by user Sarkar
Suppose I were to propose a new government program. The details aren't too important, but it will cost the taxpayers $100 million. In exchange for this investment, though, the taxpayers will get $50 million worth of new jobs and other economic benefits. Does this program sound like a winner? Would it pass, under a democratic process?
Probably not. Voters would wonder why they are wasting so much money on what appears to be an inefficient investment. In fact, it seems a lot like throwing $50 million into the ocean. So, I have another idea, one that will help it pass: the taxpayers still pay $100 million, but instead of spreading around the $50 million in benefits to everyone, I get all of it. Does that sound like it would improve the program's prospects? Does that make it a better policy?
It may not make the program a better policy -- instead of just being inefficient, now it's also extremely inequitable. But the program's much more likely to pass -- and survive -- than it was before. This is because of a chronic problem called "concentrated benefits and diffuse costs." There are 300 million people in the U.S. This new program, therefore, costs each of them about 30 cents -- less than a postage stamp. It's simply not worth it for the average person to fight this program, or even to learn that it exists. But it is most certainly worth it for me, the beneficiary, to fight for its passage and preservation. Hence, our representatives in Congress are sure to hear my point of view and my carefully-assembled arguments about why the program should stay, and they are very unlikely to hear much opposition.
We can never escape the phenomenon of concentrated benefits and diffuse costs as long as government has unlimited power to tax and spend. As long as Congress can create new agencies, new appropriations, and new entitlements without any check on their "generosity", taxpayers will only see the final bill -- but getting rid of any part of that bill is met with furious opposition. Sugar subsidies, steel and textile tariffs, bovine methane emissions research -- all of these programs are basically just like the one I described. They all have lobbies fighting tooth and nail to keep them going, since their supporters have millions of dollars to lose. But taxpayers only pay a little bit for each program. Sure, it all adds up, and politicians talk a lot about "fiscal discipline", but in the end, they will always hear more from these programs' supporters than from taxpayers, and until the American electorate decides that government can't be trusted to spend their money on whatever it wants to, we're still going to be throwing money into the ocean.