Posts Tagged ‘US government and auto industry’

Government disconnect from reality or just plain arrogance

June 26, 2009

This article deals with the disconnect between what government expects from industry and government’s own sad history of how it runs the public’s business.

Just a few months ago, members of Congress took turns wagging their fingers at CEOs of the automakers for not making tough choices–not shedding “legacy costs,” not making products consumers wanted, not cutting bloated bureaucracies.  Detroit had become self-referential, unable to compete because it was unwilling to deal with its internal constituents.

Now Washington faces a series of domestic crises that will shape the health of our society for decades–unaffordable healthcare, balkanized financial regulation, and a mind-boggling deficit, to name three.  But Washington will likely fail–indeed, may even make the problems worse–unless it deals with its own “legacy costs” and bloated bureaucracies, which currently make it impossible to achieve new focus and efficiencies.

Detroit is Google compared to Washington.  Year after year, Congress makes laws but almost never repeals them.  Washington is like a huge monument to legacy costs.  Laws from the Depression will send tens of billions in unnecessary subsidies this year to farmers, organized labor and other groups thought to be in need–80 years ago.  Bloat is also notorious–it’s nearly impossible to fire anyone under civil service laws, so layers of middle management have grown exponentially.  Professor Paul Light found 32 levels in some agencies (compared to 5 levels in most well-run enterprises).

All this accumulated law–about 300,000 pages of federal statutes and regulations–operates as a form of central planning.  It bogs people down in bureaucracy.  In healthcare, the labyrinthian requirements of Medicare, Medicaid, HIPAA, plus the equally dense, and often conflicting requirements of 50 states, plus the insurance company red tape, make it impossible for people to deliver care efficiently.  Add to that bureaucratic nightmare the ever-present fear of being hauled into court whenever a sick person gets sicker, and you have a system that looks like it was designed for frustration and waste.

The inertial forces that make it hard to achieve change in Washington, in the best of circumstances, become a kind of invincible fortress when reinforced by thousands upon thousands of pages of binding law.  Each of those provisions is zealously guarded by special interest groups, and changing any word of a statute requires the votes of 218 members of the House and (generally) 60 senators.

The article is, an interesting read, but if anyone thinks that there is any chance of a federal bureaucracy reforming itself – especially one as huge as in the U.S. – they are smoking some really strong stuff.

But it is funny – sad but funny –  that government, which has an abysmal history of piling pointless legislation on top previously passed pointless legislation, has the arrogance and the smugness to tell the auto industry how to fix its problems.

What is even funnier and sadder is that probably not one of the members of congress sees the irony of the situation.

Thanks to Instapundit for the pointer.