Results for “department why not” 205 found
Why not nationalize?
Megan McArdle piles on:
…what works in the banking system of a small economy does not
necessarily work in a large one. For starters, no offense to the
Swedes, but very few other countries are affected by what happens in
their economy. One family, the Wallenbergs,
indirectly controls something like 30-40% of Sweden’s GDP. Even now,
the Swedish financial system is considerably less broad and complex
than that in the US; it’s not a world financial center. And in 1992,
everyone’s financial system was a whole lot less complicated than they
are now…Possibly the biggest problem with this plan,
among many, is that Sweden is essentially able to command the labor of
its bankers; they have relatively few alternatives without starting
over in a new country and a new language. American government has no
such leverage. Yes, the folks in the mortgage departments royally
screwed the pooch, but running a major bank is not something you can
hand over to a GS-17. Nor is it a job for academic economists.And,
of course, the political ramifications in the United States are very
disturbing. A small homogenous country with a parliamentary system and
a lot of social capital invested in the government is going to do
better at nationalizations than we will. The fractious structure of
the American legislative system means–as we’ve just seen–that huge
amounts of political maneuvering and log-rolling will go into the
running of any national banking system. Imagine the banking system run
by the Department of the Interior.…The problem with
the Japanese system (or at least, one major problem) is that for
political, social, and career reasons, banks kept pouring money into
zombie firms, trying to salvage the bad loans of a decade ago. Is a
nationalized banking system less or more likely to do this than a
private one, in America? I imagine any banking head, appointed
or career civil service, would get a lot of calls from Senators and
congressmen demanding that the bank prevent companies in their
districts from going under.
There’s lot of talk in the blogosphere in favor of the Swedish plan, but not much consideration of its drawbacks.
Department of Uh-Oh, The End of the Mortgage Agencies
Fannie and Freddie’s
preferred shares have been considered so safe that banking regulators
let banks count them in the capital required as a cushion against loan
losses.
That should read "*had* been considered so safe." Further background is here and here. We also have an impossibility theorem. I do not see how our government can let the value of this preferred stock fall much further, given the extent to which bank insolvency would increase. I also do not see how our government can prop up the value of this preferred stock to a significant degree. Silly me. I guess that means I bet on the latter impossibility.
Here is yet further discussion of the end game. It seems the common stock owners will end up suffering more dilution than they had been expecting. The $340 billion in agency debt held by the Chinese central bank will be protected, as it must be. Have a nice day.
And the newspapers were wondering why the Dow tanked 345 points.
Why do college costs outpace inflation?
Tuition and other costs, not including room and board, rose on average
to $6,185 at public four-year colleges this year, up 6.6 percent from
last year, while tuition at private colleges hit $23,712, an increase
of 6.3 percent…In recent years, consumer prices have risen less than 3 percent a year,
while net tuition at public colleges has risen by 8.8 percent and at
private ones, 6.7 percent.
Etc., and please note that explanations for high costs (i.e., lazy professors who won’t blog) do not automatically translate into explanations for rising costs.
Rrecall that 78 percent of the buyers in this market choose the public sector. Tuition is going up because it can, to paraphrase the old saw about the dog (or is it the monkey?). But too big a sticker shock across one year would irritate voters, who might then insist on tighter regulations on public sector higher education. Think about the equilibrium. Many state schools could earn more money by forgoing state aid and raising tuition to profit-maximizing levels, or some approximation thereof. Step-by-step, we are moving toward some version of this outcome.
Why do low-tuition goodies for middle class parents no longer figure so prominently in the political calculus? Could it be the aging of the population? Or simply that some schools tried raising tuition and found that it did not backfire?.
If the market discounters — who capture 78 percent of the customers — can raise their price, so can the other suppliers.
If more people want to get into Harvard, Harvard doesn’t have much incentive to increase the size of a yearly class. The academic departments don’t want to lower standards by hiring more professors or adjuncts, and the development office seems OK with just raising the size of the required bribe for admission, rather than hoping that a bigger class means more donations thirty years from now.
At the same time the returns to skilled labor are rising, so many people even feel they’re getting their monies worth. Toss in a dash of Robin Hanson’s "showing that you care" ("I’m sorry Johnny, but we won’t be spending a penny more on you") and the market seems to hang together.
Nor do universities have the best governance structures for controlling costs. Here are some good comments on the problem.
