Great Moments in State Government

Why is the private sector efficient and the government inefficient?

I answered that question back in 2017, noting that there is feedback (both positive and negative) in the private sector. With government, by contrast, it seems that there are no consequences of any kind.

…people in the private sector make mistakes (most new business ventures ultimately fail, for instance), but I explain that’s part of a dynamic process in a market economy. Every success and every mistake leads to feedback, both via the price system and also via profits and losses. All of which leads to continuous changes as people – especially entrepreneurs – seek to better serve the needs and wants of consumers, since that’s how they can increase their income and wealth. In other words, Adam Smith was right when he said that self interest encourages people to focus on making others better off. By contrast, when politicians and bureaucrats allocate resources (either directly via spending programs, or indirectly via regulation or tax distortions), feedback mechanisms are very weak. Once politicians intervene, they never seem to care if they are generating positive results.

Today, let’s look at an example of this phenomenon.

It comes from New York, where the state government recently tossed $100 million in a toilet.

Here are some jaw-dropping details from a report by Greg Floyd of Albany’s CBS affiliate.

More than $100 million was spent on specialty lighting intended to illuminate New York State bridges, but the lights were never used and have been sitting in storage for two years. The New York Power Authority purchased the lighting equipment and design plans under former Governor Andrew Cuomo… However, the lights remained in cardboard boxes inside a warehouse, costing taxpayers an additional $2.1 million in storage fees over seven years. In late June, the state attempted to recoup some of the costs by auctioning off the lights. Despite the initial $100 million investment, the auction yielded only $383,000. Taxpayers are left to bear the financial burden of the unused lighting project.

This absurd bit of government inefficiency motivated a talk radio host to post a tweet summarizing what happened.

Except he’s being too nice.

The government didn’t squander merely $99.6 million. You also need to add the $2.1 million in storage costs.

So the total loss is $101.7 million.

Returning to the point I raised at the start of today’s column, I can’t help but ask if anyone lost their job because of this horrific example of waste?

Andrew Cuomo was forced to resign, but because of sexual harassment rather than taxpayer harassment. So that doesn’t count.

But what about the political appointees and bureaucrats who were involved with this boondoggle? Did any of them suffer any adverse consequences?

Given the no-consequences track record of government, I’m doubtful.

P.S. I feel sorry for the voters of New York City. Their main choices for Mayor are the profligate Andrew Cuomo, the corrupt Eric Adams, and the lunatic Bolshevik Zohran Mamdani.

P.P.S. For other examples of inane policy at the state level, click here.

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Image credit: Fred Hsu | CC BY-SA 4.0.