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Ten Reasons Why Governments Fail

The very nature of government administration is weighted against success. 

The Duran

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Authored by Anthony Mueller via The Mises Institute:


When politicians and bureaucrats fail to deliver what they promise – which happens a lot – we’re often told that the problem can be solved if only we get the right people to run the government instead.

We’re told that the old crop of government agents were trying hard enough. Or that they didn’t have the right intentions. While it’s true that there are plenty of incompetent and ill-intentioned people in government, we can’t always blame the people involved. Often, the likelihood of failure is simply built in to the institution of government itself. In other words, politicians and bureaucrats don’t succeed because they can’t succeed. The very nature of government administration is weighted against success.

Here are ten reasons why:

I. Knowledge

Government policies suffer from the pretense of knowledge . In order to perform a successful market intervention, politicians need to know more than they can. Market knowledge is not centralized, systematic, organized and general, but dispersed, heterogeneous, specific, and individual. Different from a market economy where there are many operators and a constant process of trial and error, the correction of government errors is limited because the government is a monopoly. For the politician, to admit an error is often worse than sticking with a wrong decision – even against own insight.

II. Information Asymmetries

While there are also information asymmetries in the market, for example between the insurer and the insured, or between the seller of a used car and its buyer, the information asymmetry is more profound in the public sector than in the private economy. While there are, for example, several insurance companies and many car dealers, there is only one government. The politicians as the representatives of the state have no skin in the game and because they are not stakeholders, they will not spend much efforts to investigate and avoid information asymmetries. On the contrary, politicians are typically eager to provide funds not to those who need them most but to those who are most relevant in the political power game.

III. Crowding out of the Private Sector

Government intervention does not eliminate what seem market deficiencies but creates them by crowding outthe private supply. If there were not a public dominance in the areas of schooling and social assistance, private supply and private charity would fill the gap as it was the case before government usurped these activities. Crowding-out of the private sector through government policies is constantly at work because politicians can get votes by offering additional public services although the public administration will not improve but deteriorate the matter.

IV. Time Lags

Government policies suffer from extended lags between diagnosis and effect. The governmental process is concerned with power and has its antenna captures those signals that are relevant for the power game. Only when an issue is sufficiently politicized will it find the attention of the government. After the lag, until an issue finds attention and gets diagnosed, another lag emerges until the authorities have found a consensus on how to tackle the political problem. From there it takes a further time span until the appropriate political means have found the necessary political support. After the measures get implemented, a further time elapses until they show their effects. The lapse of time between the articulation of a problem and the effect is so long that the nature of the problem and its context have changed – often fundamentally. It comes as no surprise that results of state interventions, including monetary policy , do not only deviate from the original goal but may produce the opposite of the intentions.

V. Rent Seeking and Rent Creation

Government intervention attracts rent-seekers. Rent seeking is the endeavor of gaining privileges through government policies. In a voter democracy, there is a constant pressure to add new rents to the existing rents in order to gain support and votes. This rent creation expands the number of rent-seekers and over time the distinction between corruption and a decent and legal conduct gets blurred. The more a government gives in to rent-seeking and rent creation, the more the country will fall victim to clientelism, corruption, and the misallocation of resources.

VI. Logrolling and Vote Trading

The public choice concept of ‘ logrolling ’ denotes the exchange of favors among the political factions in order to get one’s favored project through by supporting the projects of the other group. This conduct leads to the steady expansion of state activity. Through the ‘quid pro quo’ of the political process, the lawmakers support pieces of legislation of other factions in exchange for obtaining the political support for their own project. This behavior leads to the phenomenon of ‘legislative inflation’, the avalanche of useless, contradictory and detrimental law production.

