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Monday, January 26, 2004

Inefficiency: Myths, Lies, and the Right

We have been holding on to so many myths about economics. The greatest fallacy in the pseudo-science of economics is the widely-held misconception (especially widely-held by those on the right) that private industry is more efficient than the public sector. I had this point pounded so far in to my skull as an economics undergraduate that it practically took surgery to make me see otherwise. What made me see otherwise was history and the truth.

The misconception that all government is horribly inefficient and that all of the private sector is a paragon of economic virtue has been the driving force behind a lot of destructive anti-tax legislation in the past 25 years. The “government is bad and wasteful” commandment brought to us by the Moses of the Chicago School of Economics is the biggest reason America’s health care system is a complete mess and excludes some 40 million of its citizens. How can a private system be efficient if it doesn’t reach 40 million people? Under the current health care system we spend billions of dollars annually on insurance. No one has ever recovered from any illness because of an insurance company. Insurance is a waste of money and an inefficient middle-man.

There is talk of privatizing sector after sector of our economy: social security, public education, and more and more elements of our military. Those proposing these changes argue that private industry is more efficient. The problem is that the private sector is, by the definition of free market capitalism, subject to the risk of failure. I realize that failure has been a pretty successful business model over the past 25 years for the private sector--just ask the fat cats who made out like bandits on the savings and loan bailout of the 80’s, just ask the CEO’s of most of the failed dotcom’s, just look at how Enron’s stock went into the toilet yet its managers made a killing--but failure has no business in a lot of the busniess of government.

I defy anyone to point to a government agency in this country that comes anywhere near the incompetence of Enron, Tyco, WorldCom, et al. I challenge anyone to point to a U.S. government official who has stolen as much cash as the pirates masquerading as CEO’sof failed corporations.

There are still people who propose we privatize our social security system and put the money in the stock market. Are you people fucking kidding? Why don’t we just go to Las Vegas and put it all down on black at the roulette table? There are certain sectors of the economy, like health care, police, fire protection, social security, and education where failure is not an option in the business plan. Why should we leave such issues at the capricious disposal of the private sector?

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