THE ERA OF BETTER GOVERNMENT IS STARTING:

Government for Hire (STEPHEN GOLDSMITH and WILLIAM D. EGGERS, February 21, 2005, The New York Times)

In the past, those of us who wished to limit government's monopoly over public services were content to make the case for greater private delivery and then leave it up to the bureaucrats to figure out how to do it. But not enough attention has been devoted to one of the central policy and management issues of our time: what kinds of systems, organizational structures and skills are needed to operate a government that increasingly orchestrates (rather than owns) resources and purchases (rather than directly provides) services?

It must be recognized that involving partners to produce government services places more - not less - responsibility on public officials. It requires them, often with declining resources, to provide more public service than before, but produce less of it themselves. This in turn demands a different set of governmental abilities. It requires public leaders who understand that their job is to produce public value and not merely to manage activities.

This new breed of leadership must recruit managers skilled in negotiation, contract management and risk analysis who will tackle problems unconventionally and focus on results rather than on defending bureaucratic turf. Ultimately, this means fewer people overall at the lower and middle levels, but more highly skilled individuals at the top who are properly paid.

Record baby boomer retirements over the next four years - up to 50 percent in some federal agencies - provide an opportunity to transform the public work force without layoffs. But to attract a new kind of public employee, the government has to change outdated seniority rules, narrow job classifications and archaic hiring practices.

Management must move to center stage. Holding providers accountable and measuring and tracking their performance has to become a core government responsibility that is as important, if not more so, than managing public employees.

Public officials must be careful to retain control of outcomes even while their private partners directly manage services. This requires a delicate balancing act, building in the needed flexibility to enable dynamic change, while not becoming a captive of private vendors.

It's time to put the debate aside.

The size, power, expense and arrogance of government grow unless restrained. I’m not anti-government. But the more we rely on the government to do things for us, the less freedom we have, the less responsibility we take for ourselves and for others, the less potential we achieve. Often best public policy lies with some combination of government, the private sector, and not-for-profit organizations, and more likely at the local level which is closer to problems and better able to come up with solutions.

In the words of Daniel Webster, “Human beings will generally exercise power when they can get it, and they will exercise it most undoubtedly in popular governments under pretense of public safety.” C.S. Lewis agreed, “Of all tyrannies, a tyranny that sincerely exercises for the good of its victims may be the most oppressive.” Edmund Burke wrote: “The true danger is when liberty is nibbled away, for expedience and by parts.” And columnist Jonah Goldberg says:

The doctrine of limited government holds that government is, well, limited — that governmental neglect at the federal level is in fact benign. Conservative dogma holds that the people cannot develop the habits of the heart necessary to take care of themselves if they are being taken care of by the government. Moreover, a government that provides services simply because they are demanded is a government that reserves the right to take as much of my property and wealth as it deems necessary to meet the demands of somebody else….

We used to believe that since men are not angels, limited government is necessary. Now it seems to be that until men are made into angels — and by our own hand — unlimited government is required. After all, flawed men will make demands on the government when they are hurting and until those flaws and those pains are remedied, their demands must stir the government "to move."… We know from history that every new program creates constituencies who will fight like hell to prevent a final, program-ending, victory.

In his book What’s So Great About America Dinesh D’Souza puts it this way:

The founders took special care to devise a system that would prevent, or at least minimize, the abuse of power. To this end they established limited government, in order that the power of the state would remain confined. They divided authority between the national and state governments. Within the national framework, they provided for separation of powers, so that the legislature, executive and judiciary would each have its own domain of power. They insisted upon checks and balances, to enhance accountability.

In general the founders adopted a “policy of supplying, by opposite and rival interests, the defect of better motives.” (Federalist Papers No. 51, James Madison) This is not to say that the founders ignored the importance of virtue. But they knew that virtue is not always in abundant supply. The Greek philosophers held that virtue was not the same thing as knowledge – that people do bad things because they are ignorant – but the American founders did not agree. Their view was closer to that of St. Paul: “The good that I would, I do not. The evil that I would not, that I do.” (Romans 7:19) According to Christianity, the problem of the bad person is that his will is corrupted, and this is a fault endemic to human nature. The American founders knew they could not transform human nature, so they devised a system that would thwart the schemes of the wicked and channel the energies of flawed persons toward the public good.

Likewise, commentator Andrew Ferguson says, “Government can work – can indeed be a positive good. With vigilant oversight, it can live within its means, deliver its services with relative efficiency, and make the lives of citizens safer, richer, and more convenient.” And Wade Horn, the Assistant Secretary for Children and Families in the US Department of Health and Human Services under President George W. Bush, has said the principle should be “not about expanding government; it is about doing it better.”

