So the program budget may become, not an information system, but an approved five-year plan that serves as an instrument of control. This arrangement can correct some of the bad features of the rivalry between military branches in shaping programs that are interrelated. But gains attributable to centralization… do not automatically mean that centralization is an improvement. For it brings also some ill effects of costs, which should be weighed against the gains. With centralization, one set of views plays a greater role in decision-making, and dissenting views play lesser roles… Also, if central managers try to control in much detail, they find it imperative to simplify decision-making and to make changing the program rather difficult.
… One group’s view of the future will be less diversified than the separate judgments of multiplicity of groups. Dominance of one group will tend to discard tradeoffs and options that other may take seriously, to treat certain costs and gains more lightly than others would, and to regard a particular subset of contingencies and uncertainties as being the major ones. The need to simplify – to use half-page summaries and rules of thumb – strengthens these same tendencies.
That was Roland McKean in 1964, Economics of Defense. He was one of the founders of the DoD’s program budget system, and yet nevertheless became a critic just a couple years after it was adopted by Robert McNamara in 1961. For McKean, the problem wasn’t necessarily programming the budget, but rather the 5-year budget plan (i.e., the FYDP) and the tendency for overcentralization.
Leave a Reply