An article in The NY Times describes the efforts of Megan Smith to bring technology practices in the White House into the 21st century (they still use floppy disks there for example).
My prediction is that Ms. Smith will largely fail. Large, stodgy companies may be somewhat slower to adopt technology than those in Silicon Valley, but they do so at lightning speed compared to government. They don't do it to be "cool". They do it because it makes them more efficient. They do it because they are competing against other companies. They do it because it is profitable. None of these drivers are at play in government.
Instead, what drives government are political considerations that are often counterproductive. Exhibit A. In this article we learn that Ms. Smith is greatly concerned about what? Recruiting more female technologists. Can someone (Ms. Smith?) please explain why if the primary objective were to introduce technology for greater efficiency it would make one iota of difference what chromosomes are possessed by those designing the systems and writing the code? No doubt there will also be a push to recruit black technologists, Hispanic technologists and homosexual technologists. All of whom will continue to use floppy disks.
Showing posts with label Government inefficiency. Show all posts
Showing posts with label Government inefficiency. Show all posts
Wednesday, January 14, 2015
Tuesday, January 8, 2013
The Rent Seeking Drag
Rent Seeking is sort of an arcane economic term for those who seek to obtain benefits for themselves through the political arena.
It is, of course, not news to anyone that people lobby the government for privileges that the marketplace doesn't afford them. But why is this so bad economically? Beyond the fairly obvious fact that it diverts resources from the most productive uses to ones of lesser value (else why would you need to lobby government in the first place?), there is also an insidious dead weight cost.
Let's say, for example, a steel firm spends ten million dollars lobbying for restrictions on steel imports. Whatever money it gains by succeeding (presumably more than ten million), is not a net gain. From this gain must be subtracted the $10MM cost of seeking the restrictions. Although such an expenditure is still rational from the viewpoint of the firm that spends it, it represents a use of real resources to get a transfer from others and is therefore a pure loss to the economy as a whole.
As more and more economic decisions are made in the political arena rather than the economic marketplace, more and more money will be spent on influencing the decision makers. This dead loss starts to add up to a significant drag on economic growth. It's as if every time you went to the supermarket you had to spend an hour lobbying the store manager to put on sale the particular things that you want to buy. And others did as well. What would that do to the overall efficiencies of the retail food system?
It is, of course, not news to anyone that people lobby the government for privileges that the marketplace doesn't afford them. But why is this so bad economically? Beyond the fairly obvious fact that it diverts resources from the most productive uses to ones of lesser value (else why would you need to lobby government in the first place?), there is also an insidious dead weight cost.
Let's say, for example, a steel firm spends ten million dollars lobbying for restrictions on steel imports. Whatever money it gains by succeeding (presumably more than ten million), is not a net gain. From this gain must be subtracted the $10MM cost of seeking the restrictions. Although such an expenditure is still rational from the viewpoint of the firm that spends it, it represents a use of real resources to get a transfer from others and is therefore a pure loss to the economy as a whole.
As more and more economic decisions are made in the political arena rather than the economic marketplace, more and more money will be spent on influencing the decision makers. This dead loss starts to add up to a significant drag on economic growth. It's as if every time you went to the supermarket you had to spend an hour lobbying the store manager to put on sale the particular things that you want to buy. And others did as well. What would that do to the overall efficiencies of the retail food system?
Sunday, July 1, 2012
Free Amtrak
At a time when the country is up to its eyeballs in debt, why are we still spending billions to subsidize Amtrak? It's often faster and cheaper to take a bus or a plane. The solution is remarkably simple. Deregulate Amtrak. In 1980, the Staggers Act deregulated rail freight. It gave railways freedom to charge market rates, enter confidential contracts with shippers, drop unprofitable runs and operate trains as they liked.What did this do to costs?
Why wouldn't you expect the same things to happen with Amtrak? It would shed the unprofitable parts of its business and figure out how to make the profitable parts more profitable. And the 90% of Americans who never use passenger rail would stop paying for those who do. Yet Congress keeps renewing this incredible waste because?
Subscribe to:
Posts (Atom)