Only $2.99/month


Terms in this set (66)

Government, which has a lock on the delivery of a wide range of services, is not only a monopoly, but a particularly effective form of monopoly:

Government cannot go out of business. Every citizen of the United States, like it or not, is a customer for government services-and a new customer is born every eight seconds. Poorer Americans, especially, are customers for government services and cannot afford to go elsewhere.

Government controls revenue. If more money is needed to provide a given service, government can and will raise taxes to pay for it. While the private sector has to persuade people to make purchases, government simply takes dollars. General Motors would never close a plant if it could seize the assets of people who do not buy its cars.

Government is allowed to spend more than it takes in. While some states and cities are required by law to enact balanced budgets, most government entities are not-including the federal government. And even governments that by law must balance their budgets nevertheless avoid doing so by borrowing, deferring capital spending, and employing questionable bookkeeping devices. Private companies and families can only deficit-spend in the short term before going bankrupt; government thinks it can go into debt indefinitely.

Government delivers "essential services." Whenever reform-minded managers or elected officials exert pressure to reduce costs, status-quo managers can mount an effective defense by pointing to the essential nature of their task. A call for budget cuts in a municipal Department of Public Safety, for example, could be countered with the claim that the streets would be less safe. An attempt to slow the growth of education spending might be met with the challenge, "Aren't our kids worth a few extra dollars a month?" This is a strategy that resonates powerfully with the people, who have neither the time nor the inclination to scour budgets to see if savings are possible without cuts in service quality.