I worked with federal government employees as a contractor for 13 years, and found that they get a bad rap. Some were terrific, many were good, some were duds. While the civil service system does shield civil service employees from politicians’ whims, it gives little incentive to excel and protects those who aren’t “good enough for government work.” The same for the aspects of the contracting process which stifle initiative. We knew that the profit percentage on a government contract had to be less than for a commercial client. But we did not make enough money to invest too many of our own nickels in proactive work that could pay off for the taxpayer.

Stephen Goldsmith is former Indianapolis Mayor and currently is Professor of the Practice of Public Government at Harvard’s Kennedy School of Government. According to his faculty profile, “As Mayor of America’s 12th largest city, he reduced government spending, cut the city’s bureaucracy, held the line on taxes, eliminated counter-productive regulations and identified more than $400 million in savings. He reinvested the savings by leading a transformation of downtown Indianapolis that has been held up as a national model.”

In his book The Twenty-First Century City – Resurrecting Urban America, Goldsmith gives credit to a combination of actions: competition between private companies and government departments to provide public services, better understanding of what it costs to provide that service, the setting and measuring of performance goals that are customer-focused, and giving unionized public employees the opportunity to “be as innovative, effective, and cost-conscious as their private sector counterparts – and they can prove it in the marketplace.” He says:

The president of the local chapter of the American Federation of State, County and Municipal Workers put it much more simply. Because we broke up our government monopoly and allowed city workers to compete to please customers, he said, “city workers are no longer asked to park their brains at the door when coming to work.”

Among the big accomplishments were higher quality operations for a lower cost of the city airport, wastewater plants, jails, recreational facilities; conversion of a newly closed naval base to private hands that saved 2,000 jobs, added 700 more jobs and avoided $180 million in federal expense for the closure in the process; reduced crime and improved quality of life in neighborhoods.

Of the many things they did, here’s one small example. The city decided to put up for competitive bid some street maintenance. City workers were asked to bid. Goldsmith writes:

The workers complained they could not possibly compete while carrying unreasonable overhead in the form of managers’ salaries. For a mere ninety-four workers in the street repair division there were thirty-two politically appointed supervisors – an absurd ratio, especially considering that most of the supervisors were relatively highly paid. In part to call my bluff, union employees told us that if we serious about competition we would eliminate several of these supervisors to give the union a real chance to compete.

By normal political standards the union’s demands would have been a show stopper. The supervisors were registered Republicans. I was a Republican mayor. These managers, and their patrons in the party, had supported my election. The union had supported the opposition and campaigned strongly against me. Now the union wanted me to fire politically connected Republicans to help a Democratic union look good.

We did it. We had to. If I had blinked and shielded my fellow Republicans, the message would have been clear: we were not serious about competition. In addition to laying off or transferring fourteen of the thirty-two supervisors, we provided the workers with a consultant to help them prepare their bid.

The union was surprised, impressed, and probably nervous. Workers now knew that they, too, would be finding new jobs if they failed to draw up a competitive plan.

Making workers responsible for their own destiny sent a clear message that for the first time in ages management recognized that the men and women who do the job know better than anyone what it takes to get it done….

For example, street repair crews previously consisted of an eight-man team that used two trucks to haul a patching device and a tar kettle. Once in charge, the city workers saw that my remounting the patching equipment they could eliminate one of the trucks, and by doing do reduce the crew from eight to five.

The city employees bid significantly below their private competitors and won the job decisively. While the city previously spent $425 per ton filling potholes with hot asphalt, the new proposal reduced the city’s cost to $307 per ton – a 25 percent savings.

We were shocked. In fact, many within city government doubted the union proposal. But when DoT actually did the work, workers not only met the bid price, they beat it – by $20,000. They increased the average production of a work crew from 3.1 to 5.2 lane miles per day – a 68 percent efficiency increase.

In New York City and State, where public employee unions have enormous power to block attempts to improve efficiency and outcomes, we’ve been less successful. Today New York City employs about 100,000 more workers than it did forty years ago, a 30% increase, while the population size has stayed about the same.

For those who would condemn Goldsmith and his allies as heartless he says:

We cannot simply pull out of communities destroyed by poor services and unwise welfare state intervention. But government’s involvement must take a new form, fostering market-produced prosperity instead of making income transfers through welfare. First, government must do right by its basic responsibilities – safety, schools, and infrastructure. Second, government needs to help remove the structural barriers to investment by helping reduce the cost of investing in homes or jobs by the private sector.

Posted by Jim Siegel at February 23, 2005 10:58 AM