Really Missing the Point

We libertarians and critics of large government will often criticize this or that initiative as being misguided, or dumb, or counter-productive, or too costly, or whatever.   Too often we do so in the context of the particular personalities involved -- e.g. Bush is going to far, Obama made a mistake, Pelosi is trying to do something dumb.  This tends to give the impression that these are individual mistakes, with the corollary that if we could just get better people in government, these mistakes would not occur.

I see this reaction -- that its the quality of the people, not the system itself, at fault -- all the time.  Of course, it was a common one on the left for years during the Bush administration -- if only we had our guys, smarter guys, non-fundamentalist guys, scientific guys, whatever -- in there, things would work.  Republicans, though, did the same thing for years with Congress  -- if only we'd get those liberals out of the Congressional majority, we would run things intelligently  (anyone remember the Contract with America?).

Two examples bring this most recently to mind.  The first from Radley Balko:

This is sort of amusing. Salon writer Andrew Leonard concedes the unintended consequences of excessive regulation and bad lawmaking, walks right up to the edge of embracing libertarianism, then shrugs it off with, "And that might be one of the most distressing results of decades of being told that government is the problem "” we hear a story like Hayes', and think despondently, you know, they were right, rather than squaring our shoulders and reapplying ourselves to the wheel." Yeah. Keep reapplying yourself to that wheel. If we can just get the right people in charge"¦.

The second is perhaps the clearest statement of the fallacy I have ever seen, from the Washington Post's columnist Richard Cohen via Reason:

In Ronald Reagan's famous formulation, "government is not the solution to our problems; government is the problem." This statement, at the very heart of the so-called Reagan Revolution, denigrated government and the people in it. Reagan's statement withdrew John F. Kennedy's invitation to the intellectually gifted to come to Washington and see what they could do for their country. Reagan sent a different message. Government service is for the lame, the cautious. If you really want to do something for your country, shun Washington and make money. It was morning again in America -- whatever that meant.

It is to Barack Obama's immense credit that he has reversed Reagan's reversal. Washington crackles with people on a mission. Brains are once again in vogue, if only because Obama has them in abundance. Not for him the aw-shucks affectation of the previous eight years, when instinct was extolled and ideology trumped analysis. We are in a mess, and one of the reasons is that people who might have noticed or done something about it had been told to stay out of government.

In our scandal-soaked culture, it is de rigueur to denigrate public officials and to search for the inevitable conflict of interest. But here are people, such as [Lawrence] Summers, who have put aside wealth and lavish perks for government service. They have their reasons, sure, but whatever they are, we -- not they -- are the richer for it.

Seriously, gag me with a spoon.  Forgetting the fact that these guys are sacrificing nothing, and in fact get rich fast after office based on the power and contacts they have amassed, this just really misses the point.

The problem is not bad people.  In fact, I have said for years that with a very few exceptions, there are no bad people in government.  There are just 1) really bad incentives; 2) really bad information; and 3) problems that are not amenable to command and control.

People who believe as do Cohen simply will never accept #1 and #2, no matter how much evidence is brought to bear.  We ought, they say, to be able to find public service monks who are both brilliant and un-swayed by such incentives or information asymmetries.   Sure, the incentives are to deliver benefits to small, visible, powerful minorities even when those benefits dwarf the costs, as long as those costs are dispersed and less visible.  But their guy will be smarter and will avoid this trap.  Never mind how many free trade economists turn into protectionists once they enter the administration, succumbing to the pressure of the visible (e.g. GM jobs) over the logic of the invisible.

But lets look at #3, because this does not get nearly enough attention.  It seems incredible to me, particularly in current times, but how often do you hear someone make the case that the government simply cannot achieve a certain goal?  Almost never.  We argue about expense and constitutionality, as we should, but is it even possible for even the smartest people to make GM profitable this year?  Or to make toxic bank assets go away without economic pain?  Or stop a sufficiently motivated terrorist from killing people?  Could it be that we simply have to endure a recession, rather than firing off trillions of dollars to try to "do something" about it?

One of the things that I have learned as a systems-dynamics specialist in mechanical engineering is that there are systems out there so chaotic and so complex we cannot hope to even adequately describe them, much less effectively manage them.  The details of flow in a waterfall, of a smoke plume from a cigarette, of weather and climate ... and of the economy and individual action in a society are so complex as to defy human understanding.

