Companies competing in the market make plenty of mistakes. Managers are prone to overestimating profits from products and overlooking troubles that the firm might encounter. Politicians are no different. They too make mistakes because they’re apt to overestimate the benefits of some law or program and minimize if not completely ignore the costs and unintended results.
The difference is that firms in markets quickly realize and correct their mistakes, while government officials, lacking any feedback loop, hardly ever correct their mistakes. Cato’s David Boaz makes that point sharply in this post, where he compares the time it took Coke to reverse course in New Coke in 1985 with the duration of some political blunders.
Also, firm managers usually learn from their errors, while politicians repeat the same ones again and again, such as raising the minimum wage and turning medical care over to political control.
