Ineptness of government management:

The U.S. Government does much that is right, but also much too much that is wrong.

  The strengths and weaknesses of government economic management and the reasons for the weaknesses have been a FUTURECASTS theme from its initial issues. Government Futurecast begins with a review of the many things that the U.S. Government does right with respect to economic management, before explaining its inherent limitations. Indeed, as Bruce Scott explains in Capitalism, Its Origins and Evolution as a System of Governance. capitalist markets are actually the artificial creation of government and private institutions and depend crucially on the policies that facilitate the markets.
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The more economic responsibilities the U.S. Government takes on, the more ineptness it displays and the more its reputation plummets.

  Nevertheless, the ineptness of government management of economic entities and programs is inherent and obvious. Looking reality squarely in the eye, Peter H. Schuck, in "Why Government Fails So Often and How It Can Do Better," explains the many reasons for such failure and provides copious examples.

  As FUTURECASTS forecast right from its beginning issues, government will continue to expand its economic management role in response to electorate desires, but the more responsibilities it takes on, the more its ineptness will become evident and the more its reputation will plummet.

  Schuck recognizes that public discontent with the performance of government policy and programs constitutes a major threat to efforts to use government for economic and social purposes. He describes himself as a "militant moderate" and "melioristic realist."
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  His study of government management ineptness is conducted in the hope that improvement is possible and can be sufficient to support his evident liberal policy predilections. His judgment criteria include but are not limited to efficiency, distributive fairness, and manageability. The application of these three criteria "cast doubts on a distressingly large number of existing programs."
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It is not political gridlock that is responsible for the government's policy ineptness or that has caused the widespread and spreading disdain for Washington. Interest group politics and campaign contribution excesses play at most a minor role in policy failure,

  There are no magic bullet solutions, Schuck acknowledges. He cautions against the "Nirvana Fallacy:" comparing an existing situation with all its flaws with an idealized alternative. Because of widespread public skepticism, he favors the use of incremental tactics to deal with the government's management limitations and to reduce the risks of unintended consequences while continuing the expansion of government powers and responsibilities.

  "In short, the public views the federal government as a chronically clumsy, ineffectual, bloated giant that cannot be counted upon to do the right thing, much less do it well. It does not seem to matter much to them whether the government that fails them is liberal or conservative, or how earnestly our leaders promise to remedy these failures."

  It is thus not political gridlock that is responsible for the government's policy ineptness or that has caused the widespread and spreading disdain for Washington. Interest group politics and campaign contribution excesses play at most a minor role in policy failure, Schuck affirms, although he concedes that: "Politics and self-interest, narrowly conceived, contaminate everything." Political campaign contributions have almost negligible political impact with respect to major campaigns and policies, but are more influential on policy matters of only narrow concern.
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  Policy success and failure is generally a matter of degree, although some programs are unmitigated disasters. Schuck mentions the War on Drugs, the ethanol  program, and many policies directed at Native Americans. Many programs achieve policy objectives in varying degrees, but with degrees of inefficiency that undermine claims of success. Shuck emphasizes Medicare.
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Leviathan:

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  The shear complexity and opaqueness of policymaking in the U.S. makes actual analysis of outcomes and the reasons for success or failure an especially difficult business, Schuck warns. Skepticism should be the default attitude when evaluating policy controversy.
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In the private sector, the markets ruthlessly weed out weakness, but failure seldom results in termination of government programs. "The facts about government performance are damning."

  Shuck concentrates on the major government programs, but asserts that  there is no reason to expect that his findings will not be applicable broadly to the multitude of lesser programs. In the private sector, the markets ruthlessly weed out weakness, but failure seldom results in termination of government programs. "The facts about government performance are damning."
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  Among his examples of programs suffering implementation difficulties, disappointing results, and/or outright failure are:

1. State and federal tax codes that are economic abominations;

2. Recreational drug prohibitions;

3. Delays in the approval of medicinal drugs;

4. No Child Left Behind;

5. Insurance exchanges of the Affordable Care Act ("Obamacare");

6. The Real ID Act;

7. Student loan programs;

8. Government contracts mismanagement;

9. Unemployment insurance;

10. Expansion of disability programs to cover minor ailments;

11. Antipoverty programs that discourage employment;

12. The Postal Service;

13. Amtrak;

14. Farm subsidies;

15. Green energy subsidies;

16. Ethanol program;

17. Merchant Marine Act;

18. 1931 Davis-Bacon Act;

