President Trump plans to unveil a new White House office on Monday with sweeping authority to overhaul the federal bureaucracy and fulfill key campaign promises — such as reforming care for veterans and fighting opioid addiction — by harvesting ideas from the business world and, potentially, privatizing some government functions.
For a government agency, the incentives are perverse. Problems generate rewards, and solutions don’t. I once wrote,
In a government agency, each worker is paid more the longer the problem persists. In contrast, no one gets paid to work on an IETF task force. Instead, businesses and universities lend experts to work with the IETF. This represents a cost to the employers and perhaps also to the employees, who are kept from research or other activities that could advance their careers. Everyone involved in the process has an incentive to get the problem solved as expeditiously as possible.
An IETF is an Internet Engineering Task Force. My recommendation is to create temporary task forces to solve problems. Meanwhile, shrink agencies whose natural interest is in perpetuating problems.
Several things:
1) Yes, government programs should have expiry dates to avoid inertia.
2) Didn’t Obama do something ‘Innovation’? This should go as well with lots of Ted talks to Kushner accomplishing nothing.
3) In terms of task force of a short term failure in the US: What should be done with the WWC in rural Rust Belt and a shortage of workers in California? (Note immigration is down and has been for years.) I do agree most of these position are not well paying and it is hard to move, get a job and get ground with our high cost of living. I suspect Immigrant workers have the benefit of local community and churches like Catholic Church work with Hispanic Immigrants in our area (Riverside, CA) or many Asian-Americans have ties to Korean-,Vietnamese, Indian-American (etc. here) support groups. (Note: housing deregulation is a ‘solution’ but there are other issues here.) I would also note that I believe this is not what WWC Trump voters wanted from Trump administration.
I find that, at least in defense, a partial cause of the incentive problem is the program budget. Because budget can only go to pre-specified programs, if a manager saves money, he cannot put it toward an alternative use. It is taken back and given to someone else, or his budget is cut next year.
In a budget with fixed organic classifications by organization, managers can reprogram budgets at will to new or alternate projects as the need arises. Whereas there is nearly zero opportunity cost to saving a dollar in the program budget from the manager’s perspective, if he can spend what he saves on alternative uses the opportunity cost suddenly increases quite a bit.
Similarly, the manager won’t spend all his time trying to extract more budgets. With the program budget, the opportunity cost of additional dollars is limited to the effort the manager puts into justification, and not the opportunity cost of what other projects can be accomplished.
As Demsetz wrote: “To achieve an efficient allocation of resources, it is necessary for someone, the Government or private individuals, to prevent others from using scarce resources as if they were free goods.”
Is a congressional committee more like an IETF or like a government agency? If the latter, should we be surprised that so many problems aren’t addressed rationally?