Milky Eggs

Beware of Gell-Mann amnesia about government quality

Many people are amateur experts in some specific domain of government regulation, such as land use zoning or immigration law, which they know for sure is horribly inefficient and profoundly harmful to the nation. However, they often fail to appropriately generalize these observations to the quality of political governance at large: a form of Gell-Mann amnesia applied to the quality of our rulers.

Land use policy is obviously atrocious

Let’s consider the nascent Yes In My Backyard (YIMBY) movement in America, which has popped up in the last 10-15 years in response to housing shortages caused by a decades-long underbuilding of housing, which itself is perpetuated through the enforcement of strict zoning laws that prevent urban densification. This is quite clearly very harmful; for example, estimates by Hsieh and Moretti show that the GDP of California would be nearly 40% higher by the end of the 2010s in the absence of exclusionary zoning policies! (My sincere apologies to non-American readers; the examples here will largely be ones drawn from my own fields of relative expertise!)

This is a huge effect and YIMBYs are right to see this as an outrageous act of self-sabotage. If you were installed as CEO of a large company and went around reviewing performance division-by-division, this would be grounds for simply terminating the entire division on the spot. Arguably, the numbers enormously understate the potential benefits; while economic growth is nice, living in safe, walkable, transit-friendly cities is enjoyable in a way that is hard to quantify. Why else do Asian cities like Tokyo and Taipei hold so much sway over Western visitors all while boasting much lower GDPs per capita?

Notice, however, that it’s particularly easy to understand the effect of poor regulation here for several reasons:

• We all pay for housing, in one way or another
• The negative effects of restrictive zoning have compounded for many decades
• It’s easy to immediately see the difference better policies would make when we visit Tokyo, Taipei, Seoul, Shanghai, etc.
• Land is an intrinsically scarce resource and land use restrictions have particularly far-reaching effects across multiple industries

We all understand that in this one domain, the quality of government is downright atrocious. Let’s set aside the question of why and how it came to be this wayーof course, our democracy is “of the people, by the people, for the people,” and it’s not as though government policies arise in a vacuum. There are specific reasons one might hypothesize to be responsible for this end outcome, such as poor voter quality, excessive weight given to hyper-local governance, intrinsic failures of democratic mechanisms, and so on. Regardless of what choice of root causes one prefers to believe in, however, it is undeniable that the actual end outcome is very poor: we have ended up with inept bureaucrats handcrafting thousands of Byzantine rules that stifle the natural growth and development of America’s urban environments.

The rest of government policy is just as bad

I want to advance a modest proposal: this dismal level of governmental quality is not limited to land use regulations. It is, instead, characteristic of government at large.

Psychologically, it’s very easy to treat each and every individual instance of governmental failure as an isolated incident, while still possessing some baseline level of trust in the essential competence of the system as a whole. As the whole is inherently composed of its constituent systems, however, one can only take such optimistic reasoning so far.

Housing policy is, of course, one of the most easily understandable forms of policy failure. If we look in other domains, how easy is it for us to identify failures of comparable severity? Here, I mean severity as an assessment of the overall competence of the actors involved and the quality of the regulatory regime, rather than the absolute impact of government intervention in that domain. If we were to consider only absolute impacts, after all, we expect noticeable, “big-ticket” items like housing policy to dominate; however, we would like to argue here that even in domains with less absolute importance, the relative quality of governance is no better.

In any case, if our hypothesis is true, there should be plenty of low-quality governance to go around, should we merely decide to actually look for it:

• Immigration: Recent waves of tech layoffs have reminded us that we force H-1B visa holdersーeducated, high-skill workers who actively want to be part of American societyーto find new jobs within 60 days or leave the country. Even on top of very low quotas for high-skill immigration in the first place, this policy is manifestly absurd!
• Energy: The United States actively turns off its own nuclear reactors well before the end of their natural lifespan. Turning them back on is very expensive, so this is purely an act of self-sabotage.
• Public health: The distribution of the COVID-19 vaccine was subject to innumerable acts of bureaucratic meddling, prioritization of interest groups, and a state of general, unfocused ineptitude. This is despite many decades of preparation for exactly such a scenario!
• Occupational licensing: The imposition of arbitrary, jurisdiction-by-jurisdiction, and typically nontransferable occupational licensing schemes has been estimated to reduce labor supply by over 20% and to impose annual costs of $200 billion upon the American economy. To put that in context, this is about 1% of American annual GDP, which is a huge effect given that it is typically considered “good” for the GDP of a developed economy to grow at a rate of 3% per year.

