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.

Governments should not be run like a business

The Thinker by Rodin

It’s hard to listen to a politician today without hearing them tell you that the problem with government is that it’s not being run like a business. For example, Mitt Romney says his private sector experience running a venture capital firm (Bain Capital) was great preparation for being governor of Massachusetts and, he hopes, president of the United States.

In reality, a primary reason our government is as messed up as it is is because incoming politicians have tried to treat government as a business. The resulting mess tends to be ugly and ruinously expensive. As one example, for a couple of decades now our esteemed national leaders have declared that since the private sector can do everything better than the government, we must outsource as much of the government as possible to gain the wonderful efficiencies of the private sector.

Outsourcing the government has been great for businesses, but not so much for government and for the taxpayers. Ask Blackwater. There was a need, they had the product and they had a business model designed to shaft the government. A grunt private, even with pension and various other benefits costs a tiny fraction of the cost of a guard provided by Blackwater. How much more? It’s hard to say exactly, but add in benefits, profit and nice corporate offices in Arlington, Virginia and even the most unskilled guard from Blackwater likely bills at least $100 an hour. A private does not have a problem following orders. It’s not just a good idea, it’s required, even when inconvenient. Failure to do so may result in a courts marshal. Ask a Blackwater contractor to do something not explicitly in the contract and they will either refuse or it will require the payment of some sort of high usury fee.

Businesses are entities designed to make profits. Governments expressly don’t want to make profit because taxpayers resent paying a dime more in taxes than they have to pay. If government were truly run as a business, the IRS would charge processing fees to process your tax return and charge $1 a minute for tax advice over the phone. In fact many of us pay a fee to file a tax return, but the government doesn’t get a dime. It’s private sector entities that add value and profit by facilitating the transaction so you can get a refund faster.

If government charged a fee for every service, it would grow corrupt. How many civil servants do you see driving around in luxury cars? I’m a pretty well paid civil servant, and I’ve never come close to having the income to buy a Lexus. Those few that do are likely political appointees or elected officials, and with luck their crimes will be discovered by salaried detectives and prosecuted by salaried DAs.

Here’s the thing: the civil service works best when people are paid a respectable but not lavish living wage, they are held to a strict and impartial code of conduct and they are permitted to exercise as much independent judgment as their position allows. I know this from working inside it for thirty years. When you get a fair deal, you have incentive to work in the interest of the government. Job security in the government is not something evil; it is a feature of a job that enhances loyalty and makes it easier to put the peoples’ business first. Pay a civil servant too little and there is incentive to take bribes. This is the problem in most third world countries where bribery is rife: no one can afford to live on the pittance that is their actual salary. Corruption simply breeds more corruption. Paying civil servants a living wage solves the problem.

There are so many silly myths about the private sector that you would think experience would have debunked them. One is that businesses are oh so efficient. Businesses tend to be as efficient as they need to be and never more. The ones who are really bad at efficiency tend to go out of business. Small businesses in particular have a hard time at it. People think they are cut out for being an entrepreneur, but in reality it is very hard and the odds are against you. Take a look at the docket at your local county bankruptcy court sometime. Look at the stack of business bankruptcy filings. Businesses fail all the time, some for reasons that suggest incompetency, some because they have the wrong product or service for the market, but usually for both reasons. Every business out there wants to have a lock on a particular market so they can raise prices and reduce quality. That’s why companies like Google and IBM spend significant amounts of money to buy out competitors. They don’t invite competition. They want to cut competition off at the knees. This is done by means legal, legal but unethical, and outright criminal actions which pragmatic businesses do hoping they won’t get caught. An obvious example: companies like Citibank accused of robo-signing hundreds of thousands of home foreclosures.

Maybe that’s fine in the world of business, but do we really want to inculcate this attitude in our government? I would hope not! Government exists to address common societal issues that are not suited to business. Some of the reasons are because they must be done impartially, because the work in inherently unprofitable, and because there are long-term interests that need to be addressed.

This may be hard to believe, but there are some things the government does much better than the private sector. In general, education is one of them. It may be hard to believe when you think about failing inner city public schools, but most schools are not failing and get high marks from parents. There are enormous efficiencies when you can buy textbooks for a school district in bulk, or need to ensure that 10,000 teachers adhere to the same standards, or that your students at least get one healthy and nutritious meal a day in the school’s lunchroom.

The public sector is exceptionally cost effective delivering higher education, as evidenced by state universities near you with well moneyed alumni. A public college tends to be half the cost, or less, than a private college, and often achieve better results. They serve a critical need: making higher education relatively affordable, something the private sector could not do, which is why government created them. Community colleges are an even bigger bargain. I am wrapping up teaching a semester course at a community college. I was hired to teach the course for less than $3000. My students got plenty of individual attention. They paid a few hundred dollars each for the course. It just so happens that a similar course is available down the street from Oracle Education, at a cost of several thousands of dollars. Arguably, my students got a much richer educational experience at a tenth of the cost. Yes, community colleges are bargains, which is why they are expanding like crazy and are one of the growth sectors in this crazy economy. What’s not? Try private colleges, particularly career-oriented private colleges like Kaplan University, owned by the Washington Post. Their success rate is miserable and their costs are high. They do excel at convenience, but they have little incentive to make sure their students graduate. They are after a profit, not the success of the student.

In general, government is a much different domain than the private sector. You want those leading your government to be people who understand this, and understand what makes government work efficiently and effectively. You want leaders who align the government with the current and future needs of the citizenry. You don’t want someone who thinks that a private sector business model will work in this domain. Instead, you want someone who has demonstrated competence leading and managing governments and other non-profit institutions. This leaves out most of those currently running for president. You would be wise not to vote for any of them, because they are likely to leave your government worse off when they leave.