David R. Henderson  

Krugman and I Agree on the DMV

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A Working Economy of Strangers... The power of wishful thinking?...

The DMV is not nearly as good an example of government incompetence as other examples that are out there. Some of those other examples are of government horror. Let's use those examples.

Every once in a while I agree with Paul Krugman. Almost all such cases occur when he's putting on his economist's hat only and not his political hat. His article "Ricardo's Difficult Idea," for example, is a modern classic.

But today I found myself agreeing with him when he criticizes some libertarians. That's new. What's his criticism? He writes:

I see that some of the commenters on my libertarian piece invoke the old "horrors of the DMV" line to claim that government never works.

What's remarkable about this line is that it reflects a fantasy -- in this case, a negative fantasy -- more than the reality. I'm sure that there are terrible DMV offices where people have miserable experiences, but that's by no means universal or even normal. These days you can usually make appointments online; and even when you don't, how bad is the experience? I've visited the Baker's Basin DMV on Route 1 many times, and while I've sometimes had to wait a while, the people have been generally helpful and the lines have moved fast.

And if you compare the DMV with some private-sector bureaucracies -- [cough] ExpressScripts [cough] -- it's a model of customer service.

The point is that the vision of hopeless government isn't grounded in personal experience, let alone data. At this point it's a cultural cliche, or a projection by people who read Atlas Shrugged in their teens and never grew up.


I've never found the DMV point persuasive. Like Krugman, I've found that if I have the foresight to make an appointment, it has been pretty painless.

I think, though, that libertarians who use the DMV example are probably intellectually lazy and have not thought hard for good examples.

And good examples of hopeless government are all around us:
. Cops choking Eric Garner to death;
. Drug warriors invading the wrong house (oops) and shooting innocent people;
. George H.W. Bush setting in motion a horrible chain of events by making war on Iraq;
. Government officials in the FDA preventing people from getting access to drugs;
. Barack Obama deciding which parts of the Patient Protection and Affordable Care Act he wishes to enforce;
. The IRS going after Tea Party organizations and then, somehow, conveniently losing many of the relevant e-mails;
. Children being arrested in schools for doing the things that children often do;
. The U.S. Navy shooting down an Iranian commercial airliner, killing all on board;
and, of course,
. NSA spying on its own citizens.

I could name dozens more.

We can often learn from our ideological opponents. Paul Krugman has given us a free lesson. Let's use it.

HT to Mark Thoma.

Postcript: I just noticed this post by Tyler Cowen and found it useful. He points out, implicitly, that both Krugman and I are judging the DMV by fairly superficial criteria, the main one being waiting times. Still, I think that's how many libertarians who use the DMV as their Exhibit A of government incompetence are judging it by those same superficial criteria.


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CATEGORIES: Economic Philosophy



COMMENTS (21 to date)
Thomas Lee writes:

Let's stick with the IRS for a minute. Usually when consumers pay their bills to a remote and impersonal creditor, the creditor prepares an easy-to-read summary sent out at regular intervals. Think credit cards, for example. The consumer knows exactly where he/she stands. The creditor can deal with partial payments and send back the balance due. There are customer service representatives available on the telephone and online to help straighten out problems.

With the IRS, however, there is precious little. No regular statements and the telephone support is hard to use. There isn't even a service to acknowledge that one's payment was received. How long would the average credit card company stay in business with "outreach" like this?

There are however cryptic nastygrams from the IRS claiming that more taxes are due. These are seldom explained and lead anxious taxpayers to consult with expensive accountants. After much worry and expense, I often find out that these bills are mistaken.

I propose this aspect of the Internal Revenue "Service" be a good replacement for the DMV whipping boy!

I think the DMV is at state level, isn't it? So Krugman's experience is probably with New Jersey DMV; David's with California DMV. User experience probably varies from state to state, and along other dimensions as well.

David R. Henderson writes:

@Thomas Lee,
Good replacement.
@Richard O. Hammer,
Yes. And that helps make my point. We should use either examples that are fairly universal or examples that are specific. The examples I gave are specific. Talking as if DMV experience is universally bad is a mistake.

vikingvista writes:

This is good to know, since my last dealing with the Dallas DMV was very much the libertarian stereotype.

