My final English paper. Yeah, yeah, it's, like, identical, sorta, to my last one.

Why do we humans do what we do? The answer is obvious: we act because we want to. In short, we do things because they are in our own self-interest. Yes, there are people who do don’t do so, but we have special names for them, names like “masochist” or “psychopath.” People generally act in their own rational self-interests.
Of course, this leads to a problem. As we all know, there is more than one person in the world. At some point, their self-interests are bound to conflict. What then? Many situations like these are called market failures, in economic terms. The traditional solution? Government intervention.
But government is not famous for its stunning efficiency or heartwarming friendliness. No, it seems like more of a seething morass of faceless bureaucrats who spend their time finding new ways to torture each citizen who walks in demanding service. But there is another problem with government—not its inhuman bureaucracy, but the fact that the law of self-interest doesn’t stop at the door of the White House (or Congress, or the FCC, or the IRS, or the FDA, or the Federal Reserve or…).
Elected officials act in their own self-interests. Voters act in their own self-interests. Regulators act in their own self-interests. Thus, even if the government should act to correct a market failure, there is no reason it will—or will do so correctly. After all, it was the same self-interest that got us into the problem in the first place.
For example, let’s look at monopolies. Since they have no competition, they are often overpriced, poorly run, and inefficient. We’ll use Microsoft as our representative monopoly. I find Microsoft’s software slow, buggy, and expensive. Windows is an awkward, bloated piece of junk.
Now compare that to, say, your local Department of Motor Vehicles. I don’t think it would be too far of a stretch to call the service slow, the procedures buggy, and the system, as a whole, expensive. Both are monopolies, and both represent a failure to align people’s self-interests.
How does this come about? Consider that the average voter bears very few of the direct costs of a new government program. Many Americans pay no income tax at all, so anything they get from the government is essentially free. We could end up with a group of citizens in the lower tax brackets voting themselves perks mostly at the expense of the higher tax brackets.
Or consider the case of financial regulators. If they enact and enforce stringent rules, conservatives will roundly criticize them for stunting economic growth. But in a massive collapse, what happens but cries for more regulation? Since public workers often want to expand their programs, these regulators might actually want to provoke crises.
With that in mind, look at our current financial crisis. It seems fairly clear that we had some sort of market failure—that the markets organized self-interest in a way that led to absolutely disastrous results. Some say that more regulation would have solved this problem. But what regulations would have stopped the pooling of debt, the risk spreading, and the insane housing speculation? Should we have, say, banned home buying? Would any regulator actually want to end the party? Did anyone foresee the full extent of the problems this would cause?
Of course not. What should have been done may be obvious now, but it was far from obvious then. Why would regulators have any better chance of seeing the problems than the people actually involved in them? Regulation as a cure-all is nothing more than a magical fairy that will stop anything bad from ever happening, and we can all live happily ever after. The end. Like any fairy tale, such a solution is appealing, but it’s not something to base a theory of governance on.
Welcome to the wonderful world of public choice economics. By beginning with the assumption that people are rationally self-interested and respond to incentives, it forms a somewhat cynical theory of political science that denies our power to produce a utopia through government.
Now, maybe the self-interested model of human behavior is not valid here. After all, it can lead to some fairly odd conclusions, like economist Amartya Sen’s sarcastic interaction between two perfectly self-interested humans:
“Can you direct me to the railway station?” asks the stranger. “Certainly,” says the local, pointing in the opposite direction, towards the post office, “and would you post this letter for me on your way?” “Certainly,” says the stranger, resolving to open it to see if it contains anything worth stealing (qtd. in Ooms 3).
But the standard economic model has proven remarkably robust in the financial world; why should it not in general hold in other fields? Indeed, so long as people do not generally have the public good as their overriding concern, their actions in a democracy will not serve the public good.
As much as I’d like to believe in the free market alone, I realize that it has its flaws. But I also know that market failure itself implies government failure.