In a recent interview with Dennis Miller, Tim Pawlenty offers a great illustration of how incentives matter.
All you really need to know about what we need to do with government is go to two weddings. Go to one where there is a cash bar, go to one where there’s an open bar and you’ll see very different behaviors.
And the government has been running itself like an open bar.
If you run systems and programs where people have no idea what the price is, no idea what the quality is, the only measurement is how much they consume, and the provider of it has the measure of how much volume they can provide and the fiction is created that the bill goes somewhere else, that system is doomed to fail.
Unfortunately, that’s most of what we have in government, we’ve been running it as an open bar mentality. The party needs to come to an end in that regard. We got to switch to people being in charge of more of their own money, give them good information about price and quality and to the extent we can afford it, give them help, but give it to them directly. Don’t run it through a big bureaucracy based out of Washington DC.
Sometimes the answers are hiding in plain sight. The open bar analogy is perfect. We can all identify with it. I’ve had some rough nights after an open bar. Not so much with a cash bar. We all respond to incentives.
Yet many people unrealistically want to believe that we can have an open bar and somehow control behavior to prevent the downsides that causes.