VII. Common Good

The so-called ‘ common good’ is not a well-defined concept. Similar terms, such as that of the ‘public good’, which is defined by non-excludability and non-rivalry, misses the point because it is not the good that is ‘common’ or ‘public’ but its provision when this is deemed more efficient by collective than individual efforts. However, this is the case with all goods and the market itself is a system of providing private goods through cooperative efforts. The market economy is a collective provider of goods as it combines competition with cooperation. Any of the so-called ‘public goods’, which the government supplies, the private sector can also deliver, and cheaper and better as well. In contrast to the state, the cooperation in a market economy includes competition and thus not only economic efficiency but also the incentive to innovate.

VIII. Regulatory Capture

The term ‘ regulatory capture ’ denotes a government failure where the regulatory agency does not pursue the original intent of promoting the ‘public interest’ but falls victim to the special interest of those groups, which the agency was set up to regulate. The capture of the regulatory body by private interests means that the agency turns into an instrument to advance the special interests of the group that was targeted for regulation. For that purpose, the special interest group will ask for extra regulation to obtain the state apparatus as an instrument to promote its special interests.

IX. Short-Sightedness

The political time horizon is the next election. In the endeavor that the benefits of political action come quickly to their specific clienteles, the politician will favor short-term projects over the long-term even if the former bring only temporary benefits and cost more in the long run than an alternative project where the costs come earlier and the benefits later. Because the provision of public goods by the state severs the link between the bearer of the cost and the immediate beneficiary, the time preference for the demand for the goods that come apparently free of charge by the state is necessarily higher than in the market system.

X. Rational Ignorance

It is rational for the individual voter in a mass democracy to remain ignorant about the political issues because the value of the individual’s vote is so small that it makes not much difference for the outcome. The rational voter will vote for those candidates who promise most benefits. Given the small weight of an individual vote in a mass democracy, the rational voter will not spend much time and effort to investigate whether these promises are realistic or in a collision with his other desires. Thus, the political campaigns do not have information and enlightenment as the objective but disinformation and confusion. What counts, in the end, is to get votes. Not the solidity of the program is important but the enthusiasm a candidate can create with his supporters and how much he can degrade, denounce, and humiliate his opponent. As a consequence, election campaigns incite hatred, polarization, and the lust for revenge.

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david studdertShaun RameweTom DicanarryBarneyRubble Recent comment authors
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BarneyRubble
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BarneyRubble

Blah, blah, blah. Gubmint bad, unfettered capitalism good. More Libertarian crap.

Tom Dicanarry
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Tom Dicanarry

This commentator seems to be saying that public ownership is bad and all public ownership and public run systems should be handed over to private ownership. Yeah, right. Where have we heard this before and what could possibly go wrong?

Tell that to commuters in Britain who have had their trains and buses privatised. Wonder how that’s working out for them?

Shaun Ramewe
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Shaun Ramewe

Deceit and depravity – that’s why – two reasons.

david studdert
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david studdert

I stopped reading when I read this pile of nonsense — “Government intervention does not eliminate what seem market deficiencies but creates them by crowding outthe private supply. If there were not a public dominance in the areas of schooling and social assistance, private supply and private charity would fill the gap as it was the case before government usurped these activities” — historically incorrect, impossible to sustain since the Russian revolution and a fantasy concerning the market ( which doesn’t exist anyway not in the singular in any case)– apart from that pile of nonsense the guy really knows… Read more »

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Russia’s Lukoil Halts Oil Swaps In Venezuela After U.S. Sanctions

Under the new wide-ranging U.S. sanctions, Venezuela will not be able to import U.S. naphtha which it has typically used to dilute its heavy crude grades.

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Via Oilprice.com


Litasco, the international trading arm of Russia’s second-biggest oil producer Lukoil, stopped its oil swaps deals with Venezuela immediately after the U.S. imposed sanctions on Venezuela’s oil industry and state oil firm PDVSA, Lukoil’s chief executive Vagit Alekperov said at an investment forum in Russia.

Russia, which stands by Nicolas Maduro in the ongoing Venezuelan political crisis, has vowed to defend its interests in Venezuela—including oil interests—within the international law using “all mechanisms available to us.”

