Why government can’t get it right

There are those who think the answer to many social questions is government intervention and government control. There certainly are things which seem to be appropriate for governments to do – maintain the streets and provide police and run the criminal justice system and maintain armed forces, among other things.

However, I am not convinced that government is the answer to all ills. I’ve worked with government agencies, and in general I’m not impressed with either their efficiency or their effectiveness. I was not particularly surprised at the poor state and federal response to hurricane Katrina. I’m not surprised at the inevitable cost overruns on government programs, not at the proportion of them that are abandoned as hopeless after spending millions or even billions. I’m not surprised that the No Child Left Behind bureaucracy has produced such absurd requirements. I’m not surprised at the constant turf battles between the FBI and the CIA, nor at the number of times both agencies have fumbled their tasks. I’m not surprised the effort to “nation build” in Iraq has gone so poorly. And I expect most future government programs to be equally ineffective and overpriced.

Government agencies are institutions with a dynamic all their own. All large institutions have inefficiencies and incompetent members and meaningless activities, but business institutions have at least some level of restraint because they have a bottom line – at the end of the day they have to produce a profit for their shareholders or owners. At the end of the day they have to satisfy their customers or those customers will go elsewhere. So for businesses there is some forcing function, though not always as much as one would like, to fire the incompetent and eliminate useless work and improve processes and products.

Government agencies don’t work like that. There are indeed forces in a government agency that produce winners and losers in the organization, but these are far more often political forces or office politics forces. At the end of the day, government agencies don’t have a bottom line; they don’t have to show a profit. At the end of the day, government agencies really don’t have to satisfy their customers to stay in business, only their Congressional sponsors. When they make mistakes, generally they don’t suffer serious consequences because it is in the interests of their political sponsors not to impose consequences. If they overrun a budget, Congress gives them more money. If they make a really bad mistake, a few lower-level scapegoats are found but the upper management generally escapes the scandal undamaged. If an agency launches a program, as often as not it takes on a life of its own and runs for decades on inertia, whether or not it is effective.

Thus far we have been a rich enough country that we can afford the vast wealth government agencies waste, and the additional costs they impose on everyone – individuals and businesses alike – with their interference and regulations. And they do get some things done, if inefficiently and at enormous cost. But the European Union model, with a massive bureaucracy in Brussels trying to regulate the tiniest details all across the EU is, not surprisingly, proving cumbersome, expensive and ill-equipped to handle many of the member country’s individual and unique problems. One size does not fit all. I don’t think we want to follow that model.

Government agencies by their very nature are not very flexible, not very efficient, and not very effective, and they are always very expensive for the services they offer. Government agencies by their very nature will always be more responsive to the political masters who fund them then to the public they are supposed to serve. There certainly are a core set of services that are appropriate for government agencies to deliver, but for anything beyond that small core set of services, we ought always to look first for other, more responsive and efficient ways of obtaining those services outside of government, ones which will be properly accountable for the money spent and the results received.