There is a standard criticism of people who describe themselves as preferring free-markets. It goes like this:
“You say you trust markets. You want government out of the economy. You want lower taxes, less regulation, fewer agencies. Fine. But then you also complain about corporate power. You object to lobbying, to regulatory capture, to giant firms that seem to get whatever they want from the state. How does that work? You cannot simultaneously want less government and more restraints on the people who influence government. Pick a lane.”
The criticism sounds clever. It is also wrong. And understanding why it is wrong is the key to understanding a very large set of problems that keep recurring, decade after decade, in every developed country.
Let us ask a different question. What do government overreach and corporate overreach have in common?
Start with government. A government department is not a firm. It has no competitors. It cannot go bankrupt. It does not have to earn its budget by satisfying customers. If the Department of Motor Vehicles delivers a terrible experience, you cannot go to a competing motor-vehicle agency down the street. Instead, you queue. You pay the fee. You leave unhappy, and nothing changes.
The feedback mechanisms that keep private firms honest simply do not exist in most of government. No prices to signal where resources should go. No profit-and-loss to punish mistakes. No competitor to steal market share when service degrades. The citizen gets one vote every two to five years, and that vote is a binary choice between two slates of candidates, neither of which ran on the platform of “fix the Department of Motor Vehicles.”
In the UK, the complaint is about potholes in the roads, which local councils should fix. Same cause, different problem.
A government that delivers poor value is not punished by the system. It is rewarded, if anything, because poor performance justifies a larger budget next year to “fix” the problem the department helped create. This is not corruption. It is structure.
Now look at the corporate side. The criticism assumes that free-market types defend every large corporation equally, because corporations are “private.” But there is a difference between a firm that succeeds by serving customers better than its rivals, and a firm that succeeds by getting the state to tilt the playing field in its favour.
The first kind of success is what markets are for. The second kind is not a market outcome at all. It is the suspension of markets through political privilege.
When a company wins a no-bid government contract, it is not competing. When an industry gets a tariff that blocks foreign competitors, it is not competing. When established firms write occupational licensing rules that make it nearly impossible for new entrants to operate, they are not competing. They are using the state to do what they could not do in an open market: protect themselves from the consequences of their own mediocrity.
This is not capitalism. This is the capture of the state by private interests. It is as corrosive to a healthy economy as any government programme, and it is defended by many of the same people who denounce “big government” while quietly enjoying the privileges that only government can grant.
The paradox dissolves.
The enemy is not “government” or “markets” as abstract categories. The enemy is concentrated power with weak accountability. It makes no difference whether that power sits in a government department or a corporate boardroom. The damage is the same: the decision-makers face no effective feedback loop. They can fail, and fail again, and the consequences land elsewhere.
A government IT project that loses ten billion pounds - no one is fired. No competitor emerges to build a better system. The same contractors bid for the next disaster. A corporation that secures a regulatory barrier against new entrants - its shareholders benefit, its customers pay more, and the politicians who enabled it receive campaign donations and the promise of well-paid speaking engagements after they leave office. Everyone with power in the transaction is satisfied. Everyone else absorbs the cost.
This series, Why Things Break, will examine concrete cases where this dynamic played out. The NHS National Programme for IT, which cost the British taxpayer approximately ten billion pounds and delivered essentially nothing. Birmingham City Council’s Oracle implementation, which started at twenty million pounds and is now approaching two hundred million, with the system still not working. New Jersey’s voter registration system, where a “glitch” turned out to be a governance gap that nobody was paid to notice. And others, as they emerge.
Each case is different in detail. Each is identical in structure. Somebody with decision-making power faced weak or non-existent feedback. Somebody else paid the bill. The pattern repeated because the incentives that produced the first failure were still in place for the second, and the third, and the thirtieth.
The goal of this series is not to assign blame to individuals. The individuals are mostly interchangeable. Replace them, and the same outcomes recur, because the system selects for people who will make the same decisions. The goal is to trace the incentives. To ask, of each disaster: who benefited? Who paid? And what would need to change so that the next decision-maker faces a different set of choices?
If you find yourself thinking, after reading a few of these, that the problem is not stupidity or incompetence but structure - that is the point. The people making the decisions are not unusually stupid. They are responding rationally to the incentives they face. The tragedy is that those incentives produce outcomes that hurt almost everyone, and the people who could change them have no reason to.
That is Why Things Break. And that is why they keep breaking.