19. Inability of financial regulation to stay abreast of rapidly changing financial markets;

20. Dodd-Frank compliance costs estimated at $34 billion annually that have resulted in the withdrawal of banking services for low income consumers and the closing of many small local banks;

21. Campaign finance reform;

22. Remaining government restraints on international trade;

23. 1980 superfund and 2009 stimulus programs;

24. Mortgage credit subsidies through Fannie Mae, Freddie Mac (and today the Federal Housing Administration and even the Federal Reserve System);

25. Moral hazard credit guarantees - now expanding broadly even beyond the major banks.

  Other moral hazard programs that encourage risk taking at the ultimate expense of the taxpayers and the disabling of market discipline include:

1. The Federal Reserve's artificially low interest rate policy;

2. The Pension Benefit Guarantee Corp.;

3. The National Flood Insurance program;

4. The Federal Emergency Management Agency;

5. Federal drought insurance;

6. Health insurance programs that transfer to the taxpayer the pecuniary risk of self-destructive behavior like smoking, drinking and becoming overweight.

Government management problems:

  Government management problems are chronic and structural. They become increasingly costly as the ambitions of national policies swell.
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Regulatory discipline displaces market disciplinary mechanisms, moral hazard credit guarantees displace credit market disciplines - with disastrous consequences during the Credit Crunch recession.

  Causes include program complexity and inadequacy, the time and expense of enforcement procedures and under-funded enforcement efforts. Government contracting has multiple weaknesses. Regulatory discipline displaces market disciplinary mechanisms. Moral hazard credit guarantees displace credit market disciplines - with disastrous consequences during the Credit Crunch recession.

  "[They] grow out of a deeply entrenched policy process, a political culture, a perverse official incentive system, individual or collective irrationality, inadequate information, rigidity and inertia, lack of credibility, mismanagement, market dynamics, the inherent limits of law, implementation problems, and a weak bureaucratic system."

Government managers have little incentive to deter fraud and abuse.  When states administer programs that the federal government pays for, there is little incentive for administrative discipline.

College tuition assistance, health insurance programs, and housing subsidies designed to assist the poor and lower middle class have pushed up costs to the point where most of the middle class has become dependent on government support to access those markets.

  Failures of program management are legion. There are over 150 trust fund programs that are widely over-promised and under-funded and subject to abuse. Transplantable kidneys frequently have to be discarded. The Veterans Administration health care program has notorious problems. There are 53 overlapping programs to spur entrepreneurship, 82 to improve teacher quality, 160 to support housing, and 47 job training programs of dubious effectiveness. There are 209 programs to support science, math, engineering and technology education, but education in these fields nevertheless remains clearly unsatisfactory.
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  Astounding sums slip through government fingers. Government managers have little incentive to deter fraud and abuse.  When states administer programs that the federal government pays for, there is little incentive for administrative discipline. Food stamps and urban transit projects are responsible for vast inefficiency and program expansion. Health care programs are black holes for government funds.
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  Federal tax and budgetary subsidy programs routinely result in rapid price inflation and access problems in the affected markets. College tuition assistance, health insurance programs, and housing subsidies designed to assist the poor and lower middle class have pushed up costs to the point where most of the middle class has become dependent on government support to access those markets. 57% of college students now receive federal aid, amounting to well over $1.2 trillion and increasing rapidly. Fraud and delinquent payments are rampant as in most loan subsidy programs. Defaults total $76 billion (about 11%).
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  Documentation fraud is especially rife in immigration controls, and the government has no capacity to control the nation's borders. Weaknesses in education and prison systems are frequently made evident by privatization experiments.

  During the nine decades since the Federal Reserve System abandoned the rules of the gold standard it has presided over the Great Depression, the Keynesian inflationary morass of the 1970s, and the boom and bust economy so far of the 21st century. The dollar has lost 95 percent of its purchasing power during the century of Federal Reserve jurisdiction over monetary matters. There is no way that a rules-based gold system could have suffered such a disastrous record.

Successes:

A whole class of successes that Schuck points to are in the nature of market facilitation policy.

  A few program successes are highlighted by Schuck.

  A whole class of successes that Schuck points to are in the nature of market facilitation policy, something that governments in the U.S. have historically done very well. However, even these are not without many flaws of policy and implementation. He takes for granted the fundamental Constitutional and common law policies that facilitate commerce and, indeed, along with private institution arrangements,  create capitalist markets. 

