We're in for a wild ride. Exponentially accelerating technological, cultural, and socioeconomic evolution means that every year will see more developments than the previous one. More change will happen between now and 2050 than during all of humanity's past. Let's explore the 21st century and ride this historic wave of planetary transition with a confident open mind.

Tuesday, October 5, 2010

How to Raise Public Sector Efficiency

It is not a secret anymore that the "choice" between raising taxes and cutting public services is a false one.

Shrinking the government without drowning it in any bathtub is something we lost sight of. Similar to how the amount of workers in agriculture sector went from a quarter of the labor force to 1% of it, the government workers can shrink in numbers while delivering more. This involves meritocratic placement of system engineers and scientists in administrative charge instead of lawyers and political appointees.

Streamlining of bureaucratic functions and restructuring of service delivery mechanisms allows budgetary savings without raising additional taxes or resorting to cuts in provisions. This realization is especially key for advanced countries around the world as they struggle with the convulsions of a gradually dying monetarist debt based system. Reforms to raise the efficiency of the public middlemen are very important since they prepare us for the long and difficult transition to a post-monetarist resource based socioeconomics.

Even citizens of countries like Germany, a country that has weathered the international depression remarkably well, have to put up with a ridiculous false dilemma of either less spending on infrastructure/public provisions or higher taxes. Angela Merkel, a former physicist, may hopefully yet show the world how productive politics are done.

[ Please note: this discussion has the bottom 90% of citizens in mind who are most affected by the presentation of between a rock and a hard place construct. Taxes on the richest people should be hiked without mercy to pre neoliberal wave levels (especially in the English speaking world). This will make up for some of the looting that has occurred. Sarkozy's recent quest for an international Tobin Tax is a great start. ]

Shrinking the government without drowning it in any bathtub:

Often politicians don't focus on restructuring the public sector for the following two reasons:

1) It is a very difficult task both politically and logistically and requires long term effort. It doesn't produce the wanted quick pre-election results in a democratic system. Making the post office work 20% better so it requires 20% less funds is not a flashy gimmick to present to the crowds.

2) The majority of money that backs many politicians in the western world come from public unions and oligarchs. Both of these have deep interests in stifling efforts to raise efficiency.

Raising efficiency of transportation delivery for example may require replacement of some public workers with machines. This creates a clash with organized public labor. In the English speaking world, the government is the last place where unions have any real power and middle class wages and thus it becomes a fierce last stand.

The wealthy on the other hand can point to the politically created inefficiency of the public sector as an example of private sector superiority and use this comparison to call for cuts in public services. It becomes less palatable to raise taxes to support something that refuses to streamline. Cutting money spent on an inefficient "bloated" middleman without reform makes the services even worse.

One may think that many wealthy would call for reforming the PS instead of butchering it when pro-higher tax sentiment wins on occasion. However that would aide the idea that government can actually provide something well. A solid example is GOP puppets in USA making public sector dysfunctional deliberately to make privatization of it an easier sell.

Once the public fully realizes (that raising PS efficiency by 50% is not only doable but would allow a surplus of funds which can then be used to either lower taxes or increase quality/quantity of services), reforms can proceed. The problem of what to do with displaced public workers is not different than one facing anybody else replaced by machines. In fact, we will be able to face this key global question sooner. The sooner the better.

Privatization with its own mass scale inefficiencies due to overhead and profit driven qualitative degradation is NOT an option. Privatization of public heavy industry and other large organs drains a lot more wealth out of society long term than even lack of reform.

The solution is mass scale focus on filling the top ranks of government bureaucracies and enterprises with engineers and scientists. Just like economics is an engineering challenge, so is streamlining of delivery mechanisms for social goods. The relative success of the French public service sector can be directly attributed to large scale presence of technically minded people at the top. The same allowed East Germany to be the most productive country within the old communist block.

Regulations: Not more or less red tape but improving the quality of the tape so less is used in the first place

Same principle applies to regulative functions. "Throwing money at the problem" always pales in comparison to better implementation of advanced technological tools and application of systems theory.

Major reform is not for everyone. Some societies (you know who you are) are so rotten that major reform would destabilize them the way sudden exercise may give a very unhealthy person a heart attack. Such societies will have to do the equivalent of dying first in order for the public sector reform to truly begin within a new reincarnated body.

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  1. Hello - The problems we face in the US today are essentially the 'other empire' coming to grips with its need for Perestroika. However, since the majority of public spending is for entitlements, how can we gain a 50% efficiency on money that is essentially just a pay out. Furthermore, a slew of federal programs simply funnel funds into corporate run programs that cannot easily be reformed because of their second party structure and need to generate unbridled profits. When the USSR grappled with these same structural problems in the 1980's an important solution was to turn over management of the public sector to local authorities and workers directly. I assume you have a rudimentary understanding of US Constitutional History. Essentially what Gorbochev's reformers proposed was what we used to call "Federalism" in the US. Each state was responsible for its own budget and civil programs and they were managed democratically by the constituents of that state, much like the individual states of the EU now. Voters would be much more amenable to government programs if they were run democratically from their local governments instead of begrudgingly from Washington.

  2. xenogenex, you are absolutely correct in that we're finding ourselves in a desperate need of Perestroika. We already have had Glassnost in the form of the Internet for a while so the ground is prepared. It doesn't seem to me that USA as a society is healthy enough for successful centralized reforms from the top anymore (the way they were possible in 1930s). Serious attempt at reform may kill the patient and create forces that get out of Fed control. Lack of serious reform does the same.