Getting Wasted - The American Spectator | USA News and Politics
Getting Wasted

FiveThirtyEight’s Tom Schaller is shocked to find that, according to a ABC/Washington Post poll, Americans believe on average that 53 cents of every government dollar is “wasted.” This result, it turns out, is fairly constant across years and administrations.

Schaller thinks that ignorance is largely to blame for this response. Nevertheless, he tries to understand what the poll respondents are thinking, and comes up with three possible ways that people believe government spending is wasted:

1. Ineffective spending: Spending on programs that do not work;

2. Inefficient spending: Excessive spending or overhead/overpayment on programs that do work; and/or

3. Inappropriate spending: Efficient and effective spending on programs that the respondents normatively view as something the government shouldn’t be involved with in the first place.

To these subcategories I would add deadweight loss: the government creates deadweight loss taxing and subsidizing non-public goods, i.e. coming and going. I think that most people have a pretty good intuition of deadweight losses. Add these three together and I wouldn’t be surprised if the true underlying value of goverment “waste” was over 50 percent.

But if you expand on Schaller’s point 3, it’s easy to see how poll respondents could assign even higher values to government waste. If you define government waste as the opportunity costs of governement revenue minus goverment benefits, the perceived levels of waste should go way up.

To give some examples, there isn’t a good alternative to government spending on public goods like law enforcement, so people see some decent amount of negative government waste there. Big Corn subsidies, however, most people see as taking up money that could be spent on much better activities, so they consider those subsidies somewhat wasteful even if the money gets to Big Corn very efficiently. Lastly, if you’re a pacifist, the trillions spent on wars have a huge opportunity cost: wars have an immense negative value even if they’re very well run, and there are plenty of other activities that have positive values. Those huge negative gains could negate a lot of other efficient government spending very easily.

Obviously that example is generalizable. Add to that Schaller’s points 1 and 2, and the result is that it’s not surprising that most people think government is wasteful.

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