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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Daniel DiSalvo on the Limits of Government Efficiency



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I often make appeals to the importance of improving government efficiency. Daniel DiSalvo offers a somewhat different perspective:

The reasons government agencies are less efficient has little to do with the quality of their workforces and much to do with their incentives and constraints. The issue is that government has multiple priorities, while private enterprise has far fewer. This is wonderfully explained in James Q. Wilson’s classic book, Bureaucracy.

Red tape in government originates with citizens’ demands. Organized interest groups ask for accountability, equity, fiscal integrity, and social justice. By themselves, these are reasonable requests but they add up to make projects much slower. For instance, civil service reformers demanded that no government official should derive private benefit from a public project and that contractors all have an equal chance to bid on the job.  Fiscal hawks sought strict accounting for public expenditures, requiring them to be as detailed as possible. Minority groups asked for preferential treatment in government contracting to compensate for past discrimination. Consequently, for each demand a procedure must be established and a process followed. Violations of procedural rules can result in lawsuits, undermining the government’s reputation for integrity, and causing further delays. 

Private enterprise faces few of these demands.  It seeks to make a profit from completing a project, can hire any subcontractors it likes, and employs its own accounting methods. The incentives are clearer and the constraints fewer. 

In sum, the reason government is less efficient is because it is in fact trying to do more–to satisfy citizens who have multiple and sometimes competing priorities. 

Though DiSalvo makes an excellent point, I nevertheless think that it is possible for government to achieve certain discrete tasks more efficiently. It is true that organized interest groups make clashing demands, but some groups prevail more often than others. Most of America’s K-12 public school districts are run like public companies in which the majority shareholders are the employees, who tend to enrich themselves at the expense of other interests, e.g., their “customers,” employers with an interest in hiring educated workers, etc. The problem here is less that the different demands of different organized interest groups are gumming up the works. Rather, it is that the ownership structure is profoundly flawed. One solution for the fact that citizens have multiple and sometimes competing priorities is to facilitate the rise of more specialized providers of public services, including niche providers. This is hardly a panacea, but it can, in at least some domains, mitigate the government efficiency problem. 



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