How to fix a broken government


Remember how Rick Perry's chances in the GOP race faltered after he could not remember the name of one of the three federal agencies he wanted to eliminate. His public speaking skills were not impressive, but he could be the frontrunner today if he had hired Steven Landsburg as an adviser. The popular "armchair economist" has picked three agencies to ax that would help win most any election: Agriculture, Commerce, and Labor.

Listen to his logic: Each of these three serve well-organized special interest groups. Their powerful clients create a major obstacle to eliminating them one at a time, but clustered together they make an easy target. The first subsidizes big agribusiness at the expense of workers and entrepreneurs in other sectors. The second one siphons off resources from farmers and workers in support of selected companies that pay back by contributing generously to politicians' campaigns. The third agency secures privileges for the labor unions to the detriment of small businesses and farms. Thus a promise to eliminate all three parasitic bureaucracies seems like a pretty good deal-every American "loses one friend and two enemies," and for most of them that would be an offer they should be foolish to reject.

Landsburg's ideas on how to reform the political system don't stop there. Applying a simple principle of internalizing externalities, he proposes that every citizen should get two votes-one in his home district and one in a district of his choice. Currently, politicians have strong incentives to turn our federal tax dollars into pork for the people in their districts without considering the costs to the nation as a whole. We have an incentive as individuals to reward behavior that impoverishes us collectively. But with two votes the people get the chance to gang up against the most wasteful politicians, giving the members of Congress a reason to think about the social costs of their actions.

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It gets better. You know how people complain that so many of their fellow Americans pay no attention to the work done by their representatives, giving the latter a chance to act more irresponsibly? The next proposal solves that problem. The idea is to determine federal taxes separately for each district "as a function of the congressman's voting record." If your representative supports more spending, you will immediately pay higher taxes. Both you and your congressman or -woman are now incentivized to consider the costs as well as the benefits.

Landsburg's most intriguing proposal is to disqualify anyone who has turned 60 from voting on Social Security policy changes. According to Landsburg they must be treated like corporations that get all the profits from producing but are exempt from paying the costs for polluting. While the rest of the nation will experience over time all the costs and benefits of the program (i.e., have powerful incentives to choose wisely), the elderly get all the pleasure and none of the pain of expanding the welfare state.

Alex Tokarev
Alex Tokarev

Alex is the chair of the Department of Business at Morthland College in West Frankfort, Ill., and teaches at Northwood University in Midland, Mich. The native of communist Bulgaria fanatically supports the Bulgarian soccer team, Levski.


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