Thursday, July 08, 2010

Strategic Government (Part 2 of 2)

In the first part of this post, I pointed out some flaws in the way our government is set up, and a few examples of how these flaws manifest themselves in American society. In this post, I'll try to flesh out the philosophy that I think should be guiding our government - strategic and systems-level thinking.

Each aspect of an operation can be broken down into a system - there are inputs, outputs, and procedures for operation. The key insight of strategic government is the understanding that the system is not static - each of the components of the system can, will, and should change over time. Healthcare should use newer, safer, and cheaper technologies, teaching should incorporate psychological research to improve methods, and so on.

The question them becomes what principles should underlie these systems - what should the strategy be. 

Today's government agencies face similar issues - they can grow corrupt and impotent. The former is solved by keeping things as local and transparent as possible. And the latter, as I see it, can only be solved one way - competition. Competition provides the motivation to innovate and ensures a higher caliber of personel in an organization. Say we had competing FDAs, education systems, etc. - agencies (local, regional, or national) would shine and rise to prominence, but then, over time, grow brittle and corrupt, only to be replaced by better ones. This would give the power to the people - want to advance local, sustainable farming? Start an agency or buy from the one that promotes it.

(You could argue that this is possible in today's world, but my whole point is that the existence of government agencies impedes progress. The regulations imposed by the FDA on meat providers makes it difficult and expensive for small farms to get their products to market. The FDA has a monopoly on the rules for producing meat and thus no reason to innovate. And today's FDA is bloated, opaque, and full of industry insiders - you can almost be certain that a few FDA officials are friends with the owners of the large slaughterhouses, who have made it clear they don't want the competition that small farms would introduce.)

Furthermore, we should strive to harness people's passion to reduce cost and increase innovation. Open source principles - which allow anyone in the community to propose ideas and conduct research - are a great way to accomplish exactly this.

An example - an open source education board tasked with setting teaching methods and materials instead of the status quo, where executive boards based on seniority essentially set the agenda and everyone else must follow. How could this play out?

A very close friend of mine teaches in the Bronx and is having success using novel methods to stimulate his 8th grade class's interest in literature and poetry. If he could post videos of his class sessions online to community of teachers nationwide, his practices could be "voted up" (much like videos on YouTube) and employed by other teachers (or, conversely, ignored because his peers don't think they work).

Let's take a closer look - what would happen in this scenario? His methods would be debated, teachers would argue and get mad. Factions would form as people, being only human, would take the new ideas as new religions or personal affronts. But, over time, best practices would survive and thrive, and more students would thus have a better education. Which brings me to my next point...

Many would argue this sort of system is chaos - and they're right. It's messy and crazy and nuts. It is in fact true that there will be times where the various FDA-type organizations are more inadequate, resulting in less informed purchasing decisions and potentially more dangerous food. It's a scary thought, one that typically kills this line of thinking. Without a federal government to regulate food, how will I know I'm not buying poison?

But this is the wrong question - we should be asking if this system is better or worse than the status quo. While a decentralized approach seems to open us up to the negative elements of chance, a closer looks reveals we're always exposed to these elements due to the inadequate nature of our current agencies - the Mad Cow and Salmonella scares happen even with the FDA. It is unclear whether they would occur more frequently in a libertarian system, and they may actually happen less often due to the decrease in collusion/corruption (see the BP oil spill). And the upside is enormous - more quickly evolving standards from competition means we don't have to wait years for the FDA to finally recognize that trans fat is bad for you.

This is an important point. Humans are risk averse but not good at identifying risks - we are more scared of terrorist attacks than car crashes, of car crashes than hamburgers, when the burgers are causing way more deaths than crashes and attacks combined. The government run agencies give us a sense of safety, a theoretically bulletproof system. State run schools? Great, my child and every child will get an education. The FDA? Excellent, I'll get food I know is safe and maybe good for me. In contrast, the shortcomings of the libertarian system are plain for everyone to see - when you have multiple FDAs competing, some things will slip through the cracks. We must understand that the big government narratives aren't reality - our schools are filled with awful teachers, and the FDA approving cornfed beef doesn't make it good for you. And when you compare the flaws of the two approaches in reality, it's tough not to conclude that big government agencies tend to be much more harmful in the long run.

Of course there are remaining issues - the devil is always in the details. How would such organizations get funding? How would they serve the poor? Defense and foreign affairs is another area in which I'm largely rudderless. I'm more of the persuasion that the problems can be dealt with in mostly in isolation (i.e. you could layer solutions to those things on top of this type of government), but I've heard some very convincing arguments of the opposite.

