I’m constantly amazed by the willingness of politicians to spend trillions of dollars of taxpayer money on any given problem, without regard for less expensive solutions.
Even after spending trillions on multiple rounds of COVID stimulus, the Biden Administration is now proposing a $3 trillion federal infrastructure package to promote “long-term economic growth.” However, the administration plans to pay for most of this package by taxing economic growth via corporate income.
Things aren’t any different closer to home. While many areas of Montana suffer from an affordable housing crisis, some local governments are implementing an “affordable housing tax” in order to pay for low-income housing subsidies.
Raising taxes on something, making it more expensive, only to then spend taxpayer money helping people afford it seems counterproductive verging on downright wasteful.
Policy decisions like this often arise from the assumption only the government can solve the big economic and social problems we face.
I fundamentally disagree with that assumption. Not only is it impossible for government to solve every problem, entrepreneurs can deliver solutions better and cheaper than bureaucrats ever could.
In my past job advising Montana’s Insurance Commissioner, we constantly had lobbyists approach us asking for the state government to use policy to fix something their clients viewed as a problem. Frequently, the policy solution they proposed was either issuing more restrictions on private business or spending more money on government programs – paid for by tax dollars of course.
I developed the following matrix to guide the agency’s policy decisions as a government regulator. We worked through each of these questions when presented with a genuine problem:
1. Is the private market solving this problem on its own?
2. If not, are there state-level policies that stand in the way of a private market solution?
3. If not, are there federal-level policies that stand in the way of a private market solution?
4. If not, what sort of government action will best promote a private market solution?
After working through this matrix, our agency often found the biggest barrier to solving any given problem was the government itself — whether it be excessive regulations, bureaucratic inefficiency or something else.
Correcting government barriers should be job number one of regulators. Repealing unnecessary regulations or creating better processes to administer programs more efficiently can lead to incredible positive impacts on people’s lives, and often costs nothing but a little political courage and effective leadership.
The COVID pandemic has shown us how well this mindset can work. While the effectiveness of trillion-dollar stimulus has been hotly debated, some of the most objectively successful actions taken to respond to the pandemic have been when governments waived regulations.
For example, emergency regulatory flexibilities have allowed thousands of Montanans to benefit from telehealth for the first time in the last year. This deregulatory action was so well received the Montana Legislature recently voted unanimously on a bill to make those changes permanent. Implementing these regulatory flexibilities cost taxpayers nothing, but gave thousands a more safe and convenient option to access healthcare.
What other big problems could be solved if our governments focused on correcting their own inadequacies before jumping at the chance to dip into taxpayer’s wallets?
By focusing on enabling citizens to control their lives, governments will provide the maximum freedom for innovators, disruptors and entrepreneurs to do what they do best and solve society’s problems.
Politicians should turn to taxpayers last, not first.