Anti-government morons

The Thinker by Rodin

It’s come to this: the anti-government morons are decrying “big government” using the Internet, which would not exist without big government.

Granted, not everyone knows or cares about the history of the Internet. Rest assured it was not spawned as an invention of private industry, or manufactured in someone’s basement. That was sort of tried in the 1980s and failed. Yes, the indispensable Internet that if you are like me you are virtually addicted to (and which also keeps me employed) is a product of the systematic application of your tax dollars chasing what any sound financial analyst back in the 1960s would have called a wild goose chase. As an investment of tax dollars its return is incalculable, but it has connected us as never before, made getting information incredibly simple, and has even help foment revolution in countries like Egypt. It will probably be seen in retrospect as the most brilliant use of government tax money ever and a key enabler of democracy across the globe.

Anyone remember Compuserve? Or AOL? They were private Internet-like networks for subscribers only back in the 1980s and 1990s. Compuserve was bought out by AOL in 2003 and added to their list of “hot” acquisitions like Netscape (cough cough). AOL is no longer in the business of dishing out content only to paid subscribers and sees itself as a “digital media company”. Content equals money so they are eager to get anyone on the Internet to look at their sites, not just subscribers. In part they do that by not associating their sites with aol.com, which is unsexy, and build sites like this one. AOL still frequently loses money and every six months or so it seems to undergo reorganization.

The Internet you enjoy today is a basically a product of the Department of Defense. Back in the 1960s, the Defense Department needed a digital way to connect the department with research arms at educational institutions. It threw research money at the problem through its Advanced Research Projects Agency (ARPA), which takes on great, hard to fulfill quests. Working with a company called BBN under a government contract, the first router was manufactured. It provided a common means to move data electronically over a network through this weird idea of packets. Being able to send packets of data reliably between places on the network in turn spawned the first email systems that also went over its network. In the early 1990s, Tim Berners Lee at a multi-national research institution in Switzerland (which most recently found the God Particle) thought email was too cumbersome for his tastes, and created Hypertext Transfer Protocol (HTTP), which became the web. It was government that created the Internet and arguably it could only have happened because of government. Private industry was not interested in some decades-long research project to build an open network that they might not control. Where was the profit in that?

Arguably the Internet could not have happened without the space program. Huge amounts of government research money were thrown at developing electronic computers, needing to be ever smaller and faster, to facilitate the needs of the space program. The space program also developed a whole host of other valuable products we use today and don’t think about, like Teflon, byproducts of government funded research that were turned over to the commercial sector.

Public investments created our interstate commerce system, a system we now take for granted but which made it so much easier to move both goods and people across the country. This investment stimulated commerce, built suburbs, and made it easier and faster to see our great country. Public investments created and sustained public schools and universities, which allowed minds with lots of potential to reach actualization and be put to work for the enrichment and betterment of all.

For a couple of dollars per person per year, the National Weather Service provides non-biased, accurate and timely weather forecasts available to anyone. One of our most valuable federal agencies is also one of our least known or appreciated: the National Institute of Standards and Technology, formerly the National Bureau of Standards. Not only does it say how to define an inch or a pound, it also defines standards for more complex things, like data security. Defining it once by engaging the best minds on these subjects keeps everyone from reinventing the wheel. Standards save huge amounts of money and promote competition, but we take them for granted. By promoting open standards and interoperability, NIST and other standards organizations allow the private sector to thrive and we consumers pay lower prices and get more broadly useful products.

Does the government waste money? Most certainly. We waste billions in Medicare fraud every year, and arguably wasted hundreds of billions in recent wars in Iraq and Afghanistan. I can understand why some would infer from these examples that that the government simply cannot manage any large problems. However, the government is tasked to manage large problems all the time because lawmakers think those tasks are important. Many times, the tasks are unique and have never been done before, and are inherently risky. For any risky endeavor, there is a likelihood of failure, thus it’s not surprising that government’s record is so spotty. However, by approving these programs, lawmakers are essentially saying they should move forward in spite of the risks.

Oversight is supposed to be the solution, but it works haphazardly. Congress has the responsibility but it seems poor at it. There are other mechanisms in place to audit federal agencies: the Government Accountability Office, inspector generals at every agency, reporting to the Office of Management and Budget and much more. What does not happen often is that a program is held accountable for achieving results, with the penalty that the program goes away if results are not achieved. Some programs have sunset provisions, but these are the exception. (You might want to review my thoughts on how to make a truly accountable government.)

Yes, I can understand that people don’t like to pay taxes. Yes, I can understand that they don’t think the government should be doing lots of things that it does, and want to eliminate huge chunks of the government and pocket the money instead. Doing so may eliminate a lot of waste and fraud by ending a bad program, but it doesn’t eliminate the underlying problems. Eliminate the EPA and pollution is not going to go away. It will get worse. Eliminate the FDA and you run the risk of having unsafe drugs. Eliminate Medicaid, food stamps and welfare and you run the risk of revolution. Eliminate transportation funding and expect more people to die from bridge collapses or find their cars falling into sinkholes.

The real question is whether the costs to society are greater or less because of government, because the costs will get paid either way. They will happen either through taxes or through costs like lowered life expectancies, greater crime, poorly educated children, fouled water and air, unsafe food and a crappy transportation structure. The private sector cannot rush into save us from these problems. They might, if they see some profit in it, but any solution won’t be in your best interest, but in theirs.

