There Is No Problem Government Creates That It Can’t Make Worse

By Christian Schneider

Thursday, September 03, 2026

 

During a break in the British Parliament one day, Labour leader Clement Attlee encountered his conservative nemesis, Winston Churchill, in the restroom. Attlee noticed that Churchill took a spot as far away from him as possible and taunted him with, “Feeling standoffish today, are we, Winston?”

 

“That’s right,” Churchill answered. “Every time you see something big, you want to nationalize it.”

 

A century later, nationalization fever has once again subsumed American politics, whether it is President Trump’s administration gobbling up shares of private tech companies or the Democratic Socialists of America demanding public ownership of the nation’s largest corporations.

 

But, of course, with more government control come more government-created problems, which nationalization enthusiasts then use as leverage to create an even more oppressive regime to fix the one that came before.

 

Take socialist New York City Mayor Zohran Mamdani, who has cooked up a plan to set up five government-owned grocery stores in the city. Mamdani has said that these city-owned stores, the last of which is set to open in 2029, will offer up to 30 percent discounts on some items.

 

Yet this government “solution” to higher grocery prices (exacerbated, incidentally, by the president’s actions to increase tariffs on imported goods), has run into an obvious roadblock. Local grocery stores and bodegas won’t be able to compete with taxpayer-subsidized stores, so many of them will go out of business, turning the supposed “food deserts” the government stores were meant to ameliorate into actual ones.

 

No problem, says Mamdani’s grocery czar — the city is considering “policies and programs, grants, incentives that can come alongside these grocery stores to support other local independent businesses.”

 

In other words, taxpayers are not only going to be forced to subsidize discounted groceries for certain shoppers; they are then going to be forced to subsidize other private grocery stores so they can compete with those government stores. The city wants to pour more cash into a problem the city itself is creating. (Nonetheless, the existing grocery stores and bodegas are suing the city to prevent this unfair competition from becoming a reality.)

 

None of this matters to the DSA, whose co-chair recently mused that “if one publicly owned store is enough to put someone out of business, then maybe they shouldn’t have been in that business in the first place.”

 

But Mamdani’s plan pales in comparison to what Democratic Congressman Ro Khanna is proposing: a 5 percent “wealth tax” on California’s billionaires, pursuant to November’s vote on Proposition 40.

 

There is a long history of literature on why “wealth taxes” are so damaging — rich people, for example, have the means to move their operations out of any taxing jurisdiction that levies such a punitive tax. And it makes no sense to tax people for unrealized gains: for many young entrepreneurs, their “wealth” is tied up in their company, and thus illiquid. Their fortune is actually necessary to keep their business going, and the state taking a chunk of that money could sink the company.

 

No problem, says Khanna, chasing one bad idea after another with the speed of Usain Bolt — founders can take out a loan of up to hundreds of millions of dollars in order to pay the tax bill. And if a bank won’t lend a company founder that kind of cash to pay a tax bill? Well, then the loan could be offered by the government.

 

So, for those keeping score, the government would, for instance, loan an entrepreneur $100 million to pay off a $100 million tax bill the government has imposed. It’s like drilling holes in the bottom of a sinking boat to let all the water out.

 

Or take the recent imbroglio in Madison, Wis., a city that allowed radicals to seize a city block for weeks in order to protest the shooting of a man who pulled a knife and slashed the arm of a police officer. After the death of Corey Ruiz, Mayor Satya Rhodes-Conway allowed an encampment to take over the streets, even offering trash service, traffic barriers, and portable toilets to keep the encampment open.

 

It didn’t take a soothsayer to predict what happened next. Violence and drug use spread within the “autonomous zone.” Neighbors reported feeling “unsafe, uneasy and unwell as a result of the noise, trash and disturbances.”

 

This week, the Madison Finance Committee approved a $100,000 grant to local businesses that were affected by the encampment. Some businesses saw their sales drop 90 percent as radicals seized the streets. And now taxpayers have to clean up the entirely predictable mess, both literally and figuratively, caused by a decision made solely by the mayor.

 

This is all, of course, just a tiny sampling of the ways the government tries to solve problems the government itself actually creates. Trump’s restrictionist trade policies have increased prices for farmers, so he has proposed more subsidies to bail them out. Depression-era subsidies and price supports encouraged overproduction of certain crops (notably corn), skewing the food system toward processed foods and high-fructose corn syrup. The government then funds nutrition programs and dietary guidelines partly to counteract the health effects of a food supply its own subsidies helped shape.

 

In the early 2000s, quasi-governmental entities like Fannie Mae and Freddie Mac thought they were doing urban communities a favor by pushing people into homes they couldn’t afford, leading to a real estate bubble and its bursting in 2008. Other governmental zoning laws, such as minimum lot sizes, parking mandates, and permitting delays, constrain housing supply and drive up prices. Then governments respond with subsidized housing programs, rent control, or first-time buyer credits to address the affordability crisis those same rules helped create.

 

And, of course, the availability of federal student loans has inflated the cost of going to college, leading to a push for taxpayers to bail out the federal loan program under President Biden’s plan to “forgive” them.

 

And yet America’s elected officials continue to wander around this field of rakes, stepping on each one and learning nothing in the process. The incentive to appear as though they are “doing something” is stronger than the incentive to acknowledge the obvious and predictable result of the “something” they are trying to do.

 

Until those incentives change, politicians of both parties will continue to believe that government is, as Homer Simpson said about alcohol, the cause of, and solution to, all of life’s problems.