* Government works better when it steers than when it rows. The steer-row metaphor comes from Reinventing Government (Addison-Wesley, 1992), by David Osborne and Ted Gaebler. They mean that as a general rule government should not focus -- or get bogged down in -- operations. "Steering," they say, "requires people who see the entire universe of issues and possibilities and can balance competing demands for resources. Rowing requires people who focus intently on one mission and perform it well. Steering organizations need to find the best methods to achieve their goals. Rowing organizations tend to defend 'their' method at all costs." Private-sector rowers that defend outmoded and inefficient methods at all costs usually go out of business, which frees up the resources they were using to work someplace else. Obsolete public-sector rowers, in contrast, just keep wasting the public's money.
* Markets work better than bureaucrats (or legislators) at allocating resources, promoting innovation, and influencing behavior. Markets are not the answer to every human need, but they'll resolve many more problems a lot faster than rule makers can. Would the Interstate Commerce Commission have invented United Parcel Service, or the Federal Communications Commission, the Internet? Markets put thousands or millions of creative minds to work on a problem, whereas regulations reflect the imagination of only the regulator. Markets create incentives for people to profit by doing the right thing; regulations create incentives to beat the system.
* If it doesn't work any more, don't do it. See above under steering and rowing.
The amazing thing about those ideas is that there's nothing amazing about them. Would anyone seriously argue with the notion that it shouldn't cost a lot of time or money to get a decision from a government agency or from the judicial system? Is it radical to suggest that government should stop doing what doesn't work? Yet when you apply those not very amazing notions to the making of government policy, you get really radical results.
Take taxes. Say your objective is to invent a process of raising money to defer the cost of government. Short of extortion, the worse process you could possibly think of would be today's individual and corporate income-tax system. It violates practically every criterion of "easy to do business with." Taxing business income punishes value-creating enterprise and rewards tax-avoidance duplicity. It distorts business decision making by inducing companies to take actions for tax purposes instead of for competitive reasons. The corporate income tax decimates businesses' principal source of investment capital. And to add insult to injury, the income tax is an astonishingly inefficient device for generating revenues. (See table, page 8, "Our Costly Income-Tax System.")
A better tax system would be simple, require little or no paperwork, and have minimal effect on companies' (or individuals') economic decisions. Applying the easy-to-do-business-with criterion to the problem might lead creative policy makers to invent something like a national retail sales tax. With such a system, thousands of accountants and lawyers could find real work creating real economic value. Kiva could invest its earnings in growth instead of waiting for months to borrow from the bank.
Or take workplace safety and environmental protection, both of which the government now approaches through command-and-control-type regulation. Policies that rely on market devices -- such as an auction market for permits to emit particular air pollutants or discharge certain water contaminants -- would accomplish the same goals, probably better and certainly cheaper. If employees had the organizational means and a personal financial incentive to help make their workplaces safer, most OSHA regulations could be tossed out the window and fewer workers would get hurt.
Take the judicial system, at least the civil part. In a sense it's a service that government provides -- the adjudication of disagreements between and among private parties. If the system doesn't deliver its service in a timely fashion and at an affordable cost, it's no service at all. Worse, a badly run civil-justice system rewards unscrupulous behavior and victimizes people who try to play fair.
Of course, it's hard to imagine that judges and lawyers, whose self-interest this travesty serves, would be interested in reengineering the judicial process. But as Osborne and Gaebler say in Reinventing Government, government's responsibility is to see that services are provided, not necessarily to provide them itself. So why not think of a way the market could provide competing, for-profit, conflict-resolution companies that might coincidentally set new performance benchmarks for the public system?
* * *
Small companies have lots of legitimate complaints about government, and they've been airing them along with proposed solutions for most of the past year in preparation for the June 1995 White House Conference on Small Business. But the conference probably won't attract the attention it should. That's not because it's not important. And not because the people participating haven't worked hard. The conference process almost assures that delegate recommendations will sound superficial and obtuse.
At the preliminary statewide meetings, people who have never met before are given an hour to create a list of problems and suggested solutions to those problems. The procedure invites lots of input but little thought, so the man who wants the SBA to guarantee more small-business loans gets his point across while there's no time to delve into whether or why small-company borrowers need the government's backing.
