In the US, Republicans and Democrats like to argue about the efficiency of government. Republicans argue that government is less efficient than private enterprise, while Democrats say the opposite. However, when was the last time the US government did anything? Anything at all? Seriously, like when?
Look at the American government after World War II. They did things – big things. They built the highway system. They went to the Moon. They created suburbia and the health insurance system and the modern university system and the car culture, and many other parts of the America we know, love, and hate.
Now, what does the government really do? The “big legislative achievements” of the past decade don’t change the lives of most Americans in any substantial way. The healthcare bill? After the bill is implemented, you will still pay for medical care with insurance. Insurance will still be offered through your employer. If you’re unemployed, you still have to either pay high health insurance premiums, or pay outrageous medical bills (far above what insurers actually pay out). There will still be Medicaid for the poor and Medicare for the old. You might have to fill out an extra form, or spend a little less money here or a little more there, but nothing will be really different for almost everyone.
Is it really just more of the same? Yes. Consider that, a hundred years ago, none of that stuff existed. There was no health insurance. There was no Medicare. There was no Medicaid. Your employer sure didn’t pay for anything. Doctors charged the same amount to everyone and you paid them in cash. There was no FDA approval for drugs. There was no FDA at all. There were no Department of Health or HMOs or PPOs or FSAs or MSAs or other three-letter acronyms. All of that stuff was set up during the last century, mostly by the government.
The healthcare system used to be essentially all private spending, and now the spending is half-private, half-public. Hence, a comparable change today – comparable to back when the government actually did stuff – would be to make it all private, and eliminate Medicare and Medicaid and all the other healthcare-related government programs. Or, on the other end, make it all public, and create a single-payer health insurance system like Canada’s. What are the odds of either of those happening in the next decade?
Or, consider the “Wall Street reform” bill. What will the bill actually do? I have only the vaguest notion, and I was an economics major. Mostly, it seems, it will create additional paperwork for financial institutions, but those institutions will all still exist, in essentially their present forms. There will still be commercial banks and investment banks and private equity firms and hedge funds. There will still be IPOs and mortgages and stock trading and corporate bond issues.
Compare that to what the government did during the New Deal. Here are just a few of the things they did:
– Created the SEC, the first-ever federal agency to regulate stocks
– Eliminated all gold, and replaced it with unredeemable “greenbacks”
– Federally insured all bank deposits
– Created mortgages with fixed monthly payments
Can you imagine the government doing anything like that today? Can you imagine them eliminating the SEC – anyone is now allowed to issue their own stock to the public, for any company they want? Or banning all mortgages – sorry, that house has to be paid for in cash? Or getting rid of all dollars, and replacing them with the euro? Or removing deposit insurance? They used to do stuff like that.
To elaborate a bit on one example, gold had always been money, all through American history, all through European history, through ancient Greece and Rome and back to the dawn of civilization itself. The government banned gold. Can you imagine federal agents coming into your house, and your neighbors’ houses, and forcibly confiscating every dollar bill and every coin and replacing them all with yen? That’s what it was like back then. We can argue about whether that was a good or bad idea, but the government just doesn’t do stuff like that now. It would be way, way, way too politically impractical.
The list goes on. Space exploration? NASA’s abilities have been pretty clearly surpassed by SpaceX and other private competitors – NASA doesn’t even have a manned space vehicle anymore. Infrastructure development? New York has added seven subway stops in the last forty years, out of a total of 468. Social Security? Last significant changes in 1983. Taxes? They’ve been pretty much the same, plus or minus a few percentage points, since the Reagan reforms. The military? Our most powerful weapons – our nuclear missiles, our carrier battlegroups, our bombers and fighters and main battle tanks – are still the same as our most powerful weapons in 1970, albeit somewhat improved with electronics and so on. Iraq was largely the same style of war as Vietnam. (Minus the draft, of course, but we got rid of that more than three decades ago.) Education? If you were teleported back to a classroom from 1950, I bet you would have a hard time telling the difference, except for how people dressed. And so on, and so on.
Why doesn’t the government do anything? Very recently (since 2010), there’s been a special form of political gridlock from the Republican refusal to support anything Obama supports, leading to stuff like the debt ceiling crisis. But the trend is far deeper and broader than that. If I had to point to one reason, it would be a distressing lack of vision on the part of our leaders. There is no one in government today, except the batshit crazy Tea Partiers, who thinks that things ought to be substantially different than they are.
