Big government does not need to be reinvented, but eliminated

If you want to read a truly laughable article, try this one in today's WSJ. It describes how the federal government, after the epic failure of the healthcare.gov rollout, is reviewing how it manages high-tech projects. It has suddenly dawned on officials that government high-tech projects often fail and government high-tech practices are inefficient and wasteful (duh!). These officials are now proposing that government needs to be reinvented through the adoption of the practices of high-tech companies in the private sector.

To see how utterly ludicrous this proposal is, merely consider one significant component in private sector compensation: stock options. The article notes that government has a difficult time competing for top software talent because government is unable to offer stock options:

In contrast, private-sector companies are able to hire prized tech workers almost immediately, while typically offering higher pay and additional inducements like stock options.

But, stock options are, by definition, a feature of companies in the private sector. That is, a stock option is the right to buy a share in the ownership of a private company. Stock options exist so that individuals can band together in a private undertaking, assume risk that is isolated to that private undertaking (and poses no danger to the res publica), and reap for themselves (and to the exclusion of non-participants) the rewards if that private undertaking is successful. The idea that stock options could be offered by the government is a contradiction in terms. But, if stock options cannot be offered by government, then government compensation will never be as attractive as private compensation and government will never be able to attract the same talent as private companies. The only possible conclusion to draw is that the right solution is not to try to graft the utterly incompatible practices of private companies onto government, but to cut government back and let private companies (with the incentives of private equity) flourish.

The article also notes that officials are realizing that the utilization of consultants and contractors and the waterfall method of project management has not worked out, and a more agile approach is needed:

When building HealthCare.gov, officials say the Centers for Medicare and Medicaid Services used the traditional "monolithic" or "waterfall" contracting structure in which an agency writes out a set of requirements well in advance and contractors attempt to deliver the full system at once by a final deadline, which can be years out. Private companies have shifted to a more agile development model where teams are responsible for developing projects in smaller sprints.

I know of no surer way to doom a large software project to failure than to use contractors and consultants to do important pieces of the work. Non-technical managers and bureaucrats are always impressed by the detailed specifications and schedules that contractors produce in advance. But, these specifications and schedules (often, like the ACA, thousands of pages long with pretty charts of "burn down rates") are usually not worth the paper they're written on. What's more, the contractors always make sure they incorporate certain "reasonable assumptions" (also called "outs") into these specifications. For example, a specification will state: "The completion of this project by this date assumes that we will receive timely cooperation from subcontractor XYZ." The timely cooperation from subcontractor XYZ is, of course, never forthcoming. When the project comes in hopelessly behind schedule and utterly buggy (as healthcare.gov did), the contractors will avoid all blame by pointing to the fact that the "reasonable assumption" was not satisfied (as they recently did in Congressional hearings). Then, the contractors will formulate a new set of specifications for a new round of development. This new round of development will enable the consultants to harvest a new round of consulting fees from the victim and once again to dodge responsibility in the end when the new "reasonable assumptions" incorporated in the new specifications turn out to be unsatisfiable.

The simple fact is that the interests of consultants/contractors are never aligned with the company for whom the work is being done. The goal of the consultants/contractors is to maximize hours billed. The goal of the company, on the other hand, is to end up with a useable piece of software. It is only when ownership (private equity once again) is introduced into the equation, that interests are aligned. That is, when an engineer knows that he is going to be a part owner of the software that he produces and participate in the revenue stream generated thereby, he will have a definite interest in producing the best possible software in the shortest possible time. If, on the other hand, his reward depends on how many hours he bills, it is in his interest never to produce a fully functional piece of software by any deadline in the future.

Furthermore, the idea that introducing "agile" practices into a software development project run by consultants (or government lifers, for that matter) will be a panacea is just another example of how non-technical managers (Obama, for example) are duped by jargon. Anyone who has worked for a true startup knows that the most "agile" form of software development environment is a small group of private sector engineers with a vision and a desire to create a product that will make them all fabulously wealthy. It is only in such an environment that all members of the team work long hours with a common purpose, jumping into the breach to address any and all problems without regard for immediate compensation or consideration of "who's responsibility it is." The private startup company is the only truly "agile" development environment.

The futile idea of reinventing government so that it runs like a private sector company comes from President Obama (Der Fisch stinkt vom Kopf). Over and over again, Obama reveals himself as a non-technical manager (think: the anti-Mark Zuckerberg) who pays lip service to private entrepreneurialism, but is stymied by big government inertia. He just can't cut the Gordian Knot. For example, in a recent interview with Chuck Todd, Obama said:

When [the government buys] I.T. services generally, it is so bureaucratic and so cumbersome that a whole bunch of it doesn't work or it ends up being way over cost. And yeah, in some ways, I should have anticipated that just because this was important and I was saying this was my top priority. And I was meeting with folks once a month telling 'em, "Make sure this works."

These are very similar to the remarks Mr Obama made in a separate interview with Chris Matthews:

And the -- the challenge, I think, that we have going forward is not so much my personal management style or particular issues around White House organization.

It actually has to do with what I referred to earlier, which is we have these big agencies, some of which are outdated, some of which are not designed properly. We have got, for example, 16 different agencies that have some responsibility to help businesses, large and small, in all kinds of ways, whether it`s helping to finance them, helping them to export.

And so, if you`re a small business person getting started, you may think you need to go to the Small Business Administration on one thing, you have got to go to Commerce on another. So, we have proposed, let`s consolidate a bunch of that stuff.

The challenge we have got is that [reform] requires a law to pass. And, frankly, there are a lot of members of Congress who are chairmen of a particular committee. And they don`t want necessarily consolidations where they would lose jurisdiction over certain aspects of certain policies.

But this is going to be a major area of focus and has been over the last five years, but going forward over the next three years. How do we have a 21st century federal government?

In other words, Obama has some inkling of what the problem is: you have enormous redundant governmental agencies whose rules and management practices are hopelessly inefficient; furthermore, these agencies are controlled by special interest groups (legislators, public service employee unions, government contractors and their lobbyists) who are only interested in the perpetuation and milking of these behemoths. And yet, Obama cannot take the decisive step of resolving to eliminate these agencies, but instead thinks in terms of half-measures and seeks to reduce the bloat by "reinventing" these agencies. This should not be at all surprising when one considers that some of his strongest supporters are the various public service employee unions that benefit the most from bloated government.

If you believe, as Obama obviously does, that the right solution is to try to reform government so that it is more like the private sector, you end up with utterly ridiculous proposals like the one offered by an unnamed official in the WSJ article, namely, creating a new agency to try to fix the problems in the other agencies:

[One] official said another idea is creating an agency or unit within the federal government devoted to big technology projects. Rather than have each agency manage its own projects—as the Department of Health and Human Services did for the health-law rollout—the agency could bring together top federal technology specialists. It could be housed in an agency like the General Services Administration or exist as an independent body.

Only a government official could come up with the proposal that the right way to reform government is to create a new agency responsible for reforming government. This is just more of Al Gore's "reinventing government" bullshit. Government does not need to be reinvented by the creation of new self-perpetuating agencies to supervise other agencies. Rather big government needs to be eliminated. Full stop. And the entrepreneurs in the private sector need to be unleashed.