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  • Monkeywrenching Socialism – Ratchet Smashing I

    Posted by TM Lutas on May 10th, 2009 (All posts by )

    The effort needed to make government bigger is much less than the effort needed to make government smaller. This is the basic principle that underlies the government ratchet effect. The beneficiaries of government action are concentrated and thus both have more at stake and know it than the beneficiaries of shrinking government which are very often the general public who derive at best a diffuse benefit that is often not even noticed or even understood.

    But I believe this pro-socialist ratchet dynamic only happens so long as the starting question is “should government (or program x) be cut?” What if we start from a different question? What if the assumption is that there is a lot of bad government out there and that as a matter of course 10% (or 5% or 15%) of the government can and should be turned over each year so that poor past decisions don’t hang around forever. Which part would get cut? The answer becomes obvious, the corrupt, useless, inefficient parts, of course. The corrupt, useless, and inefficient caucus is tiny (at least when it’s identified as such). Nobody supports corrupt, useless, and inefficient government out loud, even self-described socialists. This sort of government is supported by ‘middle of the night’ bill insertions and inertia.

    The counter-argument would be to assume that good, efficient, honest programs would be disrupted and now we wouldn’t want that would we? But this assumes that a significant chunk of government programs are incapable of being reformed and improved by termination, privatization, or reform. That’s something that needs to proved, not assumed.

    Most everybody right now wants to protect their own ox from getting gored. so there is a fear that ‘my’ programs are going to be disproportionately targeted and ‘your’ programs will be protected by political juice. The trick to avoiding this sort of cynical CYA is to identify the targeted bottom percentage in a fair way. This is where things get sticky because it’s something of a risky proposition to point out that the emperor has no clothes.

    What if we simply asked everybody who would have an expert opinion, to simply rate the worthiness of every program, to the extent they can. All members of the legislature, all members of the executive giving their opinions to identify the stinkers. What if we made it a job requirement? Of course the system would be gamed but it would be a massive improvement on current practice and would significantly reduce the ratchet effect.

    Right now, there is no generalized expectation that the legislature will periodically review government expenditures, pick out the worst, and either let bad things expire, privatize the solution, or provide a better, more efficient, less expensive way to solve the problem using government action. Cutting government in this system becomes progressive, not reactionary. Getting through less than 10% of the government is a real world assertion of incompetence on the part of incumbent legislators. And all that need change to bring about this happy state of affairs is to change the expectations game. Legislation will follow to eliminate the free riders.


    13 Responses to “Monkeywrenching Socialism – Ratchet Smashing I”

    1. fred lapides Says:

      Great idea…but not so long as you have to get to where you want to go
      by using my street: K Street, lobbyist-R-Us.

    2. Jerry Says:

      A new law introduced by the South Korean president recently does something like this: every regulation expires after a certain time, and has to be legislated again.

    3. armchairpunter Says:

      I appreciate the attempt to break the inevitable log jam one encounters in seeking to downsize. I think the approach runs into severe limitations when attention in turned to entitlement programs and the fraudulent bookkeeping employed to defer serious reform and to long-term military initiatives. On the latter count, if it turns out that a missile defense system is in fact a critical component of our future military needs, it will not be missed until the day when it is needed. That day is likely some ways removed from the day when an agricultural subsidy will be missed.

    4. sol vason Says:

      The “corrupt, useless, and inefficient” parts of government are extremely deadly when they defend themselves. Those who oppose them often end up dead. destroyed, or in asylums. Liberals, who daily interact with the people of government understand this. This is why they seem so paranoid. As Kissinger notes, “even paranoid people have enemies”.

      So how does one shrink government? MacArthur did it in Japan, the Commitee for Public Safety did it in France, Hitler did it, Stalin did it, Pot Pol did it, Mao did it. Fujimori almost did it. Pinochet did it. Sadly, after heads roll, even more heads pop up. What you want to do has never been done permanently in all of recorded history.

      One can try voting them out but right now Acorn is combining billions in “stimulus” funds with unqualified White House support to game the census, pack voter registrations with phony names, and hack the computers that record the votes at the polls.

