Why do benign public policies always seem to fail?

I am asking about the U.S. here and abroad. It seems that more often than not governmental policies have the reverse effect of what they intend to have. They end up harming more people as opposed to helping more people. I wrote this a while ago thinking about this... why is it? Is it because of policy makers, or, the people involved... I personally believe that governmental regulation has the reverse effect of what it intends to... because policy makers aren't free from corruption, and, interference in the market place causes the market to not work how it should... or perhaps the program may become corruptible as it often seems to. Take a look at what I wrote, and, I want to see what you have to think about it... and why benign policies always seem to have the opposite effect they intended to.


I'll try to keep this short. I was wondering why ideas that people would normally think are good lead to unforeseen consequences. For instance, people who want a world government may have benign intentions but the fact that we cannot trust state politicians or the fact that we cannot trust mostly everyone except a few who are at higher levels of power in political establishment gets in the way. How would a world government be prevented from becoming corrupt or from experiencing the social ills of the 20th century? How would we expect to prevent all that conflict with a world government? That's the thing we couldn't. It would be impossible for us to stop all conflicts that come out at any given situation. That's what neocons try to do with our foreign policy and it doesn't work that well.

Second, on government programs... there seem to be some government programs that do what they're intended to do. We don't necessarily require the programs for a functioning society but they do their job. The police, despite all the people who act out in protests and in other areas do their job for the most part... whether it can be done privately is a question for the future... it's not whether it can... of course it could probably be outsourced to private enterprises... but as of right now the government has the monopoly over police forces... and that seems to work fine. The government accountability office seems to do its job.

But wait a second. There's all these fiscal policy programs and these monetary policy programs. Fiscal policy tries to drive demand up with the government spending more money on goods. It increases government size, and, the scope of government across the economy. The government can spend money to increase demand. It can also manipulate supply too. These policies may work in the short run but in the end it makes our economy more and more dependent on government spending as opposed to the private sector. The government (if certain people are in power) may increase in size, and, the people may have the opposite results that they wanted to have. A boost in the demand side might not mean the people are better off... it just means the government is buying more. The people themselves aren't doing that great... and with the supply side... businesses are encouraged to produce more, and it may mean that businesses have produced more than people would want to buy, and they may not anticipate the demand, so there might not be enough people who want the goods. It forces investors to be more weary of government policy as opposed to actual consumer spending. Knowing what the federal reserve will do... with its interest rates... and knowing when inflation will come because of a rise in the money supply, prices... or wages... it becomes harder and harder to anticipate government poilcy.

Welfare programs are intended to help people who live out recessions. Too much welfare spending has a contradictory effect and makes people more dependant on welfare spending as opposed to getting people off of it. The idea behind welfare spending is that people will eventually get off of it. But welfare seems to create more of a dependence to it, so, the government policy makers need to if they do it at all keep it to a minimum so people will still have incentive to get a new job. There's not much incentive to get a job when your welfare check would be more than if you were employed. These people aren't lazy... but it's all about incentives... perhaps they can be helped to find jobs as they're on these welfare checks so they won't feel like staying on it for the rest of time or something like that. And with social security, the benefits may end up costing us trillions and trillions of dollars... something has to be done about that.

As for government spending... politicians and economists seem to justify government spending. They think it's fine just to throw money at things, that, there will be a multiplier effect and that everything will get better. Yeah, this may be true, but increased government spending puts us more and more in debt, which means we'll have to either borrow more money in China or we have to print more money which leads to inflation. If China decides to stop borrowing from us we might experience higher amounts of inflation if the government keeps on spending more and more money.

I guess I don't take the view of Republicans... it's not that these programs don't work... it's that in my mind at least they lead towards unintended consequences and potential problems that we might face in the future. These policies don't work as planned, and, they always seem to lead to some less desirable future than intended. I'm talking about America's system here, of course... not what Europe does. Europe has a different system than we do. They do things a bit differently.


So, I ask, what do you think is the reason for this? Why do government policies always seem to have a perverse effect? Is it because they don't simply work, bad timing, the reality factor, or what?

reply to post by Frankidealist35

I'll try to keep this short

Can you compress this 'thread' down to two or three sentences..? I'm sure the MODs would extend the edit time normally allotted.

