Tyler (or is it Tyrone?) links to my post on war as a case of a government failure, citing it as an example of the libertarian vice of “fixing the quality of government” before comparing it to the market.
Now, that may well be a libertarian vice (although see the response from Tyler’s co-blogger Alex). And I’ve probably been guilty of it from time to time. But I just don’t see how the accusation sticks here.
In that post, I readily admitted that the war in Iraq might have gone better – or not happened at all – had someone other than GWB held office. I agreed that some government officials have done especially poorly and deserve criticism; by implication, it’s possible for other government officials to beat the curve. In short, government can vary in quality. That seems a pretty obvious point, which few would deny. But the more important issue is that the incentives of government are systematically biased in an undesirable direction, especially in the absence of competition. This is the key point that Alex made in his original post and that I was affirming, and which non-libertarians repeatedly deny or ignore. Hence the willingness of neocons to believe we can achieve any foreign policy goal if we just have sufficient will, and the willingness of liberals to lay the blame for foreign policy failure entirely at the feet of the Bush administration.
But let me address Tyler’s post more analytically. The quality of both government and market outcomes display variance around the mean. But the systematically poor incentives of government strongly indicate that the mean will be lower for government than for the market. (I use the word “market” loosely here, to mean “whatever is the alternative to government.”) So we can regard the two spheres of action as having overlapping distributions, something like this:
This is, of course, an incredibly simplistic model whose only purpose is to address Tyler’s claim about libertarians “fixing the quality of government.” That phrase implies that libertarians regard all government as having uniformly low quality – a single point instead of a distribution. As the diagram shows, if both government and market outcomes vary in quality, then it’s possible for government to outperform the market! Fine. But is that what you should expect from expanding the general power of government, or from extending government regulation into a new area, or from inserting the U.S. military in another foreign war? From an ex ante perspective, what matters most is the mean.
If the libertarian vice is to assume that government quality will always be equal to its mean, the non-libertarian vice is to assume that we can simply choose whatever point we want on the curve. If we just put the right people in power, they apparently think, we’ll jump into that right tail where the government outperforms the market! This strikes me as a much more serious vice than making decisions based on expected value.
[BTW, if anyone knows how I can create a standard bell curve in PowerPoint, please let me know. I had to draw the two above using the curve tool.]