To no surprise, trimming the size and scope of government is painful. Nevertheless, there is an elegant symmetry to budgetary changes that offers real opportunity for public-sector leaders.
Higher budgets let public managers do more of what is good, while declining budgets offer the chance to do less of what is not good. But there are impediments to acting upon these opportunities. Changes to public policy can lessen these barriers.
Recognizing inefficiency in government is far more difficult than rhetoric suggests. The private sector has the blessing of the profits to guide decisions. There is no such tool for the public sector—which is why we have a public sector in the first place. All the splendid benchmarking and performance metrics adopted by government in recent decades help, but they are not enough.
If government does something of no value with great efficiency, it is still of no value. As an example, I submit to you the Bureau of Indian Affairs. On the other hand, something necessary, which may have no meaningful performance metrics, is still necessary. Think U.S. Navy.
Identifying unneeded parts of government becomes urgent when budgets are tight. There are some examples. Indiana townships are a curious sort of antiquated fraud foisted on taxpayers, but townships are not alone.
Colleges teach courses that have crept into irrelevance, towns and counties duplicate services, and local schools build magnificent edifices as memorials to declining enrollment.
What is sad, but true, is that most resources in government are well spent and many good things are underfunded. Indeed, unlike the private sector, government is wholly in disequilibrium. All agencies are under- or over-resourced, and the spinelessness of across-the-board cuts treats them equally. However, the solution isn’t just recognizing which agency poses the problem, but also effecting change.
Most government rules are designed to hamper managerial discretion. Some rules are in response to legislation, but more often than not they are an elusive effort to stop men from sinning.
For example, a decade ago, the Department of Defense was found spending more on processing and auditing travel forms. How did it handle the problem? It chose not to streamline the process and harshly punish cheats. Rather, it simply automated the forms. The perverse reality is that the presence of bureaucratic rules tends to result in the advancement of managers who are good at executing and understanding the rules, instead of evaluating their efficacy.
Likewise, personnel systems hinder good management. Public-sector unions exist almost solely to make it impossible to eliminate unnecessary or poor employees. Tenure in both colleges and public schools is a higher-brow form of the same scam of taxpayers.
We are in for a long and hard slog to fix public finances, and the path to solvency is simple in concept: Every government program needs to be reviewed. More important, leaders in government need the tools to make changes. Nothing less will do.•
Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at email@example.com.