Dear Reader,
President-elect Trump has tapped Elon Musk and Vivek Ramaswamy upon the shoulder.
They will direct the freshly constructed “Department of Government Efficiency.”
Department of Government Efficiency? I fall from my chair, laughing at the very notion of it.
As well erect a Department of Square Circles, a Department of Honest Lies, a Department of Sane Asylums.
Not even a titanic dynamo like Mr. Musk can will the thing to success. Nor can a razor intellect like Mr. Ramaswamy’s.
Thus the Department of Government Efficiency is destined for the hellbox.
That is because the entire project is at war with itself.
As efficiency is natural to private enterprise, inefficiency is simply natural to government.
Government runs a monopoly, after all — a monopoly on power. And what monopoly is efficient?
Is This Efficient?
A private concern is jealous of its capital and guards it with terrific ferocity. Yet the government runs to a different accounting.
For example: Would an airline park its airplanes on a tarmac, idle, with the engines going? It is very nearly inconceivable. Fuel is costly.
Yet the United States Air Force does it. It deliberately wastes fuel by running the engines on parked airplanes. Why?
Because the end of the fiscal year nears. And if the Air Force does not burn through all the fuel allotted in this year’s budget?
Then it cannot justify requests for additional fuel the following year.
Therefore its solution is to run the engines on inert airplanes — to literally burn fuel.
Examples multiply and multiply.
Government Cannot Be Efficient
The late libertarian economist Murray Rothbard:
- The well-known inefficiencies of government operation are not empirical accidents… They are inherent in all government enterprise…
- There is a fatal flaw that permeates every conceivable scheme of government enterprise and ineluctably prevents it from rational pricing and efficient allocation of resources. Because of this flaw, government enterprise can never be operated on a “business” basis, no matter what the government’s intentions…
That “fatal flaw” is precisely what?
- It is the fact that government can obtain virtually unlimited resources by means of its coercive tax power…
- Private firms can get funds only from consumers and investors… Government, on the other hand, can get as much money as it likes…
- Government… has no requirement for meeting a profit-and-loss test of valued service to consumers, to enable it to obtain funds. Private enterprise can get funds only from satisfied, valuing customers and from investors guided by profits and losses. Government can get funds literally at its own whim.
Government Has no Skin in the Game
But Mr. Rothbard, why must a wrench cost the Pentagon $5,000 or some other enormity? Can’t we demand efficiency in this example?
- Proponents of government enterprise may retort that the government could simply tell its bureau to act as if it were a profit-making enterprise and to establish itself in the same way as a private business.
- (But), it is impossible to play enterprise. Enterprise means risking one’s own money in investment. Bureaucratic managers and politicians have no real incentive to develop entrepreneurial skill… They do not risk loss of their money in the enterprise…
- [They] have no incentive to be efficient. In fact, the skills they will develop will not be the economic skills of production, but political skills — how to fawn on political superiors, how demagogically to attract the electorate, how to wield force most effectively. These skills are very different from the productive ones, and therefore different people will rise to the top in the government from those who succeed in the market.
Efficient Democratic Government Is Practically Impossible
Under democracy the concept of efficient government is especially preposterous.
Efficient government is possible — in theory — under a king or a dictator.
He can take an axe to the governmental apparatus if it pleases him. Who can stop him?
But under democracy? Think of all the competing demands on the system! Think of all the parsnips that must be buttered…
The hard-luck farmer wants his back scratched. The hard-pressed businessman wants his belly rubbed. The overlabored teacher wants her apple.
And millions more are hard at the business.
All trying to work the angles, to get a bucket in the stream, to get a snout in the trough… to catch a penny.
And politicians must gratify them, else take the consequences. How can such a governmental apparatus be efficient?
A Government With a Printing Press Will Never Be Efficient
A gold standard can theoretically restrain government to one extent or other. Thus efficiency is forced upon it — it can only collar so much gold.
Nor can government print gold.
But if it wields the power to print as much money as it wants… like the United States government through its central bank?
Efficient government stands the snowball’s chance.
Consider this example:
David Stockman directed the Office of Management and Budget under President Ronald Reagan.
There he threw himself against the vast inertia of the United States government.
The inertia won and David lost.
He discovered that the slenderest budget item has impossible inertia to keep it going.
Banging Your Head Against the Wall
David proposed shuttering the national endowments for the arts and humanities and the Corporation for Public Broadcasting.
They were not proper functions of government, David argued. And there was ample private philanthropy to make any shortages good.
David says the combined budgets of these programs amounted to a mere six hours of federal spending annually.
Six hours of spending — out of a 365-day calendar!
Yet closing out those six hours proved impossible.
David was poor Sisyphus pushing his rock eternally uphill… only to have it roll eternally downhill upon him.
Just a Temporary Nick
He ultimately submitted a modest 25% trimming to Capitol Hill.
Would Capitol Hill sanction this 25% trim? It would not.
It ceded David “maybe an 8% reduction for a couple of years until the various K Street lobbies and assorted forces of high-toned culture completely restored the funding.”
That is, no elimination. Not even a 25% trim — but an 8% nicking — and a temporary nicking at that.
Here is a question:
If you cannot even put a sustained 8% nick in the national endowments for the arts and humanities or the Corporation for Public Broadcasting… how can you work genuine cuts anywhere else?
Here is the shortened answer: You cannot. Here is the lengthened answer: You cannot.
Messieurs Musk and Ramaswamy will soon learn that severe lesson.
They will come inevitably to grief.
Efficient government? You will have it the instant Hell is an ice sheet.
Regards,
Brian Maher
for Freedom Financial News
