The Procurement / Bureaucracy Excuse, and the Drive for Expanded Presidential Power

President Obama has been unwilling to admit that the problems with the Obamacare roll-out might suggest that he needs to work on improving his management skills. Instead, he has chosen to blame the complexities of government bureaucracy, and in particular the complexities of the government procurement process–all matters that have seemed to be rather surprising to him–and this view has predictably been echoed by some in the pundit class.

I have several thoughts on this matter:

1) It is not yet clear to what extent the Obamacare systems problems are a function of too much bureaucracy in the procurement process versus too little bureaucracy in that process as employed in this specific case. In particular, were Serco and CGI and other key contractors selected based on the robot-like processes of the Federal procurement system…or was heavy political influence involved? I don’t think we know yet.

2) A good workman understands the limitations of his tools and materials. We wouldn’t think much of a civil engineer who designed a high-traffic-carrying bridge without paying close attention to the load-bearing characteristics of the steel girders and cables used; nor would we think much of an architect who designed a house in which a family was investing much of their financial net worth without considering the weather resistance of the wood and other materials he was specifying. Shouldn’t Obama, before embarking on a plan to greatly increase the Federal Government’s role in healthcare, have seriously considered the characteristics and limitations of the tools and materials that he was using–the Federal agencies and their policies and procedures–for this purpose? He stands convicted out of his own mouth for not performing this basic level of due diligence.

3) Whatever the encumbrances of the Federal bureaucracy–and yes, we all know they are significant–nothing prevented Obama from taking a more serious and responsible executive role in supervising the roll-out, and/or putting effective people in key leadership positions. Can there be any doubt that if a person of the quality of General Bernard Schriever, for example, had been put in control of the technology and paperwork process implementation, the odds of success would have been considerably better?

4) Most important: Obama and his media/academic sycophants refuse to understand the inevitable limitation of government micromanagement.  I’ve previously quoted Peter Drucker:

Whether government is “a government of laws” or a “government of men” is debatable. But every government is, by definition, a “government of paper forms.” This means, inevitably, high cost. For “control” of the last 10 per cent of any phenomenon always costs more than control of the first 90 per cent. If control tries to account for everything, it becomes prohibitively expensive. Yet this is what government is always expected to do.

The reason is not just “bureaucracy” and red tape; it is a much sounder one. A “little dishonesty” in government is a corrosive disease. It rapidly spreads to infect the whole body politic. Yet the temptation to dishonesty is always great. People of modest means and dependent on a salary handle very large public sums. People of  modest position dispose of power and award contracts and privileges of tremendous importance to other people–construction jobs, radio channels, air routes, zoning laws, building codes, and so on. To fear corruption in government is not irrational.

This means, however, that government “bureaucracy”— and its consequent high costs—cannot be eliminated.  Any government that is not a “government of forms” degenerates rapidly into a mutual looting society.

(I’m confident Professor Drucker would agree that whether the forms are paper or electronic makes no difference at all in this context.)

As I also noted earlier: the expansion of government into all aspects of human life leads to increasing inefficiency–while the increasing frustration with bureaucracy results in a widespread demand to “make government more responsive” by giving more discretionary authority to administrators and to their political superiors. This is exactly what we are seeing with Obamacare, with the emphasis at present being on an increase of discretionary authority for the political superiors of the administrators. This, in turn, must result in a government which is not only a looting society (Obamacare waivers or special privileges for politically-well-connected groups, for example)  but increasingly a tyranny. Yet at the same time, there will still be enough baroque proceduralization (selectively enforced) to ensure high levels of inefficiency and very high government administrative costs. And the discretionary authority–the movement away from a Government of Laws and toward a Government of Men–must create widespread uncertainty and, consequently, equally widespread economic damage.


13 thoughts on “The Procurement / Bureaucracy Excuse, and the Drive for Expanded Presidential Power”

  1. Well stated, David. We see some of this uncertainty playing out in the lingering drag on productive private investment yielding tangible increase in living standards. Instead of investing in market driven production, businesses seem to increasingly chase political favor, market protection and government contracts. The dead weight loss is huge and is directly subtracting from productive activity.


  2. Corruption in procurement is an old story going back to rotten meat sold to Washington’s army.

    The P 38 never lived up to its potential in WWII because the Allison engine was used instead of the Rolls Merlin. The same engine nearly killed off the P 51. The Allison was built by GM and the Rolls Merlin was designed in England. I’m sure royalties on the design was an important factor in the matter. Thousands of lives were lost in the 8th Air Force that may have been spared with the more reliable Merlin engine in the P 38. The P 38 was fine in the Pacific where the weather was warmer and the range was more important than performance against the diminishing Japanese air force. The bombing war in Europe was lost until the P 51 with drop tanks came along in 1944. The P 38 was available in 1942 but the performance was not good enough. The Allison engine was the reason.

    I’ve always wondered if Arthur Miller’s play “All My Sons,” which was based on an engine scandal, was about this story.

  3. All true, but you miss the point by a country mile.

    The problem with anything run by government is that the incentives are all wrong. Government is incentivized to fail, because failure allows them to argue for more power, control of resources and higher taxes to ‘get it right’. When they fail yet again, they argue for yet more of the preceding. See government schools, for example.

    Second, government is incentivized, not to respond to market efficiency – value of returned goods and services for money spent – but to political benefit for them. All of their thinking is tuned towards making the resources made available work to entrench themselves and their cronies in positions of power and to return wealth to that group. In short, government can’t get it right because it is structurally incapable of getting it right.

