Government Paternalism in Action

by Russ Roberts on November 3, 2006

in Nanny State, Politics, Regulation

I was talking to some people last night about different approaches to government. A woman asked me if there was anything I thought government did better than the private sector. Sure, I replied. Killing people. That is the government’s best thing and governments have had unparalleled success in killing people over the last 100 years. Start with the murder of innocents. Hitler and Stalin dwarf the worst serial killer. Even if you count 9/11 as a private act of murder, that’s a few thousand versus many millions. No comparison.

Then there’s war. Government is very good at war relative to the private sector. Some wars are better than others. Some are ghastly. But there is no disputing that government armies, regardless of the merits of the cause, are better at killing people than private armies.

Come on, someone else said, before I could lengthen the list with maybe the enforcement of contracts and the rest of a very short list. What about education and health care? We can’t leave that to the private sector. That launched us into a long discussion of the current state of the public schools and whether the vigilance of the FDA in protecting us from dangerous drugs has been a net benefit or a net loss. Let’s turn the question around, I asked. Is there anything the government does well?

As an example of the dangers of using the government as an instrument for good, no matter how well-intentioned matters begin initially, I gave the example of the Tobacco Settlement. Cigarettes are nasty. Most people thought it was a good idea to take Big Tobacco to the cleaners and force them to pay for the health care costs of smokers. I thought it was a very bad idea for many reasons. But suppose you thought it was a good idea. How did it turn out in practice?

Very badly. Not like it was "supposed to." Basically, it enriched tobacco companies and trial lawyers out of the pockets of smokers who are relatively poor. What an repulsive thing it turned out to be, all done in the name of the children and health.  Read this careful account by Jeremy Bulow of how it actually played it.

I’d like to say that the Who were right: we won’t get fooled again. But we will until we remember that what we want government to do well and what it can do well are not the same thing.

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Chris Meisenzahl November 3, 2006 at 9:00 am

Very well-stated Dr. Roberts.

lowcountryjoe November 3, 2006 at 9:17 am

The Who, Dr. Roberts? Let me be the second person, then, to tip my hat and take a bow for the new revolution.

Steven Donegal November 3, 2006 at 12:43 pm

Your approval of Mr. Bulow's article is somewhat curious. He strongly disapproves of a negotiated settlement with the tobacco companies largely because some companies and some states got a better deal than others. His preferred solutions: increase litigation risk so that major retailers would quit selling cigarettes; allow states to raise taxes on cigarettes; and heavily regulate the availability of cigarettes. It seems to me that all of Mr. Bulow's cures involve significantly more government involvement than the current Master Settlement Agreement. So given the anit-government thrust of your argument, I'm at a bit of a loss to see how Mr. Bulow's article furthers your point.

Geoffrey Brand November 3, 2006 at 2:19 pm

"Your approval of Mr. Bulow's article is somewhat curious. "

I don't see Dr. Roberts approving or disaproving of Mr. Bulow's solutions.. He was just referring to it as a historical reference to what the effects were of the actual settlement.

Michael Sullivan November 3, 2006 at 2:23 pm

On reading the settlement it struck me that this agreement's problems are *exactly* the kind of problem that sometimes occurs in market transactions where parties negatively affected have no way to be represented. States were given a choice that was essentially no choice. They were already hurt by the transaction enacted by the previous parties without their consent, whether they signed or not.

This is exactly the kind of thing that happens with monopolist businesses.

Note that the fact that governments were the plaintiffs here is pretty much irrelevant to the problematic incentive structure of the settlement.

In *any* court system, you could have had this exact same problem even if the plaintiffs were all individual users of the product.

Suppose a corporation sells a product and is found to have negligently slipped some damaging bit into the product, but since has removed it. For whatever reason that corporation still can sell it's product and people buy it. But a bunch of it's consumers get together and demand satisfaction for their diminished health from having used the product previously. They settle and offer an expansion of the settlement to all other users. The settlement involves paying them off a bunch of money every year. The company will of course raise the price of it's product to offset this. Other users have the option of getting the settlement or not, but will pay the higher prices regardless. Nobody but the original plaintiffs ever had the option to keep the status quo (no settlement, no higher prices). once the first settlement was agreed, that was it.

No governments were involved, except whoever is enforcing the settlement.

To me this looks like a much more general problem with torts and the difficulty of giving all affected parties a real choice than a particular problem with government action. It's a prototypical "market failure" where the negative externalities of choices by a few key parties overwhelm everyone else's decisionmaking.

