Government. John Stossel. Give Me a Break

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Government. John Stossel. Give Me a Break.

The following is from John Stossel. Give Me a Break. pp. 124 - 133

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"WE'LL CUT THE WASTE"

The politicians always promise they will cut the fat, streamline the process. But they almost never do.

Around 1900, America had 6 million farms, and the Agriculture department employed 3,000 people. Today there are 2 million farms, but the Department employs 100,000 people. At this rate, soon there will more bureaucrats than farmers.

Last year, the Agriculture Department paid subsidies of almost $200 million to make sure some sheep and goat ranchers made a profit. Why? Because in 1954, nine years after World War II, congressmen argued it was crucial to "national security" that America have enough wool to make soldiers' uniforms. Today most military uniforms aren't even made of wool, but no matter, the Agriculture Department still gives the farmers handouts.

Government also wastes money making sure rich and politically connected people get to fly places cheaply. We videotaped passengers boarding a Colgan Air flight to Hot Springs, Virginia. Hot Springs is hardly a busy travel hub. Why did Colgan fly to there when it's not a profitable route? Because the Transportation Department deemed the route "essential air service" and subsidized it. What was "essential" in Hot Springs? Most of Colgan's passengers went to the Homestead, an elegant resort. As I write this, Hot Springs is no longer on the essential air service list, but there are still 126 other subsidized routes. Some congressmen thought it was a good idea.

Government spends even more when it has a very popular cause, like mass transit. In Los Angeles the brilliant city planners spent two decades digging up huge parts of town to create a subway—a beautiful one, with gleaming elevators, escalators, shiny new high-tech train cars, and lots of open space. The cost is phenomenal: $50,000 per foot of track.

Unfortunately, the subway carries half as many passengers as expected, because it doesn't go where most people want to go. The planners built a tunnel that runs in a straight line. But people commute every which way, in a thousand different directions.

The result? There is no "mass" in Los Angeles's mass transit. A Reason Foundation study found that today's new rail lines are so underused, each ride costs taxpayers $9 dollars.

Subsidizing buses would have been much cheaper. Even paying for people's taxi rides might have been cheaper. But buses and taxis aren't sexy enough for politicians with grand visions.

COMPETITION

Of course, no politician considered calling in the private sector to help. I assume it never crossed their minds, because most people assume things like mass transit are services only government can deliver. I assumed only the government could dig subway tunnels, yet years after I came to New York, I was surprised to learn that private companies built New York's first subway lines and ran them until the 1940s. The city only took over after it had bankrupted the private lines by refusing to allow them to raise the "five-cent fare."

People assume only government can provide "public goods" like clean drinking water. But that's not true, either. In Jersey City, New Jersey, the city water department let the pipes rust. The water tasted foul and sometimes failed safety tests. City workers told the mayor there wasn't much they could do. In fact, they said, water prices would have to be raised ... just to maintain the lousy service they had.

So the mayor, Bret Schundler, did something unusual. He put the water contract out for bid, inviting competition from private companies and from city workers. A for-profit company turned in the lowest bid. Critics said its low price and desire for profit would lead it to deliver even worse service. That didn't happen. Within months, the private company fixed the pipes government workers said couldn't be fixed. Jersey City's water now, for the first time in years, meets the highest cleanliness standard. And the private company saved taxpayers $35 million.

Why could the company do so much better than the city waterworks? Because its skills are honed by competition. The private company's survival depends on performance, and the mayor told us he made it clear to them that if they screw up, "They're fired. They're toast. I don't care. If they blow it, we're going to give the contract to somebody else." That threat focuses the mind. That's the difference between private and "public" enterprise.

Of course, critics of privatization said the private company would make life hell for the workers. That didn't happen either. The private company hired some of the men who used to work for the city, and when I asked them about it, they said that while they were working harder now, they liked it. They had better tools, and dealt with less bureaucracy. Hard work was okay, they said, because they were accomplishing more, and as one man in a hard hat put it, "that feels good."

When Pinellas County, Florida, put its ambulance service up for bid, critics there, too, warned that private enterprise would soon abuse the ambulance drivers. But private employers know that if they want to retain their best employees, they have to treat them right. It turned out that the workers liked working for the private ambulance service better. "We work harder," nurse Debbie Vass told us, but "the system is way cool. You have state-of-the-art, brand-new equipment. That is so different from the way things were. Before, it was a struggle just to have a pillow on your stretcher." The improvements after privatization astonished the county's politicians. Not only were taxes lowered because the county was now paying less for ambulances, but the workers were happier and ambulance service was better.

