Government has no business being in, well, business. I don’t mean they shouldn’t exist, they should. They just shouldn’t try to run businesses. They always – ALWAYS – do it badly and they should leave running businesses to private, free market, entities.
I include regulated monopolies as the government running a business.
The government runs businesses badly because they’re bureaucrats, not businesspeople or entrepreneurs. Give them a rule book to follow and the means of enforcing the rules and the bureaucrats function admirably. But businesses function finding, then filling, needs quickly, efficiently, and cost-effectively.
And, in a free market, where competition reigns supreme, private business has the incentive to do everything under the mantra of “bigger, better, faster, cheaper.” Government entities, by definition, have no competition and, therefore, have no incentive to do anything but operate within budget and by the rulebook.
Regulating monopolies is just as bad because governments can’t figure out how to do it effectively.
What government should do is establish laws and regulations that make the free market fair and equitable for all, then monitor to make sure private businesses are adhering to the laws. That should be the extent to which governments should run anything except the safety forces (in which I include the military). As a rule, governments run safety forces poorly, but these entities are not well suited to private enterprise – nor would I ever advocate for putting our safety forces in the hands of for-profit enterprises. Citizens’ safety and border security are simply too important to have profit motivate any decisions.
Once the government gets directly involved in businesses things start going off the rails. Any government run “business” – Medicare, Social Security, Affordable Care, etc. – quickly bogs down in a quagmire of bureaucracy, becomes rife with corruption, and provides minimal support for either users of the service or suppliers to it. Call Social Security. I had to do it a couple of times: it was painful. No matter the day or time the first thing you hear is “Due to unusually high call volume your wait will be # minutes”. Not once was the wait under 30 minutes. Same for the IRS, same for Medicare. That level of user disregard would never be tolerated in private enterprises. And the level of fraud in these programs is, simply put, staggering. Provable fraud is in the billions – BILLIONS – of dollars! Private enterprises allowing that level of fraud would be prosecuted; not so with government officials, there’s just a shrug of the shoulders by government officials.
Governments allowing regulated monopolies is just stupid. Government allows monopolies to make money on something called Rate of Return (ROR). What’s that? If allows the monopoly to charge customers for costs plus a “reasonable” ROR, which usually hovers around 11%. What does that mean? If a monopoly can show $1,000,000 in expense, they can charge users $1,110,000 ($110,000 profit on 11% ROR). If the monopoly wants to make more profit they are incented to increase costs! So, want to double your profit? Double your expenses! $2,000,000 in expense = $220,000 in profits. It’s an insane way to run a business.
Monopolies and government entities engage in an endless game of monopolies filing for increases based on increased expense, governing agencies forcing long, drawn-out, tedious hearings, then (mostly) approving the expenses. For simplicity I used million-dollar amounts; reality is these are usually billions of dollars.
One of the ironic parts is that both the monopoly and government must employ dozens (if not hundreds) of people in multiple departments to manage and monitor compliance. That simply adds to the monopoly’s costs – and profits – and costs tax dollars for the government entities.
These, and other reasons, are why we need governments to stay out of business.
And now, progressive candidates want to take over whole swaths of the USA economy: health care, energy, college education, etc. That’s a scary proposition to me and it should scare you as well. There’s simply not enough money in our country to provide the services. If we taxed all millionaires and billionaires ALL their money we couldn’t pay for of these programs. And the former rich people would need to go on government support – much to the delight of the progressives – adding to the problem of government deficits. Where would the money come from the following years? Everyone.
The above paragraph may be a bit hyperbolic as no one really knows what the costs would be for a government take-over of these elements of the economy. The lowest estimates is at least $5 Trillion a year, high estimates are above $10 Trillion a year. The best-guess of the total wealth of the top 10% puts their wealth at about $60 Trillion. So, if we bankrupted the top 10%, we could pay for all the programs for a few years before we’d have to take all of every else’s money – which would not be enough to fund the programs in total.
So, Bernie Sanders dream would eventually come true. We’d all be equal – equally poor. While visiting the old Soviet Union Bernie saw people waiting in line for food. His comment was “that’s great because it shows that everyone is equal here”. Bernie’s goal is for everyone to be equally poor – except the folks running the government. Those running things would be well compensated, just like they were in his beloved Soviet Union.
But, if you think I’m being a bit over-the-top, just think about Social Security. It’s a purely government run program. It’s been well and publicly documented for decades that it’s headed for a catastrophe. In case that didn’t sink in: the problem has been known for DECADES. What’s been done by the government? NOTHING! As is typical with politicians, the tough decisions are delayed until they’re out of power. Then, when the crisis becomes politically untenantable and no other answer will suffice they’ll simply tax everyone until the problem is solved. Social Security was the progressives first attempt at Socialism. How’s that working?
Enacting all of these progressive pipedreams would collapse our economy, cause massive unemployment, and create unsupportable government costs.
Let’s keep the government out of managing or operating private businesses. If we, the people, want to drive change, do it with our dollars. Want a reduction in carbon emissions? Buy goods that reduce carbon emissions. Private enterprise will move in a carbon-free direction.
Want better healthcare? Unshackle the healthcare industry from unreasonable regulations and laws. Let healthcare businesses operate as they see fit. Let consumers buy what they want. You’ll see a reduction in healthcare costs.
Lawmakers should pass laws protecting customers from businesses and put bureaucrats in place to monitor compliance and that’s it.
See Part 3 discussing accountability: