Why Aren't Government Employees Worse? By Bryan Caplan

I first read Murray Rothbard when I was seventeen years old, and suddenly my whole high school made sense. Lazy teachers, guys with college degrees teaching gym, required drama classes, and lies, lies, lies everywhere. Mr. Libertarian had a compelling explanation:

On the free market, in short, the consumer is king, and any business firm that wants to make profits and avoid losses tries its best to serve the consumer as efficiently and at as low a cost as possible. In a government operation, in contrast, everything changes. Inherent in all government operation is a grave and fatal split between service and payment, between the providing of a service and the payment for receiving it. The government bureau does not get its income as does the private firm, from serving the consumer well or from consumer purchases of its products exceeding its costs of operation. No, the government bureau acquires its income from mulcting the long-suffering taxpayer. Its operations therefore become inefficient, and costs zoom, since government bureaus need not worry about losses or bankruptcy; they can make up their losses by additional extractions from the public till. Furthermore, the consumer, instead of being courted and wooed for his favor, becomes a mere annoyance to the government someone who is “wasting” the government’s scarce resources. In government operations, the consumer is treated like an unwelcome intruder, an interference in the quiet enjoyment by the bureaucrat of his steady income.

In the two decades since I read those words, I’ve seen them confirmed again and again. And yet… I’ve also noticed counter-examples – government employees who actually try to do a good job. Indeed, I am a counter-example. There’s no financial reason for me to prepare written lecture notes for all of my classes. Yet prepare them I do. What’s going on?

Hypothesis #1: Government employees’ financial rewards for performance are better than Rothbard described.

Evaluation: There are clearly some grunt-level government jobs where you’ll get fired if you don’t perform. A municipal garbageman who gets high instead of picking up the trash may get more chances than a privately-employed garbageman, but he’s still on a pretty short leash. But (a) most government jobs aren’t like this, and (b) the grunts only need to worry about good performance if their supervisors do – and their supervisors have pretty weak incentives to do so.

Hypothesis #2: Elected politicians at the top of the pyramid send good incentives all the way down to the base because they’re worried about re-election.

Evaluation: While voters could give elected officials reasons to behave in this way, they almost never do.

Hypothesis #3: Government employees self-select for dedication and/or caring.

Evaluation: I’m ideologically tempted to guffaw, but this is definitely important in some government enterprises. Not at the Social Security Office or the DMV, that’s for sure. But I’ve often seen this in education. In pleasant suburban elementary schools, for example, teachers are more likely to be hyper than lazy. And at risk of sounding self-serving, when I put extra effort into my lectures, it’s primarily because I care about economic education.

The key complication: Figuring out when this self-selection mechanism works. In my high school, perhaps a third of the teachers took pride in their work. The rest seemed to just be punching the clock. Were they always that way? Or did time just wear them down? I still don’t know.

Hypothesis #4: Government employees want to look good in front of their co-workers.

This is more of a complement for #3 than a substitute. But again, it’s plausible. I don’t want to become deadwood; but if I did, the shame I would feel before my colleagues would deter me. Even at the Post Office, I’ve seen employees show off their superior postal skills in front of their co-workers. It seemed to make them feel good about themselves.

Once again, there’s a key complication: When does doing a good job lead to the admiration of your peers? And when does it lead to derision for being a sap? There are clearly multiple equilibria: Police departments where your peers despise you for taking bribes, and others where they despise you for not taking bribes – or worse yet, “ratting” on an officer who does.

Finally, it’s worth pointing out that the goodness of dedication/caring depends on the goodness of the task being performed. It’s far better for Communist secret policemen to be lazy and corrupt than zealous and pure – and the same goes government employees who enforce U.S. immigration laws.