Official Lies: How Washington Misleads Us.

• Author: Boudreaux, Donald J.

The following story is standard fare for all economics students: voluntary exchange of private property rights leads to outcomes that maximize social welfare, but only so long as market imperfections do not exist. In the face of such imperfections, markets will not work, and correction of these imperfections by government becomes a viable option.

Of course, before the ascendancy of Public Choice during the past two decades, government action was regarded as a necessary antidote to market imperfections. Now that analysts are aware that government can fail just as the market can fail, it is an empirical question whether government interference in a less-than-perfect market is desirable or not. Data on the performance of government relative to the market is crucial in answering this question.

James Bennett (George Mason University) and Thomas DiLorenzo (Loyola College in Baltimore) provide an impressive array of statistics and anecdotes persuasively demonstrating that government is seldom to be trusted to correct market failures. The reason for this distrust is that government seems chronically unable to tell the truth about itself as well as about the social problems it addresses. Indeed, these authors show that government is, perhaps, the major source of false information and half-truths in the United States. Each of the book's ten chapters is choked with information about misinformation sponsored by, or left uncorrected by, government.

Early on in the book, Bennett and DiLorenzo return to an issue that they addressed in an earlier work, namely, the various and sundry devices Congress uses to hide the true cost of its activity.|1~ Although no secret to most readers of this Journal, Congress employs off-budget financing as one method of minimizing the reported size of government expenditures. But the authors go well beyond showing that Congress fibs about the full extent of its annual expenditures. The bulk of the book documents specific pieces of misinformation fed to the American public by its government. We learn, for instance, that the Census Bureau's estimate of the number of Americans living below the official poverty line looks only to cash income in arriving at its conclusions. This method fails to take account of a citizen's wealth as well as of non-cash assistance to the poor. Failure to consider these factors--as well as others identified by Bennett and DiLorenzo--causes an overestimate of the number of people living below the...