"Our Country!
In her intercourse with foreign nations may she always be in the right;
but right or wrong, our country!"

    --Commodore Stephen Decatur

Friday, June 24, 2011

Great Expectations

With this week's announcement of "worse than expected" unemployment numbers, it is worth investigating how often the experts have gotten their predictions wrong.  While admittedly an unscientific approach, a comparison of Google search results is a quick and easy way to compare news coverage of the economy.  Below are screen captures of the Google results for the phrases "better than expected" and "worse than expected" plus unemployment.

While both searches show an increasing trend over time, this is probably attributable to better access to recent data with the growth of the Internet.  On the other hand, there is a clear bias in favor of "worse than expected" economic reports by a margin of about 28,300 to 18,100, or roughly three "bad" stories for every two "good" ones.

In is impossible to predict the future with any certainty, so it's hardly newsworthy when reality fails to meet projected targets.  However, we should be concerned when journalists distort uncertain economic predictions in order to manipulate public opinion.  If journalists were honest in their reporting, we would expect an even number of articles for better than expected and worse than expected economic performance.

By consistently favoring bad news which undermines consumer confidence, journalists create a self-fulfilling prophecy of negative feedback that makes it all the more difficult for the economy to recover.  Worse still, this unsophisticated approach to economics also undermines the vital role of the press in maintaining the educated public which is at the core of republican self-government.

Wednesday, June 15, 2011

The Hydra's Keeper

Like the many-headed Hydra of Greek legend, the federal government is a massive and poisonous beast that defies all efforts to control it. Despite Herculean efforts at reforming government over the past several decades, the deep cuts, layoffs, and efficiency gains that were promised have never materialized. Worse still, despite many attempts at reform, the growth of government waste and abuse has only accelerated.

In 1978, President Jimmy Carter fulfilled a campaign promise to make it easier to fire incompetent federal employees with the Civil Service Reform Act. Nevertheless, anybody who has worked for or interacted with the federal government knows that incompetence is still rife. Even under the improved regulations, it still takes months of repeated offenses and endless piles of red tape to get rid of problem employees.

Because of the difficulty of eliminating incompetent civil servants, President Bill Clinton sought to reform the procurement process so that the federal government could more easily hire (and fire) contractors while at the same time eliminating the burden of lavish government benefits and pensions. Despite these changes, it is harder than ever for businesses to win government contracts and the government is spending more than ever on litigation due to conflicts of interest and non-performance.

Then, in 2001, President George W. Bush articulated his President’s Management Agenda, which sought to eliminate underperforming government programs and duplication of effort. Despite ten years under the new guidelines, Congress has created countless new commissions, agencies, and panels of bureaucrats with new powers while President Obama has filled his administration with “czars” for every conceivable pet issue.

Earlier this week, the Obama’s Director of Digital Strategy observed in a blog post that, “an overall online landscape of literally thousands of websites – each focusing on a specific topic or organization – can create confusion and inefficiency” and sets a goal of eliminating half of them. If only the Obama Administration had figured this out sooner we might have been spared the onslaught of new government websites that began with the dubious change.gov, continued with recovery.gov, healthcare.gov, and goes on and on.

While it is refreshing to hear somebody in the Obama Administration talk about making government smaller in some way, the lessons of history are clear: every attempt at reform that originated with the President has met with failure. Congress has overruled attempts at reform by creating new offices, new regulations, and increasing spending.

If we are to bring the vast federal bureaucracy under control, a new mindset is needed in Congress. Instead of creating new laws to tackle problems, Congress needs to revisit the laws that are already on the books and eliminate provisions that aren’t working or are no longer needed. Instead of hiding pet projects in massive 2,000 page omnibus spending bills, every dollar the government spends should be held up to scrutiny and every program should be forced to defend its existence.

Otherwise, the leviathan of government, like the Hydra of myth, will only continue to grow with a plethora of new and even uglier faces.