Better Than Ezra

This column by my ex-friend Ezra Klein has gotten some notice. I take a big exception to it. The gist is that U.S. liberalism lacks an appreciation for certain salient deficiencies of our welfare state.

He leads with reference to our yearnings towards industrial policy. I don’t think he would disagree that we already have an industrial policy. It stinks, but we have one. The U.S. public sector subsidizes armaments, fossil fuel, and health care. In diverse ways, these policies are killing us. But there they are.

We ought to hope for a climate-friendly industrial policy, among other things. I wrote about that, noting the neglected place for public enterprise. Neglected by EZ as well in his column.

He quotes former Cato Institute scholar Brink Lindsey on our diminished state capacity – our thinned-out bureaucracies, making enforcement of existing law difficult. The hilarious but sad thing here is that Mr. Lindsey himself can take some credit for that (also unmentioned by EZ), as the Cato Institute has been a principal battering ram against our state capacity for decades. If Lindsey has repented from this record, so much the better.

These are not my principal concerns. It is the notion that a central handicap of state capacity is its focus on procedures rather than outcomes, elaborated by Nicholas Bagley of the interesting Niskanen Institute. I spent a fair amount of time writing about this my own self.

The mantra of the disastrous privatization movement since the 1990s “reinventing government” rubbish was the benefit of government “running like a business,” which meant measuring and paying for outcomes. Of course, business doesn’t run that way, at all. That’s the marginal product of labor Kool-Aid from Econ 101.

Production is accomplished by teams, not by individuals. Products are not infinitely divisible, so you can’t measure how much an individual worker produces in an hour and pay accordingly.

The difficulty in public services is magnified, as desirable outcomes are often not measurable. We can see this particularly in human services. How do you want to measure educational outcomes? With test scores? The future success of students is not observable in real time. What about counseling for persons in one or another sort of distress?

For such reasons, in the public sector it is procedures that need to be specified and supervised. Metrics can be gamed, even if they are commensurate with program objectives, which they often are not. The Department of Defense, which finances production of things, not just services, is a showcase for this problem. Efforts to reform it just lead to added layers of red tape, easy pickings for profit-seeking contractors who have no other mission.

Bagley notes that a strategy of the Right has been to cripple collective action with endless self-regulation. It’s true that in politics, politicians seek to regulate anything they don’t like but are unable to abolish. The general pattern here is not neutral. There is an underlying political economy that Bagley ignores, instead attributing the problem to the politically inchoate category of “lawyers.”

I want to mention that in W.E.B. Du Bois’s’ “Black Reconstruction in America” (a late-in-life discovery of mine, and it’s awesome), it is noted that unpacified Confederates feared effective Negro government more than the ineffective kind. Of course, in the event, they destroyed any trace of such government, effective or otherwise. The Right declaims against public sector misfeasance, but what it fears most is well-functioning government.

The experiences under Soviet central planning are instructive in this regard. When metrics become the basis for compensation, you can get bad results. Such as the fabled factory that produced nothing but left shoes, since their compensation depended on raw numbers of individual shoes.

It is all much simpler. The public sector is grossly underfunded, going back to the timeless Galbraith nostrum characterizing the U.S. as a landscape of private affluence amid public squalor. The reason is our domination by the capitalist class, also unmentioned in the august pages of the New York Times.

The cure is social-democracy or democratic socialism (the same thing). Would that we had a national organization dedicated to it.