that National Health Care thing...
I work for a large fortune 100 company. I have a unique position in the company which allows me both to observe the operations of the company and the federal government . My company and the government have many similarities. They have grown into such huge and bureaucratic organizations that they are not run under a single management model. Instead they are run by hundreds of various separate policies all instituted individually to address various separate problems. Working together, all of these policies produce a lot of gridlock and institutional incompetence. A great example is in the area of computer security. Our security policy is as bad as the governments. The security policy is a hodge podge of rules all designed to address this or that. The result is that it takes months to get new equipment or to accomplish anything. Put simply, my company and the government are like huge computer operating systems with thousands of individual patches. They run, but not very well. Like a computer operating system, it is impossible to avoid this outcome with a giant company or the government. Eventually you are going to need patches…. millions of patches.
Also in my position I have had the luxury of being able to converse with many different member s of senior management about how they do their job. One of the common themes among successful managers and executives is their ability to bypass the company bureaucracy. Put another way, these managers disregard the rules in order to implement their ideas and to get things done. These managers are responsible for most of the growth in the company. If it wasn’t for this small group of managers disregarding company policy, the company would putz along at almost no growth and would eventually shrivel up and die… Ironically, these types of managers are richly rewarded for breaking rules. They get raises, promotions, stock options, etc… No one cares that they break the rules because the company is results oriented (i.e. profits). You get results, you get promoted.
In contrast, at the government, breaking the rules will not only get you fired, but it can get you investigated by Congress, slimed by the press, and even prosecuted. The government entity I work with can’t “break” any rules, even when the results would be in everyone’s favor. The government views the “process” as important as results. No one in the government gets promoted based on results if they have disregarded the rules. You cannot disregard the process at the government.
Just like my company, there are also a few very smart and motivated people at the government. But, these people won’t get rewarded in the way people at my company do. Many of them won’t get to be in charge. Consequently, the government won’t benefit from their talents in the same way that private companies do.
Keeping this in mind, one can understand why the government has difficulty doing anything efficiently or well. The government manages to putz along with change occurring every once and a while. Keeping this in mind why would anyone want the government running a national health care system. I keep hearing proposals from various politicians about how we need the government to run our health care system because it is “broken.” Broken? If the government ran the system it would be much worse than broken. Could you imagine trying to get the government to do something for you if your issue fell outside the written procedure? You might as well take arsenic.
The general rule should be that government does things badly – they create poor assets. Thus, we should limit the amount of things that government does to only things the government must do. Things like defense, the courts, maybe even the FAA, etc…
Also in my position I have had the luxury of being able to converse with many different member s of senior management about how they do their job. One of the common themes among successful managers and executives is their ability to bypass the company bureaucracy. Put another way, these managers disregard the rules in order to implement their ideas and to get things done. These managers are responsible for most of the growth in the company. If it wasn’t for this small group of managers disregarding company policy, the company would putz along at almost no growth and would eventually shrivel up and die… Ironically, these types of managers are richly rewarded for breaking rules. They get raises, promotions, stock options, etc… No one cares that they break the rules because the company is results oriented (i.e. profits). You get results, you get promoted.
In contrast, at the government, breaking the rules will not only get you fired, but it can get you investigated by Congress, slimed by the press, and even prosecuted. The government entity I work with can’t “break” any rules, even when the results would be in everyone’s favor. The government views the “process” as important as results. No one in the government gets promoted based on results if they have disregarded the rules. You cannot disregard the process at the government.
Just like my company, there are also a few very smart and motivated people at the government. But, these people won’t get rewarded in the way people at my company do. Many of them won’t get to be in charge. Consequently, the government won’t benefit from their talents in the same way that private companies do.
Keeping this in mind, one can understand why the government has difficulty doing anything efficiently or well. The government manages to putz along with change occurring every once and a while. Keeping this in mind why would anyone want the government running a national health care system. I keep hearing proposals from various politicians about how we need the government to run our health care system because it is “broken.” Broken? If the government ran the system it would be much worse than broken. Could you imagine trying to get the government to do something for you if your issue fell outside the written procedure? You might as well take arsenic.
The general rule should be that government does things badly – they create poor assets. Thus, we should limit the amount of things that government does to only things the government must do. Things like defense, the courts, maybe even the FAA, etc…
posted by Sloanasaurus | 6/05/2007 11:16:00 PM
This is an excellent post. 'Saurus is rediscovering what in economics is called "The Theory of the Firm" which was pioneered by Coase. The idea is how is it determined which relationships are governed in a non-market manner within a firm, and which are handled in a market. That is, if you want your secretary to type something, it's basically "command and control." Please do this. It's not that you go to a market for typing one letter and buy one letter of typing services.
Coase's idea was that command and control really is better than the market for some things, like getting a letter typed, and worse for other things. The key is that the market itself determines the size of the firm - the command and control entity. If a firm gets too big, bloated and bureaucratic, it won't be able to compete with smaller firms which allow more functions to be done by the market.
The problem with the government, as Saurus points out, is that it is not subject to such discipline.
The "Theory of the Firm" that Pencil is explaining makes sense. However, rather than saying that the inability to emulate the market-savvy discipline of smaller, thriving firms is a "problem with the government," is it not a neccesary, unavoidable consequence of government in societies that cherish freedom?
Other types of government may be better for making the trains run on time than constitutional republics, but I don't consider that a problem. Yet this doesn't mean we have to let demands of public-sector unions go unchecked to the point where they can cripple the necessary functions of government.
A healthy appreciation, though, for the proper limits of government ought to make us apprehensive when technocrats or lefty corporatists tell us that "government should run like a [thriving] business".
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