Political Economy vs. Federal Fairy Tales

American Institute for Economic Research, March 29, 2021

Political Economy vs. Federal Fairy Tales

by James Bovard

“Build Back Better” is the motto for President Biden’s ambitious plans to remake much of the American economy and society. On Wednesday in Pittsburgh, Biden will reveal his plans for trillions of dollars of new spending for infrastructure and other projects. His devotees in the national media will whoop up his proposals as the greatest thing since the New Deal, or at least since Biden’s American Rescue Plan Act a couple weeks ago.

Once Biden fires the starting gun, a deluge of experts will descend upon cable news shows to tout the vast benefits of the proposed “investment.” There will be a barrage of econometric formulas that irrefutably prove, via 10 or 15 shaky or squirrely assumptions, that vastly increasing federal spending will multiply prosperity across the land.

Rather than deferring to mathematical formulas, I prefer old time political economy – i.e., analyses premised on the perfidy of politicians and the imbecility of bureaucracies. As a Washington journalist, I have investigated scores of federal programs that sounded great until they crashed and burned (okay, I did give some of them a push). Historical track records of government agencies are a better lodestar than the latest idealistic buncombe regardless of how many MSNBC hosts swoon.

“Washington knows best” is the tacit premise for most of Biden’s initiatives. The Biden administration can trust federal agencies to shamelessly fabricate statistics to vindicate any new program, or at least cover up the initial damage. 

Biden is planning on expanding federal job training programs, a beloved federal panacea dating back to the Kennedy administration. In 2014, President Obama admitted that such programs rely on a “‘train and pray’ approach. We train them and we pray that they can get a job.” To hide its dismal record, the Labor Department “defined down success” by counting trainees as hired simply by confirming they had a job interview, by certifying as permanently employed any trainee who spent one day on a new job, and by claiming victory for teaching teenagers how to make change for a dollar. No wonder programs are notorious for leaving trainees worse off than if they had never signed up.

Biden is stretching the definition of infrastructure to include new spending for early childhood education, seeking to offer free pre-kindergarten for all three- and four-year-old American children. Will Biden’s speechwriters concoct a label as punchy as President George W. Bush’s “No Child Left Behind (NCLB)?” But stretching government control over more years of childhood will turn out no better than Bush’s biggest domestic fraud. NCLB empowered the U.S. Education Department to punish local schools for not fulfilling arbitrary, often imaginary guidelines for “adequate yearly progress.” Almost half the states responded by “dumbing down” academic standards, lowering passing scores on tests to avoid harsh federal sanctions. Unfortunately, NCLB’s disasters have not deterred politicians from hustling further federal takeovers of schooling.

As part of its climate change agenda, Biden issued an executive order on January 27 proclaiming “the goal of conserving at least 30 percent of our lands by 2030.” Farmers and other landowners fear the feds may squeeze out private ownership of vast swaths of the nation’s heartland. Is there any reason to expect Biden’s Climate “Brain Trust” to be wiser than Franklin Roosevelt’s original Brain Trust which launched command-and-control farm policies that still vex America?

The sugar program, for instance, relies on import quotas and other interventions to drive U.S. sugar prices to double or triple the world price, costing consumers $3 billion a year. Since 1997, Washington’s sugar policy has zapped more than 120,000 U.S. jobs in food manufacturing. More than 10 jobs have been lost in manufacturing for every remaining sugar grower in the U.S.

Peanuts take the prize for perpetual policy perversity. When the U.S. peanut program was launched in the 1930s, the federal government gave favored farmers licenses to grow peanuts and outlawed anyone else from entering the business. To maximize its controls, the USDA used aerial photography to determine if farmers planted a few more square feet than they were allotted. In 2002, Congress spent $4 billion to buy out the peanut license owners and end the program. Problem solved, right? Nope – congressmen still needed campaign contributions. In 2014, Congress created a new program that guaranteed payments far above market prices. The cost of peanut subsidies quickly approached a billion dollars a year, nearly equaling the farm value of all the peanuts grown in the U.S. Farmers dumped surplus peanuts on USDA, which dumped them on Haiti, sowing chaos in local markets. But that wasn’t a problem because Haitian peanut farmers can’t vote in U.S. elections (at least not yet).

