government wasteYou see one every day on the streets of Kathmandu, what a friend calls D3 meaning the Daily Dead Dog. Stiller and flatter than before, sometimes the canine corpses are hauled away by the city, at other times unceremoniously chucked off the road into a ditch or the bushes. Then Nepal’s kites—handsome, eaglesque, carrion-eating birds—do the hard lifting while armies of happy ants carry away the rest.

Mother Nature hates clutter, so our planet abounds in clean-up teams. Not only disposing of the dead, but also the halt or lame, the dying and the malformed—all get recycled in one way or another. For terrestrial coyotes and vultures and insects, or a richness of ocean creatures, Nature provides calorific and perhaps even tasty incentives for her eager and industrious janitors. Throughout our vast biosphere only human government gets it wrong. Its walking-dead carry on forever.

During post-war reforms, the British government discovered that it was still paying someone to walk along the Channel coast watching out for Napoleon’s navy. In 1948. By the mid-1980s at least, and maybe still, the US government kept paying a small-pox eradication panel, although the disease had been wiped off the face of the earth by 1977. Its members even wrote requesting that they be disbanded but no dice: the money kept flowing because no bureaucrat or politician had any incentive to stop it. After all, there could be some risk attached to closing it; a constituent might complain, or small-pox might come back. As of 2014 it hasn’t.

The internet abounds in earnest US government websites hoping to reduce waste, fraud, needless paperwork and abuse, from federal and state to local levels. And experts at The Heritage Foundation found, in the Bush years, that a “real war on government waste could easily save over $100 billion annually without harming the legitimate operations and benefits of government programs.” Was there any progress?

In 2013 the Fiscal Times reported, “the GAO recommended that 176 actions be taken by federal agencies and programs to reduce overlap and waste.  Of those actions…only four or 5 percent of the total requests were fully addressed and implemented by federal agencies…” It isn’t working and never has.

Back in the 1940s, government passed The Paperwork Reduction Act, and then:

OMB chronically understaffed its responsibilities: in 1947, there were 47 personnel reviewing agency requests for the entire government, but by 1973 the number of reviewers had dwindled to 25, and these few reviewers had a number of additional responsibilities. The result of the lack of resources was both weak oversight (only between 1 and 5 percent of applications were rejected) and longer delays. Some agencies refused to submit requests for approval; others sought and received alternative processes, fragmenting the regulatory system and increasing the chance of duplicative and wasteful demands for information.

shark interior 2 moneyIt only got worse and by “fiscal year 2010, it only took 8.8 billion hours to fill out government paperwork. That figure is down from FY2009 when we consumed 9.8 billion hours. That decline seems good until we learn that most of the decline is because federal agencies decided that it really didn’t take you as long to fill out forms as they thought it did.

Government clearly cannot clean up like Mother Nature can, for two reasons. First are malign incentives that work against reform. Bureaucrats have a lot to do and resent the interruption, as well as reform potentially ending programmes and paperwork that they think necessary. Sort of. So they hide under their desks until the reformers go away as they always do. Politicians too have a reason to talk tough to overburdened taxpayers and beleaguered small-business owners, but cutting red tape is a nit-picky, thankless and endless task that Sisyphus would reject out of hand. And every government programme, no matter how stupid or useless, employs some voter living in some lawmaker’s district. Secondly there is only general complaining; no meaningful demand for specific reforms.

Economists of the Public Choice School, notably at conservative George Mason University, understand disincentives. It would be highly profitable for me to spend $10 million lobbying for a nationwide monopoly on imported shoes; it would only cost you an additional fifty cents a pair. Would you take time off from work to attend a protest rally that might only save you a dollar or two a year? Most unlikely. It’s the same for a wasteful government programme that may only cost you a few pennies. Similarly no protester, reformist politician or daring bureaucrat at risk of upsetting his peers, would stick to the grind for long. Nobody has much incentive to do the clean-up job that coyotes and sharks do for free in the natural world.

Somehow mimicking the natural clean-up operation would remove the unhappy burden from politicians and civil servants, let tax-dollars work more efficiently, and remove many economic impediments afflicting private sector growth—especially in job-creation. Economist Joseph Schumpeter’ famous concept of “Creative Destruction” replicates how the biosphere sweeps away failures, making room for new things to grow—but, so far, it only works in a competitive private-sector economy. The government sector is immune, and its “sea-floor” is littered with expensive, barely living failures while healthy small-fry go hungry.

Still, inspired by Mother Nature we might be able to construct a self-propelled mechanical shark, a self-financing agency incentivized to devour government’s waste, counter-productive regulations and needless paperwork. How might it work?

Mexican regulatory reforms may point the way. Drowning in needless red-tape, Mexico’s government in 1988 took the bold step of appointing a deregulation czar. Other countries tried it before and failed, but this was different. The deregulator had support and access right up to the president, so his decisions could only be over-ruled at the highest levels. There were time limits for bureaucratic responses and tough penalties for non-cooperation. The World Bank reports that he listened to the needs of everyone including the powerless and under-privileged. But those weren’t main reasons for his thumping success.

He held the burden of proof. When he challenged a regulation, its bureaucrats had 30 days to respond and defend it, in which case there was an evaluation and adjudication process, or else it was gone—presto! So unless an objection was filed the regulation ceased to be: no hearings, no press conferences, no paperwork, no muss, no fuss. Just a tiny new piece of freedom unhampered by government.

His team launched dozens or even hundreds of deregulation challenges a month, intentionally more than the overworked civil servants could hope to defend. So each department’s bureaucrats had to choose which very few regulations they really prized, defend them as best they could, and bid farewell to the rest. Mountains of harmful regulations turned rapidly into dust. Reversing the usual burden of proof meant that any and all civil servants could no longer drag their heels, lobby politicians behind the scenes, leak complaints to the media, propose half-measures that kept their handiwork alive, etc. In some cases they took one look at the towering pile of regulatory challenges and raised the white flag.

That is the first of two key components in our mechanical shark. She must retain the burden of proof, henceforth remaining as relatively safe from bureaucratic escape tactics as a real shark munching on an already half-eaten grouper.

pic 3 great white sharkNext, a real shark has incentives; in return for tidying up the ocean she gets fed. A mechanical shark needs similar incentives, not just to eat but to keep on eating—and not eat the taxpayers by incurring more costs. So when our mechanical shark identifies wasteful projects, regulations or paperwork, and she challenges their department and wins, she deserves some of the taxpayers’ money that she saved. This may be a one-off bonus or surely temporary, but the mechanical shark could cover her operating costs and still hire more waste-hunters, the equivalent of natural sharks breeding a whole school of hungry baby sharks. She could also raise salaries, attracting the smartest and most ambitious young women and men, but also seasoned former bureaucrats—defectors who know where the real treats are hidden. The natural equivalent is a more manoeuvrable hunting fish that drives others out of their protective coral reefs and into the open seas that the hungry sharks patrol.

The numbers must be crunched: initial staffing costs and a temporary budget until the savings roll in, estimates of how long it will take to identify the unnecessary and/or duplicative programmes as prey, how much that may save the taxpayer and what size of bonuses will be prudent but effective in sustaining reform and breeding new sharks.

It could be tested modestly, on even a very small-scale. Rather than begin by building a slavering Great White, we could start with a smaller and cuter nurse shark and see how she hunts.

But perhaps by imitating Mother Nature’s use of incentives we might solve a governmental problem that, so far, humans just cannot overcome.

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