Deregulate the Government

Ambition must be made to counteract ambition.” — James Madison

It is one of the hallmarks of American politics today to complain away about our bureaucracy. Why is it that a driver may wait in line for two hours to get her license renewed, while someone who wants to sign up for car insurance can get signed up in “15 minutes or less”? President Obama wanted to make buying health insurance on similar to buying an airline ticket or booking a hotel online. Obviously, that didn’t work out.

This is one of the bedrocks of conservative principles: that government is fundamentally unable to complete tasks as efficiently or as effectively as private organizations do, and thus the tasks that government performs should be kept to a minimum. Services that must be provided by the government should be run as much like private corporations as possible. There has been a fair amount of consensus on this latter point. At one point, Democrats were on board with this idea as well, as the REGO program under President Clinton attests. While these principles are certainly not misguided, a dogmatic adherence to them often results in leading conservatives into misguided demands to “starve the beast,” instead of endorsing more constructive reforms.

This the result of media coverage of government inefficiencies and bloated costs combined with the constant (though necessary) pandering to voter concerns during campaigns and congressional inquiries. It is also a result of blaming the inefficiency of bureaucracy on the way these organizations are run rather than the environment in which they are created and operate in, or the constraints bureaucrats operate under.

But more fundamentally, a deeper understanding must begin, as James Q. Wilson argues in his classic book Bureaucracy, with the Constitution itself.

As anyone with an elementary education can relate, one the fundamental hallmarks of American government is that of checks and balances. As related in Federalist #51, pitting opposing departments of the government against each other will help prevent any one section of government from becoming dominant. The modern result, described by Mr. Wilson is a litany of congressional committees, subcommittees, commissions; presidential czars, counselors, assistants, advisors; and the dizzying litany of forums for handling legal disputes. Each one of these organizations and titleholders can assert power over the bureaucracy in a multitude of ways. And in the case of the congressional and executive examples, political considerations are thrown into the mix. This makes any action by them more often than not a signal of intent to voters rather than an attempt to obtain a substantive result. On top of all this, any individual can bring suit in the courts to further muddy the waters.

At this point, put yourself in the shoes of a top politically appointed bureaucrat: you are the head of the Department of Defense. Having been a businessman prior to entering politics, you have years of administrative experience. But you also have a few years of political experience so not only are you great at public relations, but you know how this game works. It is your job to implement a new policy by order of the President who appointed you: you must pave the way for gay men and women to serve openly in the military. While you believe wholeheartedly that this is the right course of action, implementing this policy is so much more than simply issuing a DoD-wide order and watching it all happen automatically. You first must sit through months of meetings with the President and his advisers on the prudence of the policy. Gay rights leaders, religious leaders, high-level generals and members of the Joint Chiefs all must express their opinion: what is the humane thing to do? what effect will it have on the missions of the various branches? will it affect our war fighting capabilities? whose rights will be trampled on and whose rights will be upheld? After this lengthy process, the new policy will be rolled out amid much fanfare by the talking heads and exalted opinion leaders on CNN and Fox News.

But this is just the beginning! Next you must sit through another long series of congressional committee hearings at which you will be badgered by Senators and Congressmen intent on winning political points with their constituents. The anger towards the policy registered by many religious conservatives will be dumped in your lap, with painful results. During all this, you will be spending a large part of your day ensuring that everyone in your organization follows your order, handling those who implement the policy incorrectly or insufficiently. Cases in which the policy is poorly implemented will probably create media firestorms which you must quell, often during intense Q&A sessions with reporters intent on selling newspapers by making you look incompetent. Also during this time, you will deal with interest groups who will use the media and their organizational media (websites, twitter, email, magazines) to make you look bad for simply following the orders of your boss. After a few months of this, the media will probably lose interest and entertain itself on some other topic.

