"There are two themes in this short excerpt that are often linked together: government can help people so let's ask government to do so. Missing from the logic is whether it is reasonable to assume that asking government to do X is likely to lead to X happening. I understand the theory. But is there evidence for the theory? And putting evidence to the side—it's often ambiguous—is it reasonable to assume that government will act in the way you expect? Does government have the information that would enable a wise decision? And most importantly, does government have the incentive to act wisely?"Professor Roberts is writing an explanation of his views with respect to a recent Newsweek article. His entire piece is well worth reading. It does seem to me that many people assume government is something it is not, and, by the way, something government cannot be.
The following views seem to me to be an accurate view of government:
In my view, it's best not to assume any motives on the part of "government." There's really no such thing as "government" other than an abstraction we use to describe the sausage factory of legislation. Politicians do have motives. They are the same as mine and yours—a mixture of self-interest and altruism. In the case of the poor, I think it is too easy for a politician to convince himself or herself that interest rate limitations are good for the poor. They are actually good for the wealthier constituents.
It is tempting to assume that government is our friend. My friend might see me about to make a bad financial decision and ask me whether I'm sure it's a good idea. The friend does that out of love or affection. But government does not love. Even the love of a politician is unlikely to extend beyond that of any other stranger. So why do we expect the politician to be our friend and do what is right for us? Given power, I assume the politician will often be tempted to do what is best for the politician. So I think it is best not to ask government to help us make better decisions. Politicians do not have the incentive or the information to help poor people make better financial decisions. And as for the evidence, I see none that suggests that past policies passed in the name of helping the poor have actually done so.