Politics has been dubbed “show business for ugly people.” It’s also been compared to a sporting event, since elections amount to zero-sum contests with teams and clear winners and losers.
Everyone understands that a pinch hitter can also strike out, and is less likely than Cano to get a hit or a home run. But the very possibility that the government can fail when it steps in to substitute for a failing market seldom occurs to many people. Even among some economists, “market failure” is a magic phrase that implies a need for government intervention.
We could argue about the empirical evidence as to when government pinch-hitting is better or worse. But there is seldom even an argument at all in some quarters, where government intervention follows market failure as the night follows the day.
Milton Friedman once pointed out, “A system established largely to prevent bank panics produced the most severe banking panic in American history.” Many other examples could be cited where government intervention made a bad situation worse.
But most discussions of the role of government never even reach the point of looking for empirical evidence. Today, for example, there is much gnashing of teeth in the media because Democrats and Republicans can’t seem to get together to create a bipartisan plan for government intervention to solve our current economic problems.
Those who cry out that the government should “do something” never even ask for data on what has actually happened when the government did something, compared to what actually happened when the government did nothing. That could be a very enlightening trip through the archives.