Married couple economists Sidney Winter and Alice Rivlin came to the Naval Postgraduate School today and gave a joint talk. I'll blog on Rivlin's talk tomorrow. Today I want to focus on a true story that Winter told to make his case for government lending a helping hand to people who need help, and on the question I asked him about the story.
Decades ago, with his first wife, Winter had a kid (I think he said a son) in 3rd grade. His son had a lot of difficulty with two teachers who were backed by the principal. Winter and his wife decided that it would be good for the son if they didn't intervene and just let the son deal with the situation. Later, the two teachers were fired for cause and the principal was sent to a mental institution. That's when he and his wife realized that they should have intervened much earlier. Similarly, said Winter, we often need government to intervene to help those who need help.
In the Q&A, I asked him if that was a true story about his son. He said it was. So I said:
Look at the circumstances in that case. You knew a lot about your son. You knew something about the teacher. You seem like a nice man and so I'm going to guess that you and your first wife loved your son. [He nodded his head yes.] And yet you still made a mistake. And on the basis of that experience, you advocate giving the government power to make decisions about millions of people. Those government officials will typically have less information than you have. And they're virtually certain not to love the strangers they're making decisions for. So how can you have any confidence that they'll do a better job than you did for your son?
I wish I could tell you his answer. He said something but I'm not even sure he got my point. I think he basically said that people need help and other people in government should have the resources available to help them. But he didn't deal with the information problem or the incentive (lack of love) problem.
Francois Melese followed up afterward by asking him whether the kid was in a private school or a government school. It was a government school. When I started to tell my wife the story and the conclusion Winter drew from it, my wife cut to the core: "He wants government officials to step in and do something, but it was government officials who did do something: that's why his son had the problem."