How smart are government agencies?

Animas River’s EPA toxic spill HT: CBS Denver

Many Americans feel safer when they think “the government” is at work. They think of it as a kind of god or parent or protector. “If we didn’t have government, there would be anarchy!” they cry, when anyone questions the need for rules to be administered by government agencies.

For example, regulators are shutting down all kinds of natural resource extraction operations because of possible pollution, they say. Or harm to tiny animals. Or destruction of ancient forests. We’d put all of those alleged victims in quotes, but that would make this paragraph almost impossible to read.

What is natural resource extraction, you ask? IFO did, too, years ago, when the issues first came up under the Nixon Administration, which proudly oversaw the passage of the Environmental Protection Act. Now it is not just the EPA, but the BLM, USDA and others.

Natural resources are metals like iron ore, coal, gold, silver, nickel and more. They are trees, fish, farm products like wheat, corn, soy and hundreds of fruits and vegetables. Today, employees in dozens of federal agencies oversee and regulate these activities. Today, many of these agency employees are armed.

Years ago, when a truck driving on a curved mountain road turned over and a few gallons of oil and gasoline dripped into a nearby stream, television and radio reporters breathlessly announced the pollution and reported the size of the spill and the progress of the cleanup.

When the New Carissa ran aground off the coast in 1999, Coast Guard ships and private tugs were among the frantic efforts government agencies used to try to free it, but couldn’t. The governor angrily pronounced the ship a polluter (how many gallons of fuel did it carry???) and demanded its immediate removal. It took millions of dollars and hundreds of man-hours and ten years to get rid of it.

Yet, just a few miles up the same coast is a popular tourist attraction: a wrecked ship,

The Peter Iredale, pictured at right. Shipwrecks emerge from sand along Oregon Coast

Back to the agencies. The Securities and Exchange Commission (SEC) and numerous other federal agencies set up to monitor the behavior of financial institutions nearly collapsed in 2008 when the financial crisis hit.

Bad debt was the root cause of the crisis and there was plenty of blame to go around, but  God forbid they’d let any of those institutions fail because of bad decisions. Nope. The infamous phrase “Too big to fail,” came into being and the politicians just bailed out the shaky banks, insurance and auto companies and tinkered with … the regulations!

So many examples of massive government failures and yet, they continue. The EPA’s toxic spill into the Animas River is still the best, or worst, so far this year…

What do we learn from this? Just as with mutual funds, we can accomplish the same tasks, but often at less expense and less destructively.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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One Response to How smart are government agencies?

  1. harrogate50 says:

    I was searching on the Net for the exact number of federal agencies in existence and came
    across your interesting and well-written post. What I learned is that no one seems to know! Wikipedia makes a valiant effort but, apparently, there are hundreds of “sub-agencies” and “Offices of …” that also have regulatory authority. I fear we are doomed.

    Thank you for this informative post! I’ll be following you from now on.

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