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asr comments on Open thread, August 5-11, 2013 - Less Wrong
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If I read correctly, the question is whether government vice monopolies make the government less eager to suppress the vice.
We have data on this. Some jurisdictions (a number of US states, the province of Ontario) have government liquor monopolies. Does that influence the drinking rate, or the level of alcohol education? Does it make liquor more or less available? My impression is that it makes liquor slightly less convenient; the moral hazard isn't a big problem in practice.
Actually, I think the question wasn't whether vice is suppressed less, the question was whether the government has an incentive to keep the population dumb enough to not see through its scheme.
In any case, it's a mistake to think of government as a monolithic entity with a single will. It's more useful to visualize government as a large number of poorly coordinated tentacles -- some of them push, some of them pull, some of them just wildly flail about...
It's quite common for different government programs to provide opposite incentives for some behaviour.