Dear Friends,
It seems to me, if an accountant messes up your taxes, a plumber ruins your plumbing, or an electrician shorts out your wiring, they are accountable to repair it… a government should be just as accountable for its failures. Government, however, follows the strategy of lawyers and doctors, they mess it up and charge you to fix it… if they can. Therefore there’s more profit in all three occupations for the inept than the adept. This is because of the incentives. If a lawyer messes up a case and it costs you tens of thousands of dollars or prison time, he or she still gets paid. If a doctor messes up in an operation leading to severe complications, each occasion is billable. If a government screws up international relations killing your children… your taxes go up as well. These are terribly pernicious incentives.
Incentives have effects. Successful people understand this reality. A successful manager uses incentives to get more production from his or her workers. An unsuccessful manager will blunder and create negative incentives, harming worker safety, productivity, and happiness. I hear that’s why most managers provide negative value to the company they work for. A successful entrepreneur will use incentives to encourage their employees to do their best. That’s how enterprises are built. Have you ever heard of the carrot and the stick? The old adage that a donkey will chase a carrot and flee a stick has merit. So if we apply this age old wisdom to government, then it follows that we need to create incentives for success and disincentives for failure.
Right now there’s only a carrot for those in power and only a stick for those who are deposed from power. Look at the recent examples in Brazil, Bolivia, Mauritania, and Taiwan. The more this is the case the more corrupt, grasping, and fraudulent government will become. That’s what the incentive structure encourages. If they don’t cling to power, and the unending carrot, by tooth and claw… they go to prison. Not so much for breaking the law but because they are a threat to the next grasping crowd who want at that unending carrot. In the case of government the carrot goes to the corrupt and the stick is applied to those with ethics. This is due to the perpetual carrot when in power, and the punishment that’s applied after, for the same reason Stalin executed all his friends… they were a threat.
Another example of a backwards incentive structure is when the more government screws up a nation’s economy, international relations, or internal stability… the more power government is given to screw it up even more. If government usurps some power, say, setting rental rates by fiat, then rent stays the same but the quality of apartments drops as does the availability. Nothing is built because the rent will be insufficient to pay the cost of new construction. Moreover, what exists will rot into the ground because the owners can’t get enough profit to maintain them. So government “hears the cries of the people” and seizes the apartment houses. People cheer, politicians get rewarded electorally… and the situation gets worse. This is but one example of the myriad that exist.
Another pernicious incentive of government is that corruption is rewarded and virtue is punished. This is because the corrupt can be controlled while the virtuous are a threat. I think Epstein and Diddy taught us that lesson. To sharpen the point further, of the virtuous FBI agents that were fired by Biden’s partisan beast, how many have been rehired? I’ll tell you, almost none. Comey got off scot-free as has Brennan, Clapper, and the rest. They were rewarded for their corruption even as many innocents were destroyed by their crimes. This shows that the incentive structure in government is pernicious. So, if we want virtuous government, we must set up a virtuous cycle of incentives. Apply the stick where it’s necessary and cut off the carrot entirely. Too much carrot and no stick makes an elite a hog.
Sincerely,
John Pepin