Eg., one might look at Barack Obama’s website. There aren’t even any proposals – it just talks about stuff Obama has already done, mostly minor stuff that has small effects on small numbers of people. Or on Mitt Romney’s website, the proposals are equally small – change this by a few percent, cut that by a few more percent, and (mainly) repeal everything Obama has ever done. All campaigns involve attacking your opponent, but this focus on the past is remarkable. One candidate only talks about what he’s done already, while the other only talks about repeal, as if the world was perfect in 2008 before Obama took office. We can’t change the past. What about the future?
The Rationalist Conspiracy 
The Space Shuttle was built by private contractors on cost-plus contracts. SpaceX is a new contractor with different contractual terms with NASA and some significant improvements. It was able to attract its private investment capital thanks to the anticipation of government contracts.
The public share of healthcare reached half over many decades, not with a single legislative event. A sudden total privatization or nationalization would be far more abrupt.
Social Security initially affected only a tiny retiree population.
The FDA only tested for safety, not efficacy, until the 1960s in response to thalidomide: http://en.wikipedia.org/wiki/Drug_Efficacy_Study_Implementation
Modern non-nuclear weapons are vastly better than 1970 ones. Superior sensors, guidance, communications, and so forth made the Gulf War a turkey shoot, despite Russian hardware in Iraqi hands. In any case the power of military technology is all about relative performance.
“Education? If you were teleported back to a classroom from 1950, I bet you would have a hard time telling the difference, except for how people dressed”
And no sudden government program changed this around WWII, save quantitatively, e.g. the GI bill. In subsequent years enrollment numbers increased too.
“But the trend is far deeper and broader than that. If I had to point to one reason, it would be a distressing lack of vision on the part of our leaders.”
This sounds like explaining financial crises by “greed.” How do you measure vision in a Congressman, other than by policies enacted (affected by many forces)? What produces more or less vision and how does that get translated into policy?
There are also structural things going on, reflected when you look at the rest of the rich world. Things don’t get actively regulated until they exist and become big enough to draw legislative notice in striking events (thalidomide, the Depression, etc). Societies rich enough to afford big welfare states tend to move in that direction. When the car becomes common you need car-suitable highways. And so forth.
Re: SpaceX, I’m honestly surprised you would make an argument that silly. SpaceX and (say) Lockheed are both technically government contractors, but SpaceX designed, developed, and built the Dragon and Falcon spacecraft themselves, with the government just serving as a source of money and occasional advice. (Development of both Dragon and Falcon was started before NASA’s COTS program was announced.) Even though the Shuttle was built largely by contractors, the original decision to build it was personally made by President Nixon, and it was designed and also largely built by NASA (eg. the external tanks, although constructed by Lockheed, were built in a NASA-owned building).
Re: the FDA, that’s plausible as an example of the government doing something, but it happened fairly shortly after WWII, not within the last three decades, so it doesn’t contradict my main argument of a lack of government action since Reagan. (The Apollo program was another example from the 60s that I mentioned specifically.)
Social Security obviously wasn’t created all at once, but even in its original form in the 40s, it was still way larger than anything the government would do today (in fact, larger than the Manhattan Project as measured by annual budget). Of course, the government spends comparable amounts nowadays as a percentage of GDP (eg. Obama’s stimulus bill, TARP), but that money doesn’t go to any one specific project, but just gets used to write a zillion checks to people who need it/have enough lobbying power to get it.
If the American military in 1970 had gone up against Iraq’s military in 1990, would it not have been a turkey shoot as well? I’m not a military expert, but the US’s GDP is more than a hundred times that of Iraq, not including all the other people who were fighting on our side too. That’s a pretty darn decisive advantage. Not to mention Saddam’s general incompetence as a leader, compared to the American military establishment of the day. In any case, I agree that non-nuclear weapons have gotten somewhat better, just not different in kind.
Establishing the modern public educational system pre-dates WWII, so saying that there were no major changes during or afterward doesn’t contradict the point (indeed, the whole point of those photos was to show there were no major changes). There were major government-caused changes to the university system during that time, through the GI bill and other things, so I’ve amended the first section to say “modern university system”, which is more accurate.