However, these are solvable problems - the ones the government should be solving. Instead of trying to build the best healthcare bureaucracy possible, they should be focused on designing a system that forces transparency and accountability and allows for adaptability, competition, and entrepreneurship to solve problems. Monopolies will inevitably become self-serving and ineffective - from a particular agency to the entire government. Obviously, you would need some degree of centralization - my point is more that decentralization and open source can be employed more often than the are today to effectively solve problems.

This should sound familiar - it was what the founding fathers tried to do. They understood the best government was one that was local and always changing. They believed the Constitution should be rewritten every 50 years and that states should be laboratories for democracy. They even gave us the right to bear arms to remove the government's monopoly on violence. Think about how deeply they understood this principle, and far removed from their vision we are today.

It's a messy process, but I believe this approach would be way better than what we have today. We need to approach government at a level of systems engineering, of strategy and not tactics.

I'll try to follow this up with some specific case studies. Clearly, any sort of transition would have to be well thought out and would take much time.

Would love to hear feedback as my views on this topic are far from certain. Credit for this post goes to a few brilliant individuals and authors, as none of the ideas here are my own.

Strategic Government (Part 1 of 2)

So I wrote a really long blog post about our government, and upon finishing I realized I was better off splitting into two halves. This one will address the structural problems I see today, and the second some potential solutions. These are written for fun - to make myself crystalize thoughts into tangible points and to get feedback to add new elements and ideas to my thinking. Make of them what you will. (Also, apologies for the long gap in the "Healthy Living" series - and, unfortunately, it's going to continue. I will get back to it when work and life allow.)

Today, the prevailing ideology regardless of political party is that the federal government, with its power and resources, is the proper institution to provide for or regulate the basic rights we've defined in our country (everything from food/water to education and health care). This is especially true when the poor are involved - locked in a cycle of poverty and unattractive to private innovation, they would be in a far worse situation than the status quo without government run programs and standards. Any societal problem that arises is solved the same way: a government agency is tasked to fix it. 

When we turn to centralized government to solve problems and regulate industries, the quality of service we get is directly dependent on the quality of people in the government - if we have rockstars at every agency, we'll get a great return on our tax dollars and enjoy the efficiencies of scale that central organization provides. However, we have no built-in methodology for assuring this outcome outside of elections, which are indirect and, empirically speaking, largely ineffective.

This approach - creating government solutions to problems - is a tactical and not a strategic one. Today, our government goes from fire to fire, trying to put it out without developing any sort of broader strategy for how to fight fires. This works fine, especially at first - when the passionate and unselfish individuals who created the specific fire-fighting solution are still around (be it an agency or government program) - but eventually the programs grow bloated and, in my opinion, less and less able to handle the problems they're charged to solve. 

This seems self-evident - the SEC has no control over Wall St., our public education system is leaving many children behind, the FDA is classifying french fries as vegetables at schools (any wonder we're so fat?), and our offshore drilling oversight has allowed oil rigs to basically have no backup plan. Be it corruption or ineptitude, it's hard to find a government agency that is widely acknowledged to be doing a good job. (I'm sure I'm overlooking stuff here so I'd love to hear some counter examples.)

The status quo has a clear predisposition to failure. As government agents strengthen their ties to industry (formally by past work experience and informally through social networks), corruption naturally becomes institutionalized, for very human reasons: if you're friends with the people that your policies are going make life tougher for, you're going to think twice before making those policies. Throw in the obvious bribes and favors, and it's easy to see why the system is doomed to fail. 

The takeaway is that government should be concerned with strategy, not tactics. The approach is not "how do we build the best FDA?", then "how do we build the best SEC?", and so on - it's "how do we build the best regulatory agency?" - a systems engineering viewpoint. How do you create a system in which any industry can be sustainably regulated, be it by an outside agency or laying the groundwork for self-regulation?

This is obviously a very complex question. The intricate web of incentives and the diversity of human nature make any system fallible in a large number of ways. People work for or with the government for a number of reasons: they're passionate about their cause, they want a steady job, they know they can make easy money from bribes and favors, etc. They are motivated by vastly separate goals and desires.

The approach to government needs to take all of this into account. The purpose is to build an overall strategy - we're looking to maximize benefit (progress, justice, effectiveness) and minimize harm (waste, corruption, ineffectiveness). No system is perfect but the point is we need to be thinking about these broader issues and distilling them into sets of rules that can then be applied to each specific iteration of the regulation, utilities, and resource problems.

I'll lay out a very rough groundwork for potential solutions in a subsequent post. Again, the purpose is to get feedback and new perspectives, so feel free to share your thoughts. I've clearly left many important points out - either by choice for brevity or, more likely, by ignorance and poor analysis.