Thomas Lee makes a good point. My dealings with the IRS are often Kafkaesque, but without the comfort of knowing it is fantasy.

In the private sector, healthcare services can be about half this bad where the usual "customer is always right" business dictum is often replaced by "it's our way or the highway, ignorant patient". But then healthcare is about half government these days.

The other private sector example that comes to mind is the dreadful American Home Shield home maintenance insurance service. But at least there I know that the low quality and long waits are reflected in my low premiums. If the government ran it, it would probably be worse, mandatory, and as costly and threatening as the IRS.

But who knows, that may just be my libertarian negative fantasies speaking.

Dan C. writes:

Last time I had to go to the Santa Monica DMV I waited over two hours -- even though I had an appointment. So let's not generalize that the service at the dmv is uniformly acceptable either. I was so angry but what could I do? Take my business elsewhere? That's the thing, government may do certain things fairly well but if they don't, then what? (To say nothing of the things they do that they shouldn't be doing at all. Waiting two hours is trivial compared to what others have suffered because of the doings of governments.)

More broadly it would be interesting to get some data on the issue. How does the dmv rate on customer service and satisfaction vs corporations overall?

Jim Glass writes:

Krugman didn't cite the VA hospitals as his model of government working so well? Odd, it used to be just about his favorite...

American health care is desperately in need of reform. But what form should change take? Are there any useful examples we can turn to for guidance?
Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the government doesn't just pay the bills in this system -- it runs the hospitals and clinics.
No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration...
and...
yes, this is “socialized medicine” ... But it works — and suggests what it will take to solve the troubles of U.S. health care more broadly.
and even very recently...
until the scandal broke, all indications were that it worked very well...

John T. Kennedy writes:

DMVs have greatly improved but I clearly remember when they were hellholes. It will be decades before my lifetime experience there averages positive.

Mark V Anderson writes:

Krugamn uses the normal leftist example of capitalist horrors by citing a highly regulated industry. OF course leftists can't find a lightly regulated industry with terrible customer service because such industries have competition. Any company with bad customer service loses their customers and they go out of business.

TMC writes:

Our DMV used to be terrible, but last time worked quite well. Luckily it was privatized a few years ago.

George writes:

I've had the 'pleasure' of being in the DMVs of 4 states. My opinion is that, while there were some occasions where my experience was pleasant, for the most part they are a VERY good example of govt not working.

Can they get better? GA has improved theirs, but they have a long way to go. MD is a mixed bag. The other states were not good.

David R. Henderson writes:

@vikingvista and Dan C.,
Thanks for that information. I think both Krugman and I made the mistake that I accused Irving Fisher of recently: generalizing from a small sample size.
@TMC,
Privatized? Which state?

Seth writes:

'the old "horrors of the DMV" line to claim that government never works'

I think this is a straw man. I don't often hear the DMV invoked for this. Rather, it's invoked as a contrast to things that evolve with competition and consumer choice.

Certainly, picking your number before you go to the DMV (online appts) helps convert your wait time to time spent outside of the DMV rather than inside it, but the key question is why you have to pick a number at all?

How is that McDonald's has figured out how not to have you worry about picking a number but can still provide you with quick, accurate and friendly service at times and locations that are convenient to you?

Dave Anthony writes:

ExpressScripts is a private business with competitors. I have never been forced to use their business, unlike the DMV.

The DMV is not going to be the best example of government incompetence because there is a lot more public pressure to make sure that it functions well enough because every single voter is forced to deal with it. Not to mention that it is a service that is not exactly rocket science -- look at documents, collect money, issue license.

But Krugman will then go on to say that government is awesome at running health care (either reimbursement schemes or actual hospitals), something that is much more complicated and involves a lot more risk, moral hazard, and perverse incentives than issuing driver's licenses.

liberty writes:

David H.,

Re: using examples to support libertarian beliefs:

It is interesting to note though, that most all your examples of government incompetence and tyranny belong to the "core" functions of government (i.e, libertarians if minarchist not anarchist would tend to agree they are a legitimate function) : police, military, courts et al.

