NCPA - National Center for Policy Analysis


May 5, 2008

When the state gets involved in projects that can be done by private enterprise, the results are almost certain to be bad.  We would therefore be best off with a firm rule against such endeavors, says George C. Leef, vice president for research at the John W. Pope Center for Higher Education Policy. 

Government officials are apt to undertake projects that should not be done at all, explains Leef.  Even if they hit upon a potentially worthwhile venture, they will approach it in a very inefficient manner.  Politicians and bureaucrats are not spending their own money and do not stand to lose if they are wrong.  Therefore, resources will be wasted.

In "They Meant Well," D. R. Myddelton, a Cranfield University professor, examines government project disasters in Great Britain.  Both Conservative and Labor governments presided over those fiascos, writes Myddelton, and the results range from almost comical to utterly tragic. Some of the more extravagant blunders include:

  • £2.4 million (about U.S. $4.7 million), equal to £100 million (about U.S. $196 million) today, was spent on developing a fleet of blimp airships in the 1920s.
  • The British Government lost £46 million (about $90.5 million) on failed peanut cultivation in the British colony of Tanganykia during the 1940s.
  • A grand 30 year experiment in socialized nuclear energy beginning in 1955 cost taxpayers around £32 billion (about U.S. $63 billion), until Margret Thatcher moved power generation out of being a government monopoly and into the world of free market completion
  • £9.1 billion (about $17.9 billion) was lost on the development a supersonic jet that no private airlines would buy.
  • Most recently the disappointing Millennium Dome project netted the government a loss of £1 billion (about U.S. 1.9 billion) from 1994 to 2000.

The common thread among these projects is that the politicians overestimated benefits, underestimated costs, did not know when to stop, and stuck the public with a big tab, says Leef.

Source: George C. Leef, "Look What the Brits Have Done!" Regulation, Spring 2008; based upon: D. R. Myddelton, "They Meant Well," Institute of Economic Affairs, 2007.

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