Because of Moscow’s support for Maduro, the international community and market analysts are closely watching the relationship of Russian oil companies with Venezuela.

“Litasco does not work with Venezuela. Before the restrictions were imposed, Litasco had operations to deliver oil products and to sell oil. There were swap operations. Today there are none, since the sanctions were imposed,” Lukoil’s Alekperov said at the Russian Investment Forum in the Black Sea resort of Sochi.

Another Russian oil producer, Gazprom Neft, however, does not see major risks for its oil business in Venezuela, the company’s chief executive officer Alexander Dyukov said at the same event.

Gazprom Neft has not supplied and does not supply oil products to Venezuela needed to dilute the thick heavy Venezuelan oil, Dyukov said, noting that the Latin American country hadn’t approached Gazprom Neft for possible supply of oil products for diluents.

Under the new wide-ranging U.S. sanctions, Venezuela will not be able to import U.S. naphtha which it has typically used to dilute its heavy crude grades. Analysts expect that a shortage of diluents could accelerate beginning this month the already steadily declining Venezuelan oil production and exports.

Venezuela’s crude oil production plunged by another 59,000 bpd from December 2018 to stand at just 1.106 million bpd in January 2019, OPEC’s secondary sources figures showed in the cartel’s closely watched Monthly Oil Market Report (MOMR) this week.

By Tsvetana Paraskova for Oilprice.com

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BBC producer admits Douma attack was false flag that nearly sparked Russia – U.S. hot war (Video)

The Duran – News in Review – Episode 176.

Alex Christoforou

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BBC producer Riam Dalati believes that the scenes caught on video from a hospital in Douma, Syria were staged, all in an effort driven by jihadist terrorists and White Helmet “activists” to draw the U.S. and its allies into full on confrontation with Syria, and by extension Russia.

The viral images caused a media firestorm in 2018, showing children allegedly suffering from chemicals, as main stream media channels, like the BBC itself, called for war with Assad.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the BBC producer’s stunning admission, after a 6 month investigation, that reveals the “‘chemical attack” hospital scenes in Douma were completely staged.

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Via RT


Emotive scenes of Syrian civilians, among them crying, choking, half-naked children, dominated the airwaves in April last year after rebel-affiliated mouthpieces reported yet another “chemical attack by the Assad regime” in the town of Douma. Disturbing reports, including some from the controversial White Helmets, claimed scores of people had been killed and injured.

Mainstream media quickly picked up the horrific (but unverified) videos from a Douma hospital, where victims were treated after this “poison attack.” That hospital scene was enough to assemble a UN emergency session and prompt the US-led ‘coalition of the willing’ to rain down dozens of missiles on Damascus and other locations.

But Riam Dalati, a reputable BBC producer who has long reported from the Middle East, took the liberty of trying to sift through the fog of the Syrian war.

He believes Assad forces did attack the town, but that the much-publicized hospital scenes were staged.

After almost 6 months of investigations, I can prove without a doubt that the Douma Hospital scene was staged. No fatalities occurred in the hospital.

Anticipating further queries, he said no one from the White Helmets or opposition sources were present in Douma by the time the alleged attack had happened except for one person who was in Damascus.

Dalati also says that an attack “did happen” but that sarin, a weapons-grade nerve agent, was not used. He said, “we’ll have to wait for OPCW [Organization for the Prohibition of Chemical Weapons] to prove chlorine or otherwise.”

However, everything else around the attack was manufactured for maximum effect.

The journalist said Jaysh al-Islam, an Islamist faction that fought the Syrian army there, “ruled Douma with an iron fist. They co-opted activists, doctors and humanitarians with fear and intimidation.”

Dalati’s revelations could have become a bombshell news report, but instead it was met with a deafening media silence. His employer preferred to distance itself from his findings. The BBC told Sputnik in a statement that Dalati was expressing “his personal opinions about some of the video footage that emerged after the attack but has not claimed that the attack did not happen.” 