    Successes include:

1. 1862 Homestead Act and other 19th century land policies - opening government lands to private exploitation;
2. Interstate Highway system and physical infrastructure generally - facilitating commerce;
3. The GI Bill;
4. Food stamp program - currently threatened by lax state administration and lack of cost constraints;
5. 1965 Voting Rights Act;
6. 1965 Immigration and Nationality Act - but current immigration policy is coming apart at the seams;
7. 1975 Earned Income Tax Credit - but IRS is proving incapable of administering the program. The GAO reports $17 billion in improper payments in 2010 from tax fraud and identity theft schemes which continue to rapidly increase;
8. Deregulation of railroads, air cargo lines, passenger airlines, trucking - all involving the removal of government regulatory alternatives to market mechanisms;
9. 1996 Welfare Reform Act - but subsequent policies have undermined its success;
10. National park system;
11. Smithsonian Institution;
12. National Institutes of Health.

Why government fails so often:

  A detailed explanation for government management ineptness is provided by Schuck in the bulk of his 400 page book. It makes for dispiriting reading.
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  Yet the tools used by government for policy implementation keep increasing. Besides standard bureaucratic implementation there are:

1. Government corporations or sponsored enterprises;
2. Economic regulation - principally of public utilities;
3. Social regulation - such as anti-discrimination laws;
4. Insurance programs;
5. Information programs;
6. Government contracts and assistance agreements;
7. Government loans and loan guarantees;
8. Tax breaks;
9. Vouchers;
10. Establishment of private judicially enforceable rights; and
11. Market incentives created by charges, tradable permits and taxes.

  The vast bulk of the problem flows simply from the lack of the management incentives, disciplines and techniques found routinely in reasonably competitive private sector markets. As FUTURECASTS has repeatedly pointed out, government managers lack the managerial tools and incentives of private sector profit-seeking managers. See #Government management comment, below.

  The ineptness of government management increases inexorably. The complexity of government decision-making is legend.
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  As an example, Schuck relates how a relatively simple Economic Development Administration grant to the Port of Oakland for a minority job creation program was torn apart by bureaucratic considerations and local politics and conflicts. The result was major overruns and delays and few minority jobs created. Schuck notes similar results under the 2009 stimulus program, and under the 1980 Superfund legislation.
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    There were at least thirty clearances requiring seventy separate agreements for the Oakland project. In such grant projects, each decision point can be a possible veto point. Costs and constraints can be and often are imposed at each point. Delay becomes an effective tactic for extracting advantages. Delay can defeat, deform or sap a program and increase costs.
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  Dodd-Frank "Volcker" rule regulation is burdened by staggering complexity and massive reporting requirements that  lead Schuck to expect failure. The safety net feature actually expands moral hazard.
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There is no incentive for accurate evaluation of program effectiveness.

 Government managers have little incentive to deter fraud or abuse. Output "products" may be hard to define, difficult to value, difficult to evaluate as to quality, and generally produced without economic discipline and the signals imposed by competition. Indeed, there is no incentive for accurate evaluation of program effectiveness.
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Bureaucratic incentives generally favor program and budget expansion, sometimes undermining the effectiveness of core policies.

Government's theoretical understanding of complex social and economic problems may be compromised by numerous tangential considerations or may be just plain incompetent.

  Political considerations predominate and result in infeasible objectives and costs that increase over time. Bureaucratic incentives generally favor program and budget expansion, sometimes undermining the effectiveness of core policies. Costs imposed on private entities are generally ignored or disparaged although they are often the most significant policy costs. Unintended consequences can be substantial. Agency implementation may be afflicted by tunnel vision, resulting in damage to other government policies.
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  Market ramifications confound government officials and agencies that generally lack the understanding and competence needed to deal with them. Government's theoretical understanding of complex social and economic problems may be compromised by numerous tangential considerations or may be just plain incompetent. Each policy generates new problems in pertinent markets. 

  "[The] markets that surround policies are often so differentiated, detail-specific, dynamic, and opaque to centralized understanding and control that even the most sophisticated policy maker is apt to misunderstand the relationships among the markets' myriad moving parts."

Policy is shaped by Constitutional checks and balances at the national and state levels, electoral procedures, the media, and the varied influences of a politically, economically and legally empowered civil society.

  A list of general reasons for program failure provided by Schuck covers both design and performance failures.