Why law associates work so hard
I have learned a new mechanism to explain the organization of knowledge-based, client-intensive partnerships:
From the property rights perspective, large law firms are poorly suited to sustaining employment relationships because they have no enforceable means of controlling the firm’s key knowledge asset–client relationships. The up-or-out partnership systems that have evolved over time in these firms offer an awkward but workable resolution to this problem. By restricting partnership size to maximize surplus per partner and by making senior attorneys residual claimants, law firms limit the opportunity for sub-groups of partners to grab and leave with the firm’s clients. This action, however, creates additional demand for inexperienced associates who serve as (imperfect) substitutes for their more experienced counterparts. The result is that more associates are hired than can be promoted into a stable partnership. Those associates who do not succeed outgoing partners will be dismissed before they acquire sufficient client knowledge to themselves pose a threat of grabbing and leaving. That law firms find it worthwhile to commit to the costly practice of firing qualified attorneys in order to retain control over client relationships points to the general importance of control over assets in more conventional employment relationships.
The property rights model, in contrast to other explanations, can explain the coincidence of up-or-out promotion rules and partnerships in large law firms. At the root of our model is the claim that law firms cannot rely upon legal mechanisms to establish control over client relationships. We demonstrate that this is, in fact, the case under U.S. law. In addition, the property rights model suggests two propositions that are supported by the available historical, institutional and econometric evidence: (1) up-or-out appeared first in large corporate law firms who specialized in delivering large scale, complex legal services to valuable, long-term clients, and (2) large law firms practice a style of law that limits contact between associates and clients. Finally, the property rights model can account for the otherwise anomalous absence of up-or-out personnel policies in government agencies and large corporate litigation departments [TC: I like this latter point].
Here is the paper. Here is another version with abstract.
Market Failure? Academic Departments
The Angry Professor describes a new budgeting system at LSU:
Several years ago LSU moved to a business model budget. Under this
model, each department has control over its own funds. We might choose,
for example, to give everyone a big raise. Or, we might choose to hire
new faculty. We might purchase equipment, or furniture.As
with all such schemes, the administration makes sure that they will get
money from somewhere to sustain their bloated salaries. Each department
pays a "tax" to the college, which is determined by enrollments and
indirects as earned in "Year Zero" (the year before the new budget took
effect). If the department fails to generate at least the enrollments
and indirects earned in this year, the college will take the shortfall
out of the departmental budget. We’re not talking about that funny fake
money that colleges usually shuffle around, but real dollars: my
raises.
Some good things have come out this arrangement:
My department and several others have taken
advantage of the new model by "firing" the custodial staff provided by
Physical Facilities and hiring a private contractor to keep the
bathrooms looking spiffy. I must say, the bathroom has never looked
cleaner, and my office carpet has been vacuumed for the first time in
several years.
But, of course, the Angry Professor is angry.
In the social sciences, every department is trying to offer
statistics courses in house, so we now have about 8 courses titled
"Introduction to Statistics in [insert department name here]."
But why doesn’t the Coase Theorem and comparative advantage apply? The problem here can’t be the budgeting. I suspect a lack of property rights.
Each department is now in direct competition with every other for undergraduate enrollments.
Sounds good to me but the Angry Professor has a rebuttal:
The marginal departments, the ones with the
lowest possible academic standards, are pulling in vast numbers of warm
bodies and the tuition dollars associated with them. The departments that formerly only provided degrees to the football players are now thriving.
But grade inflation and the incentive to take easy courses in easy departments is nothing new, the only difference is that now the easy departments have funding commensurate with enrollments. The bottom line, therefore, is that the angry professor is angry at the students for not choosing classes more wisely.
A better grading system that takes into account the fact that some departments and professors grade easier than others would help students to make better choices. It’s not obvious to me, however, that on the whole the students aren’t making rational choices.
Thanks to Tom Slee for the pointer. I hope to say more about his interesting new book, No one Makes You Shop at Wal-Mart, in the future. Contrary to the title it’s about how markets fail, not a defense of Wal-Mart!
Futures markets in everything, NOT
A Wall Street lawyer gave new meaning to the term
"futures market" when he tried to auction his future Social Security
checks – money did doesn’t now have – on eBay for $200,000 so he could
use the cash for a down payment on a Manhattan apartment."I’ve put a lot of money into the Social Security system, so why can’t I sell it to someone else?" mused Thaddeus Wojcik.
