July 25, 2007
Why Government Can't Succeed.
I read hb's charming post on the success of private efforts to help Katrina victims, complete with his admonition that "the inability to provide ample support is not confined to the administration, but rather to government itself."
Shortly after that, I read this editorial, Union Doozy, in the Wall Street Journal. The contrast is explicit. The State of Indiana contracts with private companies to deliver state welfare services, using the efficiency of the private sector. Unfortunately for AFSCME, the program is a mad success and they have to get their Democratic lapdogs in the 110th Congress to overrule the State law (so much for laboratories of democracy, Justice Brandeis!)
Indiana's goal is to deliver welfare benefits more efficiently to those who qualify for them. Its reform aims to save $500 million over 10 years by moving some 1,400 government jobs to the private sector -- which AFSCME likes to call "domestic outsourcing." But while this could mean fewer dues-paying union members, the state contract with IBM specifically requires that all current employees be offered work on the new system. And what do you know? More than 99% chose the private sector. Adding call centers and online resources will also help reduce welfare fraud: In December, a federal-state investigation found more than 1,000 ineligible drug felons collecting welfare in Marion County alone.But no effort to make government more accountable goes unpunished. Under the House provision, the Hoosier state would be forced to cancel the $1.16 billion 10-year deal with IBM, while taxpayers would have to shoulder the more than $100 million in additional costs to bring the operation back into the bureaucracy. Worse, the money to make up the shortfall would likely come out of the same purse that's been funding an increasing number of child-welfare caseworkers -- which was another goal of reform.
There are a hundred good arguments against government running things, but the best to me is the Hayekian preference for distributed control and knowledge. Allowing a few Senators to have veto privileges over innovation will guarantee inefficiency every time.
The program is likely safe for now, but won't be under a Democratic administration. And why would the next IBM bother to get involved with such a program?