Popular Delusions and the Madness of Crowds

“Men…think in herds; …go mad in herds, while they only recover their senses…one by one.” — Charles MackayRepublican Assemblyman Roger Niello‘s recent editorial “Performance Based Budgeting Deserves a Look,” is his bid to appear as a man who has recovered his senses. In it, he reminds us that California’s state budget process is imperfect. The remedy he proposes, however, is simply odd. He says he wants to make sure performance standards accompany any State spending.

Imagine the reactions: “Why those spending-crazy politicians (mostly Democrats!) are at it again! How dare they spend *our* money without even checking to see whether it’s effective?! That money doesn’t grow on trees!”

What Does The Government Do For Me
In implying state spending is irresponsible, Niello is less extreme than others. Someone recently told me “the government does nothing for me!” I asked “Isn’t intelligent public policy, and the infrastructure it builds, all that distinguishes us from cave men?” If the effectiveness of public policy diminishes, prepare to live at least less conveniently, if you survive at all. Are people going to build their own private roads, and test their food and medication to make sure they’re healthy?

Nevertheless, the idea that government spends money like a drunken sailor is clearly part of current culture as far back as Reagan’s announcement that “Government is the problem.” Citizens are so paranoid that a recent community meeting in my neighborhood voted to “keep our tax dollars local” — presumably reining in those spending-crazy politicians. This same community consistently spends more on services than it pays in local taxes.

The State Monitors Spending
The absurdities of current culture aside, don’t governments at least review their spending? In a word: Yes. Agencies receiving state funding get audited to insure that they are in compliance with the terms of some very results-oriented state grants. So Niello’s premise is false; governments *do* track public monies to see they’re well spent.

In fact, the state hires many people to monitor spending, and spending cuts often reduce monitoring first. The “government does nothing for me” crowd has another agenda when it lobbies to reduce funds for programs, then complains that those programs are bad.”No Child Left Behind,” for one example, mandated additional testing without sufficient funding for additional instructional time. On the other hand, Mr. Niello’s call for a return to Jimmy Carter’s “zero-based budgeting” — a practice that asks programs to re-justify themselves with each new budget — seems sensible. After all, it would be impossible to say there’s no waste in government — if humans are doing it, it’s not likely to be perfect. This tendency is not confined to government, either. Remember Enron and AIG? But Niello’s suggestion that no oversight exists is simply absurd.

Does the State Spend Like a Drunken Sailor?
The question now is whether to expect a sensible budget process in the context of this kind of posturing. Among states, California ranks tenth in per-capita income, but only 22nd in tax burden. Nevertheless, Republicans began their budget negotiations with a pledge to never raise taxes, and Niello’s website reserves a special section for “Oppose Higher Taxes.”

Stepping outside of the paranoid anti-government culture is a likely prerequisite for a sensible budget. Legitimate reasons exist to discard sentiments like “the state spends like a drunken sailor and taxes like it doesn’t matter.” Consider an alternative view expressed in: “Why the Economy Grows Like Crazy Amid High Taxes“, for one example of what this looks like.

On the other hand, if the public persists in its ignorance of what really is going on, public policy can only lurch from crisis to crisis…sort of like that drunken sailor

Adam Eran