[Editor's Note: This post will be a work in progress. I want to get it up now. Expect edits.]
Is the model the problem? Is the system the problem?
The only obvious answer is yes.
I am going to go out on a limb with this one. It applies to the other problems as well, such as the small business relief.
We are 20% into the 21st Century. But we are still operating the country on a model developed in the mid-1930s, and perfected during World War II. It is the mid-20th Century model of industrial economy bureaucracy. It may well have worked effectively back then. We were able to build the Hoover Dam, to win WWII, to emerge in the post-WWII era as the world's greatest power, and be a bulwark against the Soviet Union and imperial communism.
It gave us the Interstate Highway system. It got us to the moon. It gave us the Century Series Fighter Jets.
However, at some point, that model started failing. Probably in the 1970s.
By the mid-1980s the Space Shuttle exploded because of bureaucratic incompetence. Bridges collapsed. Emergency response was unresponsive. We had to allow dozens of aerospace companies merge into a duopoly and give one (Lockheed) the fighter franchise, and the new "cheap" F-35 costs more than the older, more expensive F-22, an airplane that took 27 years from initial contract to IOC. We are literally trapped by our own bureaucracy.
In the pandemic, the CDC and the FDA proved the biggest impediments to our response.
Maybe we have the wrong model for today?
I read a great book on the Apollo program by Charles Murray (better known for his controversial book, "The Bell Curve"). When I read it, reading about the early days of NASA, I felt like I was reading about Silicon Valley startups. For an early unmanned test of Mercury capsule, one of the administrators literally took a belt sander to the heat shield to make it fit on the booster.
My point? You cannot look to the past successes of government bureaucracies of the 1930s through 1960s and expect the same success today.
Our political model is also broken. During a time when tens of thousands of Americans are dead due to a pandemic, and tens of millions of Americans are unemployed due to government mandated closures, our politicians prefer to try to leverage the crisis for personal and party political gain, instead of working together. Revolutions have started over less.
But even when legislation is passed and money appropriated, we hear stories of multi-billion dollar publicly traded companies getting “small business payments”, while sole proprietorships and LLCs struggle and wait.
Why? Why did the administration of this program spectacularly fail? In part it is in how the legislation was constructed. It is fair to say it was constructed in an incompetent fashion. The Small Business Administration and the Treasury Department clearly failed in administering the program.
But this is not the first time in this century such failures have occurred. The American Recovery and Reinvestment Act of 2009 (a.k.a., “The Stimulus Act”) also was littered with inefficiencies and ineffectiveness. President Obama promised “Shovel Ready” projects in 2009. Only a year later, Obama would state “there’s no such thing as shovel-ready projects.” In 2011, Obama would say “shovel-ready was not as shovel-ready as we expected.” The failures of Solyndra and Abound Solar, who together received almost $1 billion in federal loans, both declared bankruptcy. In hindsight, their products were not viable. How did the bureaucracy fail to qualify these potential recipients?
Then you have to look at the disastrous response of the unemployment insurance system to the record levels of unemployment (over 25 million in three weeks).
The number of unemployment claims was not a surprise. They were expected. How did the bureaucracy fail to ask if state unemployment insurance programs were capable of the processing expected scale of claims?
Many argued for something more like a UBI. Just issue checks to everyone—fast. It would have been simpler to do this, and there could have been some nominal “claw back” tax so those who remained employed, and were making good money, would have the value of the check taxed away. I realize bumping up the higher tax brackets by a few percent would have caused howls of “raising taxes during a pandemic”, but courageous leaders could have explained it.
The point is, the traditional unemployment insurance is the old model. Managed by a bureaucracy. The concept of UBI is something that comes from the libertarian right and the technology left (who is also arguably libertarian-leaning). It is anti-bureaucracy by design. And it would have avoided the challenges with the state unemployment insurance systems.
My argument is the model is the problem. Industrial economy bureaucracies are architected for incremental adaptation. They are generally overbuilt for “peacetime”, because they are expected to surge in time of emergency. That is why they appear fat. The government bureaucracies follow the rules provided them, and rarely change. That is in large part why they appear ossified.
However, in the name of efficiency, starting in the late 1980s and early 1990s (about twenty years after the bureaucracies started failing us), modern corporate management models were applied to government.
As a sidebar, it is important to note most large corporations operated on the industrial economy bureaucratic model as well, many before the New Deal Era of expanded government. The economy grew slowly, capital was scarce, and there was little need for large corporations to react to smaller, nimble competitors. Even after the Progressive Era trust-busting, the smaller remnants of the former monopolies often operated as regional monopolies. The companies which became the “Arsenal of Democracy” all were organized on the industrial economy bureaucratic model. There were exceptions, Higgins Industries was a very small company before it got the LCVP landing craft contract. But most heavy weapons and components were manufactured by the industrial giants.
In the 1970s, many of these industrial giants had near-death experiences as the economies of Europe and Japan had finally recovered to a point they could compete globally. Deming’s innovative management methods, ignored by the industrial economy bureaucracies in the U.S. took hold in Japan. By the 1980s, U.S. companies were desperate to improve, and adopted similar methods. The problem is you cannot adapt via piecemeal Deming’s methods onto the industrial economy bureaucracy model. You can do something totally new and different. You might be able to do some kind of hybrid model. But you cannot tinker at the edges. Cutting budgets, cutting inventories, etc. simply don’t work. If you have an emergency response bureaucracy whose job is to scale up and provide goods (think CDC’s Strategic National Stockpile), you can’t cut the staffing to all that is needed in peacetime and go to just-in-time inventory models. There might be a radically rethought model that could work and be more efficient, but you can’t adjust what you have.
