When examining any complex issue or problem in general, it's important to
first understand, appreciate, and calculate the human element that factors into
the equation. What does this mean? Well, I will elucidate upon this
question by using the topic of the Nirvana Fallacy, a logical fallacy first
named by economist Harold Demsetz in 1969, and the example he utilized.
As an economist, Demsetz was particularly interested in the issues of private market failure and the generally all-around accepted panacea, government intervention. Essentially private markets are subjected to the various whims, desires, incalculable variables, and counter-competitive incentives that all actors within the market face. Moreover, since humans are thus in part self-interested beings on top of being fallible, market failure should not be a surprising occurrence. Now the solution to this problem, which is still largely advocated today both within the realm of policy debate and within the very classrooms across the country, is that government intervention is now justifiable in order to bring a balance back to the realm of markets. The idea is that since the government now plays a large part in either facilitating or allowing the welfare of a nation state to occur (depending on your political views), employees of the public sector would have the best interest in instilling efficient policy that corrects any mistakes the private market makes. This all seems somewhat reasonable, but as the title of this post suggests, it also appears to be somewhat idealistic.
As I mentioned at the beginning, it's important to take note of the human element of any complex problem. Now it's easy to notice when examining the argument for why private markets fail, the human element has been factored in. Since it applies across the board to any issue where humans have a role though, it is only logical to apply it to the public sector as well. So let's further break down the intricacies of the public sector and the various individuals who make it up in order to get a better understanding of what we're dealing with.
The public sector is comprised of politicians, people who play a direct role in creating public policy. Bureaucrats, employees of government agencies that are in charge of implementing programs that exist as a result of public policy. There are the voters who are responsible for selecting whatever politician they feel best represents their political interests. And finally there are special interest groups; conglomerates of voting weight that are particularly concerned about one or a few more related social issues. While this is a rather simplistic model, I feel it best represents the structure of the public sector in both a palatable and efficient manner.
First let's focus on politicians. I'm sure we all have our own views about these individuals, but the fact is these are people who are interested in creating policy that impacts our lives, for the better (we hope). But if we calculate the fact that politicians are humans, and humans have a self-interest in maintaining whatever position they hold, it is logical to say they will employ whatever means possible to maintain or increase their gains. Therefore politicians are dependent upon gaining votes in order to ensure re-election.
Next we have Bureaucrats. They on the other hand run small, medium or large government agencies that implement programs, all of which require a budget. Therefore everywhere across the nation where budgeting occurs, bureaucrats submit what they need (or simply want) in order to finance their operations. Again, since bureaucrats are human, they will thus act within a competitive state and advocate their needs over another, even if their needs are over-dramatized, or unessential to the overall process of efficiently running their organization or policy programs. Sadly, something that also occurs is that bureaucrats are encouraged to spend their entire budget rather than examine ways of saving or using money prudently, because if politicians (those who okay the budget) see money was left over, they will allocate less the following year. Therefore bureaucrats are at risk of seeing their operations experience a state of atrophy. So in order to protect themselves and those who work with or underneath themselves, they must spend, spend, spend, even when it may not be necessary.
After this we have the voters, regular old citizens who may or may not work for either the private or public sector. Their interests vary but they all have a reason for ensuring the welfare of themselves and those they care about. Therefore they vote to ensure whatever political ideals they want get put into action. But the human element here is something political scientists have dubbed, "rational ignorance." What this means is that the average citizen's daily life is already so congested with activities thanks to career and social obligations that they rationally choose to ignore the issues going on in the political world. Let's say Joe Smith comes home after working 8 hours (8 am - 4 pm) at the office downtown. Not only did he have to drive into the city and wait in rush hour traffic for about an hour or more depending on construction, but he also had to experience that same mundane process on his way back from work. He's tired from the various emails, meetings, and phone calls he dealt with throughout the day, and moreover his wife Susie just called and said they were out of milk and eggs and he had to pick up their 10 year old son Johnny from soccer practice. This is his typical Tuesday, and the week doesn't get much better until the weekend itself comes. Now what self-respecting human being wants to spend his Friday, Saturday, and Sunday researching policy issues that will help him make an educated vote for the greater good come Election Day? If you say yourself in response to this, you either A) have a career within the public sector or within some academic institution, and you are either single or the family's out of town or B) you have an unusual hobby that while I encourage, also warn against for it is not very rewarding in the long run (it is grueling, defeating, and tedious, but keep up the good fight). So then Johnny chooses to plug in and get his info from some talk radio source he hears on the way home from work, or tune in to his preferred news channel for a bit after dinner right before the "big game" comes on. One thing we must take note of here is that those mediums also operate by pecuniary means, and thus by their very nature will appeal to whatever niche or mass market they are targeting. This only pinholes and narrows down public opinion even more, but that is perhaps one of the drawbacks of living within a mass-society.