  4. No Man for Himself, And The Devil Take the (Hind)Most
    The human cost of the transfer of power from the American people to the American government this century is staggering, and growing.

    Just to be clear, I support a limited social safety net. I do not think the government should be providing services that free and reasonably regulated markets are far better equipped to deliver.

  5. Michael,

    I’ve always wondered if Arthur Miller’s play “All My Sons,” which was based on an engine scandal, was about this story.

    Whoa. In the play, it’s about counterfeiting rather than inside dealing, but if you’re correct I may need to grant Miller some (the world’s most reluctant) Strange New Respect™.

  6. Oops, not exactly counterfeiting but faking test results or certifications on some bolts (and no, I’m not going to go reread or even scan the damn thing to find out the exact nature of the misdeed–not that I know where my copy is in the first place, probably turned into random cellulose molecules after our most recent, highly necessary, bookshelf purge.)

  7. Yes.

    On the other hand, there’s the critique of MBAs for having too much confidence in their general executive/administrative ability, and not enough detailed knowledge of a subject area. If there had been a national Romneycare, it would (counterfactually) be interesting to see the MBA-specific strengths and weaknesses of that approach. Judging by the Massachusetts model, I think the short answer would be “not as disastrous by a long shot, although Obamacare is setting a low bar.”

  8. A good workman knows his tools, but an Obama president knows nothing of the American people.

    There was no way every coke-addled gangbanger, every deinstitutionalized “homeless person,” every paranoid survivalist, every suspicious curmudgeon, every privacy advocate, every American will be persuaded to sign up for health care at web site, in an office, or by mail. Only an idiot could think that government web site could serve America.

    Amazingly, the Obamacare administration actually thought citizens would shout with glee and rush to their computers to sign up. This delusion is way beyond the delusions all past presidents combined.

    The only solution will be to abolish almost all regulation. Applying more patches won’t work.

    Thanks to Obamacare, America will have universal health care: minimal, no-questions-asked, hope-for-charity if you need expensive treatment.

  9. Michael H…ALL organizations, private corporations as well as government, have a *tendency* to operate themselves for the benefit of the people who run them, rather than for whatever their ostensible mission might be…this is one manifestation of what is called the Agency Problem in economics. But the problem is much more serious in government because (1) government has police power, and (2) the feedback loops for making changes are longer.

    There are of course many people in government who DO care about the missions…people in the FAA who care about aviation safety, people at CDC who care about curing diseases, people in DoD who care about making effective weapons systems available to the troops. But they tend to get overwhelmed over time by the forces of institutional aggrandizement…and in any event, they *must* be constrained by bureaucracy to a considerable degree, even at the price of mission effectiveness, if government is not to become both a tyranny and a mutual looting society.

  10. ” but to political benefit for them. All of their thinking is tuned towards making the resources made available work to entrench themselves and their cronies in positions of power and to return wealth to that group.”

    There was a lot of cronyism in the early war years and Roosevelt was not above benefiting. The torpedo story is but one example, but that is a story of a government facility that prevented any private competition. The Allison engine story is about some GM executives that were needed by Roosevelt to get the war effort going and who used the opportunity to shamelessly feather their nests. Read “Iron Men and Tin Fish for the true story. The Navy still doesn’t admit what happened.

    David Brinkley has a good book about Washington GOes to War.

  11. Michael, I use wealth as a generic term, not necessarily ‘riches’. Those who go along get rewarded with jobs, contracts, promotions, etc. Those who do not go along…they are left out. Applied incrementally over time it’s very effective. Like nudging a ship. Their motto is ‘Reward your friends, punish your enemies’. They mean it. It’s not a joke.

    The best thing we can do is to vote against and work against and speak against allotting the government more power or more control over anything. My worry, and suspicion, is that the GOP is no more interested in rolling back the power and scope of government than the Dems. The Tea Party and Libertarian wings of the GOP seems to be the core of the resistance. That, obviously, is why they, and people like Sarah Palin, are so thoroughly targetted for attack and smear campaigns. They represent an existential threat to their plans for power and control. I’m sure you know this.

    All of my political giving this year has been to Tea Party groups and supporting those media sites promoting Libertarianism. We need more people to hear our message and understand our point of view. We are vastly outnumbered in the culture war, and we need to support those promoting a message of freedom. And fight those who would take it away.

    And Lex is correct in that when the time comes when we have an opportunity to implement change, we have well thought out plans for change. We need principles, a vision, and concrete plans. Otherwise, we’ll fail. We’re beyond band-aids. The patient needs surgery.

  12. “Instead, he has chosen to blame the complexities of government bureaucracy, and in particular the complexities of the government procurement process–all matters that have seemed to be rather surprising to him”

    Limbaugh Theorem.
    Obamacare is designed to crash private insurance. Part of the crashing process is chaos. These aren’t mistakes. This is the method, the goal was always to use ACA as a stepping stone to a National Healthcare system. Obamacare is doing what it said it would, what the Progs trumpeted it would when selling it to other progs, it’s destroying private insurance.

    That the victims are quite eager to be taken piecemeal because it means they are eaten later is very helpful.

    This BTW is how the early Bolsheviks actually did it. Inflation plus government mandated chaos.

    On the surface it’s odd that people who quite recognize communism when they see it elsewhere don’t recognize it here…normalcy bias of course doesn’t make you evil or stupid. It makes you normal. Also have to consider this a disease of politics Americans haven’t had before, so we don’t have the immunity yet.


    Merry Christmas.

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