The Eight Fundamental Flaws of the Government Provision of Public Services
We Do Better is concerned with optimizing the human outcomes delivered by our public services.
In most areas of life, to improve an outcome, we compare the available means of achieving it, and choose the best one.
Remarkably, however, when it comes to providing the services on which we all rely, we don’t do that.
When most people think of the provision of public services, they don’t think about the method that provides the best results or even the most services. Rather, they think about the method to which most resources are directed.
That method involves government agencies, funded by taxation.
It has eight fundamental flaws. From the first follow all the rest.
You do not get to choose how much money to give to the government based on their efficiency, their impact, or their results. The same amount of money will be taken from you regardless and deployed in a way that you cannot directly determine and cannot be quickly changed.
Guarantees unlimited revenue
Since you have no choice in how much the government takes from you, government can and does easily increase its revenue without limit. Therefore, it has no practical need or incentive to curb waste, spend wisely, or even monitor whether its spending solves social problems.
Massively concentrates money and power
The system of collecting money by force ensures that just a few people make decisions on how large amounts of the people’s money are spent. This makes it worthwhile for special interests to seek favors from politicians, and is the essence of political corruption.
Disincentivizes quality in social services
Since people cannot send their tax money elsewhere, organizations that would address social needs more effectively or efficiently than government agencies are frequently underfunded or never see the light of day. Moreover, that lack of competition prevents us from fairly judging the effectiveness of government solutions against all of the better solutions we’ve been prevented from having, so the quality of our current solutions falls unchecked.
Does not respond to real-world outcomes
Since the collection of tax money is independent of the human consequences of how it is spent, we don’t even properly measure the outcomes, much less respond to them. Money taken by taxation is deployed in a manner that does not consider the individual circumstances of the people it affects, fails to deliver on intended objectives, and has negative unintended consequences, all of which go unmeasured. Taxation underpins a “one-size-fits-none” system.
Organizations in the voluntary sector (businesses, charities) have to earn their money by providing quality services with limited resources. They therefore have to reduce waste. Competing with other organizations puts further downward pressure on waste and the cost of delivering those services. In contrast, since taxation guarantees funds for government to spend, regardless of outcomes, and since it can be simply increased to cover waste, waste in the spending of tax money rises unchecked.
You cannot vote with your tax dollars: you have no direct say in how your tax dollars are spent, and you can’t spend them anywhere else. Therefore, the mechanisms of accountability that we rely on everywhere else are missing from every system of taxation.
Crowds out compassion
A compassionate society is one in which people feel their moral responsibility to their fellow men and women, and act on it freely. They look for suffering and need, and make a choice to help another at a material cost to themselves. The system of taxation gives people the false impression that their responsibilities to each other are already being met, eliminating their incentive to see the needs of others, and their means to meet any such needs that move them.
It’s important to understand the advantages and disadvantages of the various ways we provide public services, because only then can we effectively discuss – let alone choose – the ones that provide the best human outcomes.