1. Poor enforcement;
2. Entrenchment of "an inefficient or unjust status quo" that blocks innovation;
3. Persistence of programs more effectively left to the private sector;
4. Hindrance of economic competition;
5. Imposed increases in economic risks;
6. Policymaking discretion that is either insufficient or insufficiently constrained;
7. Threats to Constitutional values;
8. Moral hazard protections against economic risk;
9. Cost-benefit deficit;
10. Susceptibility to waste, fraud and abuse;
11. Redistribution of wealth in favor of the wealthy;
12. Predominance of unintended consequences.

  Above all, policy is shaped by Constitutional checks and balances at the national and state levels, electoral imperatives and procedures, the media, and the varied influences of a politically, economically and legally empowered civil society.
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Bureaucratic structure:

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  Characteristics that make the U.S. "a difficult nation to govern effectively" are set forth by Schuck. He provides about 35 pages describing the difficulties of judicial lawmaking and policy making, much of which is sufficiently notorious so as to not require inclusion in this review.
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While the private sector flattens its structures, government hierarchy  continues to expand.

There are now "deputy deputy assistant secretaries," "associate deputy assistant secretaries," "deputy associate deputy administrators," and "chief of staff to the associate deputy assistant secretary."

  The administrative arm of government resembles a Rube Goldberg apparatus. While the private sector energetically flattens its hierarchical structure, government continues in the opposite direction.
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  At the top, there are now "deputy deputy assistant secretaries," "associate deputy assistant secretaries," "deputy associate deputy administrators," and "chief of staff to the associate deputy assistant secretary." The thickening layer of political appointees undermines the morale and effectiveness of the career and technical civil service. Federal employees, who actually do the government's work, report upwards through 16 layers on policy and budget questions. "The average federal employee received guidance through nearly 60 layers of decision makers."
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  NASA's "Challenger" and "Columbia" tragedies and the FBI's failure to heed 9/11 warnings were caused in part by their complex bureaucratic structure. Such evident failures are just the tip of the iceberg, Schuck asserts reasonably.
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  Constitutional constraints and federalism severely dilute federal influence. Policy frequently must pass through 89,500 units of state and local governments. The nation still has a strong commitment to limited government. Schuck cites the No Child Left Behind law, the Real ID Act, and the insurance exchanges of the Affordable Care Act as primary examples of policymaking difficulties.
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  Federal payments for state-administered programs like food stamps and urban transit are responsible for vast inefficiency and program expansion. Social Security Disability Insurance recipients have tripled since 1990 "despite a much healthier working age population."
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  Policymaking at the state and local levels must be included in any analysis. Schuck provides a substantial list of agenda items dealt with primarily at state level, including term limits, voter registration, antismoking efforts, gun control, death penalty, working conditions, environmental standards, tax law, campaign finance, special education, energy deregulation, conservation, school choice, same-sex marriage, and bureaucracy reforms. State policy successes and failures can inform subsequent federal legislation.

  When states administer complex federal grants programs without being responsible for raising the funds for that program, vast levels of waste, fraud and abuse are typical.

Public response:

People impose competitive pressures to state and local policymaking by fleeing policy impositions.

  The ability of people and firms to "vote with their feet" has frequently thwarted social engineering policies. It applies competitive forces to state and local policymaking that the pertinent policymakers hate (but badly need).

  "Freedom of choice has race and class separating effects in many policy-relevant areas of social life, which puts it in tension with more egalitarian, integrative ideals."

The multifarious activities of civil society relieve or supplement governments with respect to many chores left to government in other nations.

  Black markets and gray markets undermine government regulatory and tax programs. Such "informal" markets can amount to as much as 50% of GDP in developing nations. Estimates for developed nations range from 9% in the U.S. to as high as 18% in Europe.
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  On the other hand, the multifarious activities of civil society relieve or supplement governments with respect to many chores left to government in other nations. This has many virtues and is preferred despite the apparent benefits of government interventions in certain instances, Schuck points out. Various government functions have sometimes been contracted out to private entities often but not universally with beneficial results.
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"Radical individualism" is much deplored by those with communitarian ideals.

  The U.S. is almost unique in the extent to which individual rights and interests can take precedence over the communitarian interests promoted by various public policy initiatives. This "radical individualism" is much deplored by those with communitarian ideals. The conflicts frequently wind up in the courts where individual interests are frequently protected against government policy initiatives. It is the courts that enjoy the greatest level of public approval among government institutions.
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  Litigation greatly complicates and not infrequently delays and sometimes shapes and thwarts policy initiatives despite judicial deference to legislative and administrative expertise and policy making in the vast majority of the cases. 
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Interest groups:

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  A caliginous bog of varying and often conflicting interests enmeshes government as it expands and undertakes an ever-increasing array of programs.
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Interest groups contribute to, complicate and thwart policymaking in multifarious ways, and generally succeed in getting at least some of what they want.

