One of the most common lines of argument on the right is that the government never seems to be able to do anything efficiently, so we shouldn’t let them do anything. The problem with this idea, in my opinion, is that the definition of “efficiency” being used is the wrong one. Usually we think of efficiency in terms of a ratio between resources consumed vs. outcomes. When we try to compare government to business, though, as is most often the context in which this argument gets used, we fall into a trap. The only outcome that matters to a business is the financial one, which is why analyst reports always have items for things like return on equity or return on capital. The government, however, specifically does not try to pursue activities in which it’s easy to make a financial profit. Even liberals generally accept that if the free market can do something itself, it should be allowed to do so; government takes on the tasks that profit-driven businesses can’t or won’t, and serves “customers” that those same businesses would avoid. Efficient use of funds is always important, but government agencies define success primarily in non-economic terms. The military’s goal is not profit (whatever Chomsky might say) but enforcement of US policy. The CDC’s goal is prevention of needless deaths from disease. In terms of dollars in vs. dollars out, both are massive failures, but of course they provide value that’s not measured in dollars. No government agency should be compared to a profit machine like Microsoft, and no profit-driven business should be compared to an agency like the EPA.
A secondary effect of this mismeasurement of efficiency is perceptual bias. The perceived “size” of a government agency is generally proportional to the resources it consumes, not the benefits it provides. Thus, agencies that consume massive resources to accomplish little (or whose benefits are provided to an easily-ignored subset of the population) occupy much of our attention, but agencies that accomplish a lot on a small budget remain practically unknown. There are actually many parts of government that operate efficiently, but we don’t hear about them precisely because they operate efficiently. The Secret Service’s investigations division does a lot of great work to deal with counterfeiting and financial fraud, creating great value for their small budget, but all most people ever think about when they hear of the Secret Service is the protection division. The National Weather Service provides information of critical importance to agriculture, shipping and other activities, but get taken for granted even (perhaps especially) by those who always complain about not getting enough for their tax dollars. The list goes on, but the point should already be clear: by applying the wrong definition of efficiency to government, we end up counting the misses and ignoring the hits. Government gets plenty of blame for the money they spend, and not enough credit for the value they return, contributing to an anti-government sentiment that reason would tell us is ill deserved.
On the same note, I have a vague recollection of statistics that say that Social Security has dramatically low administrative costs given the number of beneficiaries it services.
Ditto for Medicare, which has administrative costs much lower than most private health insurance companies.