Free market’s lessons go untaught

Dec. 9, 2012

By Steven Greenhut

SACRAMENTO — Advocates for bigger government — which is just about everyone these days, it seems — believe that government is the most efficient and humane provider of goods and services. It’s such a bizarre way of viewing the world, but lessons about the wonders of the free market apparently aren’t taught anywhere anymore.

The presidential election and ongoing debates in the California Legislature illustrate this frightening phenomenon. Voters chose a president who has an undying faith in the power of government, and even the Republican candidate failed to clearly explain his most-obvious advantage — why free enterprise is superior to government coercion.

I don’t like to toss around pejoratives such as “socialist,” but what do you call a state Legislature where the dominant faction seethes with hostility toward private firms and does little more than hatch plans to create new government programs?

This in spite of the fact that, wherever we look, government fails.

A reckless — and incompetent — federal agency

The Sacramento Bee recently published an instructive article about how a federal wildlife agency is gaining contracts for pest-control services of the type that private-sector companies already provide.

One of the basics of government is that it should not assume tasks that private companies already are doing, but now that government is seemingly unlimited, no one seems to care about that idea anymore.

In the Agriculture Department’s Wildlife Services program, many of the costs are off the books — i.e., unfunded pension and overhead costs, which makes it seem as if the agency is more cost competitive than it really is.

Essentially, taxpayers are footing the bill for something that should be paid for by those who need to contract for such services. And the government is putting private firms out of business.

But the most instructive aspect of this story is how poorly the agency provides pest-control services. It is notorious for its ham-fisted approach to pest management, including killing of endangered species and a culture in which such deaths are concealed by workers. The agency has simply ignored calls for reform by members of Congress and activist groups.

“[Concern] is directed at an agency called Wildlife Services, which is already under scrutiny for its lethal control of predators and other animals in the rural West,” the Bee reported. “A … series earlier this year found the agency targets wildlife in ways that have killed thousands of nontarget animals, including family pets, and can trigger unintended, negative ecological consequences.”

If a private company operated in such a way, there would be accountability — legal efforts to control its practices, lawsuits by people whose family pets were killed due to the company’s irresponsibility, and criminal prosecutions for violations of environmental laws.

Government disregards its own laws

But the government doesn’t have to live up to the same laws that apply to the rest of us. Instead of having to cease and desist, Wildlife Services goes along its merry way, expanding more deeply into an activity the private market already is handling in a better and less-costly way.

As the article pointed out, the federal agency operates in virtual secrecy, which is another hallmark of government endeavors. Here is the Bee again: “‘It’s been such an uphill struggle,” said Erick Wolf, CEO of a California firm called Innolytics, which developed a form of birth control for Canada geese and pigeons with help from Wildlife Services’ scientists in Colorado. … ‘All they want to do is shoot, trap and poison,’ said Wolf. ‘They don’t want to consider anything else.'”

Government does not have a bottom line so its incentives are different. Government agencies often are protected from meaningful oversight. This is why a federal wildlife agency can wreak havoc on wildlife and why governments often are the biggest polluters.

These days I even hear people argue that government is the best way to provide services because there is no profit motive. That reflects an almost unbelievable level of economic ignorance, but it is a point officials make as they try to use government’s power of eminent domain against private water companies, for instance.

Businesses need to earn a profit, but the prices of their products are determined by competition, which relentlessly drives down costs and increases efficiencies as the less-able providers go out of business.

There is no place to offload private costs onto the public in a free market, even though some businesses despicably lobby the government for special privileges and bailouts.

No incentives to do good job, keep costs down

If the advocates for government efficiency were right, then the Soviet Union — where thousands of unneeded tractors rusted in vacant lots as the public waited in line for toilet paper — would have been the most successful economy on the globe. We would all be happily driving Trabants rather than Toyotas, Fords and Volkswagens.

Private industry creates wealth whereas government efforts consume it.

If my neighbor starts a business, he must win over customers without coercion. He can’t force them to patronize his business or to pay his expenses. Even when government operates as a business, it forces the rest of us to subsidize its operations. Private industry must please consumers or it loses money.

Governments’ only customers are politicians and the unions that represent their workers.

It’s no wonder the results are lousy customer service and shoddy products.

There are no shareholders to please, few incentives to rein in costs, no days of reckoning when it fails.

There are two ways to provide services — through the market, which energizes private initiative as people freely pursue their own dreams, or through the political world, where government officials take money by force (taxes) and protect government providers from competition. There’s a reason the teachers unions, for instance, fight vociferously against charter schools, vouchers and other competitive systems that would embarrass them.

If we want a humane, efficient and accountable society, then we need less government, not more of it. Advocates for freedom need to quickly figure out how to better impart these lessons in a society that is bounding toward limitless government.

Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at [email protected].