Sunday, June 16, 2013

Politicians Think Passing Legislation Solves Problems, But Laws Must Be Effectively Implemented: The More Government Tries to Do, The Less It Can Do Effectively

Posted by Milton Recht:

From Real Clear Markets, "The More Government Does, The Bigger The Failures" by Jeffrey Dorfman:
Unfortunately for the government, an important lesson to learn is that the people are smarter than the government.

That is one of the central lessons in my macroeconomic classes. Obviously, not all people outside government are smarter than all or even the average person in government. However, there are almost 300 million people in the U.S. that don't work for a government and some of them are very smart. At least one will figure out how to outsmart, outwit, or outmaneuver the government's laws and regulations. Then she will tell other people what she knows (perhaps even selling the information).

Politicians think that once they pass legislation the problem is solved. In reality, nothing has been solved. The legislation must be implemented, often through regulations not even written at the time the law is enacted. Before and after the government legislates, people respond to the legislation; they think, they plan, and they react in order to gain the maximum advantage for themselves.

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