At the new private ambulance headquarters, paramedics—not just dispatchers—now answer the phone. They can give you medical advice while you wait for the ambulance. The ambulances arrive sooner because a new satellite tracking system tells the dispatcher which ambulance is closest. Better service—for less money. "Our taxes were lowered eight years in a row," said Chuck Kearns, Pinellas County EMS director. "Competition has proven to get us higher quality, faster ambulances, and lower costs. The people in our ambulance service are excellent. But then again, they have no choice. If they're not excellent, they're history." There it is again: that competition that brings out people's best efforts.

GOVERNMENT STAGNATION

By contrast, government can't get its act together, even when thousands of lives are at stake. The Federal Aviation Administration still uses antiquated vacuum tubes in its radar system. Vacuum tubes are so primitive, manufacturers took them out of our TV sets dozens of years ago. But FAA officials can't quite manage modernizing. It's not that they haven't tried. They've spent billions trying. It's just that government monopolies don't modernize well.

They don't have that problem in Canada, because in 1996, Canada privatized air traffic control. It sounds frightening. In America, Congress decreed that air traffic control is "inherently a government job." Critics said it would be insane to trust passengers' lives to a (sneer) private profit-seeking company, which would cut corners to make more money. But in Canada, the private company didn't. Its managers knew the company's profitability depended on its safety record. Today, Canada's privatized air traffic control does the job well—for one third less.

American air traffic controllers still keep track of planes on little pieces of paper. They'd slide them around, the way a bartender slides beer down the bar. In Canada, computers have replaced paper and pencil.

Controllers who used to work for the government were skeptical at first, but four years after privatization, they told us they were thrilled at the changes the private company had brought.

Andy Vasarins: We went through a divorce. We left the government behind. We left the number of management layers behind.

Bill Snelgrove: If the government was still here, we'd be falling behind the eight ball every day. Delays, delays, delays. We would gridlock this airport.

How many other things would work better if government would let go?

We take it for granted that building highways is a job for government, but when competition is allowed, private enterprise works better there, too. We never think of government as the cause of traffic jams, but it is! Traffic jams are the automotive equivalent of the human lines at the DMV or the post office. In fact, when competition is allowed, traffic patterns miraculously improve. A company rented the empty space in the middle of the 91 Freeway in California, and used it as a toll road—a better one. It has no tollbooths; computers scan the cars as they drive by (you don't even have to slow down) and bill people electronically. Since traffic jams lower profits, the private company did innovative things to keep traffic moving. It has cameras trained on the road, so if a car breaks down, they see it, and someone quickly comes to help. If you run out of gas, they give you a free gallon. Tolls change according to how many people are using the road ("congestion pricing"). A ride that costs $4.75 at rush hour might cost 50 cents at midnight.

It worked. The private toll road got people there faster. But once the operators started making a profit, local government bought them out.

GOVERNMENT ALWAYS GROWS

I shouldn't be surprised that government took over the 91 Freeway, because government always grows. Sadly, Thomas Jefferson's quote at the beginning of this chapter was prescient. [The natural progress of things is for liberty to yield and government to gain. Thomas Jefferson.] It doesn't matter that government fails and fails again; the politicians always want to do more. President Clinton received thunderous applause from Democrats and Republicans when he told Congress, "The era of big government is over." But since then government's only gotten bigger. As of this writing, 488,327 new pages have been added to the Federal Register since Clinton's speech. Every year, there is another spiderweb of rules for you to obey, and more taxes to pay. Government always gets bigger—under every administration—both parties. Republicans talk about shrinking government, but they've never done it.

How big should government be? It's not a question we normally ask. We should. America grew fastest when our government was small. From 1776 to 1915, government expenditures were less than 3 percent of gross national product. Is that the right amount? Or is 5 percent better? Ten percent? Even the Bible has a warning about that. The people of Israel demanded a king, but God warned against it: "This will be the manner of the king who shall reign over you: he will take your sons, and appoint them to him, for his chariots. . . . He will take your daughters to be perfumers, and to be cooks, and to be bakers. He will take your fields, and your vineyards, and your olive groves, even the best of them, and give them to his servants. "He will take the tenth of your seed, and of your vineyards, and give to his officers" (1 Samuel 8:11-15).

