Thrawn Rickle 66
Government—by the Bureaucrat, for the
© 2003 Williscroft
recently saw a bumper sticker that read: If you like the Post Office, you will
love socialized medicine.
taken. The Post Office can’t seem to move into the state-of-the-art world of
modern computers at any level that seems to matter. Not that the Post Office
doesn’t try. Unfortunately, its technology implementation lags by about ten
years. Think back to the PC you had on your desk ten years ago. Compare it to
what you probably use today. Imagine trying to cope with that anachronism. The
major mail processing equipment used by the Post Office suffers similar
inadequacies. By the time such equipment is put in place across the United
States, and by the time it is finally operating without significant bugs, it
is so outmoded that much of the internal hardware is no longer routinely
available on the open market. This means, of course, that repairs are
significantly more expensive than they might be were the equipment genuinely
can step into any other United States government agency or department and find
members of the liberal intelligentsia tell us there is no reason a government
agency cannot run as efficiently as a private business. I listen to the
arguments and can’t help but agree: a group of dedicated government
employees should be able to function with an efficiency at least as focused as
a similar group working for General Electric or Ford. They never do, but they
at least one way there is not a lot of difference between General Electric and
the federal government. Both are large, unwieldy bureaucracies. In fact, one
can effectively argue that from a management point of view there is only one
significant difference: GE has to be profitable in order to pay its employees.
in commercial companies, supervisor pay is at least in part determined by the
performance of the people they supervise. In any case, long-term viability of
any company is a direct function of its profitability. An employee who does
not contribute in some measurable way to this profitability sooner or later
will be doing something else.
inefficiencies and actual losses reach unacceptable levels in a commercial
firm, the market solves the problem. Inevitably, the bottom line rules.
can argue that the very nature of government prevents bottom line arguments
from being applied. As a general rule, government consumes money. Even when
government appears to be generating money, it still is a bottom line consumer.
Salaries paid to government workers, for example ultimately derive from taxes
collected from citizens, including the government workers themselves. The
money put back into the economy as paid wages is always less than that taken
from it through taxes. Again, it can be argued that the differential still
ends up back in the economy after being used to pay for overhead and
infrastructure, since eventually the money is used to pay for something,
illustrate this, tax five individuals who earn $4 thousand a thousand dollars
each, and use this money to pay a government worker $4 thousand, and use the
remaining thousand dollars to support the infrastructure in which this
government employee works. Without the tax, the four individuals would,
ideally, spend $20 thousand, making this money immediately available to the
rest of the economy, where it will percolate through the economic system.
After the tax, however, only $15 thousand immediately finds its way into the
economy. The remaining $5 thousand is put on hold. It spends time in the
collection process, in the accounting process, in the allocating process, in
the payroll process, and eventually, $4 thousand finds its way to the
government employee and from there into the economy. The other thousand
dollars also eventually finds its way back into the economy.
is a significant time lag between the time the original five individuals
received their money and spend it, and the time the remainder of the money
finally arrives in the economy. During this time, it’s not doing anything.
It just sits there. Like friction, it consumes economic energy without
producing anything. It adds an unavoidable degree of inefficiency.
mine uses workers to extract raw material from the earth, processes and then
sells the mined minerals, and uses part of the money to pay the workers, and
the rest to do other economic things like investing in other operations,
purchasing mining or office equipment, or whatever.
factory produces widgets that it sells for money that it uses to pay workers,
purchase raw material, equipment, etc.
accounting firm sells a service, using the money to pay the accountants,
purchase equipment, etc. Service firms of all kinds can profitably exist in
any economy where there also exists a manufacturing base that ultimately
underwrites the cost of these services.
production (mining, farming, etc.), manufacturing (cars, computers, etc.), and
services (accounting, legal, etc.) form a synergy that keeps an entire economy
afloat and working efficiently.
wait a minute. Doesn’t government supply a service, using people that it
pays with taxes it collects from the consumers of that service? Isn’t
government part of this synergy?
stated: yes it is. A major key to the process, however, is the degree of input
from each segment, and the efficiency of that input. An economy that has no
production, no manufacturing, that consists only of services cannot endure,
because there is nothing generating the underlying source of payment for the
services, unless, of course, such an economy services another economy that
does have a production and or manufacturing base. Ideally, an economy will
adjust so that the production and manufacturing base will balance the service
sector so that everything works smoothly and efficiently.
a part of this system develops a significant inefficiency, the whole system
suffers the consequences. Eventually, the inefficient element has to go, or it
will drag down the entire system.
example, a manufacturing process that falls behind current technology will
produce widgets that are either more expensive than gidgets, don’t work as
well as gidgets, or maybe are not even useful anymore, like chariot wheel
spokes. If this manufacturer is subsidized with money extracted from the rest
of the system, creating either an increasing but useless inventory of spokes,
or tying up the money in the inefficiency of the manufacturing process, the
whole system bogs down to the degree of this inefficiency. In effect, a
percentage of every dollar produced in the system, disappears, is used up,
consumed by the friction of the inefficiency.
in real economic systems, chariot wheel spoke manufacturers eventually wither
and die. They fall away from the whole, taking their inefficiency with them.
Since this doesn’t happen immediately, and since the effect exists at
different levels in a whole bunch of industries and processes, every economic
system has an inherent level of inefficiency that it can never overcome.
always adds to this inefficiency. It is inherent in the process. You cannot
add a taxing entity to an economic system that consumes part of the collected
taxes in overhead, and that supplies a delayed service worth less than the
collected taxes, without adding a significant inefficiency burden to that
the service is worth the price of the inefficiency. A good example is the
military. Any economic system has to protect itself collectively from other
economic systems. We need to protect ourselves from the bad guys, from the
Pearl Harbors and the Twin Towers. We need a system in place to do this, and
we must maintain that system. It adds inefficiency, but it cannot be avoided.
It is worth the price we pay. It is clearly in our interest to make such
services as efficient as possible so that the total inefficiency they add to
the economy is minimized. Lean and mean is the watchword.
On the other hand, many services government provides may not really be necessary, or they can be more efficiently accomplished within the private service sector, or there may exist a way to fund them that is much more efficient than our current tax and spend approach. We all benefit by eliminating unnecessary government functions: The perpetual committee that always seems to generate another “necessary” study just as it is about to be dismantled; the agency created to solve a specific problem that it solved, and which now competes with other unnecessary agencies for jurisdiction over new “problems”; and so forth for literally hundreds of government functions at the federal level and all fifty states.
Privatizing government services that can better function in the private sector is a no-brainer. Myriads of functions and services need to be examined in this light. The increase in efficiency gained simply by moving such functions into the private sector is phenomenal.
Practically any agency that supplies a recognized service could, in principle, be funded by the fees it charges for that service. Unfortunately, the typical user of government services is used to receiving those services “for free”. There are, of course, those services to “customers” who never will have the means to pay. At least in the short term, social welfare agencies and the vast assortment of services falling into this general category will have to retain traditional funding.
Many government services, however, such as passports or patents to name two, might be funded directly from the net proceeds of fees they could charge. The trick would be to generate a corresponding reduction in taxes, and you know how likely that would be.