Finally we have special interest groups. If you answered yes in the previous paragraph to the question pertaining to wasting your weekend away studying policy history, than this might be the career path for you! Essentially these are non-profit organizations whose main purpose is to advocate a certain social issue. Whether its gun safety, cancer, or spreading awareness of the endangered Pacific Northwest Tree Octopus, they carry both the financial and voting weight to largely impact political elections. And since they are competing for what they believe is to be of value, other important issues society face may be overlooked or underplayed. So essentially what you have here is a competitive marketplace of people advocating ideas to thus generate some policy in order to further bring their ideas into fruition. And since the regular old voter tends to be stable in his or voting patterns, the politicians main focus tends to be the special interest groups. They have the power to ensure his job.
So, after that lengthy discussion regarding the inner-workings of the public sector, it is quite reasonable to assume that policy produced may not be done in an efficient manner. Moreover, the policy itself could potentially be protecting one special interest over another. So how does something such as the government, which in of itself can have just as many of the same issues as the private sector, supposed to assist in alleviating economic woes? All individuals across the world have their interests and they will utilize whatever means and channels possible to ensure they are protected. Now I do believe that a good majority of these people truly think that what they believe to be important is in fact important and that they are doing what they do with the best intentions. Still, this doesn't convince me that government intervention is the best method of fixing the private sector. Perhaps we should start reexamining the structure of our public system to ensure incentives correlate with the meta-picture rather than the various nested games competing amongst each other deep within.
In closing, the only thing this convinces me of is that humans are extremely complex, stubborn, confusing, creatures that sometimes make problems worse off than how they were in the beginning. Even with all of this though I will still borrow a quote from the good ole Doctor Who and say that the best part of this world and our existence is, "People. Ordinary, stupid, brilliant people."
As an economist, Demsetz was particularly interested in the issues of private market failure and the generally all-around accepted panacea, government intervention. Essentially private markets are subjected to the various whims, desires, incalculable variables, and counter-competitive incentives that all actors within the market face. Moreover, since humans are thus in part self-interested beings on top of being fallible, market failure should not be a surprising occurrence. Now the solution to this problem, which is still largely advocated today both within the realm of policy debate and within the very classrooms across the country, is that government intervention is now justifiable in order to bring a balance back to the realm of markets. The idea is that since the government now plays a large part in either facilitating or allowing the welfare of a nation state to occur (depending on your political views), employees of the public sector would have the best interest in instilling efficient policy that corrects any mistakes the private market makes. This all seems somewhat reasonable, but as the title of this post suggests, it also appears to be somewhat idealistic.
As I mentioned at the beginning, it's important to take note of the human element of any complex problem. Now it's easy to notice when examining the argument for why private markets fail, the human element has been factored in. Since it applies across the board to any issue where humans have a role though, it is only logical to apply it to the public sector as well. So let's further break down the intricacies of the public sector and the various individuals who make it up in order to get a better understanding of what we're dealing with.
The public sector is comprised of politicians, people who play a direct role in creating public policy. Bureaucrats, employees of government agencies that are in charge of implementing programs that exist as a result of public policy. There are the voters who are responsible for selecting whatever politician they feel best represents their political interests. And finally there are special interest groups; conglomerates of voting weight that are particularly concerned about one or a few more related social issues. While this is a rather simplistic model, I feel it best represents the structure of the public sector in both a palatable and efficient manner.
First let's focus on politicians. I'm sure we all have our own views about these individuals, but the fact is these are people who are interested in creating policy that impacts our lives, for the better (we hope). But if we calculate the fact that politicians are humans, and humans have a self-interest in maintaining whatever position they hold, it is logical to say they will employ whatever means possible to maintain or increase their gains. Therefore politicians are dependent upon gaining votes in order to ensure re-election.
