Reinventing Government

Let me first say that I think it’s interesting to observe how David kind of slips by the issue of our $1.6 trillion federal government. It may be 30 square miles bounded by reality — although you’d have to subtract the new Cato Institute building from that total — but it’s also the home of Vice President Gore’s much-ballyhooed Reinventing Government Project. If reinventing government’s what we’re about, why not look at how things are going inside the Beltway with an administration that is, after all, as adept at tossing around business management jargon as David Osborne is?

Could the answer be that, as Peter Drucker points out in his recent piece in the Atlantic Monthly, things aren’t going so well? Most of what Al Gore’s reinventors have come up with are, in fact, reinventions of what Peter Grace came up with during the Reagan years, but which were never implemented. Indeed, Drucker says Gore’s efforts will be lucky if they streamline the federal government by two-tenths of one percent. The vice president’s efforts are a case study in why reinventing government is a problematic undertaking.

In the preface to Reinventing Government, David Osborne and his co-author write, “We believe deeply in government. We do not look at government as a necessary evil.” That they do believe deeply in government is obvious from the book and from David’s thoughtful comments this afternoon. Indeed, if I believed deeply in government I’d no doubt find David’s call for reinventing government to be nothing short of inspiring, because it is filled with insight, intelligence, and a clear commitment to making government work.

But, alas, as some of you in this room are aware, I don’t believe deeply in government. The truth is, I hardly believe in government at all. I take seriously the Jeffersonian admonition that government governs best which governs least. The sum of good government to Thomas Jefferson, of course, was one “which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”

David Osborne has government doing a bit more than that, and therein lies the rub in terms of commenting on his presentation. Because while it’s hard to find fault with the idea of making government more responsive, less bureaucratic, and more efficient, it is much less difficult to question the wisdom of the analogy he employs in the very first chapter of his book, namely, the idea that it’s the job of government to steer, rather than to row the boat called America. There is, I should say, something of a concession on David’s part that when you get down to specifics: very often government is hamfisted in the way it does things. It’s not a very good rower. But without much in the way of an explanation, we’re asked to assume that in something which is ultimately much more important than the rowing, namely, the steering, the government has a sure hand. It knows where the ship of state, and, indeed, where the ship of society, should be headed. It knows this, presumably, through the democratic process, and despite the ambiguities of that process.

And, as David points out in the book, “those who steer the boat have far more power over its destination than those who row it. Governments that focus on steering actively shape their communities, state, and nations. They make more policy decisions. They put more social and economic institutions into motion. Some even do more regulating. Rather than hiring more public employees, they make sure other institutions are delivering services and meeting community’s needs.”

So, whatever else reinventing government is all about, it is clearly designed to increase the role of government in our society. The authors of Reinventing Government even seem convinced that there’s support for an increased role for government. They write, “there is more demand for governance — for ‘leading’ society, convincing its various interest groups to embrace common goals and strategies.”

Of course, the book was written before the November 8 elections, but my guess is that David still believes people want government to perform a more active role in steering our society. The book even offers a helpful chart that lists no less than 36 different ways government can do so, ranging from old-fashioned regulations and taxes to what he calls avant-garde methods such as providing seed money and restructuring the market.

But I think David Osborne’s been talking to the wrong people. I remember the New York congressman Hamilton Fish who used to complain that during elections everyone seemed to want less government, lower taxes, and lower spending, but once he got into office, his constituents who visited him always seemed to want more government. He was, of course, talking to the representatives of concentrated benefits in his office and the unlucky recipients of diffused costs on the campaign trial. Different people. Similarly, those who find discussions of reinventing government fascinating may turn out to be an atypical lot. It’s unlikely, for instance, that the 80 percent or so of Americans who support term limits for their elected officials do so because they think replacing professional politicians with citizen legislators is going to get them more government steering. I’ve never spoken to David about this issue, but I’ll bet you a dollar he’s part of the 20 percent who oppose term limits. It seems to me that the 20th century’s been a grand experiment in big government, run by those who “believe deeply in government.” What the voters were saying on November 8 is that the experiment has failed. It’s failed in the command economies in Eastern Europe. It’s failed in the welfare states of Scandinavia. And it’s failed in the so-called mixed economies of Western Europe and the United States. The recent election was less a rejection of Bill Clinton than it was a rejection of the New Deal — of, to put it plainly, too much government involvement in our lives. And no amount of dressing up the nature of the state in jargon about mission-driven government, customer-driven government, anticipatory-government, and market- oriented government is going to change that reality.

