« Competition and the Efficiency of Bureaucracies- Becker | Main | Secular Stagnation—Posner »

01/12/2014

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B Wilds

The large number of government programs that have failed to carry out their duties and the dim view many Americans have towards Washington may be starting to take its toll on those who think big government is the answer. The Democratic Party has long been thought of as the party of "big government" filled with believers that government can solve and is the answer to curing many of our woes. Sadly cost and reality are quickly beginning to show the flaws in this theory, government is far better at providing access of citizens and good at passing popular laws, but the private sector tends to be more efficient and better at controlling costs. More on this subject in the post below.

http://brucewilds.blogspot.com/2013/11/flaws-in-big-government-concept.html

Neilehat

"Bureaucracy and or Efficiency"... Hmm... I've always believed, "That for every problem, there is a solution - of sorts". Democracy and Bureaucracy are two oganizational approaches to a "Problem Set". Yet, they are not the most efficient approaches. If it's Efficiency you're looking for, your best bet is a Dictatorship. Some are good, some are bad, take your pick...

Terry Bennett

What measure of efficiency is being proposed? For a private, for-profit enterprise, we could look at profit per investment dollar, the ratio of revenue to expenses, etc. For a government or non-profit, the presumed goal is wealth redistribution, so we could look at what percentage of money in actually gets given to someone else vs. how much gets spent on administration.

In IT, we use "bureaucracy" as a pejorative. My favorite working definition is "data that is not tied to a decision." I pay cash at the dentist; he does not need to know my SS#, or where I work, in order to service my teeth. This waste of time and productivity is repeated billions of times over, every day, because the cost of exercising intelligence is considered higher than the cost of inflicting a uniform process on everyone, even if it is wasteful. Part of the cost of this intelligence lies in its scarcity. It is easier to train someone in a repetitive task than to turn a dubious intellect loose on your customers.

Small organizations run on talent; large organizations run on structure. One of my friends was a chemist for a conglomerate. Over the course of several weeks, they received rail cars of raw material which tested as contaminated. He told his boss; the stuff kept coming in bad. So one day, he picked up the phone and called his counterpart at the supplier directly. In 20 minutes they had figured out the problem, saving both companies millions - and he promptly got fired for violating the chain of command. (Then a few months later the whole facility blew sky high, killing several of his former co-workers.)

The government in particular has an obligation to rain on all alike, and so thinking is discouraged because it might be perceived as unfairness. We on the outside find government frustrating to deal with because it is often obvious that just a small dose of intelligence would solve a problem, and there is none allowed.

Rules are a substitute for intelligence. When you are confronted with a problem, you can think creatively about how to solve it, or you can follow a rule, without thinking. Rules generally embody some measure of intelligence, but they inevitably fail to incorporate sufficient thinking to address the full breadth of problems that can potentially arise. We are admonished not to reinvent the wheel, but in fact the wheel has been reinvented, thousands of times, because new problems constantly require new and better wheels. Rules unchallenged become calcified into idols. Every so often, it is crucial for one of the intelligent among us to step up and remind us, e.g., that the Sabbath was made for man.

Jack

Well, Terry and all after the efficiency of this site ate two of my posts I should keep it short in order to limit the potential waste.

Anyway, the topic of efficiency does get sooo messy! For example one government function is that of imprisoning those who may be a threat to society, need to be punished for anti-social activities, or? perhaps rehabilitated, or "all of the above".

We can (fairly) easily measure keeping costs of warehousing our 2 million plus prisoners and even sub some of the task out to private parties who may even get the daily rate down a bit. But is THAT true efficiency?

It would seem that first we'd zoom out and see if we can figure out (or? learn from others?) why we incarcerate our fellow citizenry at rates five or more times that of the more civilized nations and even beat out Russia.

With those imprisoned in our nation having about a 50% literacy rate, despite claims or the reality of K-12 education having its own inefficiencies, is there more than can be done in the first 18 years to create a higher percentage of better citizens and productive adults that we won't have to lock up for years or decades?

IF, especially the young, and particularly males who we now know from brain scans and studies, lack common sense and judgement until well into their 20's runs afoul of the law, are we doing our best to nudge him/her back on track? Or, are we wasting time and resources with harsh prison sentences in an overzealous quest for vengeance and punishment?

What about rehab? Are we measuring our success or failure? By warehousing prisoners at the lowest daily rate in cramped public facilities or those of the private prison industry are we wasting an opp to create a person who can function and be productive in our society?

Soo, no matter how we streamline our enforcement, courts and prison bureaucracies it would seem the greatest efficiency would be that of striving to get our prison population down nearer that of the more civilized nations. On the other hand, IF the problem of America is "bad blood" and having five times the percentage of incorrigible criminals, letting them out too soon could cost us even more in from the damages wrought in our society.

But then there is the toxic combo of politics, bureaucracy and the prison-industrial complex that often provides lucrative economic opportunities and jobs for many whose goals are hardly aligned with those seeking efficiency and far better outcomes.

Neilehat

Terry, Having worked in the Oil, Gas, Petro, Chem Industry dealing with extremely Hazardous/Toxic Materials there is much more going on behind the scenes than your example shows regarding the termination of your friend the "Chemist" and quality control. I can tell you from experience, that an aggresive Individualism and taking actions on ones own intiative is akin to being a "loose cannon" with all it's potential hazards. As for the "Root Cause" of that Plant Explosion, are you completely sure that it was due to your friends termination, potentially contaminated feedstock (a lot of these plants are large bombs just waiting to go off - it's not a question of "if" but "when") and not some other root cause. Beware of using examples that are clearly "Colored" and missing important and pertinet details...

Terry Bennett

Neilehat,

I didn't mean to imply that my friend had anything to do with the explosion. I just thought it was a fitting irony that what seemed at the time like a turn of bad luck ended up revealing itself to be a turn of good luck. His superiors obviously agree with you, that the bureaucracy must be preserved, and individual brains must be suppressed, no matter how talented they are. That's their choice - they outranked him. That was my point, that large organizations run on structure, not talent. There have been attempts to let talent shine through via various management schemes at some companies, e.g., Volvo's one-time practice of assigning a team to build one car at a time, but as a rule once organizations reach a certain size they cease to be able to scale up individual talent. If anybody ever figures out how to do it, there's a pot of gold waiting.

Neilehat

Terry, Once again, Beware. That "contamination" in the feedstock may very well have been a "proprietary secret ingredient" (only known by those with a "need to know") in the feedstock recipe or a secret secondary byproduct or additve necessary for safe further processing (they're called Desensitizers, Catalysts, etc.). Without which the entire reaction string can go critical with catastrophic results. That is why some organizations cannot allow individuals to behave in a "willy-nilly" fashion on their own authority. Either in the production facility or R&D Lab...

Terry Bennett

Neilehat,

The contaminant, if I must digress, was water. I find your re-imagining of my narrative implausible. I do not think a company would pay a chemist to test for contamination and jettison several tons of material, several times, just to hide from him the fact that in the course of his assigned duties he has detected a secret ingredient above his pay grade. They fired him because he made a phone call.

I continue to assert that the anecdote stands for my premise, that large companies value structure over talent, to the point that structure must be enforced even when it is obviously inefficient, even when it affirmatively penalizes efficiency - bringing us back to the topic of bureaucracy and away from the non sequitur of the vagaries of the chemical industry. I take it you are a proponent of the belief that structure is indeed important enough in large organizations to warrant such a vigilant defense, and over the years I've talked to a few CEO's who agree with you. It's a mindset, and no doubt there is some validity in it - many large corporations make money. Whether they would make more or less money by allowing talent to override structure is an experiment waiting to be performed.

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