Keynesian Stimulus is Foot in the Door

Some conservatives and libertarians think that an Obama overreach will merely generate a backlash to an economy with less government. I'm not so sanguine. After all, the monopoly government has over education has never increased support for vouchers, rather, calls for increased funding to the same people that are screwing it up. Unlike business failures, which are abandoned, government failures merely ask for more money. A great take on this tendency is this podcast with Duke University's Mike Munger about Santiago's bus system. What was once a private decentralized system with differing levels of quality and price was been transformed into a system of uniform quality designed from the top down. The private system had problems, as sometimes drivers would drive too fast to get passengers (in a race), but they made money. The new system does not make money. Instead of paying drivers by the number of customers they pick up, they pay them by the time they keep, so if they are late they don't stop for passengers. The commute times went way up, and the diversity of services--express buses for rich people, simpler buses for lower fares--went way down. Everyone gets the same service now. The result is quite ugly but there is no going back, politically it is very difficult to undo a nationalization.

The scenario is very much like what I hear in modern public transit debates, where the thought that there are premium services, or services that skip the inner city, are taboo. So rich people don't ride. Anything that does not discriminate becomes crap. The smart or rich ones see they are subsidizing the others, leaving only the poor and stupid as your customers, being served by a non-profit maximizing entity. The result is classic public service: public golf courses, public schools, public rest rooms--the contrast with 'private' is night and day.

The new initiatives that are part of a stimulus package are permanent increases in the size of government, GS-14s with lots of rights until they retire, but little initiative, imagination, or incentives to get any. Oh well. I'm glad I wasn't born in Haiti, or in AD 1300.