Why Do Government Enterprises Work So Well?

wordcloudgovfreshIf there is a huge disparity between what people say and what people do, the people who take words quite literally will be the first to notice it. What would the literalists do? The literalists will exaggerate the disparity between the words and actions of people. The literalists are “sincere” because if people do not really mean what they say, God only knows what they might do—Or so they think.

When the literalists notice that the government is a bunch of robbers and mass murderers, they perhaps assume that the bureaucrats and politicians have verbalized their true motives, and have set out to rob and murder people. This is not surprising. They take words literally, and often refuse to act upon motives that they have not yet verbalized.

But, even if the libertarians do not make such extreme assumptions—they almost never do—they do not have much insight into how a politician’s or a government official’s mind works. So, are these politicians and bureaucrats trying to defraud people? Are they trying to serve the masses? Neither? Then, what? If the truth lies somewhere between these two point of views, where does the truth lie? I cannot tell. From what I know, Mr. Libertarian could not either. So, when they see this disparity, the libertarians are outraged, and cannot help exaggerating the disparity between theory and practice.

For instance, many libertarian economists are surprised when they hear that learned people are more likely to “think like economists” because, well, “The professors are all Marxists”. When the Austrians see that the mainstream economists are often boring and dishonest, they claim that it would do a great deal of good if all the economics departments in the world are shut down. I am not surprised that Mises predicted that the British pound would be worthless within a week when the UK went off the gold standard—“because the central bank will print truckloads of currency”. Mencken felt that “on some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.”

Now, what would the other people—the hypocrites—do? The hypocrites will deny this. The hypocrites are probably “sincere” because they do not take words too literally. They do not fully understand what the literalists are talking about. Even if they understand, they are not likely to take it too seriously because this fits in well with the subconscious assumptions about human nature they hold. When the hypocrites sense that the government is evil and inefficient, they accept these as part and parcel of democracy. “Okay, what is the big deal? It could have been worse.”

Because they do not take words literally, 1) They find it easier to deny the claims of literalists. 2) They act as if the literalists are right, but speak as if they are not. 3) They believe their own lies.

The statists believe their own lies. This can have two effects. They are oblivious to their own motives. They might go too far. Libertarians know, for instance, that governments kill more people than all the private individuals combined. True enough. But, there is another major effect. Believing their own lies—or self-deception—can act as a safety valve.

The statists want to be seen as doing the right thing. They even want to see themselves as doing the right thing. They do not want to be seen as outright scoundrels. The police and the court system in India is bad enough for people to not approach them. But, it is often good enough to scare even the rich and powerful. When the government officials do wrong things, there is often plausible deniability, except when there are greater incentives to break the rules. But, of course, greater incentives to break the rules are fairly common.

So, what might happen? It can go either way. But, I think in many contexts, the libertarians should be grateful that the statists do not know what they are doing. I think libertarians should thank the statists for their phony concern for the larger good.  

So, when Bryan Caplan wonders (1, 2) why the government works so well, I think it is an interesting question. I think a major reason is that the government officials and bureaucrats tend not to be “inefficient” and “corrupt” when there isn’t plausible deniability. Of course, the specifics differ from case to case, country to country. 

This is true of the government, but there is something similar going on in every sphere. The deluded people instinctively grasp this, and this is perhaps why they say that writers like Ayn Rand have a black-and-white view of the world. They also say that Aspies split things into black and white. People are not “all good”, or “all bad”, as they say.

Now, a lot of libertarians retort: “The government is not so bad, but when compared with what?” Libertarians underestimate the inefficiency of private firms. Private firms can be unbearably inefficient even if the government leaves them alone. Robin Hanson is right in saying that coalition politics is the major reason. So, how do the private firms deal with it? Robin says, by allowing the powerful coalitions to take over. So, when a literalist confronts coalition politics at workplace, he wonders why the whole structure does not collapse like a pack of cards. It is horrible. Office politics beats democratic politics. Why, even the CEO encourages coalition politics. But, lacking insight into people with covert conniving skills, he might still be overstating his case.

Shikha Sood Dalmia says, “Try living in India, dealing with the bureaucracy”. True, but when you compare the Indian government with the Indian private companies, I doubt whether the government looks too bad. This might be very true of many industries—for instance the private TV channels are incomparably better than the government channels. But, if you compare the government internet service providers with the private ones, or the government post office with the private courier services, this is not quite true. These are bad enough, but comparable to the private services.

Teacher absenteeism in government schools in India is fairly high.  But, in my state, the government schools run for the children of government officials are at least as good (!) as the well-known private schools. That side of the world never had much of an urban culture, and most educated people are on government payroll. Even the well-known private schools are cheap, and the private school teachers are paid a pittance. So, relatively speaking, it might be true that the government teachers self-select for teaching and caring.

While I never studied in a government school, anecdotal evidence tells me that it is not *always* as bad as people think. The students are gone cases, but at least in some of these schools, teachers turn up every day to work. But, in police stations and other government offices where conformity pressure is likely to dehumanize people, it is complete pandemonium.

My point is that our understanding of how the world works has a lot to do with what makes us tick—and what makes others tick. If a system is driven by factors that make us tick, we are likely to assume that it might work well.

In Ayn Rand’s The Fountainhead, Howard Roark says that “Every major horror of history was committed in the name of an altruistic motive. Has any act of selfishness ever equaled the carnage perpetrated by disciples of altruism? A humanitarian who starts with declarations of love for mankind and ends with a sea of blood.” But, most people believe that the world would collapse if everyone were selfish. I do not think so, and I am not alone.

Now, observe. Most people equate selfishness with predation, when what she means is “rational self-interest”. Ayn Rand sees—rightly so—that altruism is a cover for power lust. If this is true, ordinary folks will overstate the flaws of a Randian utopia, and underestimate the horrors of collectivism. When they compare predation with reciprocal altruism, it is not surprising that they find a selfish world scary. But what if people conflate “groupism” with altruism? They are likely to think that predation and “the refusal to engage in reciprocal altruism” as two sides of the same coin. Ayn Rand was good at separating the appearance from substance, but the collectivist ideal rarely results in the unmitigated disaster that many libertarians fear. The reason, I suspect, is that they lack the courage of their own malice.

Post Script: I think something similar is going on when neurotypicals claim that Aspies lack empathy and that it is empathy that keeps the world go round. So, when the neurotypical researchers see that Aspies do not have empathy (mindreading skills), but are super moral, they are shocked. They use logic to create their own moral code (Too bad). So, the Aspies wonder why the neurotypical world does not collapse and the neurotypicals wonder why the Aspies do not slaughter them.

I think this is closer to what neurotypicals think:

“Oh, you’ll never renounce anything! You’d walk over corpses for what you want. But it’s what you’ve renounced by never wanting it.”


    Why government functions as well as it does is an interesting question, but one should be careful not to frame this as a competition for the best results between the state and the market, because the state is not morally permissible, as Michael Huemer demonstrates. http://www.theproblemofpoliticalauthority.com/

    John T. Kennedy | 3 years ago

    John, Thank You. I am an extreme anarchist and do not think that the state should replace the market. I have read Huemer's works, and I like them. :)

    Henry Mencken | 3 years ago

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