Gurri the Younger on Reforming Government, 1/16

Adam Gurri writes,

Kling clearly sees the need for the administrative state, and this makes him more clear-eyed in his criticism of it. Additionally, his insight that failures of governance can create the political conditions for further intrusions has considerable merit and generalizes well beyond the specific domains he discusses. Finally, his focus on the institutional culture and moral commitments of regulators avoids the common mistake of thinking that regulator discretion can simply be constrained by adopting the right rules. 

The weaknesses of his analysis, however, are also considerable. . . .These conditions apply quite widely, around the world but also in America for well over a century. Failure to take this into consideration leaves Kling with an approach that is provincial in both a national and a historical sense, and leads to an excessive focus on how private sector corporate governance operates over more fruitful comparative questions. This lays the foundation for the inadequacy of his proposed solutions. There is simply no chance that the president and Congress will act akin to a corporate board of directors to whom a federal COO will report, nor will adding yet another audit agency create, by providing information, a system of accountability akin to market competition.

He refers to my essay on designing a better regulatory state.

His criticism of my idea for a COO rests in part on assuming that I am thinking that it would allow government to operate like a business. He wrote his piece before I published my response on that point. In short, I don’t think that a COO could (or should) run the administrative agencies like a business, but I think that a COO could manage them much better than they are managed today.

Gurri worries that the COO position would have too much discretion. My view is that under the status quo, the agencies of the Administrative State have too high a ratio of discretionary authority to accountability. When agency bureaucrats grab power, there is no one to check them. When they screw up, there is no one to punish them. My hope is that a COO would say to an agency “You have one job,” and make changes if the agency is not doing that job. As for providing a check on the COO position itself, that would be the role of the Chief Auditor, the President, and Congress.

Concerning my other proposal, for a Chief Auditor, Gurri questions whether anyone would listen to the auditor’s findings. The answer depends on what sort of cultural norms emerge.

When the Congressional Budget Office was created in 1975, many observers were skeptical that would have any impact. In fact, its budget “scoring” function became focal. CBO scoring affects the behavior of legislators. Some of the legislators’ effort goes into gaming the score, but the process still puts up some resistance to wild extravagance. My hope for the Chief Auditor function is that with the right government culture it would achieve something similar. Not a perfect defense against bad performance or malfeasance on the part of agencies, but a fairly strong check.

Gurri’s alternative proposal is to allocate more government responsibility to state governments. He claims that local governments are too parochial and not well run. The federal government is too clumsy and resistant to reform.

There is a lot to be said for governmental units that oversee populations an order of magnitude smaller than the U.S. population. Nearly every other country that has a population over 100 million is either very unfree or badly managed—or both. I once undertook a study in which I found that the best-run countries tended to be smaller ones.

But I doubt that the U.S. can learn much from this. As an extreme thought-experiment, imagine if the U.S. had no central government. That this would not go well seems clear. States might all differ in how they regulate automobile design, digital privacy, social media censorship, and so on. A person with a license to be a health-care provider in one state might be ineligible to practice in a neighboring state—oh, oops, that is the case now.

Some of these differences could be resolved through negotiation and bargaining among state governments. But eventually the need for a central governing body would re-assert itself.

That said, I think that there is a lot of room to improve governance in America by reconfiguring the responsibilities and authority among the Federal government and the state governments, mostly transferring responsibility to the states. Perhaps a Chief Operating Officer could be authorized to negotiate such arrangements.