Katrina: Time for a New Paradigm in Government

09/15/2005: Thomas Sowell articulates the difference between free enterprise and government enterprise with respect to disaster response. What he points out is noteworthy:

(1) FEMA’s bungle of the Katrina aftermath is nothing new: they bungle almost every emergency. What FEMA provided was their standard response to a disaster. In most instances–tornadoes, lower-grade hurricanes, moderately strong earthquakes–that response would have been somewhat adequate. Unfortunately, Katrina was the natural equivalent of a WMD attack on 90,000 square miles of coast. This exposed longstanding systemic problems with FEMA. A legitimate issue would be whether including FEMA under the Department of Homeland Security exacerbated those problems.

(2) Contrasting the federal response with that of private enterprise–Wal Mart, Federal Express, State Farm, et al–magnifies the inefficiency of government. While people tend to overlook private enterprises–which are profit-generating entities–it does not change the reality: free markets work. Markets–in and of themselves–are impersonal and amoral, but corporate entitles act within their own best interests, and goodwill is often within their best interests. The best CEOs know that social responsibility is good for profitability in the long run.

On the other hand, it is normal for us to want a government-run relief agency that we control. The trouble is that government-run entities, like private entities, also act within their own best interests. Because government entities do not generate revenue or profit, CYA is the operative standard.

That approach by government agencies is perfectly rational, especially when internal policymakers are lawyers and those policymakers have to answer to legislators (who are mostly lawyers). Such policymakers implement strict internal controls (bureaucracy) to satisfy government auditors and legislators and legislative staff. Even the hint of failure is career-damaging to any aspiring policy wonk.

As a result, policymakers take a defensive approach to policy. Why? Most of the time, the risk of failure outweighs the benefits of innovation.

Hopefully, if nothing else, Katrina–coupled with 9/11 and the recent Space Shuttle debacles–has tipped the risk-benefit scale for government toward innovation and proactivity.

Now, we have a new paradigm: the risk of bureaucracy outweighs the risk of innovation.

We need innovators: people who will shake up the system–even to the point of eliminating some jobs, creating others, streamlining policies, who will quit studying problems and actually solve them and implement those solutions.

We need leaders who are willing to take risks and do big things that make a difference. This is how we won the Revolutionary War. This is how the Union prevailed in the Civil War. This is how we won World War I. This is how we won World War II. This is how we won the Cold War. This is the only way we will win the war against Islammunism, prepare for major disasters, and maintain economic stability all at the same time.

Many people complain that government should be run like a business. To a certain extent that is not possible–some bureaucracy will always be necessary. (This is true even in the private sector, especially with respect to corporate governance.)

In the latter respect, government can learn from the private sector: bureaucracy allows for sufficient accountability, but does not hinder good companies from innovating, competing effectively, providing social benefits, and providing solid returns to their stakeholders. Toyota has sufficient bureaucracy to run a transparent operation, but that did not stop the company from implementing Just-In-Time manufacturing, which revolutionized the whole manufacturing sector. Starbucks is very active in social and environmental causes, but that has not stopped them from achieving strong profitability. Southwest Airlines is probably the best-run airline in the world: bureaucracy does not stop them from blowing away their competition.

Ultimately, government needs leaders who will think less like policy wonks and more like leaders who seek to actually accomplish something.

It is my hope that Katrina will spark such leaders to pursue government service.

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