Knock the halos off government services

The one sure way to ensure that an initiative gets funding from a state government is to keep it popular. Politicians and people are in control of fiscal policy do what they can to reflect popular preferences. But it turns out that the most popular government services also tend to be the most mismanaged.

There is a simple mechanism at work here. The public has a favorable impression of a government program and puts a halo around it. This protects the service from budget cuts and encourages greater taxpayer spending on it. 

This would be a virtuous cycle if it led to better services, but the greater inputs don’t result in higher quality outputs. The increased spending instead is simply captured as a perk to the service providers.

The prime example of this phenomenon are public schools. Each additional resource poured into public education benefits the adults who work in them far more than the students. More money — which has been a trend for generations — doesn’t automatically lead to better outcomes. It would be nice if it did, but spending just isn’t connected that closely with how much students learn.

Yet the halo around your local school remains firm and districts get more money, year after year, without having to show much in return. Indeed, school interests are careful to frame most discussions about education around “resources,” constantly reminding us that education is really important and taxpayers should spend more on it. The effectiveness of the spending is rarely questioned. And school interest groups divide people into two camps: those who “support public education” and want to give it more money and those who “oppose public education” by daring to question whether spending more on schools is a good idea.

This halo effect exists for other government services. In the military, service members tend to love their jobs, but think it’s a terribly misrun enterprise. Police and fire services share similar protections. Police pension funds owe billions of dollars more than what has been saved and public sympathy shields police departments from real accountability for their performance. And despite that buildings are safer these days — the U.S. is around record lows for structural fires even though we keep building more buildings — the costs to fight fires keep going up. People even volunteer to fight fires, and are good at doing so, yet many taxpayers end up paying for an expensive full-time fire service staff anyway. 

Not all services enjoy a halo, however. Consider waste management. We’d live much less happy and healthy lives without it, and modern waste management services prevent a lot of the spillover problems from the past. Where governments provide it, waste control tends to be done effectively. Perhaps this is because waste management is not provided as a monopoly service — not every local government offers it and many governments contract the service out to private companies. 

Indeed, competition for public services is a way to force the government to consider the outcomes of a service. If public managers can save money by contracting out the service, taxpayers will be better off. Either their tax dollars will stretch further or they’ll be able to keep more of their own money. 

Contracting out public services is not the full answer on how to get effective government services, however. Corrupt public officials can rig bids, sell work and practice other malfeasance that isn’t in the public interest. Just because contractors can theoretically provide competitive pressure doesn’t mean that contracting out will provide it.

To get better government services, people need to change what their sympathy for government services means. People should value the outputs from government services, rather than the inputs, and if they really care about the services being provided, then they should be the first to push for reforms. If the service is important, after all, then it is important to do it well and how it is done should be constantly scrutinized. 

Those who only focus only on government resources assume there’s an efficient machine operating out there and it just needs more inputs to produce better outputs. Those interested in effective government want people to take a step back and analyze the cost and benefit of all services, even ones with large halos hovering over them. 

Adjusting this mindset on a large scale will not be easy. There is a lot of interest in keeping the same old ways. Political systems only change when enough people want them to change. When citizens want a more effective government, politicians will respond and deliver it to them. 

James M. Hohman is director of fiscal policy at Mackinac Center for Public Policy, a research and educational institute located in Midland, Mich. Follow him on Twitter @JamesHohman.