  Interest groups have descended on Washington like a plague since 1961 in large part due to the expansion of the federal government policy agenda. About 70% of interest group offices in Washington date from after 1960. Interest groups contribute to, complicate and thwart policymaking in multifarious ways, and generally succeed in getting at least some of what they want.
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  Small concentrated interests often predominate over larger but diffuse interests, short term interests often predominate over long term interests, political institutions are designed predominately to meet the interests of the politicians, benefits are often exaggerated and costs understated or deferred or hidden or disguised or shifted away from beneficiaries, legislative coalition building ("log rolling") advances many narrow interests, a wide array of moral hazard government guarantees and other risk transfer policies can go disastrously awry, government disaster insurance programs (flood, earthquake, fire, crop failure, etc.) routinely under-price costs and thus subsidize premiums and encourage risk taking. Schuck provides numerous examples.
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With recent antipoverty program initiatives, the disability program has pretty much reversed the employment gains from welfare reforms.

  The government's negative learning curve is demonstrated by, among many other programs, federal drought insurance that actually creates drought damage by making it profitable, and the expansion of disability programs to cover minor ailments that has turned the program into an invitation for fraud. With recent antipoverty program initiatives, the disability program has pretty much reversed the employment gains from welfare reforms.
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  Government departments and entities figure prominently among these interest groups, Schuck emphasizes. They often ally themselves with the private interests within their remit. Powerful public employee unions threaten the fiscal solvency of state and national governments. They press their interests for government agenda items and increases in benefits.
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  Other difficulties acknowledged by Schuck include the varying attitudes towards inequality, religious and political moral claims, the unparalleled diversity of society in the U.S., widespread skepticism about political and even technical authorities, increasing influence of public opinion on "hot button" issues, implementation issues, and the influence of a vast array of politically, economically, and legally empowered civil society groups. Schuck explains each of these factors at some length.
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A surfeit of management problems:

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  Irrationality afflicts the decision-making processes of both public officials and electorates. Schuck reviews some of the growing scholarship on this subject. While these factors also apply to market participants, markets quickly punish and limit irrational decision-making whereas politics often entrenches it. Ideological bias afflicts all parts of the political spectrum.
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   Politics, costs, complexity and delay often undermine the benefits of even regulatory efforts designed to facilitate market mechanisms. Schuck mentions Dodd-Frank and other financial disclosure requirements, antitrust law enforcement, medicinal drug and other safety regulations, inefficiency in infrastructure and other public works, partial deregulation of banking and finance that reduced regulatory oversight while continuing to disable market disciplinary mechanisms.
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  Other inherent management problems involve the frequent lack of pertinent information, the lack of needed flexibility, the lack of credibility, and management ineptness with respect to the noxious trio of waste, fraud and abuse. These factors, too, are explained by Schuck at some length.
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Resistance to reform:

Needed reforms are determinedly resisted.

  The Postal Service is cited by Schuck as a prime example of the destructiveness and rigidity of government decision-making processes. Needed entitlement reforms are also determinedly avoided. Imposing discipline on government employees is extraordinarily difficult, and affects performance broadly.
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Only markets have the ability "to elicit and process" and make use of vast aggregations of diverse and opaque information. Markets remain the most effective - often the only effective - means of organizing and motivating human activity.

  Schuck lists a number of notoriously anachronistic policies that resist repeal or reform, including farm subsidies, numerous tax code provisions, Merchant Marine Act requirements, the ethanol program, and even acceptable safety levels for water supply fluoridation. Fannie Mae and Freddie Mac remain in existence and financial regulators struggle to keep abreast of rapid changes in financial markets. Legacy policies powerfully constrain policymaking, especially under the Constitutional system that provides numerous opportunities for obstructing reforms and new initiatives.
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  Schuck cites deficient data systems that undermine gun controls, Medicaid's digitalized medical records program, Dodd-Frank law risk assessment, and Obamacare efforts to prevent fraudulent applications. Privacy policies can prevent the government from acquiring needed data, as occurs with gun controls and immigration policy.
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  Citing Hayek, Schuck acknowledges that only markets have the ability "to elicit and process" and make use of vast aggregations of diverse and opaque information. Markets remain the most effective - often the only effective - means of organizing and motivating human activity.
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Performance criteria:

  Profits and sales provide objective criteria for evaluating performance of private sector profit centers in competitive markets.
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The lack of reliable performance criteria is broadly corrosive.

