How can we make government constantly increase its efficiency like private enterprises do?
Asked by
ETpro (
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October 7th, 2010
It has become a common meme in America (and much of the free world, I think) that government is always inefficient at everything it does. The meme is often, but not always true.
In one of my first jobs, I worked for Newport News Shipbuilding & Dry Dock Corp. (Now owned by Northrop Grumman) We had to bid against the Norfolk Naval Shipyard for contracts, and we always underbid them. The Navy arbitrarily awarded some of its contracts to the Naval Shipyard just to keep it open in case it was again needed for war. But Newport News Ship was able to pay corporate taxes, pay shareholders and earn a profit—none of which the Naval Shipyard had to do—and yet still underbid the government run facility. And Newport News Ship paid really good wages and offered great benefits to its workers. It was a union shop.
On the other hand, the Social Security Administration is an example of an efficient government program. Their 2009 administrative costs were just 0.9%. Typical private, for-profit retirement funds run total costs of 5% or more. The Veterans Administration delivers high quality healthcare to vets for far less than the same care would cost if delivered by private industry. Our military could certainly be more efficient, but its costs per man in the field are far lower than private, for-profit security firms such as Blackwater (now Xe). And there are very obvious potentials for conflicts of interest should we outsource our military to a private corporation.
In areas such as fire protection, prisons, policing, industry oversight and our military; there are grave potentials for conflicts of interest between the profit motive and public welfare and safety. So it makes sense to resist privatization and instead figure out how to run these programs at a lower cost than private, for-profit industry can deliver.
So what differs between those examples of government programs that do work efficiently and all the others that do not? For those things government clearly should supply, what can we do to make it more efficient than private enterprise?
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9 Answers
Easy: Make it more like private enterprise.
One problem stems from the fact that government pays out money based on need. This seems like a good idea on the face of it, but it acts as a disincentive for cities to improve, because they would then get less money. One idea I heard to get around this problem is to give money based both on need and performance, so there would be more of a monetary incentive to improve.
@LostInParadise – are these loans or outright grants?
My problem with your suggestion is only then we’d have to trust the government to both (1) set up a way to effectively judge performance, and (2) do so in a financially efficient manner.
It has been argued that the American federal government was deliberately designed to be inefficient.
My take:
1) The government has stagnated, in any case, because they are convinced that they will always be needed—they are too big to fail. Private industry doesn’t usually think this way.
2) The publicly-traded company needs to satisfy its investors and board and all that; this they do by continuously working to increase its profits. Government has no such drive.
Government isn’t about being efficient, it’s about being united. Besides, how would you quantify the merit of action on a national scale?
I think the trick is to really start using the federal system as it was meant to be used in the beginning – yes, I’m a liberal, arguing for small government. However, I think that small FED government can be achieved by transfer of more power and a general increase of STATE government.
As stated above, large governments inevitably become inefficient. The states should be allowed to be areas of experimentation – and compete among each other for the most efficient systems. As each government feels pressure from its people to perform in step with the others, they will be motivated to change and grow – perhaps mimicking, a little more closely, private industry.
Consider, for example, this Harvard site dedicated to government innovation – NO, it’s not an oxymoron! :-) However, although I don’t know for sure, I bet that a lot of the initiatives discussed here are non-Federal.
@iamthemob It seems to me that government is government. State government faces the same efficiency challenges that Federal GOvernment does. THe Federalist Papers laid out some compelling reasons why certain government action needed to be at the national level. But whether government is national, state or local, making it run as efficiently as possible is in everyone’s best interest. Ultimately, it is even in the interest of the government employees. When institutions get more and more inefficient, they cross a threshold of sustainably and get replaced. And people are more fulfilled in their work when they feel that they are getting things done in an efficient manner. Digging a hole while someone else shovels the dirt back in is about the hardest work on earth, because it frustrates both workers involved.
@ETpro
The difference between state and local governments and the federal governments is the potential for actual competition on some levels. Governments rely on tax revenues for portions of their revenue. The right to freely travel within the nation is constitutionally protected. Therefore, there is a more significant chance that people will move from one town or state to another for better opportunities than another nation. Therefore there’s a distinct incentive in place if we (1) shift our focus more toward our local governments and (2) empower people to know this.
@iamthemob Good point. States are painfully aware of the consequences of setting taxes too high—however many have set them too low and are suffering economically and educatinoally without batting an eye. Same goes for the federal government. We bitch about our terribnle tax burden all the time, but the US has the lowest income tax rate of any industrialized nation on Earth. Arguably it is too low, because we are piling up debt, letting our infrastructure decay around us, and not doing enough to get the economy back on the rails.
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