“Vision” and “greed” are obviously terms that are prone to misuse, but I think they both do mean specific things. The financial crisis really was caused by “greed” in the sense that having an old CEO, who is CEO for only a few years, and who gets paid large bonuses based on the stock price during his tenure is strongly incentivized to ignore long-term prospects for short-term gains. (The first was true pre-Reagan, but the second much less so and the third not at all.) A lot of current problems are caused by a lack of “vision” in the sense that the political climate, media, party structure and educational system strongly favors people who will not make any real changes and not rock the boat. This is not entirely a bad thing – eg., the reverse was true in 1920s Germany and Russia, with disastrous consequences – but it does cause a lot of difficulty.
As I said, private investment capital could go into SpaceX thanks to the shadow of the government money indicating a market that could pay off the investment. The Obama administration has been actively backing the emergence of the new private space industry, although the firms were started first. And as I said, the new relationship of independent firms designing and then renting their vehicles, as opposed to bureaucratic cost-plus contracting is an innovation. When you say that NASA’s capabilities have been surpassed by the private sector, that’s voluntary on the part of the government, choosing not to replace the Shuttle in the old way and instead purchase from and fund the new space firms.
“If the American military in 1970 had gone up against Iraq’s military in 1990, would it not have been a turkey shoot as well?”
They would have won, but not with the ridiculous damage ratio.
“Social Security… but that money doesn’t go to any one specific project, but just gets used to write a zillion checks to people who need it/have enough lobbying power to get it”
That’s Social Security, along with the EITC, SCHIP, AFDC, and so forth.
You’ve focused almost entirely on the Federal Government. Plenty of exciting innovation and cultural shifts are happening at the municipal level, at an accelerating pace. The tweets of @PPS_Placemaking and Gary Hustwit’s film Urbanized highlight some examples.
Are the things you’re referring to nationwide? I’m sure some cities are doing cool things, but that will always be true just by luck (barring extreme centralization), because there are many thousands of cities.
The thing you have to keep in mind is that our political system rewards inactivity. We have a legislature that administrates a very large and diverse group of organizations established to create and enforce policies that used to be done by the lawmakers. Consider the EPA, Federal Reserve, FCC, and the FTC to name just a few. The regulations established by these groups have the force of law, even though those policies were not voted on by the Congress. Congress set up the system this way using the excuse that policy is too complex now for it to understand everything going on, so their role should be having oversight of this ungainly mess.
Because the President is supposed to be the chief Administrator in the country, all of the above leads to a sharp blurring of lines between Executive and Legislative branches. Many big, bold actions a President may want to do would get killed or interfered with by the congressional members overseeing the departments or departmental divisions charged with implementing his vision.
While this reads like I’m picking on the Legislature only, there are problems caused by the Presidency as well. For example, the US hasn’t had a formal declaration of war since the end of WW2, but that hasn’t stopped the troops from being deployed to many wars. Abuse of the so-called Executive Order is a severe problem. When you consider that EPA, as just one example, was established solely by presidential executive order, it becomes clear how much legislating the President is actually allowed to do.
Needless to say, the system is big and really messed up. The complexity goes well beyond what I’ve described here and explains how perverse the incentives are that we have setup for the government.
I invite you to show some evidence that the US federal government created health insurance or the car culture.
That really should be obvious, but to spell it out, the government massively subsidizes both directly (Medicare, Medicaid, the interstate highway system) and indirectly (mortgage interest and employer-sponsored health insurance are tax exempt).
(Copy-pasting a comment I made elsewhere when a friend discussed your article.)
A problem with being a very powerful and large nation with as complex a legislative-executive-judicial bureaucracy as running a large and powerful nation tends to require, is that every very wealthy interest group wants to buy influence in your bureaucracy.
For many decades now, pretty much every very smart and very rich interest group in the world has been very hard at work, trying to acquire as much influence in your bureaucracy as they can, including trying to shape it so that it’s *very* difficult to change anything that some of them benefit from in a major way.
Simply put, you’re a nation whose bureaucracy has been bought out and shaped into it’s current form by lobbyists. It is now essentially impossible to make large changes in which some powerful lobby would be a major loser, except of course after your nation eventually collapses due to the ever-increasing paralysis, and also the ongoing looting of the wealth of the middle class by all the sufficiently powerful groups, which looting will only intensify as collapse nears.
But don’t feel bad, it probably couldn’t have turned out any different for any nation that made the mistake of becoming a powerful democracy. Democracies are easy to take over by very smart and very rich interest groups working patiently together, because the ordinary voter is so much more stupid and short-sighted than they are (and the sciences of manipulating the ordinary human have gotten so advanced now), and the more powerful a democracy is, the more attention it will receive from said interest groups.