And just when you feel like you can kick back on your porch with a glass of sweet tea to enjoy your long-awaited success, your phone will buzz. It’s a text message from one of your assistants: a citizens group is contesting the policy in court and you’re going to have to testify in front a federal district court on the subject in 5 months. It will probably take that long in consultation with your team of government lawyers (in sessions back at the White House) to prepare. And so it continues…

This point can be summed up by pointing out that fundamental to the problems that we see in bureaucracies is the environment in which they operate, which is a direct result of our constitutional government of checks, balances and judicial review.

“Now wait a minute!” some readers might be thinking. “What about XYZ agency that does a great job, as opposed to ABC agency which sucks at its job?” While all bureaucracies operate in the environment that our Constitution fosters, there are other factors at play here: the different types of tasks that an organization is created to carry out. First, a little background.

The term “task” is used instead of “goal” because goals are often ambiguous statements that describe what an organization wants to ultimately achieve, while tasks describe how that goal will be achieved in specific terms. For example, the U.S. Army’s goal is to win wars. How it does so can be different in each war. In Vietnam, the Army thought the task was to kill as many Viet Cong as possible through attrition warfare. It realized at a tragically late date that a counterinsurgency strategy aimed at winning the populace to the South Vietnamese democratic philosophy was the only way to achieve its goal of preventing the North Vietnamese communists from uniting Vietnam under their banner. On the other hand, in the first Iraq War, the Army’s goal was to liberate Kuwait. The task was simple: destroy those units integral to the operation of the Iraqi army and eliminate their ability to continue their invasion. With this task clearly defined, the U.S. won a resounding victory. Kuwait was liberated and American prestige reached new heights.

Wilson describes this “critical task” as “those behaviors which, if successfully performed by key organizational members, would enable the organization to manage its critical environmental problem.” Most importantly, the definition of a task involves identifying the “critical environmental problem.” This is the problem that the organization must solve to achieve their goal. Identifying the wrong critical environmental problem can lead to tragic results as the Vietnam experience attests.

Once that critical task is defined the battle is not over. The cornerstone of Wilson’s brilliant work is his identification that outputs (the work performed by individual operators in the bureaucracy), and outcomes (the macro effect of those outputs in helping the organization to complete its tasks) are sometimes hard to measure. In some cases, they are impossible to measure: witness the Department of State.

The goal of the State Department, as described by its website, is to “…shape a freer, more secure, and more prosperous world through formulating and implementing the President’s foreign policy, while supporting and protecting American interests abroad.” Obviously this broad, ambiguous definition leaves a lot of room for interpretation. There are going to be a large number of critical tasks that need to be defined here, and they will certainly change over time. Even assuming those tasks can be defined, can the daily activities of those who work at State be measured and shown to help in the achievement of those tasks? One must conclude that it is very difficult to measure both the outcomes and outputs at the State Department. Wilson calls the State Department and other bureaucracies like it a coping organization.

Wilson then describes an organization at the opposite end of the spectrum: a production organization. In these types of bureaucracies, outcomes and outputs can easily be measured and observed. A good example of a production organization is that most hated of government agencies, the Internal Revenue Service. It is easy to measure how the daily activities of IRS agents helps the agency to fulfill its task of collecting taxes in accordance with the U.S. tax code. IRS agents perform audits, correct errors, and calculate refunds and at the end of every year, one can easily find how much money in tax revenue the IRS collected.

If an organization’s outputs can easily be measured, but the outcomes cannot be easily measured, Wilson dubs it a procedural organization. These types of organizations, like the U.S. Army, will attempt to ensure that all members are following a set of procedures in their daily operations. But when it comes to outcomes, the observation gets a little more difficult: the Army isn’t always fighting a war, and even when it is, it can be tricky to tell at any given point before the end of the war whether the U.S. is winning or not. An old soldier’s adage says that “Generals are always fighting the last war,” so how is one to define the critical tasks that may be important in future wars and whether the Army is effectively attending to those tasks? Leaders and observers won’t know the answers until the next war is lost or won.

