Back in March, The American Interest's Walter Russell Mead took Midwestern (specifically Minnesota) Republicans to task in a blog post for failing "to turn voters’ urgent concerns...into a politically sustainable program for deep change." Mead observed that,
"Rather than propose innovative new ideas toward a vision for the future, the Midwestern GOP is projecting a message about what they are against. Those who want to get beyond blue need to think more creatively about the next steps."
Thus chastened, over at Private Citizen we offered this except from our perpetually forthcoming book as a partial down payment on that program for deep change.
“The nearest approach to immortality on earth is a government bureau"
--South Carolina politician James F. Brynes
Count us in favor of both government reform and reduced spending. Simply voting less money is the easy part. How to change business as usual is more difficult, especially when government is part of the problem. Quoting Walter Russell Mead,
Government is inevitably going to be part of the solution for these problems—if only by correcting so many of the misguided policies that in many cases make existing conditions worse. [1]
So reform, yes, but what kind of reform? To answer that question, we need to go back to the beginning and cover a little economic theory.
A government program, once created, develops its own constituencies—the direct recipients who want to continue getting benefits, bureaucrats whose careers depend on the program’s existence, not to mention the lobbyists and advocates who will go to bat for a program, if it were threatened.
Incentives for Government Managers: What You Reward is What You Get
For government managers, compensation and advancement depend on factors other than performance. For a government worker, time in service, academic credentials, and pre-set compensation ladders play a much greater role than meeting targets and achieving goals in determining rank and compensation.
The academic field of Public Choice Theory, a branch of economics, has much to offer in explaining the difference between private sector and government behavior.
Nobel-prize-winning economist Joseph Stiglitz described the thinking in this field in his textbook Economics of the Public Sector, explaining,
bureaucrats are not given incentive structures in which their pay is related very closely with their performance. The question then is, What do bureaucrats seek to maximize?[2]
Stiglitz answers that question with a popular theory explaining bureaucratic behavior, one put forward by former auto company executive and Presidential advisor William A. Niskanen,
[Niskanen] postulated that bureaucrats seek to maximize the size of their agency. Bureaucrats are concerned with “their salary, the perquisites of office, public reputation, power, patronage,” all of which are related the size of their agency.[3]
Niskanen’s theory goes a long way to explaining why government grows and grows, regardless of the party in power, regardless of the underlying economic climate. The permanent feature of government, the career civil-service management, is rewarded for growing their empires, not producing results for the taxpayer.
In his textbook, Stiglitz notes the work of British academic Cyril Northcote Parkinson, who coined the humorous phrase “work expands so as to fill the time available for its completion” and who promulgated “Parkinson’s Law” for public entities,[4] “An official wants to multiply subordinates, not rivals, and officials make work for each other.”[5]
Parkinson’s Law is uniquely instructive on this issue. Parkinson’s famous satirical essay, printed in The Economist in November 1955, tracks the employment levels in the British Colonial Office. Parkinson describes the shrinking of the British Colonial Empire in the first half of the 20th century, even as employment in the Colonial Office continues to grow,
It would be rational, prior to the discovery of Parkinson’s Law, to suppose that these changes in the scope of Empire would be reflected in the size of its central administration. But a glance at the figures shows that the staff totals represent automatic stages in an inevitable increase. And this increase, while related to that observed in other departments, has nothing to do with the size—or even the existence—of the Empire.[6]
In introducing his Law, Parkinson explains,
Politicians and taxpayers have assumed (with occasional phases of doubt) that a rising total in the number of civil servants must reflect a growing volume of the work to be done. Cynics, in questioning this belief, have imagined that the multiplication of officials must have left some of them idle or all of them able to work for shorter hours. But this is a matter in which faith and doubt seem equally misplaced. The fact is that the number of the officials and the quantity of the work to be done are not related to each other at all.[7]
A naval historian, Parkinson is said to have predicted as early as the 1930’s that the number of admirals would one day exceed the number of ships in the Royal Navy.[8] Parkinson died in 1993.
The U.K.
There are currently 41 admirals, vice-admirals and rear-admirals but with constant cuts the number of fighting ships in the Navy now stands at just 40. [9]
Of course, the Royal Navy bureaucrats defended the staffing levels, as reported by the Telegraph,
But Commander John Muxworthy…defended the number of admirals saying they were the equivalent to senior managers who were necessary to oversee big budgets and construction projects.
Clearly, reform represents swimming up stream. Of course, changing performance, pay, and promotion incentives for government managers will be no easy task. Assuming that we are successful in assigning realistic goals for programs and provide incentives for managers to meet those goals, we are still left with the monumental task of changing the way government goes about delivering its services.
To guide that effort, we believe that a few principles need to be established. While many agree on the need for reform, few agree on what that reform should look like. Others still believe that reform is unnecessary, that a new method of reassembling Humpty-Dumpty will be developed any day now.
Applying Principles
A useful starting point for reform would be to decide the criteria upon which to judge whether a reform policy is good or bad, that is, whether it advances the general principles that we hold dear. In this regard, the Heritage Foundation’s Kiki Bradley has collected a group of “Governance” principles and criteria worth reviewing.[10]
A list of principles, which she credits to Heritage President Ed Feulner’s book Getting America
- Is it the government’s business?