Our interaction with the natural world is a great example.  We used to act with a certain hubris - like, "we can manage the deer population."   I think several decades of trying to "manage" animal populations have taught us a certain humility.   What if, for example, we wanted to increase the deer population in Yellowstone?   Well, we could put out feeders full of corn, but we might then find that by domesticating the deer, we have in fact doomed them long-term.  We could kill their natural predators, but we might find that these predators were also eating something else, possibly something that competed with the deer.  We could kill whatever competes with the deer for food, but again we might cause imbalances in other populations.  Or we could actually be successful, and increase the deer population, and then find it quickly devastated as they outgrow their food supply and habitat area.

We describe these problems by saying that these actions in complex systems carry "unintended consequences".  The problem is that when I use this term in a political world the reaction is "well, that's just an artifact of poor design - my guy will be smart enough to avoid them."  But here is another way to put it:  "Unintended consequences" is a simple way of saying that in a nearly infinitely multi-variate, hugely complex system (like the economy), it is impossible to narrowly target changes to a single variable without all the other variables in the system being effected, often in ways impossible for us to predict in advance.  In this context, "unintended consequences" are not avoidable design defects -- they are absolutely required.  They are unavoidable.  They are an absolute fact that politicians cannot wish away (but if they are clever, they can hide, at least until after reelection).

Sometimes, I wonder how my education had such a different impact on me than on others.  I could easily be called part of the over-educated elite -- magna cum laude at Princeton, first in my class at Harvard Business School.  Folks with similar backgrounds in this administration seemed to have walked away from similar educations with a deep confidence that they can run or fix anything -- Take over GM, run it successfully where decades of industry experts have failed, manage its turnaround better than a coterie of experienced bankruptcy guys -- No problem!  I just can't even imagine thinking this way.  If anything, I walked away from my mechanical engineering degree with a deep sense that most complex systems would always be out of my analytical reach, and I walked away from Harvard Business School with an understanding of just how hard it is, even as the top boss, to move and drive change in large organizations.

Some older thoughts on this topic, in relation to technocrats, here.

  • morganovich

    if only Mao had gone to Yale...

  • Joe Antognini

    Even in many of the science and engineering majors, the emphasis is not on complex, real-world phenomena, but rather, idealized problems that are tractable by analytical methods. After four years of courses with these kinds of problems, one gets the idea that all of the world's problems are similarly tractable if only one is clever enough. Most universities don't require anything in the way of chaos theory courses, so the sorts of problems one would see in the real world tend not to get studied very hard in college.

  • Dr. T

    "I have said for years that with a very few exceptions, there are no bad people in government."

    I disagree. Government jobs are very appealing to bad people, who work for the government in droves. Government workers are disproportionately rude, lackadaisical, arrogant, domineering, uncaring, lazy, system-gamers (promotions, sick leave, division-of-labor, extra benefits, disability, etc.), buck-passers, and butt-coverers. I spent five years at a VA medical center in a large city, and I was astounded at how many bad people worked there. I've met bad people at most grades of the federal payscale, from G1 janitors to G20 Washington administrators. My sister worked for county and town governments where at least one-third of the employees (and most of the top administrators) were bad people, so the problem isn't limited to the federal government.

    I do agree that the system (excessive government) is a more important problem than the people who work in government. But, the people and the system aren't completely dissociated.

  • http://www.paulstagg.com Paul

    Fantastic post!

    @Mr T:

    I think what you describe is more the issue of poor incentives, not bad people.

    Sure, there are rude people working at the MVA call center, but there are rude people working in every call center. I know n=1, but my experience with government employees has run from the horrific to the wonderful.

    There's no incentive to be nice to you if you treat them like crap (as opposed to the private sector, where you can take your business elsewhere), but I often suggest people who have consistent poor experiences interacting with others look at their own behavior.

    Just a thought. What do I know?

  • Mike W

    A wonderfully succinct post. Thank you.

    "...how often do you hear someone make the case that the government simply cannot achieve a certain goal?" That's another thing I should be thankful for. I hear it every day at my office, from co-workers and the boss. Believe it or not, I work in a government office!

    As a young man, I lived in a socialist country for several years and happened to read Gulag Archipelago while there. Both things shaped my view of both human and bureaucratic nature, and of the limits of government.

  • bill allen

    Unfortunately, the majority of folks in Washington are lawyers and not engineers. Obviously not all engineers always think logically because they let their emotions get in the way, but we would be somewhat better off with more engineers in Washington. Unfortunately, not many engineers go into politics.