  Objective performance criteria are almost totally lacking in government administration. Other methods of measuring performance are more difficult to apply and not always applicable. The lack of reliable performance criteria is broadly corrosive.

  "[Civil service] morale is lower than that of their private nonprofit counterparts. None of the resources needed to perform their jobs well are sufficiently available. Especially at the middle and lower levels, where most of the work of government gets done, they criticize the competence of their own colleagues and rate their organizations unfavorably in terms of spending money wisely, helping people, acting fairly, and being worthy of trust. No wonder, then, that they say they work for the government for the pay, benefits, and security rather than out of a sense of public spirit; that for Americans entering the job market, federal services 'come in last in almost every indicator, from the motivation to make a difference to organization resources' well behind private nonprofit organizations, and that this chorus of criticism by the most knowledgeable people has increased over the years."

  The "Senior Executive Service" program established in 1978 to provide elite leadership has been thwarted by "a maelstrom of political, economic, and managerial forces that can frustrate even well-intentioned and carefully crafted campaigns."

  "[The] federal bureaucracy is highly differentiated and serves many political masters -- Congress, the president, the public, its own workers, and powerful outside interest groups that lobby for contracts, as in the aerospace industry -- each with different incentives to support outsourcing, and at different levels."

The hidden government:

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  Government contracting jobs totaled over 7.6 million, government grant jobs almost 2.9 million - not including military personnel. State and local governments have no idea of the man-hours spent administering federal mandates. Half a million contractor employees have top secret clearances (as did Edward Snowden).
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  Agency procurement offices lack the manpower and skills to effectively manage all their contractors and thousands of subcontractors. GAO reports of troubled contracting programs and systems continue for decades, beginning with Defense, Energy, and NASA. Obamacare's website contract is all too typical. The civil service is an "increasingly demoralized, poorly equipped, marginalized, publicly scorned, and - literally - undisciplined workforce."
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A reform wish-list:

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  Schuck provides a wish-list of cultural, constitutional, statutory and political changes and reforms that might lead to improvements in government managerial performance. He realistically acknowledges that, with a few exceptions, the chances range from slim to none.

•   Changes in culture and human nature head the list (as they usually do for socialists and other utopians). Cultural changes can occur, as recently with gay rights, but they are slow and frequently involve complexities and unintended consequences.
•   Constitutional and legislative procedural obstacles get in the way of efforts to expand and manage the government's responsibilities and powers. Reform of Senate cloture rules (as occurred recently with respect to Presidential appointments) might eliminate one obstacle to liberal policymaking, but elimination of the localism bias inherent in the Senate would require Constitutional amendment.
•   Presidential line item veto would greatly enhance the powers of the President, and his responsibility for the budget. (It would also accelerate the development of the "Imperial Presidency.")
•   Redistricting reform to combat gerrymandering (as recently in California) might reduce the influence of partisan extremes, but results at the state level have not been entirely successful.
•   Campaign finance reform is an extremely complex and uncertain endeavor. (The reforms of the 1970s contribute to the current political fragmentation and gridlock.) The author believes that extending mail privileges and TV access rights to challengers might be both achievable and useful. (The definition of who qualifies as a "challenger" would be a fraught issue.)

  Congress remains the single greatest source of governmental failure.

  "Its poorly designed policies, tendency to subordinate broad but diffuse interests to narrow but well-organized ones, rigidity and inertia in the face of new challenges, lack of credibility in maintaining earlier policy commitments, insouciance about implementation problems, gerrymandered representation system, and other defects give it much to answer for."

  However, reform is a political nonstarter, and complexities make even the most well intentioned changes extraordinarily fraught with unintended and often dangerous consequences.
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  There are a host of procedural reforms designed to overcome partisan gridlock and reinforce "moderation" being circulated by academics. Among these are open primaries, easier voter registration, filibuster reform, all of which have to varying degrees recently been tried at state or federal levels.

