Does Government Have The Right Incentive?

Professor David Henderson writes,

``what so few advocates of government intervention even try to show us, is how a government regulator will have the right incentive to do the right thing. Will the government regulator be fired if he screws up? Not typically. Will he get a huge bonus if he does something right? Not typically. And how, with a centralized information system, will he get the information needed to make a good decision...”

Exactly.

This is in contrast to the conventional or popular expectation where political entities function as supposed saviours of mankind. Or that once people get ushered into public office, they are elevated or transformed into entities who assume omniscience and superhuman virtues. Or as Professor Henderson points out, government is expected to play the role of Deux ex Machina.

But as we keep pointing out regulators, bureaucrats, or politicos are merely human beings. They are all influenced by the knowledge problem, stakeholder’s dilemma, time consistency, cognitive bias, perceptional variance, networks, personal values and others, all of which adds up to what shapes their priorities.

With markets people are driven by mainly profit and loss incentives. How about politics? Isn’t the incentives all about power over the others? So how does power over the others or political become a better alternative in solving social and distributional problems relative to the market?