All Commentary
Monday, January 1, 2001

Book Review ~ Governments End: Why Washington Stopped Working by Jonathan Rauch

Public Affairs • 1999 • 295 pages • $12.00

Jonathan Rauch is among the keenest observers of government in the United States. By “government’s end” he means that “government has become what it is and will remain: a large, incoherent, often incomprehensible mass that is solicitous of its clients but impervious to any broad, coherent program of reform.” To put it bluntly, big government is here to stay with all its taxes, bloated budgets, and intrusive regulations.

There is much evidence of this. Consider what Rauch calls “poor followership.” We citizens demand more benefits from the government without showing any sign of moderation. We fail to understand Frederic Bastiat’s characterization of government as “that great fictitious entity by which everyone seeks to live at the expense of everyone else.” Our penchant for government benefits is also rational. Even though we’d all be better off giving up our favorite programs, why should you give up yours without knowing whether I’ll give up mine and vice versa?

The bad news is that there is no cure. The good news is that we’ll live anyway. Rauch manages to say that “the end of government will not, I think, be a sad time.” The impetus of this book follows from the late Mancur Olson’s idea that special-interest groups and transfer activity will stifle economic progress and government. Rauch’s contribution is to thoroughly investigate the latter possibility. He states: “This book is about the side effects of the postwar style of politics, a style that emphasizes interest-group activism and redistributive programs.” These side effects relate to the transfer economy and “demosclerosis.”

An individual can get rich through either productive activity or transfer activity. What do we give up to the extent that many of us legally steal from one another? We give up dollars to pay lobbyists, lawyers, and politicians—the agents of the transfer economy, if you will. We pay for defense lawyers and insurance policies that protect us from legal theft. And we go without the goods that would have been produced in the absence of subsidies. For instance, the government can only encourage a favored industry like sugar with subsidies by taxing some other activity like communications. We get more sugar but fewer communication services.

Economists figure that these three types of costs amount to 5-12 percent of the nation’s output. Transfer-seeking, in Rauch’s view, poses a greater threat to government than the economy. He states: “‘Demosclerosis’—government’s progressive loss of the ability to adapt—is a gradual but continuing process.” Among the implications are that existing government programs are difficult to modify, let alone terminate, and that trial and error in public policymaking becomes impossible.

Actually, Rauch identified demosclerosis earlier and made it the title of a 1994 book. “In this revised version,” he explains, “I’ve taken the opportunity to think about the lessons of the failed reforms, about the possible routes to better success, and about ways in which the country can develop a more productive and less pathological relationship with its government.”

The author is pessimistic about “fixing the process” by restricting lobbying, imposing term limits, or reforming campaign finance. He sees more promise in decentralizing and terminating government programs, deregulating the economy, and further opening the U.S. economy to international trade. At this point the reader will notice a paradox. “Just how are we supposed to use competition to weaken lobbies,” Rauch admits, “when the whole problem is that lobbies are blocking competition?”

The answer is that each of us as individuals must recognize his own complicity in the transfer economy and demosclerosis. Rauch frames the question this way: “Who finances and sustains the parasite economy?” His answer is: “Look in the mirror.” Government’s End is indeed an excellent lesson in public-choice economics, history, and civics.

Philip Murray is a professor of economics at Webber College in Babson Park, Florida.