…and so on and so forth.

Notably, I’ve tried to not cherry-pick examples of niche, arcane, out-of-the-way instances of government incompetence. Instead, these can all be argued to be related to the core purposes of those departments. Ensuring the inflow of high-skilled labor is perhaps the most important function of the entire national immigration apparatus, especially in an era of declining birthrates. The provisioning of cheap and reliable energy is the fundamental raison d’être of the national electrical grid, and the failure to adequately tap into nuclear plants as an abundance source of that energy is one of the greatest missteps of the last several decades. We devote millions of dollars and thousands of personnel to the task of “pandemic prevention and response,” but when one happens, the entire process is transparently co-opted by competing groups to advance their own interests. Licensure, permitting, and other forms of “red tape” are, pure and simple, forms of state capture by interest groups working against the interests of the peopleーexactly the sort of accrual of rot that any effective process of governance is supposed to avoid.

I don’t mean to belabor the point too much. It is not difficult to extend this list down as far as one wants, if one is willing to put in the necessary effort. Notice, though, how the examples that most naturally come to mind are ones that are readily comprehensible by the ordinary man, because they damage our daily lives in ways that are, if not immediately perceptible, then at least imaginable. It is not too much of a stretch to say that these are outcomes more characteristic of a failed state, plodding by on its last legs, than of a sensible process of governance overseen by intelligent adults working toward a common goal.

The state of affairs is probably very dismal indeed

These considerations lead us to a very natural question: why do we expect the other, less visible, parts of the American government, whether federal, state, or local, to be any better?

I imagine that most readers of this post will think to themselves: “Well, I don’t have an amazing opinion of government of general. Aren’t you assuming that my view of the government is more favorable than it is?” Perhaps you may in fact have some general sentiment against “red tape” or “excessive bureaucracy” (note that these are terms that are definitionally undesirable!). But do you view, say, the FDA, the Department of Education, or the USPTO as verging on being criminally incompetent with the same vitriol that you rage against NIMBY policies online? I suspect not.

That is the crux of my argument. If you look closely enough at any particular function of the government and with enough domain-level expertise, the flaws in that particular domain are incredibly obvious! But we do not extrapolate this fully to the rest of government. Even if we might have generally pessimistic views about the quality of American governance as a whole, we assume that the parts that catch our attention are uniquely worse than others, an assumption which appears generally unsubstantiated.

This is analogous to the phenomenon known as Gell-Mann amnesia:

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

Ultimately, there are hundreds upon hundreds of government agencies that exist, but any given person is only aware of the existence of a small handful of them. It is pleasant, therefore, to imagine that most of this colossal apparatus functions in a “more or less reasonable manner.” Does it, though? Sure, I might not be able to enumerate every single flaw of Federal Agency #9,203 to exhaustive detail, but I certainly don’t see how the incentive structure is any better in the less visible parts of American governance!

To be sure, American civilization has not collapsed. But one could say the same of housing and land use policies! There are only some homeless people; most Americans ultimately find jobs somewhere and manage to pay rent; besides, aren’t Europeans struggling with the same problems? Sure, perhaps our GDP could have counterfactually been much higher than it is now… but it’s not like our cities have literally collapsed.

Well… okay, maybe that wasn’t the best example. Nevertheless, “we have not yet reached a point of irreversible civilizational collapse” is not a very high bar. There is a great deal of room for incompetence, malice, and abject failure that we can bear without actually having the entire nation blow up!

Closing thoughts

By default, we should assume that any given function of government is grossly mismanaged in the absence of direct evidence to the contrary. I don’t just mean “inefficiently run” or “somewhat poorly setup” but, in fact, a level of misconduct that would warrant immediate termination in even the most bloated corporations.

When interacting with government bureaucracies, therefore, we should not assume good will upon their part. Instead, the default assumption should be that you are interacting with the organ of an adversarial, even arguably anti-human behemoth. (There is only one exception that readily comes to mind, namely, all the random forest rangers that staff outposts in our national parks and forests… I suspect there is a strong selection effect there in terms of who actually chooses to take up those posts!)