The Private Sector Always Does a Better Job than Government

Using road management as an example, John Stossel explains that government does a bad job than the private sector, even at things that theoretically are a government responsibility. Part of this is because of the profit motive, to be sure, but a big reason is probably because government bureaucracies inevitably are filled with overpaid bureaucrats who understand that job security is best assured by maintaining problems rather than solving them. Stossel makes an excellent point by noting that "contracting out" is not the same thing as genuine free enterprise. But at least it means whatever government is doing (either good things or bad things) will be done for less cost and with more competence.

Free enterprise does everything better. Why? Because if private companies don't do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax. Even when a private company operates a public facility under contract to government, it must perform. If it doesn't, it will be "fired" -- its contract won't be renewed. Government is never fired. Contracting out to private enterprise isn't the same thing as letting fully competitive free markets operate, but it still works better than government. Roads are one example. Politicians call road management a "public good" that "government must control." Nonsense. In 1995, a private road company added two lanes in the middle of California Highway 91, right where the median strip used to be. It then used "congestion pricing" to let some drivers pay to speed past rush-hour traffic. Using the principles of supply and demand, road operators charge higher tolls at times of day when demand is high. That encourages those who are most in a hurry to pay for what they need. ...for years there was a gap in the ring road surrounding Paris that created huge traffic problems. Then private developers made an unsolicited proposal to build a $2 billion toll tunnel in exchange for a 70-year lease to run it. They built a double-decker tunnel that fits six lanes of traffic in the space usually required for just two. The tunnel's profit-seeking owners have an incentive to keep traffic moving. They collect tolls based on congestion pricing, and tolls are collected electronically, so cars don't have to stop. The tunnel operators clear accidents quickly. Most are detected within 10 seconds -- thanks to 350 cameras inside the tunnel. The private road has cut a 45-minute trip to 10 minutes.

Alan Greenspan Should "Man Up" or Drop Out of Sight

John Stossel appropriately scolds the former Federal Reserve Chairman for blaming the financial crisis on the free market. I'll go one step farther and say that Greenspan's behavior is a reprehensible example of someone lacking the cojones to take responsibility for his mistakes. Greenspan is surely not responsible for the corrupt system of subsidies from the government-created nightmares known as Fannie Mae and Freddie Mac, but he definitely deserves the lion's share of the blame for the Fed's easy-money policy of artificially-low interest rates. Greenspan presumably knows he screwed up, which makes his attack on free markets especially despicable. The icing on the cake is that he's also sucking up to the political establishment by endorsing higher taxes. Hasn't he already done enough damage?

I'm getting tired of Alan Greenspan. First, the former Federal Reserve chairman blamed an allegedly unregulated free market for the housing and financial debacle. Now he favors repealing the Bush-era tax cuts. ...During a congressional hearing two years ago, Greenspan shocked me by blaming the free market -- not Fed and housing policies -- for the financial collapse. As The New York Times gleefully reported, "(A) humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets." He said he favored regulation of big banks, as if the banking industry weren't already a heavily regulated cartel run for the benefit of bankers. Bush-era deregulation is a myth perpetrated by those who would have government control the economy. We libertarians were distressed by Greenspan's apparent abandonment of his free-market philosophy and his neglect of the government's decisive role in the crisis. ...now Greenspan, going beyond what even President Obama favors, calls on Congress to let the 2001 and 2003 Bush tax cuts expire -- not just for upper-income people but for everyone. ...the stupidest thing said about tax cuts is the often-repeated claim that "they ought to be paid for." How absurd! Tax cuts merely let people keep money they rightfully own. It's government programs, not tax cuts, that must be paid for. The tax-hungry politicians' demand that cuts be "paid for" implies the federal budget isn't $3 trillion, but $15 trillion -- the whole GDP -- with anything mercifully left in our pockets being some form of government spending. How monstrous!

Government Thuggery

It is common to mock paper-pushing bureaucrats and nanny-state politicians for silly laws and mindless regulations, but sometimes absurd policies translate into genuine oppression. John Stossel outlines some of the disturbing ways that the American people are being mistreated.

