Arnold Kling  

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from John Goodman.


In general, a bureaucratic system is one in which normal market forces have been systematically suppressed. In such an environment, there tends to be a sea of (relative) mediocrity, sometimes punctuated by little islands of excellence. Further, the islands of excellence tend to be randomly distributed. They do not correlate with much of anything.

When government provides a service, such as health care or education, variation tends to be random. There is no market mechanism to weed out bad performance or reward good performance.


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COMMENTS (12 to date)
david writes:

But a heavily controlled quasi-market mechanism can weed out bad performance and reward good performance, whilst suppressing the problem of uneven risk inherent in any pure market approach. I'd go on about Singapore but reading there is easily available for anyone willing to Google.

What was it Tyler Cowen wrote, some time back? The libertarian vice is assuming that the quality of government is constant.

Rebecca Burlingame writes:

What no government can second guess is the constant fluctuation in valuations people actually assign to most anything...and it is hard enough for private enterprise to notice where valuations have shifted and changed. The AMA certainly does not know what people value and health care as a result gets warped even without the help of government.

frankcross writes:

The islands do not appear to be randomly distributed, but they do represent a problem. Where is the government competent? The military is pretty good. The DoJ and the SEC are very capable on the legal side (less so for other aspects of hte SEC). Maybe law is an area where the government is most competent. Also, in various scientific and engineering related fields the government can be pretty good. These generally do not involve addressing the needs of individual customers, though.

mike shupp writes:

Used to be some fellow named Weber who wrote a few things, favorable and unfavorable, about something he called "bureaucracy."

I don't think you and he could carry on much of a conversation.

Floccina writes:
Where is the government competent? The military is pretty good.

Surely you jest?

mulp writes:

When government provides a service, such as health care or education, variation tends to be random. There is no market mechanism to weed out bad performance or reward good performance.

Ok, we can test this by comparing nations expecting the quality of health care and education to be more uniform and of higher quality in nations with the least government involvement, and of the lowest quality and highest variations in those with the greatest government involvement. A sample of ~200 nations should be sufficient data to establish showing even weak support for this hypothesis.

Seems like an obvious study and not that hard to do given the many comparative studies of nations.

Chris Koresko writes:

frankcross: "Where is the government competent? The military is pretty good. The DoJ and the SEC are very capable on the legal side (less so for other aspects of the SEC). Maybe law is an area where the government is most competent."

Well, with regard to the military, the government competes with other governments. So the fact that it does well doesn't necessarily reflect any special competence by comparison with other fields of endeavor in which it compete with private entities.

I'm not sure how you measure the competence of the DoJ.

Also, in various scientific and engineering related fields the government can be pretty good. These generally do not involve addressing the needs of individual customers, though.

This one's kind of difficult to assess too. My impression is that government funding of science is not more effective than private funding, but rather considerably less so; however, the enormous amounts of money it can throw at a finite set of problems can produce a few spectacular successes. The Manhattan Project and Project Apollo would be the most prominent examples... which, come to think of it, were half a century ago.

Brian Clendinen writes:

I agree when it comes to the military but not the other institutions. Considering the U.S. military is I believe the largest bureaucracy in the world, it is run quite well. That is one area I would never want to be run as a private enterprise, like in Neil Stephensons, Snow Crash. One has to consider economies of scale and they are quite far on the up-tick. They are well run in part because officer core make the system work because they believe in the institution. I would argue a major reason why the military is well run despite being government is the personal are religious in nature, therefore it has a very positive effect when it comes to operations. If it were not for a large core of very smart, highly motivated people (never seen evidence of any other public institution in the history of the world coming close) trying to do the right thing, much of the statutory laws and regulations would seriously hamper the military.

Then again wars tend to have the same effect competitions does, I think that is the primary reason the military is run better than all other government intuitions. Fighting so many conflicts in the last 100 years with enemies that are really smart defeating systems, tactics, and strategies which result in people being injured or dieing tends to be a strong incentive for good change. Especially when you have the public and politicians looking over your shoulder. It is a pretty good metric people actually care about that forces the military to change and become better.

Granted the GOA has not certified their books in ages. However, considering the complexity of their financials, their size, and the huge verity and complexity of the cost plus, cost plus fee and ect contracts. It is such a highly complex system no one has a clue how it works at the level the GOA would need to certify their books. I doubt anyone can could foreseeable manage want one would consider a good audit with-out some revolutionary tools that do not exist anywhere.

John Goodman writes:

Anyone who thinks the military is well run is someone who has never been in the military.

Marc A Cohen writes:

Another reason for better performance from the US military is the way authority and decision making are broadly distributed. Yes, the decision to invade country X is made far away in Washington. But the decision about how to go about killing the snipers hiding in that building right there is made by a company commander who is standing right in front of that building, and has all the incentive in the world to do it right.

Brian Clendinen writes:

@John

When compaired to other goverment and State insitutions in the world it is well run. I was never claiming it should be used as a model to run a private sector organization.

endorendil writes:

"When government provides a service, such as health care or education, variation tends to be random. There is no market mechanism to weed out bad performance or reward good performance."

Poppycock. In government-run healthcare insurance systems, better doctors still get more patients, as do good hospitals. People still contrast and compare their options. Good schools attract more students, whether the government runs them or private organisations do.

Whether a service is government-provided or provided by a private enterprise does not matter, what matters is that there is the possibility of variation in quality and the ability for consumers to detect that variation easily. The disappearance of quality as a market force is possible in both public and private systems. An example of the first: the DMV, and example of the second: Microsoft.

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