27 3.4 – GOVERNMENT FAILURES

5. GOVERNMENT FAILURES

Government failures occur when a government does not leave society better off, particularly in the context of correcting market failures. Gupta (2011; see also Weimer and Vining, 2017) provides ten reasons for government failure:

1. Inability to Define Social Welfare
2. Limits of Democracy and the Paradox of Voting
3. Inability to Define the Marginal Costs and Benefits of Public Goods
4. Political Constraints
5. Cultural Constraints
6. Institutional Constraints
7. Legal Constraints
8. Knowledge Constraints
9. Analytical Constraints
10. Timing of Policies

Government failure that stems from an inability to define social welfare typically occurs due to the ambiguity of the term “social welfare.” As we will discuss later, ambiguous terms are hard to analyze due to their multiple, and often personal, meanings. As such, there is no sufficient way to intervene in market failures that center around needs that cannot be clearly articulated.

Second, democracy hinders government intervention because of the unpredict- able nature of voters and those who have agenda-setting power. The paradox of voting brings into question the common assumption that voting outcomes reflect the “will of the people” (Weimer & Vining, 2017). Instead, if a voter’s first choice candidate has little chance of getting a majority of the votes, as is the case with 3^rd party candidates, the voter may find it advantageous to vote for a less preferred but more viable candidate instead of “wasting” their vote on a candidate with little chance of winning. This scenario results in the election of a candidate who many not reflect the true policy preferences of the people.

A third reason government intervention is limited comes from the inability to adequately calculate marginal costs and benefits due to the nature of public goods. For example, public roads and highways certainly provide benefits, but how can their costs be adequately measured? The costs associated with hiring contractors can be accounted for, but the impact on drivers having to detour during construction or any environmental effects are less clear. Similarly, benefits cannot be sufficiently measured. The new road may reduce congestion and traffic accidents which could lead to improved motorist well-being, but well-being is not quantifiable.

The next set of reasons listed by Gupta are a series of constraints: political, cultural, institutional, legal, knowledge-based, and analytical. Political constraints refer to the inability to enact new policy due to the unwillingness of politicians. Policies can be proposed that may be effective at correcting a market failure, but without enough support from political actors, the proposal becomes a moot point. Similarly, cultural constraints exist when members of the affected community do not buy in to the proposed policy. Elected officials may not be willing to risk political capital to pass a policy if it could affect their reelection prospects. Therefore, regardless of their certainty in the proposal’s ability at correcting the market, they may deem it as not in their best interest to support that policy.

Institutional and legal constraints refer to the structure of those implementing policy (see chapter 6). These restraints refer to the policy maker and implementers working within a specific legal framework. For example, the gun control debate is a major policy issue in the U.S., and the argument for or against gun control largely depends on how one interprets the Second Amendment. The Constitution is the legal framework which policy makers must consider before enacting, or refusing to enact, gun control. Knowledge constraints arise when the evidence related to a policy proposal is speculative at best. For example, a state deciding to legalize marijuana before another state must rely on projection models to determine if the costs outweigh the benefits, which, as discussed above, is hard to adequately define. However, once one state implements the policy, it opens the door for other states to follow the example it provides. Policymakers will have more evidence on policy success as more states enact the policy. The last constraint, analytical constraints, occur when policy justification relies heavily on quantitative analysis. The analytics are generally computed in the proposal or implementation stage and would need to be replicated in the analysis stage to determine if the original analysis was conducted objectively, for example, determining that the policymaker did not shape the results to increase favor for the proposed policy.

Lastly, the final reason provided by Gupta is the timing of policies. According to Gupta, four issues relating to the timing of policies constrain policymakers: recognition gap, prescription lag, adoption lag, and implementation lag. Policymakers must look at trends and predict changes well before they occur to prevent the policy from being enacted too late. However, it is nearly impossible to predict issues that arise which might affect the social welfare of society; therefore, the issue may not be recognized in time to address the problem. Prescription, adoption, and implementation lags refer to the time constraints from issue recognition to program implementation. Each stage, including proposal, adoption, and implementation, moves slowly, thus further hindering policymakers from correcting failures even if the problem is recognized early.