      It is better to emulate Clive of India. He showed up in India as a bookkeeper; ended up very rich. He changed nothing in India except who got the money.

    5. Shannon Love Says:

      Texas has had some success with creating institutional mechanism to restrain government spending and invasion.

      Texas is currently the envy of the nation with an $11 billion budget surplus. How did the state do it? For starters, the Texas Constitution gives the state Comptroller of Public Accounts (a chief fiscal officer, of sorts) the responsibility to certify the state’s budget and send back any spending bills that the state can’t afford. It’s an elected position and the current comptroller, Susan Combs, launched a “Where the Money Goes” website to boost transparency and show taxpayers where their money is going. Having a third-party enforce prudent fiscal forecasting and spending helps to avoid the situation so many states now face—governors and legislators gravitate to the rosiest of revenue projections to help justify new spending, and then when the mythical money doesn’t materialize, the state faces a budget “crisis.”

      Texas also engages in performance-based budgeting—tying a given programs’ funding to its effectiveness at meeting clear performance targets. A Sunset Advisory Commission conducts mandatory periodic reviews of all state agencies to find duplicative or unnecessary programs that must be cut. Since the Sunset Commission was created in 1977, over 47 governmental agencies have been eliminated and another 11 have been consolidated.

      I think we need to establish the institutional expectation that all policies are just hypothesis in need of testing in the real world. All new bills should come with concrete predictions of how they what good they seek to accomplish and in what time frame and at what cost. The bill should be revered at set time periods to see if the all the programs goals have been reached. If they have not, the program should have be terminated automatically and new program created (or not.)

      I think that tax bills should come with explicit revenue caps. If the tax a raises more money than expected, that money automatically is refunded, used to pay down debt or stashed in a rainy day fund. Right now politicians treat taxes the same way the businesses treat profits. If a tax generates more money than expected they treat that as a personal windfall. Instead, specific taxes should be raised for specific purposes and be refunded if more of the tax is collected than needed.

    6. renminbi Says:

      Since representatives use legislation to buy votes from rent-seekers ath the expense of the general interest,the taxpaying public should have the final say. Special juries should have the power to veto legislation and impound funds back to the treasury. If a legislator has supported too much bad legislation he may be removed and forbidden to work for the public. Put the fear of god into these people.

      No vote for those on the public payroll also.

    7. TM Lutas Says:

      Fred Lapides – Lobbyists only matter where the people don’t care. If your seat is on the line and you know a vote for a favored contributor will cost you that seat, that favored contributor will find himself not so favored. I believe that about 10-15% of our current expenditures are about the absolute minimum we need for government. The lobbyists can bribe as many in Congress as they wish for their favored programs to get chewed up last by this proposed reverse ratchet. I’m actually not that exercised by that. To have that sort of a situation would be a tremendous step forward from the current state of affairs that I’d be tickled pink to have it and count myself a great success for conceiving the idea.

      Jerry – Bravo for South Korea. I’d love to hear details.

      Armchairpunter – I take your point but all the reasons why we have a missile defense program in the first place (the military need to be able to intercept a ballistic package in the ICBM speed/trajectory range) will still apply. The usual political pressures not to be soft on defense will apply. I would think that things like the sugar quota system would fall far sooner.

      Reversing the ratchet is not a magic bullet. Other political fights will remain. The difference will be that programs will be engaged in one giant game of survivor. Every year 10% get voted off the government spending inertia island and have to get back on on their own merits.

      Sol Vason – In my introductory post, I started straight out by saying that illegal action was not needed. You are writing about a world where Jeffersonian rebellion is needed and the law is straight out the window. We seem to disagree fundamentally on the world we live in.

      If we actually lived in the world you write about, I should be planting bombs and plotting assassinations. We do not live in that world. You do not think we live in that world because in that world writing what you have written would be distinctly unhealthy. Try to be internally consistent, would you?

      Shannon Love – Bravo, can I steal shamelessly for future installments of this series?

