So many government programs fail because government can’t solve something economists call “The Mother’s Dilemma”. It goes more or less like this.
Mother has “X” dollars. She has one very small child, two middle-sized children, a husband and a cat. She has enough money to buy a finite amount of milk and bread. She, herself, loves a pudding dish. Her husband and she eat toast for breakfast. Her two middle-sized children need bread for their school lunches and for an after-school snack. The cat loves milk, her husband likes milk in his coffee. The cat doesn’t need bread and neither does the baby. She doesn’t have enough money to satisfy all conceivable wants. So, she allocates just enough money to get just enough bread for two toasts in the morning, four sanwiches at noon and two in the afternoon.
She then allocates the remaining money this way. She gets enough milk for the baby’s needs completely, enough for one glass each for the school-age children after school, a tiny bit for her husband’s coffee, none for the cat because the cat is going to get the leftovers from a fish dinner, and defers making the pudding until she has more money at her disposal.
Mother can solve the “Mother’s Dilemma” because she knows exactly what every need is, and knows how to allocate in a way that satisfies needs, though not necessarily all wants.
Government is inherently incapable of solving it because it knows nothing about her, her baby, her school-age children, her husband or her cat, and has no idea how to allocate what each really needs. But when it attempts to do so, it hires numerous bureaucrats to distribute; too much here, too little there, it subsidizes milk to ensure a sufficient supply and to please dairy farmers besides, then ends up turning it into cheese that sits in storage for years because nobody wants it, subsidizes wheat that nobody wants, then sells it below cost to some third world country whose farmers go broke because they can’t compete. It dumps some of the cheese into school lunch programs in order to get rid of it somehow. The schools try to use it up by putting it in everything, then people get angry because the children are getting obese. And the government spends astronomical amounts of money doing those things, wasting a great deal of it, whereas Mother spends exactly the proper amount.
There is a formulation that I like. It goes like this: Income from labor + Income from property=Consumption + Transfer payments. Consumption for a lot of people is only somewhat elastic. Transfer payments preferred by most people are those which they transfer themselves; to children, to spouse, to charity, to Church. And when individuals decide on their own Transfer payments, they do so in a far more p(name removed by moderator)ointed (and useful) way than does government.
When government takes more and more of Transferrable income, it makes it ever harder for even Mother to solve the “Mother’s Dilemma”, notwithstanding that she’s better at it than the government is. At some point, the government decides that Mother can no longer solve it, takes more of the family’s Transferrable income, spends it on bureaucrats and political allies as well as on the needed resources, and warps the situation even more.
