Contrary to the view of many, our government does many things very well. When I am on an airplane flying across the country and can see neither land nor sky because of clouds, I am very comforted in the knowledge that a government air controller is guiding the plane to our destination. This and thousands of other services we often take for granted. And yet they make our lives safer, healthier and even more prosperous. It is a great blessing, but even the government takes actions that often cause unintended results. A few examples–some minor, others more significant–will illustrate the point.
For most of its existence Social Security provided a death benefit of $255.
Funeral homes routinely filed for this benefit as part of their services. A few years back the decision was made to eliminate this payment. The small amount of the benefit did not amount to much in the economy at the time and it seemed a prudent way to save a few dollars for the system. The unintended result: funeral homes no longer notified the Social Security system of the death of one of its participants, resulting in payments continuing to be paid into checking accounts. Confused spouses did not realize checks should have been stopped and payments continued for long periods and much of it unrecoverable. The result: eliminating the benefit cost more than continuing it. By now there hopefully is a back-up system to avoid this.
A more recent example comes to mind. Several months ago the much maligned AIG organization scheduled a conference here at a local resort. The local media got wind of it and in the light of AIG’s financial dilemma deemed it an inappropriate function and crucified the company in print, radio, and TV. Never mind that the meeting was being paid for mostly by outside vendors and that the program was an incentive for increased productivity, a practice deemed necessary for many businesses. The result: the meeting was cut short and 18 other conventions in our area were cancelled by other companies fearing similar criticism. Hundreds of hotel workers lost jobs, sales tax revenues fell, hurting the city, and hotel vacancy rose at the busiest time of the year. After the media expos?, politicians jumped on the bandwagon, spreading the malaise to other convention cities with further negative consequences.
The whole episode reminded me of the effort by then president Jimmy Carter to stamp out the 3-martini business lunch. It got a lot of traction until one of his closest advisors advised him that “the business lunch is to businessmen as fertilizer is to a peanut farmer.” Thus ended the flap.