It would be better for everyone...

reply to post by happygolucky


I can summarize my opening post. I realize that my OP was a little long... but I don't have the time to make it shorter right now without losing its meaning... so but here's a summary of what I said:

Policies made by central planners always seem to have the reverse effect of what they were intended. Interventions in other countries cause blowback, the federal reserve manipulation of the market causes the market to fluctuate and go in a business cycle when it would not normally, an elastic money supply causes more harm than good, welfare has the reverse effect of policy planners, etc. My main point is that government policies tend to have the reverse effect of what they were intended to. People with benign intentions are lead to failure. Why do their ideas seem to not work out that well in reality?

[edit on 19-1-2010 by Frankidealist35]

reply to post by Frankidealist35

"This is the shabby secret of the welfare statists' tirades against Gold. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism towards the Gold Standard."
Alan Greenspan - Gold and Economic Freedom (1966)

Source


Would going back to the Gold Standard make you happy frank..?

reply to post by happygolucky


No. I'm one of those people who are for a commodity standard. We don't necessarily need gold as the standard. The reason why some people want to go back to gold is because it is really valuable, but the truth is any commodity could be used as a standard. The standard should be decided by whatever people seem to deem the most valuable as a means of exchange. Personally, I prefer the idea of an inflexible money supply... I think that a flexible money supply is a far more greater evil.

Also, we can still use cash under a commodity system. You don't have to stop using cash if you're using a hard currency. Its value would be tied to the commodity, and, there could still be inflation. So that argument that it'd be hard to carry it would be false because we could still have the current system, but it would just be valued differently. I would love to have a commodity standard as a check on the politicians so they can't just print anything they want to or borrow anything they want... they'd have to be held accountable by it.

This current system we have where you can just make unlimited credit and pass it on to other banks and they can make even more credit (fractional reserve banking) doesn't make sense to me. It would be better if we had a system where banks were honest, and, I think that having a commodity system would keep them honest. Fractional reserve banking is also a great evil, one that comes with a flexible currency.

People tend to want a flexible currency since they want more money. It's not more money that they want. They want more value for what they purchase. So you could still have a system of cash where everyone has enough... just there wouldn't be infinite money in the system... and prices would not soar higher than they would be since inflation would be kept in check more.

That's why I'm for a commodity standard. Other people may disagree with me... but I think that the current economic system is filled with many evils that we would be better off without.

Well here is an interesting contrast for you, a tale of two railroads one could call it:

The current piece I'm working on has to do with the re-nationalization of British Rail. The vast majority of Brits want it, but there are a massive number of questions that have to be answered first. To do so I've been looking at other railroad nationalizations and the United States has actually proven particularly interesting in that regard.

In 1976 the Penn-Central system, the largest railroad in America was failing miserably. This railroad served basically everything east of Chicago, north of D.C. and south of Canada, the industrial heart of America and the Northeast. The government did not want to nationalize the company, not at all, but faced with the complete shutdown of the rail network they were forced to. The railroad and the attendants to it were nationalized into the Consolidated Rail Corporation or Conrail. The federal government picked up the pieces, funneled massive amounts of capital into the physical plant, and by 1981 the railroad was again profitable. In 1987, at the urging of President Regan, Conrail was privatized again with the largest initial public offering in American history. The railroad continued as a private company becoming even more profitable, and was eventually split between two others creating an even better market for competition. In the end, the program was a resounding success.

However by contrast Amtrak, America's passenger rail system was nationalized in 1971 and has never turned a profit. There is a theory that long-distance passenger rail in the United States cannot ever be profitable, and that Amtrak will, for the immediate future at least, remain a state-provided service rather than a money-making venture for the US Government. Currently the system is costing American taxpayers $2.6 Billion a year, but ridership is quite robust.

The question here I think comes to the point of what are realistic expectations. Conrail was a good system that needed an overhaul and new managers. Amtrak is a system that may never again show a cent in the black. Both in can be argued however are vital to the American people. Much of the problem I believe comes when governments are unprepared or too lofty in their goals for projects. Realistic interpretation of facts is needed, not just accepting the most glowing scenario as fact.