The Public Sector: Standing in Our Way until We Pay Up
...The problem with the standover business model, obviously, is the same as the problem of scorched-earth banditry: It drives away exactly the sort of activity that the criminal needs to make his own living — it’s a crime on the wrong side of the Laffer Curve. For this reason, banditry frequently degenerates into a protection racket, a relatively modest tax on criminal enterprises and non-criminal enterprises alike. Protection rackets have their own challenges: For one thing, you actually do have to provide some protection, mainly from other predators like you. Over the years, economic success and administrative demands eventually transform bands of roving bandits into bands of stationary bandits. One popular theory of the state — one that is pretty well-supported by the historical evidence in the European context — is that this is where governments come from: protection rackets that survive for a long enough period of time that they take on a patina of legitimacy. At some point, Romulus-and-Remus stories are invented to explain that the local Mafiosi have not only historical roots but divine sanction....

...In reality, we have governments for lots of reasons, most of them illegitimate: That ancient instinct toward banditry is powerful, and the desire to make a living by simply commanding economic resources rather than earning them through trade or labor seems to be a fixed feature of a certain subset of human beings. Patronage and clientelism are very strong forces, too, and government can be used to create public-sector salaries or welfare benefits that are well in excess of the wages that political clients could expect to earn in honest work. In the United States, our swollen public-sector payrolls, particularly at the state and local level, are little more than a supplementary welfare state, providing a more dignified form of public dependency for relatively low-skilled and mainly unenterprising people....

...When it comes to government, if you aren’t involved in the provision of actual public goods, you are involved in extortion. It may be legal. It may have the blessing of the mayor, the city council, and your union representative, but it’s still extortion. And you should be ashamed of yourself. If your only purpose is getting in the way until somebody hands you money, then you are part of a protection racket. And you might want to think about going into a more honorable line of work.