Over at Coyote Blog there’s an interesting post about how government funding stifles initiative:

I will make two-hour presentations to parks agencies about how we can improve operations quality while cutting costs by 30-50% or more, and the near-universal response is, “well, if you reduce costs, then the legislature will just reduce our appropriations.”  More efficient park operations, and at the margin better visitor service, don’t create any wins for agency employees given their incentives.  In fact, if the parks are improved and more people show up, their job is just harder.  I had the manager of Arizona’s premier state park tell me, absolutely in all seriousness, that he had the best job in the world if it wasn’t for all the visitors.

What strikes me about this is that it is the exact same reason why foreign aid to Africa has such negative results. I’ve written before about a business proposal some of the rafting guides thought up in Uganda. There was a small tourist boat operating on a shoe-string budget at the base of the spectacular Murchison Falls in the national park. The guides had a brilliant proposal to improve the service and thus make the park a lot more money.

It gained no traction precisely because it was a good idea. More money would mean that the park would risk showing a yearly profit. That would immediately end the foreign aid that was coming in for the park, which would also end the long line of officials sticking their hand in the money jar as it made its slow way to the park’s coffers.

In the quoted example from Coyote Blog there is clear motivation for park agencies not to improve or become more efficient as it will reduce their appropriations from government. But when you consider that one of the great strengths of private enterprise is the ability to innovate and reduce costs it becomes clear why government funded entities can only ever ask for more money and not less.

The other great purpose of private businesses is the act of finding and then satisfying a customer. But in the example case of the Arizona state park this would just mean that their job would be harder. More people turning up does not mean more money in their pocket. It just means more work, which the employees resent because there is no additional reward, and the increased park profit would then once again impact their annual appropriations.

Every government funded entity works in the same way. They can only ever demand more money, not less, while simultaneously providing an increasingly outdated service. Whether it be schools, hospitals, broadcasting, parks and wildlife, whatever the sector the rule will hold true.

The whole process of more government funding is a slow creep towards becoming a dysfunctional state like those in Africa. The foreign aid we rely on is the enormous loans that governments take out to fund this top-down system. The other way governments fund this largess is to raise taxes, thus taking money away from businesses that created the money in the first place. It is like a snake eating its own tail.

Finally a nice joke from one of the commentors on Coyote Blog that sums up the situation:

A U.S. Postal Service driver crossed paths with a United Parcel Service (UPS) driver during the busy holiday season.

UPS driver: “Hey! How’s it going!”

Government employed, unionized USPS driver: “Horrible! So many packages! How’s it going with you?”

UPS driver: “Terrific! So many packages!”