Last Saturday, I woke up at 1:45 a.m. feeling sick as a dog. I didn’t get back to sleep. I had a bad cold, a stuffed-up nose, a headache, and lots of phlegm. (I apologize if this is TMI.) When my wife woke up, she told me I should take Advil. I’m careful not to overdo drugs, and so I took only one Advil. Within an hour, I felt better, not better enough to do anything other than sleep, but better. My headache was gone.
Because I had time to reflect, I told my wife that I didn’t remember having Advil as a child. She said that was because it didn’t exist then. She was right. Ibuprofen, of which Advil is a particular brand, didn’t become available in the United States until 1974, when I was in my early twenties. That got me thinking about the huge range of high-quality cheap goods that we have available in this economy. Of course, because I’m an economist, it reminded me of what’s required for those goods to keep being made and for better ones to replace them. What we need is a fairly free economy. Virtually every government move to make that economy less free, whether by regulating, having the government take over an industry, or taxing more, will reduce our economic progress.
This is from David R. Henderson, “Our Amazing Somewhat-free Economy,” Defining Ideas, October 6, 2022.
Another excerpt:
One tragic case of government ownership in recent years is the government-owned water system in Jackson, Mississippi. In a March 2021 article in Mississippi Today, Anna Wolfe tells how the water system deteriorated over the years. She attributes the deterioration to “a shrinking city, aging infrastructure, and racism.” But she is a good enough reporter that, without totally seeing its significance, she lands on the real reason for the water problems, in a quote from University of Wisconsin professor Manuel Teodoro:
“The nature of local politics is that city governments will tend to neglect utilities until they break because they’re literally buried,” he [Teodoro] said. “One of the things that is a perennial challenge for governments that operate water systems is that the quality of the water system is very hard for people to observe. But the price is very easy for them to observe.”
The quality of the water system is hard to observe. But the quality of infrastructure in many for-profit businesses is hard to observe and yet many of these businesses deliver a consistently high quality. What makes for bad results is that the quality of the water system is hard to observe and that it’s run by government officials who have the wrong incentives.
Read the whole thing.
READER COMMENTS
Speed
Oct 7 2022 at 9:32am
The problem is that government officials aren’t good at marketing. If I was spending money replacing an aging water system, I would start by showing voters what can happen if it isn’t maintained — on second thought that would be a little late.
I would really start by telling voters repeatedly what is being done to test and maintain their water system and repeatedly tell them that all water systems need, eventually, to be replaced and that the city has a plan in place to finance maintenance and replacement. Also make it clear that money spent on other projects may or will take money from water-system maintenance and replacement.
And when the time comes, announce loudly how the system (or parts of the system) are being replaced, what it is costing, where the money is coming from and why this is good for the citizens.
People are not stupid. Sometimes they are ignorant and fixing that costs less than making them sick or killing them.
“Key Moments in Flint, Michigan’s lead-tainted water crisis”
https://www.msn.com/en-us/news/us/key-moments-in-flint-michigan-e2-80-99s-lead-tainted-water-crisis/ar-AA12AIsD
Jon Murphy
Oct 7 2022 at 9:35am
Given that, in a democracy, the whole first step of becoming a government official is marketing, I do not think that can be the problem.
Rather, the question is (as David points point) why don’t they do what you suggest? It’s a matter of incentives, not marketing skills.
robc
Oct 7 2022 at 12:57pm
I was going to point out the same thing. Marketing they excel at. The problem is what they accuse businesses of…short term thinking. Politicians rarely think past the next election and what of the chances of the water system failing in that time span?
nobody.really
Oct 9 2022 at 3:13am
Elected officials are good at marketing. Bureaucrats? Not so much.
But not to worry! Thanks to galloping paranoia on the part of the electorate, technocratic bureaucracies everywhere are hiring ever more “public outreach” and “communications” specialists. Why use taxpayer dollars to hire engineers when we can instead spend the money on marketing professionals/lobbyists to persuade the public/legislature that their tax dollars are being well-spent?
Responsive government at its finest….
Thomas Lee Hutcheson
Oct 9 2022 at 3:08pm
I think we need a little nuance. Would you agree that the publicly owned water system of Ashville NC works better than the one of Jackson MS? Ownership may not be the most important variable.
Nick Ronalds
Oct 8 2022 at 4:54pm
Thank you David, spot on as always. [Among the institutions we need for progress to continue are] “private property, little regulation or regulation that’s not heavily oppressive, and tax rates that are not too high, to name three.” Your words recall Adam Smith’s observation that “little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.” Sadly we seem too thick to learn these truths. You always articulate them brilliantly, with powerful arguments and clear examples.
David Henderson
Oct 9 2022 at 5:14pm
Thank you, Nick.
Thomas Lee Hutcheson
Oct 9 2022 at 3:17pm
No dispute there with most neo liberals.
“Not heavily oppressive” regulation I’d take to mean following principles of cost benefit analysis. and “not too high” taxes to mean pigou taxes and other low deadweight loss taxes suffuent to pay for public expenditures that are themselves guided by cost benefit considerations, although giving more weight to benefits accruing to low income people than to high income people.
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