The Cato Institute’s David Boaz looks at the Hewlett Packard split up and asks what HP shareholders know that the American bureaucrats apparently do not about when big becomes just too big.
One reason that government grows too big is what Milton and Rose Friedman called “the tyranny of the status quo.” That is, when a new government program is proposed, it’s often the subject of heated debate. (At least if we’re talking about big programs, such as farm subsidies or Medicare. Plenty of smaller programs get slipped into the budget with little or no debate, and some of them get pretty big after a few years. “Emergency” measures, such as the Patriot Act of 2001 and the 2009 stimulus bill, may pass with little real deliberation.) Once it has passed, debate over the program virtually ceases.
After that, Congress just considers every year how much to increase its budget. There’s no longer any debate about whether the program should exist. Reforms like zero-based budgeting and sunset laws are supposed to counter this problem, but they haven’t had much effect.
When the federal government moved to shut down the Civil Aeronautics Board in 1979, it found that there were no guidelines for terminating a government agency. It just never happens. President Clinton’s “reinventing government” project said, “The federal government seems unable to abandon the obsolete. It knows how to add, but not to subtract.” You could search any president’s budget for a long time and not find a proposal to eliminate a program.
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