THE LIBERTARIAN ENTERPRISE
Number 494, November 23, 2008
"Any government will grow until it
claims power over absolutely everything."
Attribute to The Libertarian Enterprise
Early last June, under cover of darkness, by voice vote so that no one would be held accountable, the United States Senate voted to privatize a long-time government-run operation. After subsidizing the system for more than four decades, the champions of government intervention decided to call it quits.
According to the Washington Post, Senator Dianne Feinstein (D-CA), normally a strong proponent of federal involvement in the marketplace, sounded a call for the efficiency of free enterprise to replace a failing government operation. "Candidly, I don't think the taxpayers should be subsidizing something that doesn't need to be. There are parts of government that can be run like a business and should be run like businesses."
Senator Feinstein also quoted a study by the Government Accountability Office that illustrates the concept of moral hazard, the expectation that one will be sheltered from the consequence of bad decisions. "[F]inancially breaking even has not been the objective of the current management due to an expectation that the (organization) will operate at a deficit annually."
With losses averaging well over a million dollars a year, and a loss of almost two million dollars in 2008 alone, it was time for a change; time, perhaps, for government dis-intervention.
The operation that was privatized? The Senate Restaurants, a food system service tasked with operating a number of venues, from a huge cafeteria and a number of coffee shops to the plush Senate Dining Room.
Meanwhile, on the House of Representatives side of the Capitol, food service has been privatized for more than 20 years. That operation has managed to turn a substantial profit, while paying $1.2 million in commissions to the House over the last five years.
The natural assumption would be that lavish meals prepared with loving care for the Senators would make it much harder to to turn a profit, justifying the notable differences in profitability. However, that assumption is wrong.
Senator Feinstein blamed "noticeably subpar" food and service for the losses experienced by The Senate Restaurants.
"Those who think the House and Senate don't talk enough clearly haven't been in the Longworth cafeteria on the House side at lunchtime recently. Senate staffers have been flocking there for better food, more options, and you get some exercise to boot," according to Brian Walsh, spokesman for Senator John Coryn (R-TX). Walsh himself is a frequent customer of the House-side operation.
The clear superiority of the House operation over that of the Senate should serve as a powerful object lesson in the power of the marketplace to the Senators and Representatives who chart the course of the country.
Unfortunately, the recent purchase of equity shares in banking firms, the ongoing support for Fannie Mae and Freddie Mac, and rumblings on Capitol Hill concerning nationalization of the airline and automotive manufacturing industries show that no such lesson has been learned.
Forget the Alamo. The next time you hear a congressperson decrying the evils of free enterprise and praising the importance of government intervention, remember where they eat lunch.