  • greg

    Dealing with the physical world (as we ME's specialize in) is very humbling. You can't argue with it, all you can do is try to understand it.

    After a few years of experiencing this, it's hard not to apply that logic to every problem you encounter. (my wife hates it!)

  • Global Warming

    Excellent essay. I would emphasize your point that aiming for the bad guys often distracts us from recognizing or calling out the inevitability of systemic failure when government grapples with intractable problems. Thus, even if there are bad people in government, getting rid of the bad people will not bring the desired reform. We must tell politicians to leave some problems alone.

  • Robert Arvanitis

    Whenever I start to feel that this time, the models will work...

    ...I pause and look at a long-term historical chart of the dollar-yen exchange rate. The gyrating curve shows the implied forward at regular intervals, projected by assuming the future exchange will offset differences in interest rates.

    In the last 30 years, the implied forward has only ever been realized by luck, hitting the actual exchange rate as it was on its way up or down.

    It's about over-determined equations. We have more inputs and constraints than there are free variables in the system.

    (BTW, excellent point on Navier-Stokes)

  • MCLA

    "Washington crackles with people on a mission."

    This is enough to make anyone blood run cold...

  • HS

    I like it. Government usually leads to money and power which then drive people to think they can control the most chaotic phenomenon. Maybe one day, a leader will think they are God. Oh wait, they already did, that is why we revolted.

  • BCM

    Bravo! Very nicely said and well written! Thanks for posting.

  • Henry Bowman

    The late Michael Crichton gave a very interesting speech a few years back on complexity. Perhaps you've even blogged about this in the past. But, clearly, nature tends to be vastly more complicated that we can hope to model accurately. But, believing that we can is one of the worst offenses we make, but unfortunately one of the more frequent ones.

  • dearieme

    "first in my class at Harvard Business School": golly, just like the ass who CEO'd Bank of Scotland to its ruin. Founded 1695. Can nothing resist HBS?

  • Bearster

    I think coyote makes excellent points. However, just as frustrating as it is to see people avoid acknowledging that there are many problems unsolvable by government... it is frustrating to see people avoiding that there really is such a thing as evil in the world. Evil is attracted to government for a simple reason.

    The difference between government and any other group of people is: the power to use force.

    What is it about compelling obedience that attracts evil?

    While there are many people who love nothing more than to figure out how to make a computer do something new, or how to optimize a factory production line, or how to create a new business model... there are many people who love nothing more than to force people to do their bidding, to take from people by force, and to hurt people.

    In a laissez-faire capitalist society, this would be a small group of psychopathic criminals. In a culture like ours, crackling at the opportunity to take over industries as varied as auto manufacturing, finance and insurance, and health care, government offers a legal and socially acceptable outlet.

    Every envious thug and destroyer who can think past the range of one moment will join government!

    "They don't want to live. They want you to die." -- Ayn Rand

  • http://azatlan.blogspot.com Kunal

    Sure, the incentives are to deliver benefits to small, visible, powerful minorities even when those benefits dwarf the costs, as long as those costs are dispersed and less visible.

    I think you meant the benefits are dwarfed by the costs.

    Excellent post otherwise. Thank you.

  • the other coyote

    I've come to the conclusion that the only answer is to starve the government. If you don't let it have your money, it can't screw as many things up. Sometimes I think I could reach common ground with liberals this way... by starting this conversation...

    "Hey - let's agree that you and I are never, ever going to agree on anything. So let's get the federal government out of everything but national defense, and let the states run everything else. Cut federal taxes to the bone, so we're only paying for national defense. Now, let's turn everything else into a local discussion. If you think a welfare state is a good thing, let your state run a welfare state. You can argue about it with other folks in your state. People in my state don't think it's a good idea, so we won't have a welfare state."

    If liberals and conservatives could agree to make hot buttons a local option issue, I think there would be a lot less disagreements. And, I could slam the door shut at the state line and let New York and California go on to hell in their handbasket, with my wallet intact.

  • UM Eng '73

    Studying Engineering tends to impart a certain humility in the human being, not found in the soft sciences.

  • ASU Eng '70

    To echo UM '73, my career was chosen such that I would never get away with ooching towards a solution with woulda, shoulda, coulda. It either works or it doesn't. Needless to say, not a lot of modeling involved. Sometimes modeling was used to plan out a test program, but never to claim a final 'reality'.

    ps. to Warren: I spend many years working/playing up around DVT in the '60s and early '70s. Will buy the beer the next time I'm in the area.