A tenth? What kind of puny threat is that? Today, the sad truth is that government (federal, state, local) is about 40 percent of the economy. This is not what the founding fathers had in mind.

Today government runs trains, subways, schools, parks, public housing, welfare, Medicare, Medicaid, Social Security, a war on drugs. It subsidizes students, farmers, ranchers, Indians, researchers, volunteers, small businessmen, rich businessmen, and artists. It polices the world and, at home, polices our speech, jobs, schools, sports, and bedrooms. Maybe if it weren't doing all those things—badly—it would do a better job doing what it should do: like protect us from terrorists.

The founders said government should have limited duties. They laid it out in Article 1, Section 8, of the Constitution: Government should keep the peace, coin money, establish a post office, postal roads, and the courts, and secure time-limited copyrights and patents. For 150 years, that's about all it did. The focus was on guaranteeing individual liberty.

In the 1930s, Franklin Roosevelt changed that. His New Deal decreed it was government's job to get people jobs, retirement benefits, and health care. Every administration since has expanded the New Deal's programs, and started new ones.

Economist Walter Williams says, "If you want to take all liberty away from all Americans, you have to know how to cook a frog." When a frog is killed by water heated slowly, he doesn't notice the rise in temperature. If it happened suddenly, he'd jump out. It's an apt metafor. I mind the loss of freedom most, but since freedom is hard to measure let's track the growth of government.

When America began, government cost every citizen $20 (in today's money) per year. Taxes rose during wars, but for most of the life of America, spending never exceeded a few hundred dollars per person. During World War II, government got much bigger. It was supposed to shrink again after the war but never did. Instead, it just kept growing. Now the federal government costs every man, woman, and child an average of $10,000 per year.

You probably don't know you pay that much, because the government is sneaky about how it taxes you. Paying withholding taxes each pay period dulls the pain of the income tax, and a hundred other taxes are hidden. For my special "John Stossel Goes to Washington," we followed St. Louis construction worker Bill Thurston and totaled the little-known taxes he paid as the day went by. It started with the tax on the electricity that powered the alarm clock that woke him. Bill paid two taxes on his toothpaste. He paid a sewer fee so the water could drain, and a tax on the water. Daring to drive to work cost him more: He pays personal property tax and sales tax on his truck. And when he buys gas there's a county gas tax, a state gas tax, and a federal gas tax.

At work, Bill's boss needs two employees just to calculate how much to withhold from paychecks. They make sure every employee pays local income tax, state income tax, federal income tax, FICA, and Medicare.

Because Bill's wife works as a nurse, the Thurstons pay a marriage tax of $1,000 a year. Then there's grocery tax, property tax, utility tax, FCC tax, a county tax on cable TV, five taxes on the phone (line tax, local tax, municipal tax, county tax, state tax), and finally, a sin tax on the beer they drink.

Add it up. Collectively Americans now pay more in taxes than we do for food, clothing, and shelter combined. Yet government keeps getting bigger. I fear nothing will stop Jefferson's "natural progress of things." Why does government keep growing? It's not just that politicians want more power. Representative democracy has a built-in bias toward increased spending.

Political scientist James L. Payne examined the record of 14 congressional appropriations hearings and found that of 1,060 witnesses who testified, only seven spoke against spending money, while more than 1,000 testified in favor. Even a politician who believed in limited government would have a tough time resisting a constant onslaught of needy people saying, "This program is crucial."

The testimony is lopsided because of the "concentrated benefits—diffuse costs" problem: Benefits of government programs go to a few, but the costs are spread among many. If sheep and goat ranchers get $200 million in handouts, it costs each of us less than a buck. What are you going to do about that? Go to Washington and protest? I doubt it. For a buck, you probably won't even write your congressman, let alone take him out to dinner or give him a $2,000 campaign contribution. Yet the sheep ranchers have an incentive to spend $199 million lobbying if it gets them $200 million back.

Economists call that "rent seeking." A 1987 advertisement in the Durango (Colorado) Herald spelled it out perfectly, telling readers why they should support a big federal water project: "Because someone else is paying the tab! We get the water. We get the reservoir. They get the bill."

That was remarkably honest, but this doesn't help America. It just makes government bigger. In the end, we all lose.

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20 June 2024