- Does it promote self-reliance?
- Is it responsible?
- Does it make us more prosperous?
- Does it make us safer?
- Does it unify us?
The idea is that any reform proposal would need to pass the above tests with a “yes” before we can consider moving forward.
Ms. Bradley expands beyond principles to include some guidelines and recommendations for areas to explore, which we adapt here,
- Include Sunset Dates with all Legislation – No perpetual programs
- Hold Programs to Measurable Outcomes – So we know if we are successful or not
- Include Penalties for Non-Success – “Sticks” as well as “carrots”
- Find a Way to Pay for it — No new entitlements without funding
- Provide Flexibility — Providers should be allowed to experiment, to see what works and what doesn’t
- Create No New Programs – Repurpose an old program, if need be
- Set Grant Program Requirements--To include the measures above and hold recipients accountable
Approaches to Explore
Now that we have a set of principles to apply and guidelines to shape legislation, what would be some useful areas to explore?
We suggest starting with how services are delivered. Many observers both inside and outside government have pointed out how services are still being delivered with approaches developed (pick a decade) in the 1950’s, ‘60’s or ‘70’s. The information technology revolution that has swept through private business in the past two decades has largely left the public sector lagging behind.
But the solutions aren’t all about more computers and more clever use of the Internet. The coming public pensions crisis and the public/private sector wage gap show that we cannot continue to have services delivered using government employees in the same old way. Other approaches need to be found.
Private Contacting and Competition
One promising avenue is for a greater use of private contractors, in an effort to harness the power of competition. Walter Russell Mead writes, on the example of municipal garbage service,
If something can be done more efficiently and cheaply by a private contractor, the jobs should be outsourced. Where the municipal workforce is more effective, then they should stay on the job. Over time a competitive approach should improve the performance of both public and private sector bidders.[11]
Of course, as Professor Mead acknowledges, there are dangers with private contracting, too. Contractors will need oversight and bidding rules must be developed and strictly followed. A few bad apples will try to take advantage of the system. But it is much easier to remove a bad private contractor than to reform an entire useless bureaucracy.
Local, Non-Profits
Private does not have to mean for-profit or big business, either. Mead suggests that private, non-profit institutions and small, local firms may also be good candidates for the delivery of social services. He writes,
[One] approach to government would see small, locally based partnerships or firms take over current government functions. A charter school organized by teachers and administrators who have roots in their community is one example, and some of these have been extremely successful. Perhaps unemployment offices and other government services could be remodeled in this way.
Transforming government programs as far as possible (and some are more transformable than others) from programs administered by career bureaucracies into programs managed by independent community-based firms under contract is a way to use government resources to build a private, entrepreneurial middle class.
With contractors held accountable to producing measurable outcomes and subject to penalties for non-performance, results should improve. The idea that Mead promotes has the added advantage of moving the delivery of services closer to the people receiving the services.
Innovation From Without Not Within
We believe that the truly innovative ideas are more likely to come from outside of government than to arise from within the current workforce. Do not misunderstand. Public workforces at all levels of government contain intelligent and talented people. Unfortunately, the incentives provided to government workers tends to discourage, rather than encourage, entrepreneurial thinking.
For the past few years, the Federal government has conducted an annual contest—called SAVE, Securing Americans Value and Efficiency[12]--asking rank-and-file workers for their cost-cutting ideas. First prize includes a meeting with President Obama and an opportunity to present the idea directly to the enterprise’s CEO. The White House reports on the four finalist ideas for 2011,[13]
- Create a tool "lending library" for NASA flight projects
- Reduce the frequency of reviews for superior [government housing] properties
- Stop buying hard copies of the U.S. Code Books
- Stop printing [Social Security’s] OASIS Magazine
The Washington Post reported on the President’s reaction to the first 2011 nominee,[14]
One of this year’s finalists is Matthew Ritsko, a NASA employee from Maryland
“It’s like a toolshed at your house” where tools are retrieved and then returned, Ritsko told Obama on Wednesday.
The president said he liked the idea of having all NASA workers use “the same super-duper space wrench” instead of buying multiple copies.
A super-duper space wrench. The Federal debt stands above $15 trillion, or about $133,000 per federal taxpayer.[15] As of 2010, the Federal civilian workforce stood at more than 1.8 million workers.[16] Faced with a $15 trillion debt, the best the 1.8 million federal workers could come up with was a “super-duper space wrench.” Forgive us if we pine for the days of Al Gore and his steam trap.[17]But, perhaps we are being unfair. Who knows? The contest judges may have discarded truly revolutionary ideas out of caution or ignorance.
In our serial experience inside government—both state and federal, executive and legislative branches—we have found the majority of public-sector workers to be diligent, if earnest, professionals who truly are trying their level best to fulfill their agency’s mission. On a daily basis, they are the ones who face the frustrations of a government not working. More than any other group, the rank-and-file staffer understands what is working and what is not about how government delivers services to the people.
If we could work around the public-sector unions who mediate between our elected officials and the front-line workers, then, perhaps, a treasure-trove of good ideas would come out.
A Government 2.0 would go a long way to giving taxpayers value for money and relieving the regulatory burden on employers. However, it will take a new vision for the private sector world of employment to truly arrest
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