Wednesday, June 3, 2009

It is the system, not the party.

I have written in several posts that the problem we have with our government is not a Republican or Democratic thing, but a systematic thing. Our government has no incentive to be efficient or cut costs. In fact, it can be said the government officials and employees are have negative incentives to do these things. If a department becomes more efficient and doesn't use their entire budget, their budget is slashed next year. However, if they meet or exceed their budget, they can ask for an increase next year.

Why is it like this? Because unlike private companies, the government doesn't sell anything. They don't have to convince people to buy their products to produce revenue, they take money from us through taxes. A private company has to produce something with value, then convince consumers to purchase. If a company not efficient, it will go out of business. If the government is not efficient, it will tax, borrow and print money to get to breakeven.

A great article discussing this in more detail can be found here.

Anybody remember the SNL parody of Ross Perot? Dana Carvey impersonated Ross Perot. In a satirical commercial, Perot (Carvey) stated that based on the performance of the country, Perot would receive a "bonus" of billions of dollars. At the time it was funny. In hindsight, maybe Carvey accidentally discovered something that would improve, not increase, our government.

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