“The self-interest of people in government leads them to behave in a way that is against the self-interest of the rest of us…I say there is a reverse invisible hand: People who intend to serve only the public interest are led by an invisible hand to serve private interest which was no part of their intention.” – Why Government Is the Problem
In fiscal year 2018, downsizinggovernment.org, a project of the Cato Institute, found that the average federal employee compensation for its 2.1 million workers exceeded private sector compensation by 80 percent. That is, while federal employees pocketed on average $135,971, private sector employees received just $75,381. A further study from the Heritage Foundation also revealed that private sector employees work on average 3 more hours a week than their public sector peers, a cumulative of one month more per year. Nonetheless, in March 2023, President Biden vowed to grow the size and scope of government back to WWII levels, including a 16 percent increase in staffing at the EPA, one of the most corrupt departments of the federal government. How he planned to keep these new workers busy, in light of a 2017 NBC News 4 investigation scandal, is anyone’s guess.
Some may recall a pornography exposé by a local Washington news bureau following a FOIA request for information from a dozen government agencies, including the Departments of Justice, Transportation, and the EPA. Its content reveals scores of federal workers caught watching and downloading pornography on their work computers, with some ogling their monitors for up to 6 hours a day. With compensation and bonuses in excess of $100,000 a year, taxpayers were once again on the losing side when guilty employees received a mere slap on the wrist, returning to their “make work” duties seemingly unscathed by the drama.
While entrepreneurs and capitalists regularly fight claims of greed and selfishness, government employees are often perceived as motivated by benevolence and impartiality. Yet, a closer look reveals that nothing could be further from the truth. Hired to serve the public good, a 2001 Brooking’s Institute survey suggested that workers in government are more concerned about acquiring a paycheck and job security than serving the interests of the public. These so-called servants of the state are increasingly working against the benefit of society while using the levers of government to their own advantage.
In Milton Friedman’s 1993 pamphlet, “Why Government Is the Problem”, Friedman gives his introductory overview of the excesses and inefficiencies of government in several areas of life from education, housing, healthcare, crime, and more. Why government is so often the problem is easily understood once we recognize how a small but powerful group can side with politicians and bureaucrats to override the interests of the masses. If the government was a problem in Friedman’s day, it would be a downright monstrosity in 2023. Friedman, an economist who was awarded the Nobel Prize in 1976, predates the work of another economist, James Buchanan, who also won a Nobel Prize in 1986 for his work acknowledging that politicians and bureaucrats make decisions in their own best interest despite their fiduciary responsibility to work for the public good, a key element of Friedman’s book.
Buchanan’s economic principle called “public choice theory” shows that bureaucrats and politicians also have the same self-interest when they get into office or serve in government, as do workers in the private sector. British journalist Alistair Cooke concurred when he noted that “Public choice embodies the homely but important truth that politicians are, after all, no less selfish than the rest of us.” Thus, instead of working for the benefit of the people, many public sector employees begin to work for their own ends, resulting in the desire to grow the government’s size, scope, and importance. Inherent in the system, not necessarily with the people, self-interest has shown to be a boom in the private sector, but a bust in public employment.
Adam Smith was the first to reveal that self-interest in private industry actually results in a benefit for society. By coining the phrase “invisible hand” in his blockbuster book, “The Wealth of Nations”, Smith describes how market forces spontaneously balance supply and demand as individuals go about their business. Thus, exhibiting how free markets and the profit motive solve many problems by leaving money in the hands of the public who earned it, allowing the cumulative choices of free citizens to fulfill their many wants and needs. Entrepreneurs in a market economy must, in fact, survive in order to succeed. This creates a strong incentive to economize and stretch resources, eliminating inefficiencies in their drive to stay in business. The government, on the flip side, has no such limits. When a government program falters or otherwise fails in its intended purpose, it is given more money, leading to not only wastefulness but economic stagnation for the country.
This private/public conundrum is best explained in the economic theory of concentrated benefits and dispersed costs. A small group of individuals and interests works collectively towards a specific goal that promises them huge profits by contributing to politicians in exchange for advantageous legislation and favored treatment. While special interests receive the bulk of the boon, the public ultimately pays the price, through increased costs of products and services. In fact, most citizens are actually unaware of the added expenses they ultimately pay. The dispersed masses, scattered and independent, are nearly impossible to wrangle without a clear cause to unite them. The obvious imbalance of interest between those who gain and those who pay is the hidden result of government interference that removes incentives, distorts markets, and wastes money.
While the American government was created with a limited role, mainly in defense of the nation, protection of individual rights, and resolution of contracts and crimes, it has far exceeded its charter. The government has become a black hole of gluttony consuming resources without end. Biden’s new call for a 105-billion-dollar foreign aid package to support war efforts in Ukraine and now Israel and Palestine must be weighed against a spiraling national debt that now exceeds 33 trillion dollars.
Every penny diverted to the government through taxes, or the pernicious effect of inflation, is money removed from a more efficient private sector. With new leadership in the House, it’s time to slay the government dragon and return resources to the businesses and people who earned it.
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