about how things should be changed as the phoenix subsequently struggles to rise from the ashes. Because if there is one lesson from the long sweep of history, it is the lesson of long-term progress over the centuries. Intermittent progress, unfortunately punctuated by major debacles and regressions. But progress all the same.

  • Snorri Godhi

    Neonsnake makes a good point. Mind you, i’d disallow the vote from some classes of criminals, but the number of such criminals is small enough not to make much difference. Still, i do not feel strongly about this.

    Fraser: please note that the straightforward moral case that i made for my proposal, about the Upper Chamber, is not the only case that can be made. For instance, take your proposal:

    At the end of your annual tax return there is a list of all government programs costing more than, for example, $10M. Or perhaps an item could be added to the list by a petition signed by 100,000 people. Next to it is a “yes” or “no” box. If you check “no” then the funding for that government department would be decreased pro rata. It doesn’t decrease your tax burden, but it would allow people to opt out of paying for things they find morally repugnant

    I added emphasis to the crucial bit: your proposal does not affect the tax burden. (In fact, it might encourage the government to raise tax rates, because people are lulled into thinking that the money goes where they want it to go.)

    Under the neo-Aristotelian system that i proposed otoh the Upper Chamber has an incentive to cut the tax burden. They cannot just spread out the burden of taxation, because they would give more people more voting power, and thereby lose control of how their tax money is used.

    Another problem with your proposal: to pay for national defense, it is in my view ethical to take money by force, because of the free-riding problem. (There are qualifications that i won’t go into.) What if somebody prefers their tax money to go to hospices for cats instead of defense? (Not that i don’t like cats, mind you.)

  • neonsnake (June 14, 2019 at 8:04 pm), a distinction between ‘malum in se’ crimes and ‘malum prohibitum’ crimes is perhaps what Snorri Godhi (June 15, 2019 at 9:55 am) has in mind – and I too.

    That conviction for ‘hate speech’ can lead to being jailed and so losing your vote certainly has an ugly double-jeopardy aspect to it – but the state will have abolished hate speech laws long before any sane version of your idea will pass. Meanwhile there is an obvious double-jeopardy for the rest of us if those who can be jailed for killing or robbing us get to vote on whether they can be amnestied to have a quiet word about it with the prosecution witnesses. Anyone who wonders about sharing their vote with the man who lives off their taxes can wonder more about sharing it with the man who lives of what he steals from them.

  • Fraser Orr

    @Snorri Godhi
    I added emphasis to the crucial bit: your proposal does not affect the tax burden.

    As I said I don’t especially agree with that caveat, however, I include it because it makes that idea the only one that has a snowball’s chance of being implemented. Everyone hates some sort of government program. My biggest concern is that I’d get writer’s cramp from ticking all the boxes.

    Another problem with your proposal: to pay for national defense, it is in my view ethical to take money by force, because of the free-riding problem.

    I’m not sure why you think threatening people with jail for not supporting your particular vision of national defense is a good thing. It is kind of like conscription for your money. If national defense is important let those who spend the money make a convincing case to us both that what they are doing is good and that they spend the money efficiently. Remember people give to causes the favor all the time, and there is plenty of groundswell support for national defense. Plus I would remind you that the US Navy is larger than the next eight navies put together — don’t you think that is a bit of overkill?

    As to free rider — nearly half of Americans don’t pay any income tax at all. And you really think that this change will increase the free rider problem? Remember the top 1% of tax payers pay 40% of all taxes. And you are concerned with “free riders”? Also remember that your children and grandchildren, and great grandchildren are right now being burdened with 30% of all government expenditure even though their grandparents haven’t even been born yet. And you are concerned with free riders?

    Apologies to non US readers, I am sure your countries have similar, if not quite so extreme, problems. I am just not so familiar with the specific numbers.

  • Jim

    “When taxation gets high enough, production will drastically slow down. Hasn’t happened yet.”

    Why are so many western nations afflicted by slow growth do you think? Yes its also down to over regulation by the State, but the two (high taxes and high regulation) go hand in hand. We have slowly strangled our economies, but its been done so slowly that the electorates do not connect the noose around their necks with their ever increasing difficulty in breathing…………….indeed call for more rope to improve their oxygen intake……

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