Category — Public Choice Economics

A recent opinion-page editorial by a Ray Hankamer Jr. in the Houston Chronicle, Government as Referee for Society, espoused big government to promote basic protection in a modern society. 

Such is the romantic view of government; the Good Government and We the People view of democracy where the body politic is all of us (not us versus them). But the real world is different from this all-to-common textbook view.

Romantic Government

Hankamer begins:

“Leave the market alone and it will self-regulate just fine.” “Stop taxing the people and let them spend their own money instead of letting the government take it and waste it on ‘meddlesome bureaucrats and business-stifling regulators.’” This is the viewpoint of the tea party and many Republicans. But wait a minute: How would such a philosophy really work if implemented?

He then invokes the sports metaphor to conclude that we need federal regulators in an alphabet soup of agencies to do the necessary and sometimes dirty work to achieve fairness:

They are the public’s referees and umpires, such as the Securities and Exchange Commission, the Environmental Protection Agency and the Fish and Game Commission. They are there to enforce the rules for the good of all the people.

But when they are reined in, the public suffers. Remember Enron, WorldCom, Bernie Madoff, Stanford Financial, Lehman Brothers and all the other examples of the market being left alone to self-regulate?

One caveat, Hankhamer adds: “Overzealous referees and umpires can stifle an athletic contest, and overzealous regulators can do the same for an economy. But the suggestion that we can play the game with no supervision is preposterous.”

In response to Hankamer’s use of the tragedy of the commons as a pervasive reason for government intervention, I opined in a letter published by the Houston Chronicle: [Read more →]