Tuesday, August 23, 2011

The Economy Will Improve If We All Spend More Time Filling Out Forms

... which is the essence of the concept behind stimulus packages.

Banks are now regulated to the point of being in straightjackets. Dittos for corporate financial operations. And the auto industry. And the medical industry. There are mountains of regulations dealing with each*.

They're pikers and need to stop complaining.

Government employees operate under more regulations than any of them. If you don't believe me, stop by any government agency and check out their contracts department. That's where the money gets distributed to businesses to do work. That's where stimulus meets employment.

Welcome to the Land of Inertia. Spend a little time clicking around this site, just for fun. Take a look at how much work is entailed in getting, say, a $30,000 contract out the door to buy some IT services. Now consider how much work it would be if you owned your own business. You'd just go out and buy the thing, right? Oh, you'd shop around a bit and ask colleagues for recommendations, but in the end, you'd write a check and the job would get done.

Increased government intervention means, at the micro level, more people will spend more time following the rules like the ones laid out in the Department of Interior site linked above. That time is completely unproductive. In short, government intervention reduces the amount of productive labor being done in the economy. If you're following "The procedures set forth in the Federal Supply Schedule for Governmentwide Commercial Credit Card Services, Treasury Financial Manual, TFM 4-4500, and "U.S. Department of Interior Handbook for Utilization of Government Wide Commercial Credit Card" issued by PAM contain guidance on the utilization of Governmentwide purchase card services," you're not laying tile, repairing bicycles or baking bread.

The progressive faith in government is built entirely on a foundation of ignorance. It sounds like a good idea to intervene, but in real life it fails because the government wastes people's time. Wasted time reduces economic output. It's as simple as that.

* - Before you spaz out and cry that they're not regulated, you need to distinguish between regulations on the books and regulations that are enforced. If some of them go off the reservation from time to time, it's a good bet that they've violated current regulations, but there are so many current regulations that it's impossible to enforce them all. Enforcing regulations becomes like pushing a rope.


tim eisele said...

You know what the horrible thing is about all those forms and specific procedures? The majority of them were specifically created in an attempt to prevent fraud, theft, and waste, by making people account for every pencil and sheet of paper that they use.

And now the forms take so much time and effort, that it might actually be cheaper and more efficient to ditch a lot of the forms and just live with a certain level of fraud, theft and waste.

K T Cat said...

Tim, you're exactly right. I would bet that almost every regulation has as its source some major crime of embesslement, fraud or nepotism. The solution is not more enforcement, but less use of these inefficient entities.

It's not that government employees are stupid, lazy or wasteful, it's that government, by proper design, is inefficient and wasteful. It should be doing as little as possible.

Ohioan@Heart said...

Since you've brought up how badly the government buys things, my favorite reason for why government acquisition does not work is the official Defense Acquisition University "Wall Chart" for Integrated Defense Acquisition.

See it in all its gory, er, I meant glory, here.

K T Cat said...

My reply.

Dean said...

Guys, I think we are all in violent agreement. I'm in the initial stages of my DAU training and after each session, my head hurts.

It hurts from tons and tons of good intent.

There's no doubt in my mind that the resulting byzantine nature of federal aquisition regs were meant to prevent waste, fraud and abuse but with such a maze through which to navigate, it would appear it incentivizes that very behavior at the end of the day.

Oh, by the way, if we need batteries for our flashlights for inspections out in the yard, our safety guy fills out the requisite paperworks and sends it to... Maine where said batteries are shipped from.

... creating waste by attempting to eliminate fraud?

tom said...

Our (gov't) credit card process just got the benefit of Lean Six Sigma. Now every time you want to buy something using the credit card, it will only cost $220. That might not sound bad at the top limit of $2500, but when you're buying a $50 item, it sure makes you want to thank the taxpayers for supporting your cost-saving measures.

The $600 hammer was never about the hammer, it was the overhead required to specify, buy, and inspect the hammer.