The final type of organization is the craft organization. These are organizations that have easily observed outcomes but difficult to observe outputs. Wilson’s example here is the Wage and Hour Division of the Department of Labor. The goal of this organization is to “promote and achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce.” It would not be a particularly difficult task to produce statistics on whether U.S. businesses are following labor standards. But determining how the daily activities of employees at the Wage and Hour Division help in achieving this goal involves more in the way of judgement and guesswork.

When a manager runs a business, it is easy to determine outputs and outcomes: the overriding goal is to create revenue possible while simultaneously maximizing profit. Every employee plays a role in helping the company produce and sell more of its product or service more efficiently. Managers work to structure the organization in such a way as to keep operating costs low so that profits can be maximized. Whether or not a company does so is easy to see as the information is freely available and open to little interpretation. Either the company has been profitable and well-run or it has not. In Wilson’s parlance, there is no ambiguity in terms of outputs and outcomes. But in a government agency, the ambiguity in deciding what an organization’s critical tasks should be and whether or not the outputs and outcomes are helping in the ongoing completion of that task results in a set of constraints under which that organization must operate.

It is these constraints that make up the final piece of the puzzle. Every member of an organization from the street-level bureaucrat up to the cabinet-level secretary responsible for an agency operates under a large number of constraints unheard of in the business world. We already saw first hand the different political constraints that an agency manager must work under. But there are so many more that we haven’t yet covered.

The first example that comes to mind is a manager’s relative inability to fire troublesome employees. Federal laws and rules relating to the rights of federal workers make it extremely difficult to fire a federal employee. Often it is cheaper to simply deal with their inefficient work or bad behavior rather than go through the procedural and legal rigamarole of firing someone. Many agencies also must follow strict rules about who they hire as well, further reducing efficiency.

Agencies also must deal with constant second guessing and micromanagement by Congress, the executive branch, outside organizations, think tanks, and powerful businesses that are affected by their work. Thus, there is a tendency to focus on following the resultant set of procedures rather than focus solely on results. This way, when problems arise or mistakes occur, blame can immediately be placed and a scapegoat can be found. Sometimes the nature of an organization’s work dictates that it cannot be micromanaged by the powers that be (think police work). But even these types of organizations face micromanagement and second guessing as the recent spate of outrage over police violence shows.

Another constraint agencies and their operators face is that of being seen as “too competent.” That is, agencies that are good at what achieving their goals by clearly defining and carrying out their critical tasks often have additional tasks foisted upon them, which often ends up inhibiting the agency’s ability to do both the old and the new task. Wilson uses the example of the Social Security Administration to illustrate this point: the retirement program was well run from its inception in 1937 until 1954, when Social Security Disability Insurance was added to the mix. There was much more ambiguity in the outcomes and outputs in the task of providing payment to the disabled: how exactly should the agency define a “disabled person?” how much should a person receive, based on his type of disability? This new task made life at the SSA much more difficult.

The list of different constraints could go on and on, each agency facing its own unique challenges, each constraint something that no independent business must face.

These factors have led to the situation we now face: an endless litany of court battles, congressional inquiries, investigations, blue ribbon panels, etc. The mere existence of many government agencies arouse a large amount of angst amongst the electorate, resulting in the “outsider” candidacies we are seeing in the 2016 Republican race. But further inspection reveals that many of the same agencies that we think operate so poorly actually do a pretty decent job given the environment, the ambiguity of tasks, and the constraints that they must operate under.

That’s not to say that there is not much that could be done to improve the performance of these bureaucracies. In the final calculus, it is impossible to have both an extremely transparent government with so many checks and balances and an extremely efficient government. It is partly a problem of “too much democracy.” Yes, the citizens of the nation hold the keys, but this level of control by the electorate and by proxy, elected leaders, can result in ambiguity of tasks and inefficiencies in execution. As Wilson argues, to make this beast run more efficiently, we must “deregulate the government.” Even this will be a monumental task- the federal government is very much a product of the political incentives that agency managers, executive branch appointees and elected officials face. Thoughtful and targeted changes to the charter laws of government agencies that better define their tasks and reduce the rampant second-guessing we see within government will help to achieve the results that many conservatives seek.

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