Under Franklin Roosevelt and Lyndon Johnson, liberals created a federal leviathan that taxes, regulates and redistributes across every walk of American life. In the process, though, they bound the hands of future generations of reformers. Programs became entrenched. Bureaucracies proliferated. Subsidies became “entitlements,” tax breaks became part of the informal social contract. And our government was transformed, slowly but irreversibly, into a “large, incoherent, often incomprehensible mass that is solicitous of its clients but impervious to any broad, coherent program of reform.”
In other words, the problem with big governmental reforms is that earlier decisions create public interest groups that dramatically constrain later decisions. This ultimately leads to path dependence. Large public interest groups that benefit from earlier decisions become resistant to change. So, bad public policy decisions that affect large groups of people -- like the deduction for employer-based health insurance -- become nearly impossible to reverse.
This isn't a new theory, but Ross lays the argument out very well.
For anyone who's interested in this subject, I'd recommend reading Rauch's book, Government's End, as well as Jacob Hacker's The Divided Welfare State.
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