The really successful governments these days are those that meld the best of the private and public sectors. Look at Germany, with a progressive government and a huge welfare state that still lives within its means, is thrifty and is innovative in producing products the world needs. Thanks to its government, it is leading the way in getting energy from renewable resources. It did not happen in the absence of government, but because of government. It also happened because Germans believe in their government and support it, unlike large portions of Americans, who are trained to be suspicious of government.

Our imperfect government is a result of an imperfect democracy driven largely by unelected special interests. When it does not truly serve the public good, it becomes ineffective and corrupt. When it works with the public good in mind, as it did for the Internet, it can drive the future and make us world leaders, rather than laggards.

Whether you agree with me or not, that you are reading this at all is due to the fact that you, the taxpayer, invested in a risky venture that networked us together. Without this investment, the United States would now almost certainly be a second world country, because what would we produce otherwise that the world would want? It values our ability to innovate, and our innovation is predicated in part on massive research, far beyond the ability of the private sector alone to attempt. This kind of research can only be done by the public sector and our educational institutions. If we don’t make these investments, other countries will before we will, and we will be a far poorer nation because of it.

How to achieve an accountable government

The Thinker by Rodin

After having spent decades largely ignoring the problem, the exploding federal deficit is suddenly on the minds of Congress. It’s so on their minds that they have forgotten to work on other things, like creating jobs. This new deficit fever is especially surprising given that Republicans are leading the bandwagon, since their deficit spending caused most of our debt. Moreover, one of their heroes, Dick Cheney, famously said deficits don’t matter.

While debt matters, I doubt our increasing indebtedness is what is driving these new deficit hawks. What matters is that a vote on the debt ceiling can be used to restrain the size of government, and Republicans passionately care about that. The same senators and representatives, who just a few years ago were voting for programs to increase the debt, and just last December agreed to extend tax cuts for the rich and lower social security withholdings, are now threatening not to extend the debt ceiling next month.

Something does need to be done about controlling our debt, but intelligently, not stupidly. I consider myself a fiscal conservative. That does not mean I am also ideologically aligned with “small government”.  I simply believe that, in general, government should to live within our means. To me this does not mean we necessarily cut spending to match expected receipts. If we as a nation decide we have priorities, like addressing global climate change, and that requires raising taxes, then I am okay with raising taxes. I suspect we would be long gone from both Iraq and Afghanistan had we had “pay as you go” wars. In fact, the Iraq war probably would never have started, and our debt would be at least a trillion dollars less.

There are times when reducing deficit spending is counterproductive, and that may still be true today. We know enough about economics now to know that spending money stimulates others to spend money, which helps the economy grow and creates jobs. If our federal deficit is about $1.5 trillion a year, taking that much spending out of our economy suddenly will be like throwing sand into our nation’s engine. This effect can be observed in Great Britain, which chose sudden and severe austerity. It is finding its unemployment rate soaring, its GDP declining and its taxes much higher. Perhaps they had no choice given how overextended they were. At least in the short-term, austerity is causing immense suffering for no obvious reward. In general, debt is undesirable, but is it more undesirable than negative growth and increased unemployment? Shocks to any system are rarely beneficial.

To me it makes much more sense to come to consensus on national deficit goals and systematically work toward them. A pragmatic goal would be to have a balanced budget in five years and a credible bipartisan law in place that gets us there. How to make it credible? It could be that the president’s budget has to meet the yearly goal, and first be scored by the Congressional Budget Office (CBO), which asserts it as financially sound. If the deficit is $1.5 trillion, reducing debt by $300 million a year should be doable, particularly if it allows for taxes to be increased if spending is also cut. While we are easing off the economy’s gas pedal, perhaps the country will perk up enough where that growth will provide more tax revenues, thus making spending cuts less draconian. Why put our nation through needless pain?

I think our debt speaks to two larger problems. The first is political dysfunction for which traditionally deficit spending has been the consequence. In addition, we often spend tax money inefficiently or on “nice to have programs” of marginal value. We already have organizations like the General Accountability Office (GAO) and the CBO that exist to inform policymakers on whether programs are effective or not. The problem is Congress rarely takes their advice.

We already know how to intelligently solve most of these problems; we just lack the will to do it. Medicare, for example, wastes tens of billions of dollars a year by paying fraudulent bills. It probably cannot be solved by audits alone, as the volume of billing makes it impossible to root out all fraud. Systemic change is needed instead. There is also a lot of waste when we pay providers for unneeded services and tests. Doctors complain they don’t earn enough from Medicare reimbursement to be profitable. The evidence is overwhelming that they make up for it by adding additional tests and procedures.  Consequently, Medicare needs to reward efficient health care based on satisfactory outcomes. Medical practices suspected of a lot of bogus billing should be audited, prosecuted when possible and publicly scorned if they bill for markedly more procedures per patient than most practices. Ironically, even with its waste, Medicare is still far more efficient and cost effective than private health insurance. If we could find effective and cost effective ways to deliver health care in the United States, and cap defense spending to inflation, then most of the other problems would solve themselves.

I favor automatic sunset provisions for all programs unless they can be independently shown to be achieving their objectives for the agreed upon budget. New programs should be established with clear goals, with expected outcomes required within defined timeframes. These accountability criteria should be part of the legislation. The CBO should provide language for objective criteria that the program would have to meet and it should be inserted into an accountability part of any spending legislation. The GAO should be the independent arbiter of whether the programs actually met their goals. If they did not, programs would automatically sunset unless Congress granted an extension. This too would do a lot to align our government toward being efficient by building efficiency into the system.

This is similar to how I manage my own financial life. Government is more complicated of course, but these principles are solid and should scale. If we could actually govern like this, then maybe no one would talk about out of control government again.