Saturday, July 19, 2008

Government's Role

A friend sent me a postcard that reminded her of me--it was very kind of her, and absolutely up my alley:

It is not the function of government to keep the citizen from falling into error; it is the function of the citizen to keep the government from falling into error. -- Justice Robert Jackson (Nuremberg Trial Judge)

The key point here is good governance is a two-way street. Citizens should be wary of government attempts to solve problems, because in the absence of omnipotence, unintended consequences will arise from government intervention. One recent example occurred around 1992, when Bill Clinton promised to limit CEO pay by placing a cap on salary deductions. Although it sought to limit CEO pay, Congress's one million dollar cap on the tax deductibility of salaries ended up with corporate boards increasing CEO pay to just under a million dollars. The result was that the middle class got their taxes hiked while the executives got more stock options.

Also, rarely does Congress pass a law with a view towards long term consequences. Such consequences could include the creation of a new enforcement agency (e.g. Homeland Security), more taxes diverted or raised to support the agency, and a broadening of power. Given this natural predilection to increase rather than decrease jurisdiction and scope, most laws ought to have sunset provisions that subject them to more debate down the line about whether they are still necessary. The way Congress currently passes most laws and regulations, they stay on the books forever and spawn new enforcement measures, whether they are necessary or not.

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