Government: the next great frontier?

 

Looking at the world today, it seems the one thing we can say for certain is that Bob Dylan is being proven right – the times are a changin’.  And increasingly it seems that our standard explanations of political economy don’t hold the water they used to.

People talk about the financial crisis as if it’s history; it’s not.  The global banking crisis continues to rage on in Europe, and the President of the IMF predicts that the global economy won’t recover from this episode until 2018.

The Financial Crisis Inquiry Commission - a blue ribbon, bipartisan group of experts chartered by the US Congress, armed with the best available data and subpeona access to relevant actors - ultimately presented three different conclusions in its final report.  (see Lo “Reading about the Financial Crisis” for a more detailed explication) 

Above all else, the panoply of financial crisis explanations seem to signify how little we really understand human society and how much more complex such phenemena are than the physical world.  Can you imagine a similar body presenting three different explanations for say a rocket launch failure?  Really though, should we be surprised?  When we think about  the natural world - even something as complex as say “rocket science”- our materials don’t think back.

So why not look deeper?  Below is a simple graph from the Federal Reserve Bank of St. Louis detailing the multi-decade growth in debt leading up to the crisis.

 

Blue line = Total Credit Market Debt / Real GDP 
Red line = Consumer Market Debt / Real GDP

 

So to return to our original question, what’s up with the world today?  There’s a growing school of thought led by the likes of Tyler Cowen and Peter Thiel arguing that today’s problems are the consequence of deeper structural shifts within the economy, in particular the slowing growth in technological progress (as shown in the chart below).

 

"Total Factor Productivity is one attempt to measure how much the economy is receiving a boost from innovation and new ideas, as opposed to, say, people working longer hours or taking a second job. It's been down considerably since 1973, and I have labeled this period 'The Great Stagnation.' ''  -- Tyler Cowen

 

The obvious question to this claim about technological trends is “well, what about the internet?”  And that’s where things get interesting – particularly when you look at one glaring area of the economy where the internet has not transformed our lives: government.

Decreasing Nimbleness of Government

Go down to your local school district and you’ll find a situation that’s about the same as you would have found a century ago.  Lots in that district office will have changed (communications pathways, fashion sense).  Yet the underlying professional civil service model pioneered by the original Progressives and built around top-down hierarchies and bureaucratic procedures has endured.

So again looking for explanations to our original question, this time I turn to my Aunt Maryly, acknowledging that sometimes the simplest pipes carry the most water.  A couple months ago I was picking her brain on family history and she said something I thought was very profound.  Trying to remember whether the number she was going to give me was in here analog planner or digital phone, she said, “it seems we’ve gotten caught between two cultures.”

Nowhere is the disconnect so large as in the basic mechanics of government.  Look at for instance the bureaucratic nature of contemporary K-12 mathematics teaching and then the potential of something like Khan Academy for public education.  In fact, when you look more broadly at how government constructs new projects, it seems that if anything this bureaucracy problem is getting worse.  Why?

Causality

Public problems are particularly tricky.  Often there isn’t agreement on whether something is a problem, let alone what’s causing it.   Consider education, which has been a recognized as a public problem in America meriting “reform” at least since Dewey and acquiring a new urgency when A Nation and Risk was released in 1983 and proclaimed:

“If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war.”

Yet before we can even talk about solutions, what even causes learning?  The endeavor can happen anywhere yet is firmly associated with place.  It is notoriously difficult to measure yet incites obsession over accountability and rigor.  It is a highly individualized activity yet progress often requires interpersonal interaction. 

Compound that problem by the incredible complexity that is a human community and a local school site and you can begin to imagine the difficulty in understanding – let alone improving – public education. Why is educational opportunity in Los Angeles a function of zip code? What's causing that disparity? What "solutions" actually help the situation? Which scale and how might we tailor that to a specific situation?  Which have unintended side effects? What else might we consider as potentially new approaches?

These sorts of basic questions on the underlying causes of a public problem lack easy -- or often any -- answers and notoriously lead to elliptical discourse on the human condition. We tell ourselves stories to make sense of this complexity; education is about Lisa the teacher and little Johnny the student, yet underneath such simple narratives all this complexity remains.

So what’s changed?

Certainly something, given how much people talk about how much the world’s changing.  We definitely have access to greater and greater quantities of information, as the graphic below from the Economist makes clear:

 
   

 

Yet is this onslaught of information and develop of new information technology tools enough to develop new pathways for tackling those thorny public problems?  And as we engage that question, it’s worth remembering what James Q. Wilson, perhaps the greatest thinker on the problem of bureaucracy, had to say about the possibility of its solution:

“Perhaps a grand re-organization, accompanied by lots of "systems analysis," "citizen participation," "creative federalism," and "interdepartmental coordination." Merely to state this prospect is to deny it.”

Perhaps.  Yet perhaps not. Don't those requirement -- "systems analysis," "citizen participation," or "interdepartemental coordination" -- see like precisely the sort of problems that the internet would enable new categories of solutions to.  Those are ultimately communications and knowledge gaps.

More deeply, I’m reminded of one of my favorite childhood books: Longitude.  People today often forget how difficult it is to measure longitude, requiring precise timekeeping (before the advent of satellites) – no small feat.  Techniques to measure latitude have been known since the ancients, relying on stars and celestial knowledge.  Yet longitude was one of the biggest scientific problems for millennia.

When John Harrison built his chronometer, ships could keep steady time of a fixed location (usually Greenwich, England), and calculate their location from the time differential to their current location.  The implications of this invention were staggering, changing the course of discovery itself:

"By laying down the invisible lines of latitude and longitude, the cartographers paved the way for later explorers, like columbus: as with the later scientific method, the abstract system gave rational expectations, even if on the basis of inaccurate knowledge. No longer was it necessary for the navigator to hug the shore line: he could launch out into the unknown, set his course toward an arbitrary point, and return approximately to the place of departure."

Luis Mumford, Technics and Civilization

I cannot help but wonder whether the current proliferation of data will be similar transformative to public problems, allowing orders of magnitude deeper analysis that allows us to confidently experiment beyond standard convention.  Imagine if:

A small business owner could know what regulations they’re subject to as easily as they order a ride through uber.  A water district manager could easily access analysis on optimal water conservation tools for their locality.  Or more broadly, we had tools that allowed for real time analytics on proposed policy changes.

Does that world not seem possible?  Is that not potentially the tip of a much more transformative iceberg?

I do not know the answer to these questions.  Yet is that not precisely the point with a new frontier – a region defined by the unknown?

The internet may very well have created new categories of solutions to the problem of bureaucracy, a vast frontier of possibility for how we tackle basic public problems.  Why not pioneer that frontier?