Sowell and the fundamental issue of public policy

In an interesting interview, Thomas Sowell quickly and concisely frames the absolutely key question for public policy.

I notice that many liberals are prone to making a certain leap. Here's how it goes. Step one: there's something wrong in the world. Step two: the government ought to be doing something. Have you figured out where the tendency to make that leap comes from?

No, I have not. What they notice is what in economics is called market failure. The market has failed in this or that way. And therefore -- the great non sequitur -- the government should step in. I like to say, if Mark McGwire strikes out, do we send in a pinch hitter the next time he comes to bat? Or do we ask the question, what if the pinch hitter should strike out? And: is the pinch hitter as likely as McGwire to hit a home run?

Many liberals seem to have great faith in government, and to see it as superior to any other agency. Have you got that puzzled out?

The government that they conceive is the ideal government. And it's true that the ideal government will do things better than the actual marketplace. It's also true that the ideal marketplace will do things better than the actual government. I think it should be a question of comparing the two actuals. What is the actual government likely to do, compared with what is the actual marketplace likely to do?

The fact is that its much tougher for the government to do many things. It's not just that you have bad people, although sometimes you do. But even if the government were staffed wholly with honest and dedicated people there would be many things they couldn't do well. Because the very circumstances in which they're operating make it almost impossible for them to do those things well.

Because of the incentive structure in government?

Not only because of the incentive structure, but because of the knowledge structure.

(Link via 2Blowhards.)