•   Schuck would like Congress to agree to a legislative checklist that would assure that Congress would address issues that might lead to litigation or otherwise undermine success. (However, ambiguity is often the only way that controversial legislation can be enacted.) There should be procedural obstacles to omnibus appropriations legislation, which is often used to usher complex policies past Congress with little examination or publicity. (However, no Congress can bind its successors.)
•   More popular would be for Congress to agree to comply with the same rules that it imposes on the public. He also recommends taking advantage of modern information technology to increase transparency and public feedback in the legislative process. Disclosure and sunset provisions can provide cost effective approaches to dealing with interest groups, but both are not without serious problems.
•   Repeal or reform of moral hazard credit subsidy programs like Fannie Mae and Freddie Mac (joined today by the Federal Housing Agency and even the Federal Reserve).
•   Congress should at least remove all accounting mandates that artificially overstate the prospects of government programs, like the understatement of loan losses in the student loan program. (You should live so long!)
•   Reform of student loan programs. "It is folly to imagine that all high school graduates should go on to college at public expense" when good vocational alternatives are available. (Schuck fails to mention the price inflation impact on market prices of such government efforts to boost demand.)
•   Paygo reform that requires proponents of new spending to recommend offsetting cuts would help balance interest groups against each other. Unfortunately, paygo reforms are ferociously opposed and often ignored in omnibus legislation. To the extent budget constraints are imposed, pressure for costly action simply transfers off budget to regulations, private-sector mandates, special trust funds, and borrowing authorities. Paygo efforts will thus have to apply also to off-budget expenditures to be affective.
•   Schuck suggests withdrawal of federal disaster assistance for structures rebuilt on coastal areas after being destroyed by hurricanes. He mentions the $700 million misspent from hurricane Katrina funds. (Should the same apply to structures built on active earthquake faults -  or in tornado alley - or in periodically dry forest areas? How about crop insurance in the drier Western plains?)
•   Schuck recommends voucher alternatives like food stamps, Section 8 housing, school vouchers, "regulated to prevent fraud or consumer abuse." Voucher programs should be "the default form of federally provided access to non-cash benefits." Schuck believes that many Obamacare problems would have been avoided by use of income and wealth-tested vouchers for insurance coverage.

  The political temptation is always in the direction of vast expansion of such programs, especially as government intrusion increases price inflation rates in the pertinent markets until most of the middle class become dependent on government assistance to access those markets. To repeat, this has already happened in housing, heath care and college tuition.

•   Schuck suggests reform of inefficient politically driven policies with respect to tariffs, government enterprises like the postal service and Amtrak, agricultural subsidies, and Medicaid procedures. He opposes "corporate welfare programs." (However, such grossly inefficient policies exist because Congress and influential constituents love them.) 
•   Schuck favors increased use of the tax code as a policy tool to discourage certain activities and encourage others. The intellectual woods are full of marvelous suggestions for surely beneficial government policies.

  That's precisely what is needed, more complexity in the tax code, and further opportunities for sharp gaming of the system and outright fraud.

•   Providing more resources for the GAO and department Inspector Generals and publicity for their findings might be helpful.
•   User fees - such as used by the National Park service - are recommended where applicable, with aid for the poor.
•   Schuck would like to see a regulator of the regulators unit established in the Office of Management and Budget to expand the cost/benefit analyses of "major" regulations. This office could also be used to push political agenda items by means of the administrative apparatus without Congressional approval. The Obama administration has already expanded use of the Administrative apparatus to cover "dignity and income distribution" factors.

  Adding yet another level to the government's regulatory apparatus will surely restrain costs and increase regulatory efficiency, won't it?

  Other Schuck suggestions include:

•   Waivers should be granted to state agencies executing federal policies to permit experimentation;
•   Federal  policy innovations should first be tested on various groups prior to full implementation;
•   Social impact bond approaches should be tested to encourage innovative efforts by for-profit entities in dealing with societal problems;
•   "Big data" internet mining techniques might be usefully employed to facilitate government programs, but run into privacy concerns;
•   Private regulatory systems often supplement government regulation, but are subject to many of the same problems as government regulatory systems.
•   Increased staffing of important regulatory, collection and enforcement agencies is strongly recommended by Schuck to improve performance of government policies.
•   Tax simplification.

  This was tried with some success in 1986, but didn't long survive Congressional meddling. Schuck himself can't resist further meddling to achieve policy objectives.

•   Avoidance of regulations that impose undue burdens on small or new entrants to markets. (Dodd-Frank is a death knell for many small local banks.)
•   Court imposed costs on litigious parties. (There are huge problems with definitions here.) More reliance on standard tort law where appropriate instead of administered alternatives. 
•   Flattening the bureaucratic hierarchy.

