Imposing Market Discipline on Government

Imposing Market Discipline on Government

Capitalism is prolific, and it generates both good and bad products. But there's a reason almost nobody drives an Edsel, listens to a Zune, or sips New Coke today: Capitalism tends to shut down bad product lines and replace them with good ones.

And that's where the private and public sectors diverge. Government, too, generates plenty of products, and many of them don't work as advertised. Yet when Congress creates a new program, it almost always leaves the old ones operating as well.

Consider the (at least) 47 federal government programs aimed at training workers. Most, if not all of them, should be shut down, because they're a waste of taxpayer money -- $18 billion in fiscal year 2009.

"Federal job training programs targeting youth and young adults have been found to be extraordinarily ineffective," the Heritage Foundation's David Muhlhausen writes. "The simple fact is that when it comes to federal job training programs, there is a dearth of evidence suggesting that these programs work.

The government itself agrees. "Only 5 of the 47 programs have had impact studies that assess whether the program is responsible for improved employment outcomes," the Government Accounting Office has written. "The five impact studies generally found that the effects of participation were not consistent across programs, with only some demonstrating positive impacts that tended to be small, inconclusive, or restricted to short-term impacts.

As Wall Street Journal columnist Holman Jenkins put it last year, "In business, you cut your losses quickly. In politics you cling to your blunders and deny they are blunders." The solution is to impose a little private-sector creativity on government programs.

Companies cut their losses because for them, failed programs are just that: failures -- financial losses. But lawmakers are spending our money, not their own. And the government doesn't go out of business. So there's little reason to eliminate individual programs, even if they're a waste of resources.

Perhaps the best way to approach the problem would be to use the economy of scale. Set up a commission and have it propose a bill to shut down many programs at once. It could be modeled on the successful Base Realignment and Closings commissions that shuttered unnecessary military bases.

A domestic BRAC could address scores of federal programs. Congress would vote on whether to close them all, all at once. This would allow lawmakers to point to big savings -- $18 billion is real money, even in D.C. -- that could be obtained with just one vote. It would also reduce the incentive for each lawmaker to fight for the one program that happens to reside in his district.

If it's not immediately eliminated, job training could at least be consolidated and made subject to federalism. The proposed SKILLS Act would combine some 35 federal job-training programs under one umbrella. It would also transfer control of the funding to the states. This would have the benefit of allowing each state to experiment and find out what (if anything) works. The bill would also require the federal government to get rid of the workers who currently administer job-training programs, thus saving more taxpayer money.

The people wasting their time in ineffective training programs are the very people who need help. That's a key reason job training should be left up to the private sector, which needs the workers.

Government will never be as efficient as the private sector, and will never be as adept at picking winners and losers. Imposing some market discipline on the government, though, would be a positive step.

Rich Tucker is a senior writer in the B. Kenneth Simon Center for Principles and Politics at the Heritage Foundation.

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