Obama selectively enforcing the PPAC Act is the primary exception, although arguably the drug war and things related to expansionist, imperialist military are also caused by allowing police and military to take on functions they should not have (per libertarian ethos).

The rest are the government getting out of control while doing things it is allowed to do, and expanding social programs or reducing them, nationalizing or privatizing, adding or eliminating regulations, will have no effect.

Libertarians choose things like the DMV and Medicaid offices when they are trying to show that government provision of stuff that the left wants them to provide (highways, health care) is ugly, inefficient, etc. Especially since the left will agree with you that the drug war and the Iraq war and the new secret police are sucky things.

Charley Hooper writes:

I'm not swayed.

(1) Krugman's ad hominem attack on libertarians notwithstanding, the DMV's poor reputation among the general population would be hard to explain without some element of truth behind it.

(2) Go to the DMV and look at the faces of the customers and the employees. The DMV is a sad, depressing place to be.

(3) How long did it take for the DMV to innovate by allowing appointments? And, by the way, it's much easier to innovate by copying others, as government agencies usually do. Even when there's a good model to copy, government agencies still innovate with glacial speed.

(4) Part of the reason that some DMV visits are tolerable is that, deep down, we know that DMV visits are problematic, so we adapt and plan our visits at uncrowded times, make appointments, take books to read, etc. Instead of this "business" adapting to its customers, its customers have adapted to it. The fact that the outcome is sometimes tolerable does not mean that the DMV provides good service or that the DMV can be held up as a model.

David R. Henderson writes:

@Charley Hooper,
Uncle! :-)
All good points, except the first. I didn’t see the ad hominem in the part I quoted. Could you identify it?

Daublin writes:

I would add balancing its budget.

No other major organization would be considered competent if it managed its budget like the U.S. feds do. State and local governments all stay balanced, as do private organizations of all stripes.

While there are plausible macroeconomic arguments for *sometimes* running a defecit, there is no plausible argument for running one consistently. It's just mismanagement.

Thomas Sewell writes:

In Arizona, the DMV has been partially privatized. 99% of vehicle registration activities can be done at a private business, including car dealerships.

Driver license activities still require the DMV and typically take 2+ hours, even in the sparser populated parts of the State during "off-peak" times like when most people are working.

You can still go to the DMV to register your vehicle, but virtually no one does, because for an extra $5-$10 convenience fee, it's worth being able to just walk into a place and get immediate service from someone knowledgeable and friendly.

I've also experienced DMVs in UT, VA, and CA and while they do vary widely from state to state (and even within the same state), none of them are as fast and convenient as the private businesses.

I mean, imagine simple things like no appointment needed service, big wall charts with the various fees and documentation requirements, etc... Seen that in your DMV lately?

Saves the state budget a bunch of money as well, as they don't have to pay the private companies to process the registrations (fee for service, only those who need service pay and then only the lowest amount possible), while they do have to pay for the DMVs.

Mark Bahner writes:

Hi,

No excuse in this age for Paul Krugman or anyone else not to search to actually find average wait times before the opinion piece is published. (I wonder if Paul Krugman actually goes through an editor who tries to figure out whether what he's writing is valid?)

Per this site, California's was 49 minutes, and has been cut to 16 minutes. I'd say 49 minutes is terrrible, and 16 minutes is not great, but not terrible:

California DMV wait times (according to the California DMV)

Charley Hooper writes:

This is what I was referring to:

At this point it's a cultural cliche, or a projection by people who read Atlas Shrugged in their teens and never grew up.
David R. Henderson writes:

@Charley Hooper,
That one’s borderline but I’ll give it to you. It illustrates the point I’ve made earlier, though, that it’s very hard to find a clean example of an ad hominem like those presented in logic texts. See here. Also look at the comments. What one commenter pointed out might apply here. It’s an example of poisoning the well.

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