Government Good and Bad?

Ben Bernanke

Reader J.F. has a question about my post on how not all government agencies are as bad as that one time the DMV really screwed up: “RE: AirForce, I agree with your broad point, but do you have any thoughts regarding the fact that the well run government agencies you mention are all military? Are civilian run agencies just never as good? And why is that? Further, should we ask the military to run our healthcare. I’m only half-kidding on that last one.”

First off, I would reject the premise. One of the examples I cited of an effective public institution is the Federal Reserve system. The very same conservatives who seem certain that the government would botch even the most minor regulatory tasks have pretty much no problem with the idea of the Fed setting interests rates that do an enormous amount to control the overall level of employment, GDP growth, and inflation in the country. And rightly so — the details of the Fed’s conduct over the past 20-30 years are certainly open to criticism, but they’ve definitely delivered shorter, shallower recessions than we had in the past and the very same Bush administration that put Michael Brown in charge of FEMA picked a new Fed chief whose decision-making regularly earns praise from Paul Krugman.

Beyond the Fed and the military there are lots of parts of the government that work quite well — we have bad schools and bad police departments in this country, but also good schools and good police departments. We fight forest fires with extraordinary skill and I’ve had great visits to any number of attractions run by the National Park Service.

And then, yes, there’s the military. But there’s no real mystery here as to why our very large military is also a reasonably high-performing government agency — it’s something our political leaders put a high priority on. This is similar to the Fed — political elites wouldn’t stand for staffing it with incompetents and know-nothings. Other agencies become patronage mills or suffer from funding shortfalls or deliberate sabotage. When the government is run by people who don’t want environmental regulations, civil rights law, or labor law to be enforced properly those things don’t happen. What’s more, a lot of the better public institutions — from the Fed to the Navy to state universities and so forth — are structured in special ways to try to insulate them from problematic forms of politicization.

This topic initially arose in the context of some snark about the evils of the government taking over the health care system, and my point wouldn’t be to say that government-run health care would necessarily be good but only that one could envision a wide range of outcomes. Were the government to start running American health care, it would be important to think about a lot of questions of institutional design to try to make sure that it ran health care well. In the real world, the government is already pretty heavily involved in the health care system in terms of regulating it and the main progressive legislative proposals all involve basically maintaining the current framework of a regulated-and-subsidized but privately owned-and-operated health care system so I’m not sure that this debate is all that relevant. In terms of the military running health care, though, the Veterans’ Administration provides excellent health care and I hear good things about the schools the DOD runs on military babes.