      Renminbi – I would feel better about your proposals if you could ever point to a successful restriction of the franchise. I’m unaware of such a thing. Infantalizing a segment of a society by taking away its political rights seems to be accompanied by bloodshed and revolution. I’m hoping to avoid that sort of thing.

    8. Anonymous Says:

      Is there one “democratic” polity in christendom which isn’t in the process of failing? When this does happen they won’t be mourned, nor will anyone stand up for them. It is up to economists to address this impending failure, since clearly the political science type are clueless.

      The greatest success was Hong Kong because the civil servants running it had no mandate and therefore did the minimum to keep order.

    9. renminbi Says:

      Anonymous was Renminbi-not using my home computer.

    10. sol vason Says:

      TM Lutas: I do not advocate cutting off the heads of “useless, corrupt, and inefficient” bureaucrats. Instead I point out that everyone who has tried this approach (either legally or illegally) has ended up with even more bureaucrats than when they started lopping heads. First all the original heads were replaced with new ones, and 2 or more layers of bureaucrats were created to investigate the previous revolution and to prevent recurrances.

      I point out Clive as a person who worked within the system to carve out a niche for himself. He did this by being a trustyworthy person of integrity, honor and moderation. He ended up owning Calcutta and the surriounding area known as Bengal.

      The time has passed when Americans can believe that the growth of government can be reduced to 1800 levels. The future will be one in which the federal government will take over more and more businesses with a goal of re-establishing the quality of life achieved in the Golden Age of the late 1900s but will fail as scarce resources become scarcer.

    11. tomw Says:

      Shannon Love:I think that tax bills should come with explicit revenue caps. If the tax a raises more money than expected, that money automatically is refunded, used to pay down debt or stashed in a rainy day fund. Right now politicians treat taxes the same way the businesses treat profits. If a tax generates more money than expected they treat that as a personal windfall. Instead, specific taxes should be raised for specific purposes and be refunded if more of the tax is collected than needed.
      The local “Special Purpose Local Option Sales Tax” {SPLOST} was authorized for a specific amount or term. Did they stop collecting the tax when the amount was reached? Of course not.
      The GA400 toll road was to become toll free when the bonds were paid off. They currently have more than enough to pay off the bonds, but there is a penalty to pay them off early, so they continue collecting toll revenue.
      Have you ever seen a politician who considers ‘tax revenue’ as anything other than funds to be allocated and spent? The politicians are giving taxpayers a “Break” or a “Subsidy” when they take less of your money than before.
      If politicians were given less perks, and paid less, were forbidden to accumulate the power of ‘seniority’, there would be a lot less lawyers running for office over and over again. Two of the smallest states, West Virginia and Delaware, have (well had until 1/20) some of the most senior Senators. They wield power beyond the reach of law. They set their own rules, and in effect run roughshod over others without restraint.
      Seniority distorts power. Why do you think WV gets a 10X return on their federal tax dollars? Well, maybe not 10x, but up there… Sen Robert Byrd, who has something named for him no matter where you go. /rant

    12. Shannon Love Says:


      My proposals aren’t magic bullets anymore than the Constitution is. Government grows. People in government seek more power and they use tax money to get. Put an obstacle in their path and they will squirm around.

      However, institutional safeguards can slow the process down significantly and that can be important. Our major problem at present is that we risk the cost of government outrunning our gains in productivity. Government can grow in absolute or even relative terms if the economy grows even faster in terms of money and diversity. (See the unregulated growth of the computer industry as an example.) Institutional safeguards slow the growth of government and that allows time for the economy and culture to grow even faster.

    13. TMLutas Says:

      Sol Vason – You mistake my advocacy. I’m advocating lopping off the bottom 10%. In a Democrat administration that would add another 10% of new spending right on top. In a GOP administration that would lead to maybe 8% new spending and a 2% tax reduction. The net effect would be to create a small government ratchet by changing expectations so that the public demands that the bottom 10% go, even if it’s replaced by a different program to do the same thing better. The best circumstance will be when the bottom 10% will be populated by programs that were created for problems the government has actually solved.