Something's happened to America, and it isn't good. It's become easier to get into trouble. We've become a nation of a million rules...top-down rules formed in the brains of meddling bureaucrats who think they know better than we how to manage our lives. Cross them, and we are in trouble. The National Marine Fishery Service (NMFS) received an anonymous fax that a seafood shipment to Alabama from David McNab contained "undersized lobster tails" and was improperly packed in clear plastic bags, rather than the cardboard boxes allegedly required under Honduran law. When the $4 million shipment arrived, NMFS agents seized it. McNab served eight years in prison, even though the Honduran government informed the court that the regulation requiring cardboard boxes had been repealed. How about this one? Four kindergartners -- yes, 5-year-old boys -- played cops and robbers at Wilson Elementary in New Jersey. One yelled: "Boom! I have a bazooka, and I want to shoot you." He did not, of course, have a bazooka. Nevertheless, all four boys were suspended from school for three days for "making threats," a violation of their school district's zero-tolerance policy. ...Palo Alto, Calif., ordered Kay Leibrand, a grandmother, to lower her carefully trimmed hedges. Leibrand argued that no one's vision was obstructed and asked the code officer to take a look. He refused. Then the city dispatched two police officers. They arrested her, loaded her into a patrol car in front of her neighbors and hauled her down to the station. In 2001, honor student Lindsay Brown parked her car in the wrong spot at her high school. A county police
officer looked inside and saw a kitchen knife -- a butter knife with a rounded tip. Because Lindsay was on school property, she had violated the zero-tolerance policy for knives. She was arrested, handcuffed and hauled off to county jail where she spent nine hours on a felony weapons possession charge. School Principal Fred Bode told a local paper, "A weapon is a weapon."

Look Before You Leap on Nuclear Energy

In his Townhall column, John Stossel cites my Cato colleague Jerry Taylor as he explains that nuclear energy may not be viable without government subsidies.

President Obama recently announced $8 billion in loan guarantees for nuclear power plants. I smiled when I heard. Finally, even Democrats woke up to the benefits of nuclear power. But Cato Institute energy analyst Jerry Taylor set me straight: "If nuclear power made economic sense, we wouldn't need to subsidize it." Affordable nuclear power, says Taylor, is a Republican fantasy. Promoting it makes no more sense than Nancy Pelosi's promotion of wind and solar power. "Take a Republican speech about nuclear power, cross out the phrase 'nuclear,' and put in 'solar' -- you've got a Democratic speech about energy." ...I thought the only reason that nuclear didn't pay for itself is the burden of excessive regulations and objections from silly environmentalists. Apply for permission to build a plant, and their cumbersome lawsuits impose ruinously expensive delays. Again, Taylor set me straight. He says the nuclear industry itself is comfortable with today's level of regulation. The big problem today is not environmental rules, but simply the huge cost. The same high costs, he says, are found in countries that have long been friendly to nuclear power. He also notes that when the Department of Energy proposed offering to guarantee 80 percent of the cost of new nuclear plants, the big investment banks told the department that even 80 percent loan guarantees wouldn't be enough. They needed 100 percent guarantees, or they wouldn't make the loans. "To me that's a market verdict that you're supposed to respect. ... We need to leave these (matters) to markets. And in the marketplace, investors will not spend a single red dime on nuclear power because it's too expensive. ... It's not Jane Fonda or Greenpeace that killed nuclear power. It's Wall Street investment banks who've looked at the bottom line."

The Real-World Version of Atlas Shrugged

John Stossel's show tomorrow on Fox Business News will discuss how modern events are eerily similar to what happened in Ayn Rand's Atlas Shrugged. Writing about the show in his column, Stossel asks which political figure from today would be akin to the evil Wesley Mouch in the book. That's a challenging question. During the Clinton years, Ira Magaziner or Robert Reich would have been obvious choices. But who is the statist Rasputin of the modern era? You can vote at this link. Geithner, Frank, and Obama currently lead the voting:

Even though Rand published "Atlas" in 1957, her descriptions of intrusive and bloated government read like today's news. The "Preservation of Livelihood Law" and "Equalization of Opportunity Law" could be Nancy Pelosi's or Harry Reid's work. The novel's chief villain is Wesley Mouch, a bureaucrat who cripples the economy with endless regulations. This sounds familiar. Reason magazine reports that "as he looks around Washington these days," Rep. Paul Ryan "can't help but think he's seeing a lot of Wesley Mouch". Me, too. I also saw a lot of him under George W. Bush. So I'm conducting this unscientific poll: Who is our Wesley Mouch? Hank Paulson? Tim Geithner? Barney Frank? You can vote here. Personally, I think Chris Dodd's ridiculous financial proposals ought to win him the honor. But he isn't among the choices on Fox's list. As I write this, Geithner, President Obama and Barney Frank lead the voting. ...Rand brings out ferocious hatred in some people. ...Had today's bureaucrats been in charge decades ago, they would have banned things like aspirin, cars and airplanes. Sadly, they are in charge now. That makes the "Atlas" message important today. Although Rand idolizes businessman in the abstract, "Atlas Shrugged" makes clear that she (like Adam Smith) understood that they are not natural friends of free markets. They are often first in line for privileges bestowed by the state. That's called "crony capitalism," and that's what Orren Boyle practices in "Atlas."