Ann November 3, 2006 at 2:43 pm

"Hitler and Stalin dwarf the worst serial killer."

How could you forget the record holder? Mao topped them all.

eddie November 3, 2006 at 4:30 pm

Government is very good at war relative to the private sector. [..] [T]here is no disputing that government armies, regardless of the merits of the cause, are better at killing people than private armies.

Do you have anything to back up those two assertions? I think you're selling mercenaries short (not to mention conflating "war" with "killing people").

In all fairness, anarcho-capitalists (such as myself) think that the private sector would be better than governments at conducting war and enforcing contracts. So that basically just leaves murder as the area of government expertise, although I think you could add extortion and theft to the list.

Brad Hutchings November 3, 2006 at 5:20 pm

Too bad you didn't have any (liberal) teachers in the crowd. Just say "No Child Left Behind" and you have won the argument. Or seniors. Say "Medicare Prescription Drug Benefit". We're halfway there really… This establishes that Big Government created by Republicans is sure to fail. Now toss in the EPA under that theory.

ryan November 3, 2006 at 7:56 pm


The reason we assume that governments are better than private corporations at war is because governments that are bad at war are generally referred to as "our most recently annexed province." It's sort of like the reason why I assume that Microsoft is probably better at running a computer firm than I am — if they weren't, I'd be making millions and/or they'd be out of business. It's a bit odd to argue that private corporations would be better if only they were given a fair chance — the whole nature of war is not to be given a fair chance.

Ragerz November 3, 2006 at 9:16 pm

Here is one problem with the assertion that the private sector is always better than the government. In a given arena, there are many ways to structure rules governing private action, and many ways of structuring rules governing public action. All those different approaches will result in different outcomes, depending on the rules, the actors, the arena, and their interactions.

Libertarians are silly, because they systematically discount all possibilities involving public action, without reference to specific situations. Such arguments are not persuasive, except to other libertarians. A clear thinking pragmatists looks to specifics for guidance, not silly stereotypes concerning the general case by ignorant yahoos.

Lowcountryjoe November 3, 2006 at 9:57 pm

The real reason why Libertarians are silly, Ragerz, is because they actually believe that individual choice — providing that these choices do not directly interfer with the choices of others and ensuring such through constitutional laws — is preferable to having know-it-all asshats dictate what choices stay on the table for said individuals. Maybe there will come a day when you'll make an agrument so compelling that I'll become an ex-libertarian just like you did…you've got a long ways to go though; I do enjoy my freedoms.

Russell Nelson November 4, 2006 at 1:42 am

Ragerz says "Libertarians are silly, because they systematically discount all possibilities involving public action, without reference to specific situations."

And yet water always flows downhill. Do we really need to make reference to specific hills?

The reason coerced actions are always worse than market actions is because the coercion has a higher cost than the transaction cost in the marketplace. If you believe otherwise than you must claim that it's more expensive to persuade people than to threaten them.

Russell Nelson November 4, 2006 at 1:45 am

lowcountryjoe says " I do enjoy my freedoms."

But more to the point, lowcountryjoe understands that he has to put up with other people's freedoms in order to enjoy his own. That is the difference between the caricature of libertarianism that Ragerz enjoys dissing and dismissing, and the reality of what libertarians actually believe.

eddie November 4, 2006 at 10:32 am

ryan: Good point, but I don't think it holds. There's a reason private sector warfare isn't in widespread use, and it's not related to the private sector's ability (or lack thereof) to win. Government warfare enjoys the advantage of isolating the decision-makers from the costs of their decisions, and thus it's the method of warfare preferred by government leaders.

In private sector warfare, the costs are fully born by those engaging in it – where "those engaging in it" are the decision-makers who want to wage warfare, not the armies themselves. The armies are simply performing a service for their war-waging customers and necessarily pass their costs on to them directly.

When governments had recourse to the draft, there was no reason to engage the private sector. Even now with the draft largely a thing of the past, governments are reluctant to privatize their military functions for much the same reasons they are reluctant to privatize utilities and health care.

But ultimately, the reason that governments have conquered the world and private armies have not is that governments want to conquer for their own ends whereas private armies only do so if they have paying customers.

Dr Anjan Chatterjee November 4, 2006 at 12:09 pm

yeah truly the some govts are truly killers but we must not forget the good things that many govts do.Much bloodshed is saved by sane govts and much brutalities are committed by insane govts.

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