Government Creates More Problems Than It Solves

January 8, 1997 • Commentary

President Clinton spent much of his re‐​election campaign attempting to rehabilitate government. Even if he really believes the era of big government is over, he certainly still believes in government. He remains a believer in ”the age of politics” as historian Paul Johnson has termed the 20th century.

Yet it is government, and not just big government, that has failed. It has well‐​earned its negative reputation. Every day the state is busy creating more problems than it solves.

Consider: Washington now is deeply engaged in a new war on tobacco that will treat us all like children in order to stop kids from smoking. Yet Washington has been subsidizing tobacco for decades. Federal support for the tobacco industry seems more than a little incongruous, especially for an administration supposedly dedicated to suppressing tobacco use.

Of course, this is not the first time that government has exacerbated the very problem it has been tasked to solve. For instance, access to and cost of health care remains a concern of Democrats and Republicans alike. But federal tax policy, which encourages business to offer comprehensive, first‐​dollar insurance policies to workers, and Medicare/​Medicaid, the government’s massive fee‐​for‐​service insurance programs for the elderly and poor, have resulted in three out of every four dollars of medical care being directly paid by someone other than the patient. The natural result has been rising demand, exploding costs, and increasing bureaucratization as private insurers and government alike attempt to restrict patient choice.

Despite important improvements in the quality of America’s air and water over the last two decades, the environment remains an emotional political issue. Many environmentalists criticize widespread timbering in undeveloped forests in America and overseas. Yet the federal government uses— and wastes—taxpayer funds to open up fragile land for lumbering.

Indeed, Uncle Sam has lost as much as 99 cents of every dollar spent on timber operations in Alaska’s Tongass forest. Similarly, the World Bank, to which America is the largest contributor, has generously funded destructive development in Brazil’s Amazon rain forest.

Almost everyone today acknowledges that welfare recipients have too few incentives to work. This should come as no surprise, however. Analysts Michael Tanner, Stephen Moore, and David Hartman estimate that the total value of government benefits—Uncle Sam alone has some 80 different antipoverty programs—exceeds $12 an hour in some states. In 30 states a person on welfare would have to earn more than a starting secretary to make it financially worthwhile to work. But that’s unlikely as long as government creates a multitude of employment barriers, such as occupational licensing, business regulation, the Davis‐​Bacon Act, and the minimum wage. In fact increases in the latter, like that voted by Congress last summer, not only reduce the number of jobs, but also encourage employers to shift from marginal workers seeking to escape poverty to better educated middle‐​class teens.

The Clinton administration recently initiated an antitrust investigation of the supermarket shelf space controlled by Frito‐​Lay. Yet government routinely creates and protects monopolies. For instance, the Postal Service survives only because the Justice Department will prosecute anyone else who attempts to deliver the equivalent of first class mail. Quotas on auto imports allowed U.S. manufacturers to gouge consumers throughout the 1980s. Years ago Uncle Sam simultaneously sued the aluminum giant ALCOA for violating the antitrust laws and protected it with tariffs. Many cities, like New York run taxicab monopolies with strict limits on the entry of new competitors. And professionals like doctors and lawyers engage in a host of anti‐​competitive practices, protected by government.

International development, too is a leading concern of Washington which has given and lent, in current dollars, some $1 trillion to poorer states since World War II. But U.S. quotas on sugar imports have devastated the Caribbean nations restrictions on imports of clothing steel, textiles, uranium and more have made it hard for Russia and its East European neighbors to develop vibrant private sectors. Michael Finger of the World Bank figures that trade barriers today reduce the income of poorer countries by twice as much as they receive in aid.

Even in trying to help the government often hurts. In their fight against drunk driving, many states have lowered the blood alcohol content (BAC) level at which drivers are presumed to be drunk. Yet most accidents are caused by people with far higher BACs—.15 and above twice the level now being pushed by many activists. Thus, lowering the BAC actually drains resources away from enforcement efforts directed at the most dangerous drivers.

President Clinton has suggested that he differs from the Republican Party in believing that government can help improve our lives. But government is often responsible for the problems in the first place. The answer is less government.

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