After a while, Dalati restricted access to his Twitter account which is now open only to confirmed followers.

Interestingly, his previous inputs did not sit well with the official narrative either. “Sick and tired of activists and rebels using corpses of dead children to stage emotive scenes for Western consumption. Then they wonder why some serious journos are questioning part of the narrative,” he said in a tweet which he later deleted over “the breach of editorial policy.”

In all, Dalati is not a lone voice in the wilderness. The Intercept has recently run a story that also cast doubt on the mainstream coverage of Douma, although it doesn’t doubt that the attack itself happened. While a veteran British reporter Robert Fisk suggested there was no gas attack at all, saying people there were suffering from oxygen starvation. Witnesses of the “chemical attack,” for their part, told international investigators the story was a set-up.

Moscow, which supports Damascus in its fight against terrorists, has long stated the Douma incident was staged, calling for an international OPCW inquiry. Last year, the Defense Ministry presented what it said was proof the “provocation” was to trigger Western airstrikes against Syrian government forces.

This time, the military recalled a similar 2017 incident in Khan Sheikhoun, where an alleged chemical attack took place. The ministry’s spokesman Igor Konashenkov said on Friday that a closer inspection of footage from that location clearly shows this was a set-up as well.

Now the Foreign Ministry has suggested Dalati is being silenced for voicing inconvenient views, with spokeswoman Maria Zakharova asking on Facebook: “A telling story. How about Western advocates of rights and freedoms? Had they accused BBC of censorship and pressuring the journalist?”

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President Trump schools liberals with National Emergency declaration

President Trump skillfully defeats Democrat naysayers, by increasing support for the border wall prior to declaring a National Emergency.

Seraphim Hanisch

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President Trump signed a continuing resolution to keep the US government fully running through the rest of the 2019 fiscal year. The CR contained a $1.374 bn allocation for US border security, and that money includes and pays for the completion of some fifty-five miles of border fence (or wall, or barrier, or “not-a-wall” depending on one’s preferential phrasing.) He also declared a National Emergency, theoretically freeing at least another $8 bn for the continued construction of the border wall.

Yes, it is a wall. And, yes, it is being built right now. And yes, it will be completed. The President of the United States has made this abundantly clear.

Some news reporters talk about this matter still as though there is in fact no wall now, and that there is no construction in progress on any wall. To that we can say, please watch this:

This section of the wall is going up near Santa Teresa, New Mexico. It augments a very well-designed 18 foot wall stretching from west of Santa Teresa, NM to Tornillo, Texas. If someone wants to cross the border without having to negotiate this barrier they have to go very far off the beaten path to do it. President Trump wants to make it even more difficult; in fact, he wants to have the barrier run the entire length of the US-Mexico border.

This second video says a bit more about the situation:

His campaign to get this has been brilliant in terms of getting the American people informed that there is a problem. How did he do this with a press that hates him?

Easy. He made an issue out of it, knowing that the news media has no choice but to cover the President’s every antic, and in so doing, while seeking fodder for criticism, they actually ended up reporting on the actual problem.

This has been an interesting flow of events:

  • Mainstream news slamming the President’s every statement about the need for a wall
  • The fury of Democrat leaders Nancy Pelosi and Charles “Chuck” Schumer in their 100% opposition – their own temper tantrum whilst blaming that tantrum on Trump, who actually acted more like a strict parent than a bratty teenager
  • The very public presentations of Border Patrol experts that Trump arranged, the purpose being to listen to their own expert assessment of the actual needs at the border

This last issue marks a need for even the conservative press to have a wake-up call. Daniel Horowitz wrote a piece in The Conservative Review excoriating President Trump’s signing of this present deal as a “sell out”, noting that:

Trump originally demanded $25 billion for the wall. Then he negotiated himself down to $5.6 billion. Democrats balked and only agreed to $1.6 billion. This bill calls it a day at $1.375 billion, enough to construct 55 miles. But it’s worse than that. This bill limits the president’s ability to construct “barriers” to just the Rio Grande Valley sector and only bollard fencing, not concrete walls of any kind.

