We Can Get Fooled By Good Intentions
One Takeaway
Public officials respond to incentives just like the rest of us. We must always remember that self-interest doesn’t disappear simply because someone wants to be a public servant.
Why Good Intentions Aren’t Enough
Many times we expect governments to act like wise caretakers. We want them to be objective, farsighted, and selfless. We often assume or hope that once someone is elected to office or appointed to a public agency, they stop being self-interested and start working solely for the public good.
But that’s not how people work. And it just so happens that politicians, regulators, and bureaucrats are people. They respond to incentives just like consumers and business owners do. This idea changes how we understand everything from budgets to bailouts.
People, Not Angels
People in government are not self-sacrificing angels. They’re humans. Because of this, we need to apply the same logic to government that we apply to everyone else and keep in mind:
Politicians want to stay in office. They’re rewarded for making promises and spending money in ways that secure votes, not necessarily in ways that create long-term prosperity.
Bureaucrats want more resources. Agencies are rewarded for expanding their budgets, increasing staff, and regulating more things, not for becoming more efficient.
Voters are rational, but don’t have all the information they may need. Most citizens don’t have time to research every policy or candidate. That’s not laziness. It’s a reasonable response to the low likelihood of their vote changing the outcome and the fact that there may be other more time-sensitive demands on their plate.
In this system, each parties’ behavior makes sense, but the outcomes often don’t.
Incentives in the Wrong Places
When private businesses serve customers poorly, they lose money. But in government, there’s no equivalent feedback loop. The incentives don’t reward serving the public. They reward expanding power, budgets, and influence.
A few examples:
Politicians propose popular programs, even if they’re unaffordable, because the costs can be delayed while the (perceived) benefits are immediate.
Bureaucrats rarely shrink their own departments. Why would they? Larger agencies mean more prestige, more funding, and more job security.
Lobbyists seek favors for their industries because the benefits are concentrated on their clients, while the costs are spread across millions of taxpayers who may never notice.
This isn’t corruption, it’s understandable behavior based how the system is designed.
Why “Government Failure” Happens
Well-intentioned policies can fail. Not because of bad people, but because of bad incentives, knowledge, or both.
When policies are made through the political process:
Short-term optics beat long-term planning.
Symbolic victories beat real solutions.
Winners are chosen based on promises, not value creation.
For instance, a politician might support giving taxpayer money to a specific industry not because it’s good policy, but because that industry is located in a district they need to win or that maybe (likely) funds their campaign.
The result? Policies that look good on paper or at press conferences, but backfire in practice.
The Trouble With Benevolent Planning
Markets are messy, but they align incentives. Customers reward businesses that serve them well. Investors fund companies that manage uncertainty and deliver value.
Government, by contrast, operates without prices, profit, or loss. Without those signals, planners must guess what people want. They can, and do, guess wrong.
That’s not a moral failing. It’s both an information problem and a motivation problem.
No one becomes all-knowing or perfectly self-sacrificing just by winning an election or getting hired at a regulatory agency.
A Realistic View of Reform
Economics doesn’t argue that government can’t do anything right. It simply insists we need to build systems that account for how humans are, not how we wish they were.
That means:
Aligning incentives. For example, giving schools more autonomy while tying funding to performance, not how well they fill out forms.
Decentralizing decisions. Local governments are more accountable because they’re closer to the people they affect.
Adding transparency. Citizens need tools to see how money is spent and who benefits.
Good governance doesn’t reliably come from simply finding better people. It comes from better rules.
We sometimes create rules based on the hope that we will get the brightest and best to be in charge. Ideally, we want the best and the brightest to do the most good possible once they are in office. But, at the same time, we shouldn’t want a system where the best people can do the most good if that system also can allow the worst people to do the most bad.
We need rules where the worst people do the least harm because the people who end up in charge aren’t always good.
The Bottom Line
Government actors are not above self-interest. Recognizing this isn’t cynical, it’s honest. Economics helps us stop building for angels to be in charge and start designing systems that work for real people, with real incentives.