Next we have Bureaucrats. They on the other hand run small, medium or large government agencies that implement programs, all of which require a budget. Therefore everywhere across the nation where budgeting occurs, bureaucrats submit what they need (or simply want) in order to finance their operations. Again, since bureaucrats are human, they will thus act within a competitive state and advocate their needs over another, even if their needs are over-dramatized, or unessential to the overall process of efficiently running their organization or policy programs. Sadly, something that also occurs is that bureaucrats are encouraged to spend their entire budget rather than examine ways of saving or using money prudently, because if politicians (those who okay the budget) see money was left over, they will allocate less the following year. Therefore bureaucrats are at risk of seeing their operations experience a state of atrophy. So in order to protect themselves and those who work with or underneath themselves, they must spend, spend, spend, even when it may not be necessary.
After this we have the voters, regular old citizens who may or may not work for either the private or public sector. Their interests vary but they all have a reason for ensuring the welfare of themselves and those they care about. Therefore they vote to ensure whatever political ideals they want get put into action. But the human element here is something political scientists have dubbed, "rational ignorance." What this means is that the average citizen's daily life is already so congested with activities thanks to career and social obligations that they rationally choose to ignore the issues going on in the political world. Let's say Joe Smith comes home after working 8 hours (8 am - 4 pm) at the office downtown. Not only did he have to drive into the city and wait in rush hour traffic for about an hour or more depending on construction, but he also had to experience that same mundane process on his way back from work. He's tired from the various emails, meetings, and phone calls he dealt with throughout the day, and moreover his wife Susie just called and said they were out of milk and eggs and he had to pick up their 10 year old son Johnny from soccer practice. This is his typical Tuesday, and the week doesn't get much better until the weekend itself comes. Now what self-respecting human being wants to spend his Friday, Saturday, and Sunday researching policy issues that will help him make an educated vote for the greater good come Election Day? If you say yourself in response to this, you either A) have a career within the public sector or within some academic institution, and you are either single or the family's out of town or B) you have an unusual hobby that while I encourage, also warn against for it is not very rewarding in the long run (it is grueling, defeating, and tedious, but keep up the good fight). So then Johnny chooses to plug in and get his info from some talk radio source he hears on the way home from work, or tune in to his preferred news channel for a bit after dinner right before the "big game" comes on. One thing we must take note of here is that those mediums also operate by pecuniary means, and thus by their very nature will appeal to whatever niche or mass market they are targeting. This only pinholes and narrows down public opinion even more, but that is perhaps one of the drawbacks of living within a mass-society.
Finally we have special interest groups. If you answered yes in the previous paragraph to the question pertaining to wasting your weekend away studying policy history, than this might be the career path for you! Essentially these are non-profit organizations whose main purpose is to advocate a certain social issue. Whether its gun safety, cancer, or spreading awareness of the endangered Pacific Northwest Tree Octopus, they carry both the financial and voting weight to largely impact political elections. And since they are competing for what they believe is to be of value, other important issues society face may be overlooked or underplayed. So essentially what you have here is a competitive marketplace of people advocating ideas to thus generate some policy in order to further bring their ideas into fruition. And since the regular old voter tends to be stable in his or voting patterns, the politicians main focus tends to be the special interest groups. They have the power to ensure his job.
So, after that lengthy discussion regarding the inner-workings of the public sector, it is quite reasonable to assume that policy produced may not be done in an efficient manner. Moreover, the policy itself could potentially be protecting one special interest over another. So how does something such as the government, which in of itself can have just as many of the same issues as the private sector, supposed to assist in alleviating economic woes? All individuals across the world have their interests and they will utilize whatever means and channels possible to ensure they are protected. Now I do believe that a good majority of these people truly think that what they believe to be important is in fact important and that they are doing what they do with the best intentions. Still, this doesn't convince me that government intervention is the best method of fixing the private sector. Perhaps we should start reexamining the structure of our public system to ensure incentives correlate with the meta-picture rather than the various nested games competing amongst each other deep within.
In closing, the only thing this convinces me of is that humans are extremely complex, stubborn, confusing, creatures that sometimes make problems worse off than how they were in the beginning. Even with all of this though I will still borrow a quote from the good ole Doctor Who and say that the best part of this world and our existence is, "People. Ordinary, stupid, brilliant people."