Daniel’s point is great for rhetoric because, of course, the President originally did promise a big beautiful concrete wall running the entire length of the border.

However, he missed the point about using bollard-style walls that can be seen through – the Border Patrol agents themselves said this kind of wall is to their advantage. A solid wall prevents natural visibility and the agents were getting rocks thrown at them from people they could not see on the other side. A see-through capability means that people approaching the wall on the other side can be seen and tracked.

This marks an example of conservative ideology being too strongly fixed, just as the liberals’ ideology is fixed at the level of a four-year old child refusing to let someone else play with his toys.

They both do not understand that President Trump is not concerned with ideology. He is concerned with useful results, which he got in this deal.

Now about that National Emergency. Is this really the constitutional crisis Trump’s detractors say it is?

Probably not.

It has been widely reported that the US is currently running under some 31 other national emergencies, and that the one President Trump declared makes it number 32. The rhetoric from the news media and Democrats is centered around the idea that no President has ever used this power to get money that only the Congress can allot.

We also probably already know that this is an irrelevant point – the President is in charge of the national security of the nation, and he can and must do what he can to ensure it. The huge numbers of illegal crossings, nearly half a million in 2018 were largely apprehended and released into the United States, rather than deported. Half a million is far less than the 1.6 million that came through in 2000, but it is also not zero. Half a million is the size of the city of Atlanta, Georgia.

The distractors in the Democrat party and media do not want anyone comprehending this fact, so they try to divert and dissuade. But President Trump has not let any of this get past him. In a media event, the President had parents and relatives of people who were murdered by illegal aliens in a direct face-off with none other than CNN’s provocateur-in-chief Jim Acosta, and the reporter was forced to listen to what these family members had to say about their convictions that the president was correct in his:

Trump pointed to angel moms in attendance, asking them for their thoughts.

“You think I’m creating something? Ask these incredible women who lost their daughters and their sons,” Trump said. “OK, Because your question is a very political question because you have an agenda. You’re CNN. You’re fake news.”

Trump told Acosta the statistics he provided were “wrong” and told him to take a look at the federal prison population for proof.

“See how many of them,percentage-wise, are illegal aliens,” Trump said. “Just see, go ahead and see. It’s a fake question.”

Acosta was subsequently confronted by the angel moms in attendance, after the press conference. As angel moms confronted the CNN reporter, he invited them to appear on the network in the background of a live shot.

“There is no attempt whatsoever to diminish what they’ve gone through, or take away what they’ve gone through, but as you heard in that question that I had with the president … it was really about the facts and the data,” Acosta said on CNN following his exchange with Trump. “Some of these folks came up to me right after this press conference … they’re holding up these pictures of loved ones who lost their lives.”

An angel mom then discussed that a previously deported illegal alien murdered her son.

“President Trump is completely correct on this issue, we need to protect this country,” the angel mom told Acosta.

Acosta actually was a victim of his own passions when he went to the border to a place where the bollard wall presently stands and reported that nothing was happening there. It seemed that he was expecting that there were supposed to be angry mobs on the other side trying to get through. However, no one was there, because it is rather pointless to try to get over this wall at this place. Even liberals were forced to acknowledge Mr. Acosta’s strategic miscalculation.

The new national emergency is about getting results. If we were concerned only with smooth and impressive politics, we could only remark on the President’s success in maneuvering the Democrats (not all of them were slavishly going with the Pelosi-Schumer stance) and his ability to do what he does best – getting his message to the American people, and giving them information with which to decide what they want.

This campaign is not over, but this particular battle appears to have been won with a lot of hard work.

Slowly, oh, so slowly, it would seem that the forces of common sense are making some headway in America.

 

 

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