Because there are, at bottom, basically two ways to order societal affairs. Coercively, through the mechanisms of the state — what I call political society. And voluntarily, through the private interaction of individuals and associations — what we can call civil society. All the various political “isms,” from socialism to fascism to liberalism to conservatism to “entrepreneurial governmentalism,” are all predicated on a single question: Who’s going to make this decision about your life? You, or somebody else? In a civil society you make the decision. In a political society someone else does.

It strikes me that the enhanced “steering” that David sees as an appropriate role for government in our society of necessity involves a diminution of individual decision-making on one’s own behalf. The steering, after all, involves rewards and punishments, subsidies, prodding, regulations, mandates, and government-sponsored incentives. All undertaken, of course, in the best spirit of entrepreneurial government.

But is that really what the American experiment is all about? David asks in his book how we solve societal problems. He answers, “By acting collectively. How do we act collectively? Through government.” There is throughout this reinventing government mantra — whether from Al Gore or Bill Clinton or David Osborne — a kind of concerned undercurrent that somehow Americans are slipping away from the world of government-imposed solutions to society ills. So we’ll dress up government and repackage it in the rhetoric of the marketplace. Maybe then everyone will recognize the importance of politics, good government, and “acting collectively.”

But I think Americans are slipping away from the old paradigm. The continuous rationales for a prominent government role in our society have a hollow ring these days. Even the old reductios that David brought out — the Great Depression and the public school system are weak reeds to justify pervasive government. The Great Depression was not caused by laissez faire but by the actions of well-intended politicians and bureaucrats. The Federal Reserve System, after all, was not created in response to the Great Depression, but in 1914. Soon thereafter it began experimenting with its awesome powers, expanding the money supply during the Roaring Twenties, propping up the pound Sterling in London, extending credit so Europeans could buy American agricultural products. All the while Congress was becoming more and more protectionist. When the Fed reversed policies in 1929 and actually shrank the money supply by a third over the next three years and Congress culminated its protectionist tendencies with the Smoot-Hawley tariff, the collapse was underway. The fact that Hoover then raised taxes and Roosevelt kept wages artificially high guaranteed the massive unemployment that marked the 1930s. Government caused and exacerbated the Great Depression.

As for the public schools, most scholars agree that their advent had nothing to do with universal education or illiteracy, but everything to do with assimilating the Catholic masses into Protestant America. Horace Mann was quite explicit about the rationale for his campaign to create an America dominated by government-run schools. The public school system started here in New England in the 1840s, so it’s interesting to note that a couple of years ago Sen. Edward Kennedy’s office issued a study that pointed out that literacy in Massachusetts reached its peak at 98 percent prior to the advent of the first public school. It is considerably lower than that now.

So, yes, I’m an advocate of laissez-faire, of what I call civil society. Will civil society be perfect? Will it be a utopia? Of course not. Human beings are fallible and the civil society will have its problems. But compared to the litigious, contentious, corrupt, and coercive political society? There can be no comparison. David skipped over the federal government and looked to what he estimates in his book to be 83,000 separate state and local governmental units in the United States for his success stories of entrepreneurial government. Some struck me as more compelling than others. But the point is that when you’re dealing with 83,000 governments you’re bound to find some resourceful bureaucrats. Yet, since we’re betting here today, I’ll bet you another dollar that I could pick a government at random out of those 83,000 and come up with more horror stories of incompetence, indifference, and indolence than all the alleged successes in Reinventing Government.

Let me say here by way of disclaimer that I agree with Will Rogers or whoever said that it’s a good thing we don’t get all the government we pay for. Efficiency in government is a two- edged sword. But even if we agreed that it would be a good thing to have government do more steering in our society on the cheap, I have grave doubts about how successful we could ever be in implementing this entrepreneurial, market-oriented government. The bureaucratic imperative to expand the power of the bureaucracy is second right behind the sex drive in terms of persistence. Indeed, it’s my view that the book Reinventing Government is itself a sophisticated manifestation of that imperative.

But methodologically speaking, I don’t think you can get from here to there. From unresponsive bureaucracies to happy, helpful market-driven government employees. Because the market isn’t something you can imitate. Our friends in Eastern Europe can tell you about that. The market is simply what happens in the absence of artificial restraints and within a framework of private property and respect for contract. The market is primarily a discovery process, which is why regulation tends to be so detrimental to it. When government proscribes entrepreneurial options it short-circuits the discovery process and inherently inhibits economic growth because each new discovery is used by countless entrepreneurs in new ways to yield yet more useful discoveries.

