You can either look at this as deterministic history that, once upon a time there were really smart people in government who knew how to negotiate contracts and now we no longer have theses people. Or, you can look at it as an outcome of ideology, political forces, and lobbying, that have gotten us into the mess we have.
I would argue, somewhere in the middle, but closer to the latter, which is the way we have framed government in recent years — and let’s just put it simply, the Reagan/Thatcher neo-liberal economics associated with that — has been landed in our public administrations. And by the way, there are theories about this, the way we teach public servants has been fed by this neoliberal view of the economy in terms of public choice theory and new public management. We have convinced public servants that at best they are there to fix market failures, but because government failure is worse than market failure, do as little as you can and get out of the way… That has affected the types of people willing to work in government.
You can imagine — I actually think government is full of really smart people — but they are constrained massively by the structures they work in. But to get to that point, if you see yourself as a value creator, you like taking risks — and by definition you will make mistakes and have to learn from that — you don’t want to go to an organization where if you make a mistake you’ll be on the front page. By not admitting government creates value… of course you’re going to prefer working in the private sector where we glorify risk taking.
That was Mariana Mazzucato again on the Hidden Forces podcast. As I recently discussed, Mazzucato wants government to be more active in formulating grand programs for the economy. There is this popular perception that government was simply more competent and innovative in the 1940-60s period, and it has since lost that spunk. She blames the performance decline to neoliberal economics. I’ll say that she’s flat out wrong, but so was neoliberal economics in some ways .
First, we must understand what neoliberals were actually saying. Her characterization is spot on when you consider big parts of the economy including tech, agriculture, housing, and manufacturing. Finance, healthcare, and education is a more complicated story.* And for “public goods” like a judicial system, law enforcement, and national security, neoliberals supported a strong government presence. But they had no framework for understanding what is effective for public goods. That was a different problem, an administrative problem. It’s simply outside their mental framework, and so they had nothing to say on it.
The Reagan-era military build up was well known. He inspired a generation with space-based lasers to defeat ballistic missiles. Even if the SDI failed, the approach basically aligned with her ideal for government pursuing a concrete mission of grave importance. He reinvested in the military across the board, including its acquisition programs such beefing up shipbuilding to a near 600 ship fleet.
Only anarcho-capitalists would favor getting rid of government administration of the military. And Mazzucato clearly defines her objective of expanding the system of administration used by DoD and NASA to other missions like pandemics, climate, healthcare, and so forth. So the real question is: did the decline in the quality of government execution of its discretionary programs start before or after the neoliberal resurgence in the Regan era?
As a historian of military acquisition, it is clear to me that the decline started in the 1960s, but simply took time to start impacting programs across the board. By the 1980s, acquisition was already in a deeply degraded state. Seymour Melman documents this pretty well in his books. In 1980, Chuck Spinney released the Defense Facts of Life: Plans/Reality Mismatch, which clearly showed how program costs were skyrocketing and taking far longer than they had in the past. Literature abounds. More recently, Dan Patt and Bill Greenwalt show that defense program timelines started growing right around 1970s for aircraft, missiles, and ships (see one example chart below).
Something happened not in the 1980s with neoliberals, but in the 1960s with the Planning-Programming-Budgeting System, or PPBS. Installed by SecDef Robert McNamara, the Pentagon and other agencies still operate under this management paradigm to this day. This was a HUGE deal back in the 1960s, creating massive debates in these epic multi-year hearings like the Jackson Committee Hearings of 1967-1970. Simply put, the PPBS was a revolution in government management of discretionary programs, and that had an impact far greater than neoliberal ideology.
Has Mazzucato even heard of the PPBS? The Apollo program, her favorite example, was not run under the PPBS paradigm, nor were nuclear aircraft carriers, jet aircraft, laser guided bombs, nuclear submarines armed with ballistic missiles, etc. These programs pre-dated the PPBS roll out. How can she talk about government administration of incredible innovation programs if she doesn’t address PPBS?
To the historian of acquisition, it is clear the PPBS is what put the handcuffs on government officials by requiring decision-making by consensus using overly simplified analyses of outputs and then locking in poorly conceived program baselines. All this process led to program failures, which led to more process and checks, which put the bureaucracy into a fishbowl. It was the failure of so-called experts to rationalize complex human affairs.
Mazzucato talks about risk taking in the business world and blindly compares that to government. In the business world, it is private money at risk and so the calculus is different. In the government sector, politicians and bureaucrats are risking taxpayer dollars. I agree government officials should be allowed to take calculated risks. But they cannot do that in the PPBS paradigm when every risk has to be articulated and approved by dozens of irresponsible bureaucrats (literally, not responsible for the outcomes of their decisions) and a Congress that wants to know what district every dollar will go to. The pre-PPBS methods of oversight allowed for responsible risk-taking with useful balances.
It is the PPBS, not neoliberal economics, which led to government’s declining ability to execute complex technology programs. That is my assertion. The evidence backs it up. The problem is that most people don’t have experience with how government programs actually work and have no idea what the PPBS (now PPBE) actually is. These problems of government performance cannot be addressed until all sides of the debate have a common understanding of the history and issues involved. I hope once people understand the history, they will see how PPBE reform is central to American progress in these areas of public goods requiring complex technology programs.
*A subpoint: socialism is not redistribution of money between private individuals, it is government control over capital allocation — what is produced, how it is produced, and who gets what. Climate change is usually addressed through tax incentives and other policy levers to change private behavior in the market. That is very different than having government direct a program to develop new energy technologies using taxpayer dollars and directed by agency bureaucrats.
Leave a Reply