Business more efficient than government?

Sometimes it’s easy to see why people think government is too big.  Take a recent news report in Maine papers.

In many towns, to get a license to dig claims commercially, you have to do two things.  You pay the annual fee and you put in some time cleaning up and reseeding the clam flats.  This so-called conservation time is for your own benefit.

This practice has been going on the decades, and it works pretty well.  But then, along comes the Department of Labor – federal, state or both.  They say that when people are required by government to work, they become employees and have to be paid.

We are not talking about a lot of money here, because typically in each year conservation time takes only part of a few days.  Nobody forces people to dig clams, and shellfish harvesters understand the terms set by local government.

Government could spend less time investigating this harmless practice.  Instead, some towns will now raise their license fees and then pay rebates to the diggers in return for their conservation time.  Presumably, the diggers will have to pay taxes on the income, but for some the fee itself may not be a tax deduction.

This looks like government run amok.  The law, undoubtedly drafted by staffers with little real world experience, demands this process rather than exempting such small-scale practices.

Of course, a town could challenge government and face the consequences, but they could find it’s not worth the taxpayers’ money.

This is a small matter, but one that just about anybody can understand and conclude is ridiculous.  And that could cause them to oppose government regulation, even when it is justified, to say nothing of its government inefficiency and cost.

This is raw meat for opponents of government.  They argue that, if matters are left to the private sector, government excess will be avoided and the market, with its competitive forces, will produce sensible results.

For decades, General Motors was the largest automobile company in the world, a symbol of the success of the American way of doing business.  Its shareholders were well rewarded, and it was unionized, ensuring its workers were well paid.

When President Nixon asked the Israeli prime minister what she would want in exchange for a couple of her successful military generals, Golda Meir replied she would accept a couple of American generals, General Motors and General Electric.

GM came to believe that it set the standard and that whatever it did was the right thing to do.

Meanwhile, in Japan, automobile company leaders were listening to W. Edwards Deming, an American engineer, largely ignored in the United States.  He advised on a statistical approach to manufacturing with a heavy emphasis on increasing quality while controlling costs.

As Japanese production grew and its methods took hold, GM and other American carmakers ignored these developments.  More importantly, GM stuck to its own internal business practices as the world around it changed.

In 2009, despite having received federal aid, the company filed for bankruptcy.  To protect jobs and boost the economy, the U.S. and Canadian governments bailed it out.  On the U.S. side, the government put $49.5 billion into GM, but did not recover about $10.5 billion by the time GM ended government support in 2013.

The GM case, involving the pride of American manufacturing, supports the argument that big business can be as inefficient as big government.

But the problems with government may be inevitable, because we resist change.

Sen. Tom Coburn, an Oklahoma Republican who has just retired from office, asked congressional auditors to review all government programs to identify duplication and overlap.  It took the auditors three years, but they came up with hundreds of duplicate programs.

If these programs were simply merged, the savings would have been enormous.  But nothing happened.  Members of Congress want to bring federal money home, and that prevents efficient operations.  Even the toughest critics of government resist cuts in public spending that hurt their districts.

Of course, advocating smaller government may have nothing to do with efficiency, but simply be a way of lifting regulation from your friends and cutting programs favored by the other party.

Maybe the issue is bigness itself.  Institutions may grow so large that people miss the small mistakes, like the clam issue, that mount up to cause major problems, like a GM bankruptcy.

Whatever the reason, there’s no evidence that the private sector, through competition, would be any better at producing desired public policy results than is the government itself.