Among other pending marvels, Biden is planning to reform the Postal Service, an agency that has almost perfected statistical chicanery. In the 1980s, it boasted of 95% next-day delivery of first-class mail but the official tests measured only when letters moved from one post office to another, not when they were actually delivered. When the target for overnight first-class delivery was slashed to less than 50 miles in 1989, Postmaster General Anthony Frank promised that the new standards would “improve our ability to deliver local mail on time.” Sen. David Pryor (D-AR) groused, “This is like trying to fool the public by cutting the top off the flagpole when the flag is stuck halfway up.” In 2015, the Postal Service effectively eliminated overnight mail delivery even for local mail in much of the nation. With revised standards, “mail was considered on time if it took four to five days to arrive instead of three,” the Washington Post noted. The Postal Service has gotten away with cutbacks because it has a monopoly: it is a federal crime to provide better mail service than the government.

Biden administration policymakers can take solace knowing that federal agencies will shroud their abuses with statistical smokescreens. Transportation Security Administration agents, for instance, are sometimes derided as hopeless knuckleheads (cynics suggest that “TSA” actually stands for “Too Stupid for Arby’s”). Though TSA screeners dismally failed to detect most of the smuggled weapons and fake bombs in undercover tests, TSA in its early years issued triumphal press releases touting the number of knickknacks confiscated at airport checkpoints. TSA chief James Loy bragged that TSA screeners “have identified, intercepted, and therefore kept off aircraft more than 4.8 million dangerous items.” All the fingernail clippers, cigar cutters, frying pans, horseshoes, and small pointy objects TSA seized proved that the feds were protecting airline passengers better than ever. TSA doubled down by spending billions of dollars on Whole Body Scanners to take nude photos of travelers, after which TSA screeners’ failure rate on undercover tests rose to 95%. But presidents and members of Congress have been exempted from most of TSA’s indignities, so this particular federal gropefest continues.

Transportation Secretary Anthony Foxx declared in 2015, “Defective agencies, like defective people, need the capacity for self-reflection and to make room for self-improvement.” But bureaucracies don’t learn from mistakes because they don’t pay for their failures. Government intervention is a cornucopia for politicians and bureaucrats regardless of what happens to purported beneficiaries.

Nor is there a detectable learning curve among the likely hallelujah chorus for Biden’s proposals. Philip Tetlock, a University of California research psychologist, noted “a perversely inverse relationship between indicators of good judgment and the qualities the media prizes in pundits.” Washington policy experts are akin to baseball commentators who never consider players’ batting averages and then are perennially shocked at all of the strikeouts. Rather than soiling their pristine minds with Inspector General and Government Accountability Office reports documenting the failure of similar prior programs, media cheerleaders will showcase the latest White House talking points.

But Biden can still count on economists riding to the rescue with multipliers, right? Alas, if such multipliers were reliable, America would have reached financial Valhalla many boondoggles ago. Econometric formulas omit the “X factor” for government incompetence. Nobel laureate economist George Stigler noted in 1963 that, for the preceding century, “No economist deemed it necessary to document his belief that the State could effectively discharge the new duties he proposed to give it.” Things haven’t improved much since Stigler’s time. Swedish economist Niclas Berggren observed in 2011 that 95% of paternalist proposals “do not contain any analysis of the cognitive ability of [government] policymakers.”

The more power a politician captures, the more flattery he hears, and the more deluded he usually becomes. In the same way that Biden feels entitled to deny media access to the most damning scenes of children in overcrowded refugee centers at the southern border, so he will demand that the media ignore the debacles spawned by his new programs. But at some point, there will be too many fiascos to suppress by a president shouting demands for “unity.”

Nowadays, the federal government is controlling almost everything except itself. Instead of economic salvation, Biden offers standard D.C. issue “no-fault pseudo-benevolence.” How many more trillion dollars will America waste for another Beltway “triumph of hope over experience?”