My First Theorem of Government is the simple observation that insiders are the biggest beneficiaries of government.

I was motivated to release that theorem because bad news for taxpayers is good news for bureaucrats, consultants, contractors, lobbyists, and politicians.

A classic example is the Department of Education in Washington, which has squandered more than $2.6 trillion since it was created, yet there have been no positive results for students.

But you can be confident that all that money wound up in the pockets of various interest groups.

A failure for the country was good news for them.

Another example is high-speed rail in California. More than $13 billion has been spent with no rail actually built. That’s a remarkable achievement.

A bad achievement from the perspective of taxpayers, but rest assured that the various interest groups that pocketed the money are very happy.

For today’s example, let’s stay in the not-so-Golden State and look at Los Angeles. Here are some excerpts from a report by Matthew Seedorf for a local news station in the city.

A long-promised transit project at LAX remains closed to the public, years after its original target opening date. …The Automated People Mover, designed to ease congestion around LAX, is still sitting behind locked doors and fencing. The project was initially slated to open about three years ago. Today, airport officials have not announced a new opening date. …Airport officials did not return calls or emails seeking comment about the ongoing delays. …Construction on the nearly $3.5 billion project began in 2019. In 2024, it was considered 96% complete. …the price tag has since been estimated to have climbed to nearly a billion dollars over its original budget. …”I’m disappointed about that,” one person said. “Although the Olympics in 2028, maybe it’ll be ready by then.”

For purposes of today’s column, the key think to understand is that $3.5 billion of taxpayer money wound up as “income” for various interest groups.

You can be confident they are not disappointed the project is late and over budget.

The bottom line is that taxpayers lose when there are cost overruns (a depressingly common occurrence, for programs as well as projects), but there’s little if any incentive to fix the problem.

But there is a way of reducing the problem. If we shrink the size and scope of the federal government, that obviously will lead to fewer federal boondoggles. But shrinking the federal government also would mean that state and local governments would need to finance their own boondoggles instead of getting federal grants, which presumably would lead to at least some degree of cost-benefit analysis.