Three hurdles

Michael Hartl — Sun, 26 Feb 2006 16:09:00 -0800

There are problems in the world. Hard problems. Who should solve them? Government should.

Well, maybe not. Most advocates of government action to fix Problem A with Policy X make three key assumptions:

Policy X will fix Problem A.

The government, if empowered to do X, will in fact do X, and will keep doing X (only) as long as Problem A remains a problem.

The benefit due to fixing Problem A is worth the cost of Policy X.

In my view, many government policies fail #1, and those that don’t almost invariably fail #2. The few policies that seem both well-conceived and well-executed either fail #3 outright or provide insufficient evidence of passing a cost-benefit analysis. The set of policies that unambiguously clear all three hurdles is minuscule.

The space of Policy Xs that people propose to fix all the Problem As is vast, and rarely contains a plausible solution. Indeed, potential solutions to Problem A are often so counter-intuitive that the straightforward Policy X, rather than helping, or even merely being orthogonal to Problem A, may actively make it worse.

Of course, simply because you’ve found an effective solution to Problem A doesn’t mean that the government will do it and do it right. Government has its own internal incentives, which aren’t necessarily aligned with the goals of those who would use it to implement Policy X. Oftentimes regulated industries capture their regulators with strategic campaign donations and high-priced lobbyists. And “temporary” policies often become effectively permanent (for example, the 3% excise tax on telephone calls recently in the news was passed in 1898 to help fund the Spanish-American War).

Finally, even should a particular Policy X be effective, and be implemented, there is a cost that comes with any new law. Is the benefit worth the cost? It’s often difficult to say; government doesn’t really provide a framework for answering the question. And many, especially those who most passionately support government intervention, completely ignore an important intangible cost: the inevitable loss of freedom due to Policy X.

Eikonoklastes by Michael Hartl: Three hurdles

Three hurdles