Does This Country Need More Efficient Government?

By Connor O'Keeffe, Mises Institute | October 02, 2024

Last month, Donald Trump announced that he intends to set up a government efficiency commission if he wins a second term. The commission would be led by tech entrepreneur Elon Musk, who would audit the entire federal government to find and eliminate inefficiencies that needlessly cost taxpayers trillions of dollars.

While Austrian economists tend to be wary of the entire concept of “efficiency” in a world without perfect, universal knowledge of the future and static, unanimously agreed-upon goals, it’s hard to label the federal government’s record at effectively using tax dollars to solve problems as anything short of abysmal.

For decades, the federal government has repeatedly set out to allegedly address societal problems by pouring absurd amounts of money into them, only to see the problems get worse.

There are far too many examples to list here, but to name a few—the War on Poverty was implemented in the 1960s with the stated aim of reducing dependency on government programs. After implementation, the level of government dependency shot up, and the poverty rate, which had previously been falling, began climbing again. Around the same time, the government rolled out programs that were presented as ways to make higher education more affordable. Similar federal efforts have been implemented or expanded in the 1990s and 2010s. Over that same period, the price of a college degree has skyrocketed.

The same thing happened after the federal government started to address the affordability of healthcare and the accessibility of home ownership. In 1913, the establishment of the Federal Reserve was meant to usher in a period of economic stability but instead kicked off the most dramatic series of booms and busts in history. And the last two decades of American military intervention in the Middle East was meant to bring peace to the region and “rid the world of terrorists.” But today, the ideology of Osama bin Laden is significantly more popular than it was in 2001, and the region is still consumed by violence.

To call the federal government’s performance on these and other programs “inefficient” or even counterproductive is a serious understatement. Government involvement in all the above areas has been cataclysmic, which brings us to the first problem with the Trump-Musk efficiency commission: the scale is far too limited.

Trump and Musk have set their planned commission’s sights on improper federal payments. While this certainly is a problem, with an estimated $236 billion in improper payments made last year (virtually all of which were overpayments), the issue is tiny compared to the programs outlined above—most of which are ongoing.

It is also important to understand that, as worthwhile as it is to point out the many shortcomings and outright destructive consequences of current government programs, the ideal of an “efficient” government is impossible. As Mises, Rothbard, and others have explained in detail, the very characteristics that make something a government also ensure it will be terrible at allocating resources. Governments are immune from economic losses, attain capital through seizure, are often operating without a price system to guide them, and are directed by decision-makers who are institutionally protected from the consequences of being wrong.

But the biggest mistake made by Trump, Musk, and anyone else arguing we need to make government more efficient is taking the political class at its word. Politicians, bureaucrats, and big political donors may say they want government policies that tackle the many problems facing the American people—and a couple of them may genuinely believe it. But, at the same time, federal policies have not only failed to fix, but worsened so many of our problems, those same policies have made the political class—which includes the politically-connected rich—a tremendous amount of money. At the very least, it should not be taken as a given that this is an accident.

There absolutely is value in Elon Musk leading an efficiency commission that audits the federal government. Anything that exposes and wakes people up to the waste and deficiencies at the heart of our political system is productive. But don’t be fooled by claims of incompetence. The true purpose of our monstrosity of a political system is not to accomplish the nice-sounding goals politicians talk about. It’s to transfer as much money and power as possible to politicians, federal agencies, and the politically-connected rich. And in that pursuit, the government is wildly efficient.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Connor O’Keeffe produces media and content at the Mises Institute. He has a master’s in economics and a bachelor’s in geology.

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