Why Government Fails So Often: And How It Can Do Better


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It doesn't matter which party is in power. It doesn't matter what the state of the economy is. And we all have an enormous stake in understanding the reasons why. So what are the structural reasons for failure? Before I go through the six main ones, I should note that the main index of a program's performance should not be its durability or its enthusiastic defenders, but instead its cost-effectiveness. This is the indicator I use throughout my analysis. To begin with, the most fundamental characteristics that shape the substance of public policy include the incentives that both policymakers and private actors face.

I note that officials have powerful incentives to provide voters and interest groups with short-term benefits, while hiding the longterm costs of paying for them.

In short, government officials design policy to advance their own self-interests, while ordinary citizens have little incentive to participate actively in political activity. Second, our policy system also suffers from information deficiencies, inflexibility, a credibility problem, and mismanagement.


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Much government failure reflects the fact that information is costly to gather, assess, deploy, and keep up-to-date. Government is therefore especially ill equipped to adapt its goals and instruments to changing technological, economic, and political conditions. Many programs can succeed only if the federal government can assure others that the rules of the game are not going to cha — nge.

However, federal mismanagement — including fraud, waste, and abuse — is a chronic problem at the very time when the ambition of national policies has swelled. Third, markets themselves also affect policy performance.

Book Review: 'Why Government Fails So Often' by Peter H. Schuck - WSJ

The powerful incentives, logic, hydraulics, and political influences of markets are difficult to control and tend to undermine the effectiveness of many public policies, including those explicitly designed to correct market failures. Fourth, I analyze the problem of implementation — the obstacles that invariably litter the path between policy designs and outcomes.

These obstacles are important; they are not readily dispensed with and they are not easily circumvented. The real world consists of complex social, political, fiscal, market, and legal conditions that even the most seasoned policymakers in Washington cannot fully anticipate. Worse, even if policymakers could foresee them, they would have relatively little control over them.

Fifth, there are certain inherent limits in using law as an instrument of public policy. These limits include its ubiquity, the inescapable tradeoffs between simplicity and complexity, its linguistic ambiguity, the discretion necessary for it to function, its costly procedural apparatus, and its inertia. Precisely because of law's powerful allure, policymakers must attend care — fully to its constraints.

Sixth, every public policy is run through a bureaucracy. In the United States, the federal bureaucracy is not merely problematic.

Is Government Prone to Fail?

It is distinctively so. Despite generations of blue-ribbon commissions calling for fundamental reform of our civil service, it is increasingly a backwater. The consequences of this progressively demoralized, poorly equipped, marginalized, publicly scorned, and undisciplined workforce for government performance are deeply dismaying. These employees are, after all, the shock troops, the implementers, the ultimate instruments of our public policies. If they are not up to the job, then neither is our government. All Americans have a strong stake in understanding why government's failures are so endemic, and what might be done to improve matters.

If we do not do so — and soon — our great experiment in self-government may itself come to be seen as a failure.

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In an era of fiscal cliffs, pallid enforcement, special-interest pandering, and growing public disgust with politicians, this warning is not hyperbole. Reform is both essential and within our reach. I might describe myself as a low-key libertarian, which includes alliteration as well and is, many would argue, also an oxymoron. But neither of us would have necessarily always described ourselves this way. With that in mind, the word that kept coming to me as I read this book was "transitional. If we split 40 random, ordinary, liberal college students into two groups — giving half of them a copy of this book and the other half a placebo — I suspect that in a few years the treatment group would have more libertarians in it.

I believe, in other words, that Schuck's work could be an effective gateway drug.

If you think of this book as a roadmap and you're looking to climb the mountain of enlightenment that eventually leads to the state of higher consciousness that we call libertarianism, Why Government Fails So Often will help you take some important steps along that journey. I'd like to take a moment to discuss the steps that it does take, and perhaps a few more that it could take in order to reach the summit. Schuck's first step along the path is that he confronts the phenomenon of government failure in an extremely forthright manner.

He doesn't mince words or sugarcoat that message, nor does he say that public ineffectiveness is the exception rather than the rule. Peter Schuck catalogs an overwhelming list of US government failures. He points to both structural problems culture and institutions and incentives. Despairing of cultural change, Schuck focuses on incentives. He relies on Charles Wolf's theory of nonmarket failures in which "internalities" replace the heavily-studied market failure from externalities Wolf Internalities are evidence of a discord between the public goals by which a program is defended and the private goals of its administrators.

What might economists contribute? We suggest that economists have neglected internalities because they take group goals as exogenously determined and we defend an alternative tradition in which group goals are endogenously determined.


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Schuck on Why Government Fails So Often

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