  Unfortunately, all political and bureaucratic incentives run in the opposite direction, as proved by Schuck's advocacy of an OMB office to regulate the regulators.

•   More tolerance for administrative discretion in lieu of rigid rules. (Unfortunately, abuses of discretion are inevitable, which inevitably lead back to constraining rules.)
•   Greater use of grants to states and localities to get around the many layers of federal bureaucracy.

  Given the many shortcomings of the bureaucracy, there is no shortage of ideas for improvements. Schuck mentions flattening to no more than six levels the hierarchy, reserving at least 25% of supervisory openings for outside candidates, streamlining disciplinary and hiring processes, reducing supervisory ranks by half, strengthening oversight for contracts and assistance contracts. Congress and unions show no interest in any of this.
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Disgust with government intrusiveness and policy failure is eroding public voluntary compliance with law.

Government management:

  As FUTURECASTS has previously pointed out:

  Organizational efficiency can only be obtained by organizing in breadth. Front-line managers must have substantial discretionary powers subject to the natural discipline of objective and clear functional standards of success. They must not be buried so deep in a pyramidal bureaucracy - at the end of long chains of command - that they lack ready access to the top decision makers.
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  Profits and sales provide functional performance benchmarks for private enterprise, and the means for organizational efficiency. However,

• without profits there can be no autonomous profit centers;
• without sales there can be no sales charts; and,
• without meaningful and transparent accounting methods there can be no competent and efficient management at any level.

  Government accounting procedures are notoriously unreliable and twisted for budgetary and propaganda purposes to the point where they - often intentionally - fail to show how programs are actually faring. There are seldom anything resembling sales charts and profit and loss statements with which to judge efficiency and effectiveness. Moreover, in the absence of any private ownership interest, there is nobody who has any incentive for evaluating actual performance.
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  It is beyond dispute that government outputs don't equal government inputs. Billion dollar programs for health care, housing, education, military arms, etc., invariably produce substantially less than billion dollar outputs of health care, housing, education, military arms, etc.
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  Lacking these essential management tools, government cannot grant broad discretionary powers to its front-line managers. Government cannot decentralize decision making. Government is stuck with its smothering layers of organization in depth - up and down which must flow the interminable paperwork of myriad planning cycles, authorizations, appropriations, reports, and inspections - all smothered in proliferating regulations.
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  Litigation threatens and ensnares government management at every point where it may conflict with private interests. There is Administrative Procedure Act litigation - bid protest litigation - environmental impact statement litigation - and litigation arising from dozens of statutory and regulatory substantive conditions and cross cutting policy strings imposed on government activities, contracts and grants.
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  Our governments are wrapped in constraints to protect us from our governments. They simply were not designed to intrude effectively in the details of our economic or social lives. "The process that is due" is constantly elaborated as a check on government excess. Even though the electorate wants ever more benefits from government, it really still distrusts government.
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  Government procurement of goods and services has its own peculiar horrors, as regulations governing contract bidding or negotiation, acceptance and performance, disputes resolution, reports and inspections, constantly proliferate and become more arcane. Government contractors must include the costs of over two dozen clauses imposing such requirements as special accounting procedures, special subcontracting procedures and requirements, preferences for domestic suppliers and favored groups, union wage requirements, and reporting and inspection requirements.

  Then, there is the government's NEGATIVE learning curve. If a government program involves much more than merely taking money in and issuing it to designated recipients on the basis of objective criteria, it must become increasingly inefficient over time.
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  There is the tendency for government to increasingly burden existing programs with additional and broader tasks, and all of the policy baggage of each new political fad. This tendency applies broadly - even where government is engaged in core operations - such as defense - or has established reasonably efficient programs - such as social security. It applies to all programs involving government procurement or grants.
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  Constitutional constraints are widely resented by both liberal and conservative ideologues for obstructing the achievement of agenda items and forcing compromises that undermine legislative coherence.  These constraints force extensive debate over contentious issues, sometimes over several electoral cycles.
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  These constraints were clearly intended for a government with limited domestic responsibilities. They clearly frustrate those with broad policy agendas. Since the New Deal, agenda advocates have been successfully gaining judicial interpretations that considerably undermine the Constitutional constraints. Today, there are four Supreme Court justices who clearly favor the elimination of these Constitutional constraints at least with respect to economic policy, leaving only the electoral process - and the tender mercies of the markets - to deal with government economic excess.