The Issue is Ossification

Lawrence Summers has a straightforward account of why people don't trust government. What he would like is a similarly straightforward account of how to fix it.
...what should have been a routine maintenance project on the Anderson Memorial Bridge over the Charles River next to my office in Cambridge. Though the bridge took only 11 months to build in 1912, it will take close to five years to repair today at a huge cost in dollars and mass delays.

Investigating the reasons behind the bridge blunders have helped to illuminate an aspect of American sclerosis — a gaggle of regulators and veto players, each with the power to block or to delay, and each with their own parochial concerns. All the actors — the historical commission, the contractor, the environmental agencies, the advocacy groups, the state transportation department — are reasonable in their own terms, but the final result is wildly unreasonable.


More than questions of personality or even those of high policy, the question of how to escape this trap should be a central issue in this election year.
The person who can help you answer this question is Joseph Schumpeter. His insights on economics are relevant to government, too.
Our institutions are so large and so intricate in their approval chains that [our enemies have] a huge advantage in terms of how fast a decision can be made and acted upon for streamlined organizations. Putin just issues orders, after all. ISIS isn't very big. USEUCOM or USCENTCOM has to socialize a plan among all their staff sections, who reach down to subordinate commands for input and then hash out a plan among themselves before they present it to their general. Most likely, he will need to push that plan up to the Pentagon if it represents a radical change to existing strategy. They have their own process before an answer comes back down, and the easiest answer is to push the suspense for the decision to the right while we ask a few more people. If the change requires a change from an interagency partner, their bureaucracies have to get involved too.

Even if the President were replaced with someone with new-blood ideas and the will to enact them, the bureaucracy would still have to go through at least a basic staffing process to ensure that it carried out the decisions in an orderly fashion. Because the bureaucrats are part of the existing order, there will be many who drag their feet or otherwise resist firm leadership (remember the CIA's campaign of leaks to the press about Bush's programs?).
That's just what Summers is describing. Each process is fine on its own: the problem is that there are dozens of them. These dozens of bureaucracies are each interest groups, which makes them hard to eliminate. There are whole buildings, and large buildings, full of people whose living depends on things not being streamlined.

Ultimately, in economics, what happens when a corporation becomes this ossified is that new, smaller, leaner competitors eat it alive. They may not be able to do everything that the big monopoly does, and they lack its economies of scale, but they still outperform the giants because they can make decisions and act upon them quickly and cheaply. The giants may not die -- IBM's $8 billion loss from the 1990s didn't kill it, and it's still a major world corporation though it has shed a lot of the functions it performed in the 1980s. Still, IBM and similar tech giants now don't even try to compete with startups -- they just find the ones they want and fund them.

There is no similar governmental process. You aren't allowed to compete with the EPA, nor take over parts of its functions if you do a better job for less. That isn't to say that the private sector doesn't try: Delta just invented a better way of doing airport security because its business is being harmed by TSA incompetence. However, all Delta can do is try to help streamline the steps before the TSA bottleneck. They can't replace the TSA. They can't even compete with it, or offer an alternative to it.

In economics, the ossified bureaucracy full of rent-seekers is self-correcting because of competition. In government, the problem is much harder. We have to find the political will to disband much of the government in spite of entrenched interests with their hands on the levers of power. If we can't do that, government will just get more and more incompetent the older and more ossified it becomes.


David Foster said...

Delta "innovation lanes" has struck me for the last several years that there is not enough time or counter space for people to get ready for the screening...also, that the dishes for change & keys should be made more accessible. At ATL just the other day, I mentioned to the guy that it would be better if the dishes were put somewhere within reach, resulting in an 'it's not my fault' type of response.

Any garden-variety industrial engineer should be able to figure these things out, as should any undergraduate operations-research student, or indeed anyone who spent 10 minutes thinking about the process.

The only part of the Delta solution that appears to require any special technology is the automatic tray-returner; the rest of it is pure business-process stuff.

An interesting example of the point that innovation and productivity are not only the result of technology development, but are also very dependent on the intelligent organization of work.

douglas said...

You know who could take over parts of federal government? State and local governments. Not that I think they'll be uber-efficient either, but at least they have competition for businesses and even residents, whereas the Feds do not.

Grim said...

That's right. It's been a part of my advocacy for enforcing the 10th Amendment: almost everything the Federal government does should be done by the states instead, if at all. Competition is just one of the benefits of that approach.

Ymar Sakar said...

There is no need for airport screenings of the TSA variant. The government already knows this.

How many terrorists have the TSA actually found and stopped? The government bureaucratic Oligarchy knows this answer very well.

There are a couple of relay centers that are higher risk, however. Egypt. Turkey. Greece or Germany now. Amsterdam. Israel certainly. But those countries know about the risks, that is why they at least attempt to use their full powers to protect themselves.

The US is playing a different game with the TSA.

Ymar Sakar said...

What he would like is a similarly straightforward account of how to fix it.

I foresaw that people would begin to seek a solution against the Leftist alliance, but even after years of pondering this issue, there are numerous complications. And they don't get easier to resolve with time.

For Summers, of course, his complication is that the Left took out a piece of his spine and has withheld it from him for some time now. Presuming he's that Summers, of course.

There are 2 divine solutions, and about 3-5 temporal or earth based solutions. The Alternative Right is one type, although their origin was not predicted by me. I was watching them, of course, but they had spent so many years being uninterested in politics I thought they would just coast through Civil War II entirely, until almost the end.

I had underestimated the Sheer White Rage of certain young generations of Americans, however. That emotion is very useful, for a war at least.