Tag Archives: government

Reason for Slow Recovery: Bad Government

Here is Gary Becker:

While slow recoveries from major financial crises are common, employment would have increased considerably more rapidly, and unemployment would have fallen much faster, were it not for several factors special to this recovery. Scott Baker, Nicholas Bloom and Steven Davis have studied changes in economic policy uncertainty since 1985, and have constructed an index of the degree of economic policy uncertainty during the past 26 years (see their “Measuring Economic Policy Uncertainty”)…

[S]ome of the uncertainty during this financial crisis was avoidable if Congress and the president had not passed an ineffective stimulus package over a divided Congress, if they had resolved the budget deficit and debt ceiling issues (especially by trying to get entitlements under control), if agreement on tax policy toward broader and flatter taxes had been achieved, and if clearer policies were adopted about which companies would be allowed to go bankrupt and which would be bailed out.

 

Friedman on WikiLeaks

This is David Friedman, writing at his blog:

The question at this point is whether when the government fails to keep something secret, when it gives access to its secrets to someone who proceeds to pass them on, it is entitled to put the genie back in the bottle by making everyone whom they have been passed on to, at least everyone with the ability to publicize them, shut up.

Legally speaking, the answer is that they are not — as in the case of the Pentagon Papers. I think that’s the right answer. If keeping things secret is important, the government should keep them secret, not let them out and then do its best to gag the press in order to keep the general public from learning them.

Instead, as best I can tell by public discussions, the U.S. government labels a wide range of things secret and then lets a wide range of people have access to them.

See David Henderson on this question here.

Does Government Overpay or Underpay for Services?

Government and private pay scales differ. Relative to the private sector, government tends to underpay people in jobs requiring more experience and more complex skills. It tends to overpay those in jobs requiring less experience and less complex skills. This has produced problems in Canada, Great Britain, and other countries where government run health care means government controls pay scales. The table below shows the U.S. numbers for salaried, full-time, workers from a larger table provided by the Bureau of Labor Statistics.

Note: the hourly earnings data exclude overtime. They do not include incomes for people with their own businesses or who work part-time or benefits. Benefits tend to be richer for public employees, increasing their total compensation relative to private workers. The category “all private industry” includes private non-profits.

average-hourly-earnings-of-selected-full-time-occupations

What if Bureaucrats Could Benefit Financially from Finding Cost Savings?

Let’s say the federal widget inspection office in Seattle comes up with a way to save a million dollars a year by changing the method it uses to inspect widgets. Why not give personnel in that office the first year’s savings, distributing it according to a set formula…? A million dollars in “prize money” would certainly be an incentive to motivate even the most slothful government office to find new ways to do things.

Tyler Cowen Endorses Managed Care

Under the heading “Managed Care: Get Used to It,” he writes:

The question is not managed care versus the status quo, but which opportunities — and the restrictions that go with them — we are prepared to accept. When will we acknowledge that our government — or, for that matter, our insurance companies — can’t pay every bill? We’re in denial, and the longer we wait, the more painful the solution will be.

Should the Government Subsidize Jobs?

A common objection is that it will encourage fraud — employers will fire workers and then rehire them, to obtain the subsidy. Or, less transparently, it will fire workers and hire replacements, again in order to obtain the subsidy. But a bigger objection, which is also an objection to the original stimulus program, is that it’s not targeted on industries or areas of above-average unemployment. Even in an area of low unemployment, an employer will have an incentive to hire workers in order to obtain the subsidy, but he may do this by hiring workers who already have a job, and the net effect on unemployment will therefore depend on what the hired worker’s former employer does — maybe just pay him to stay.

The Dutch Version of Managed Competition

This is Ab Klink, the Dutch health minister, interviewed by Gardiner Harris in The New York Times:

In the Netherlands, everyone chooses from a list of 10 or so insurers who offer a standardized health plan that can be enriched with other options. Those who cannot afford the premiums are given subsidies… The government once set prices for nearly all medical services, but to inject some competition into the system, the government last year allowed prices to vary for about one-third of medical services. Next year that share will increase to half. I cannot tell you that Dutch hospitals are better than the Mayo Clinic or Johns Hopkins. Probably it’s the other way around… We would love the Mayo to open a hospital in the Netherlands.