So why did they? My guess is much of this has to do with federal employee unions. Unions are necessarily protectors of the status quo. Their job is to resist change, and as a side-effect, they resist innovation. Federal employee unions were threatened by modern management models, so they sought to keep the impact to incremental effects. Not complete redesigns of departments, but tolerating the 10% staffing cut here, the A-76 study outsourcing of a function there. We will give up that role to a contractor as long as experienced union members are protected and allowed to find new jobs.
There is another factor about public sector unions which must be considered. The era from 1933 to 1945, and beyond until 1960 was a model based on federal employees as public servants. There was a mentality of duty similar to the military. But after President Kennedy expanded the powers of federal employee unions, the reality is the loyalty shifted from serving the people to the union. This is similar to the trend seen in private sector unions in the 1960s, leading to more aggressive union behavior in the 1970s, followed by anti-union sentiment in the 1980s.
What we did is we took an outdated model and made it worse. The simple truth is the bureaucracy of 1955, if preserved and funded, and operated by a pre-1960 federal employee model, might have served us well.
But even increasing funding and staffing cannot fix the existing environment. I recall hearing a reporter talk about the increase in government workers in the post 9/11 era. This reporter started by stating prior to 9/11, a D.C. press pass allowed reporters to roam the halls of federal agencies. Post 9/11, considerable restrictions were put in place. When he did get into the federal agencies, he noted many more employees, many of whom did not seem busy at all. In other words, the post-Deming 1990s stripped bureaucracies at least featured busy, hardworking employees. But adding employees did not change anything. The new bureaucracies simply were throwing more bodies at the wrong model.
Only a different model can fix this. Only a reinvention can address this. Unfortunately, the 2001 Global Terrorism crisis, the 2009 financial crisis, and the 2020 COVID-19 crisis have proven unable to address this. Perhaps the 2020-2022 Economic Depression will. Trumps and Bidens and AOCs are not the answer. We may see something external to government form. The idea of a group of business leaders, perhaps including high profile figures like Mark Cuban and Peter Thiel, organizing and demanding a fundamental rethinking of government. A large enough organized effort would strike terror in the hearts of traditional politicians, much in the same way Ross Perot’s third party run in 1992 shook up politicians of both parties and got them focused on the debt and deficit.
But there is more. The industrial economy bureaucratic model also applied to education. The rise of the educational model is timed with the Second Industrial Revolution, around the turn of the 20th Century. That is when high schools (secondary education) was mainstreamed, to prepare people for industrial and white collar jobs. Little has changed in the primary and secondary education in a over century. There have been various experimental alternatives in education, but nothing has disrupted the industrial economy bureaucratic model of education.
The COVID-19 pandemic caused 100% primary and secondary public and private school closures throughout the country. Schools rapidly attempted to shift to a distance learning model with mixed results. The only students who were not disrupted were homeschooled students. And that is instructive.
Author and home school mother Bethany Mandel stated the mistake being made was the schools were forcing the students into “home schooling”, when home schoolers had learned the right approach was not home schooling but “home education”. The point Mandel was making is home and education have to be integrated for it to work. The example often put forth is using baking to teach fractions.
Much of the distance learning is focused on workbooks and exercises and limited to little testing. Grading for many students has moved to a pass/fail model, without letter grades. Some schools are simply planning to give all students As.
For some students, the tools for remote learning (computers, Internet access, etc.) are severely limited. Some students have no parent in the home, due to the parent being an essential service worker. Others have parents at home who are not able to adequately support the home schooling effort. In some school districts, a significant percentage of students have simply dropped off the radar.
We are at a point where two things are highly probable. Schools will return to session in the fall of 2020, and there will be a second wave of COVID-19 which will force another round of school closures.
The industrial economy bureaucratic model is likely to drive school systems to simply double-down. Buy more laptops. Maybe fund cellular hot spots. Try to do the same thing done in Spring of 2020 but a little better.
The correct answer is a new model. The obvious approach would be to bring leaders of traditional education together with leaders in the homes schooling community. Building a lesson plan for hybrid schooling, something that offers three alternatives to an individual lesson—a traditional distance learning with workbooks, and two alternative experiential lessons designed to fit most student needs, perhaps one for a student with a parent, and another for a student alone—would be a model that would be far more successful if another round of school closures was required. Yes, it is a lot of work, but the resources are there. And the time is available (we have all summer).
The simple truth is the hybrid model could work fine even in the classroom with no school closures. It would make learning more fun, and it would exercise the hybrid model.
Another round of school closings, with many students falling even further behind, may cause significant unrest among parents. New thinking is required. New models are required.
And this is where we are. We are in the Fourth Industrial Revolution, but we are still operating governments and education on a Second Industrial Revolution model, the industrial economy bureaucratic model—big, heavy, slow-moving, very slow changing, centralized structures. It is long obsolete, by about a half a century. It could have sustained for a decade or two, but It should have been replaced no later than the 1990s. It has been exposed. It will be replaced. But how soon, and through what process?