Let me give you an example. When interstate trucking was heavily regulated, there wasn’t much competition and a few big companies dominated the industry. Many smart economists and even some bureaucrats believed that if the market for interstate trucking were deregulated, competition would increase, leading to lower shipping rates. They were right. But what they didn’t predict was that the deregulated market would generate much greater savings — on the order of tens of billions of dollars — by discovering that greater flexibility allowed for radical downsizing of inventories, the just-in-time inventory phenomenon. Government wasn’t reinvented here, it was simply removed from the scene.

But there’s a greater problem there than just the mechanics of how you go about reinventing government. There’s an assumption that somehow basic societal needs — from drug treatment to day care to garbage collection — simply won’t be met unless bureaucrats, albeit now helpful bureaucrats, aren’t involved.

If I had to cite one book that answers the issues raised by Reinventing Government, it would be Charles Murray’s In Pursuit of Happiness and Good Government. In it he argues that the de facto goal of social policy has been to “take the trouble out of things.”

Social Security took the trouble out of planning for retirement. AFDC took the trouble out of having a baby without a father. Government-run unemployment insurance took the trouble out of being unemployed. But he argues that there’s a subtle corruption of our culture that takes place as a result, and the cost to society is enormous.

Murray writes, straight from Aristotle, “that the practice of a virtue has the characteristics of a habit and of a skill. People may be born with the capacity of being generous, but become generous only practicing generosity. People have the capacity for honesty, but become honest only by practicing honesty.” “People,” he writes “tend not to do a chore when someone else will do it for them. At the micro-level, the dialogue between the government and the citizen goes roughly like this:

‘Do you want to go out and feed the hungry or are you going to sit here and watch television?’
‘I’m tired. What’ll happen if I don’t go?’ ‘Well, if you don’t go I guess I’ll just have to do it myself.’
‘In that case, you go.’”

Through this process, Murray argues, the tendrils of community are severed. He goes on to suggest that we eventually come to treat social ills not as something odd where we should look to see what is blocking our natural tendency to seek happiness, but as something systemic, natural, and generic that requires a government program — not to solve the problem — but to service it, to live side-by-side with it for the indefinite future.

Civil society tends to automatically deal with problems, not by direction or steering but through the spontaneous order that F. A. Hayek spoke of. It does so through voluntary help organizations and through natural incentives to correct self- destructive behavior.

And if the answer is, “Well, perhaps civil society does work better than a big centralized federal government, but local, entrepreneurial governments can ultimately do the best job.” I would respond that it is precisely at the local level where government severs most of the tendrils of community. Further, it is at the local level where the coercive power of government is often most abused, as anyone who has sat in on a city council meeting or a zoning board meeting can testify. We can paint happy faces on local bureaucrats and politicians but the reality is that political society gets pretty nasty at that level.

In his classic book Modern Times, Paul Johnson wrote, “The state was the great gainer of the twentieth century; and the central failure. Whereas, at the time of the Versailles Treaty, most intelligent people believed that an enlarged state could increase the sum total of human happiness, by the 1980s that view was held by no one outside a small, diminishing and dispirited band of zealots. The experiment had been tried innumerable ways, and it had failed in nearly all of them. The state had proven itself an insatiable spender, an unrivalled waster.” “To the new class,” Johnson wrote, “politics — by which they meant the engineering of society for lofty purposes — was the one legitimate form of moral activity, the only sure means of improving humanity. By the 1980s, the new ruling class was still, by and large, in charge, but no longer so confident…. Was it possible to hope that the “age of politics” was now drawing to a close?”

I would argue that in the decade since Paul Johnson wrote Modern Times the age of politics has in fact continued to fade as more and more Americans take a skeptical view of the pronouncements of those who “believe deeply in government.”

Ladies and gentlemen, America was never meant to be the land where citizens are cajoled, subsidized, regulated, mandated, and steered. America was meant to be the land of the free. As Lord Acton put it, “Liberty is not the means to a higher political end. It is itself the highest political end.”

Let me conclude with a quote from none other than George Washington, a dead white male to be sure, but nevertheless the father of our country. He said, “Government is not reason, it is not eloquence. It is force. Like fire, it is a dangerous servant and a fearsome master.” It seems to me that Washington wasn’t just admonishing us to be wary of government. He was juxtaposing civil society with political society. Civil society is based on reason, eloquence, persuasion, which is to say voluntarism. Political society, on the other hand, is based on force.

Regrettably, no amount of government reinvention will change that fact.

Edward H. Crane is president of the Cato Institute.

Philanthropic Roundtable Speech, Boston