File that under "Department of HA!." Ebay yanked the auction. Here is the full story, and thanks to Chris D. for the pointer.
Department of Yikes
Two teams of federal and university scientists announced today that they had resurrected the 1918 influenza virus, the cause of one of history’s most deadly epidemics, and had found that unlike the viruses that caused more recent flu pandemics of 1957 and 1968, the 1918 virus was actually a bird flu that jumped directly to humans.
The work, being published in the journals Nature and Science, involved getting the complete genetic sequence of the 1918 virus, using techniques of molecular biology to synthesize it, and then using it to infect mice and human lung cells in a specially equipped, secure lab at the Centers for Disease Control and Prevention in Atlanta.
The findings, the scientists say, reveal a small number of genetic changes that may explain why the virus was so lethal. The work also confirms the legitimacy of worries about the bird flu viruses that are now emerging in Asia.
The new studies find that today’s bird flu viruses share some of the crucial genetic changes that occurred in the 1918 flu. The scientists suspect that with the 1918 flu, changes in just 25 to 30 out of about 4,400 amino acids in the viral proteins turned the virus into a killer. The bird flus, known as H5N1 viruses, have a few, but not all of those changes.
Here is the full story, which contains many other points of interest, including whether the sequencing should have been done in the first place. In case you forgot, 1918 was the flu pandemic which killed 50 to 100 million people, and don’t think we are so much better protected in 2005. Today I started writing my piece on what we should do about avian flu.
Why do intellectuals oppose capitalism?
This essay by the deceased Robert Nozick has a few years on it, but I never knew there was an on-line version. It is the best piece I know on why so many intellectuals oppose capitalism. See my earlier blog post on the inability of some researchers to find a single registered Republican within some departments of MIT and other universities (of course Republicans commonly fail capitalism but I suspect that is not the objection of the MIT faculty). With thanks to Cato, Newmarksdoor, and BrianMicklethwait.com.
Here is one excellent sentence of many:
“The intellectual wants the whole society to be a school writ large.”
My first trip to Tokyo
To continue with the biographical segments:
My first trip to Tokyo was in 1992. I was living in New Zealand at the time, and my friend Dan Klein contacted me and said “Hey, I have a work trip to Tokyo, do you want to meet me there?” And so I was off, even though the flight was more of a drag than I had been expecting. It is a long way up the Pacific.
Narita airport I found baffling, and it was basically a two hour, multi-transfer trip to central Tokyo. Fortunately, a Japanese woman was able to help us make the connections. I am glad these days that the main flights come into Haneda.
(One Japan trip, right before pandemic, I decided to spend a whole day in Narita proper. Definitely recommended for its weirdness. Raw chicken was served in the restaurants, and it felt like a ghost town except for some of the derelicts in the streets. This experience showed me another side of Japan.)
We stayed in a business hotel in Ikebukuro, a densely populated but not especially glamorous part of Tokyo. It turned out that was a good way to master the subway system and also to get a good sense of how Tokyo was organized. I had to one-shot memorize the rather complicated footpath from the main subway station to the hotel, which had been chosen by my friend’s sponsors. As we first emerged from the subway station, we had, getting there the first time, to ask two Japanese high schoolers to help us find the way. They spoke only a few words of English, but we showed them the address in Japanese and they even carried our bags for us, grunting “Hai!” along the way, giving us a very Japanese experience.
In those days very little English was spoken in Tokyo, especially outside a few major areas such as Ginza. You were basically on your own.
I recall visiting the Sony Center, which at the time was considered the place to go to see new developments in “tech.” I marveled at the 3-D TV, and realized we had nothing like it. I felt like I was glimpsing the future, but little did I know the technology was not going anywhere. Nor for that matter was the company. Here is Noah, wanting the Japanese future back.
Most of all, Tokyo was an extreme marvel to me. I felt it was the single best and most interesting place I had visited. Everywhere I looked — even Ikebukuro — there was something interesting to take note of. The plastic displays of food in the windows (now on the way out, sadly) fascinated me. The diversity, order, and package wrapping sensibilities of the department stores were amazing. The underground cities in the subways had to be seen to be believed (just try emerging from Shinjuku station and finding the right exit). The level of dress and stylishness and sophistication was extreme, noting I would not say the same about Tokyo today. This was not long after the bubble had burst, but the city still had the feel of prosperity. Everything seemed young and dynamic.
I also found Tokyo affordable. The reports of the $2,000 melon were true, but the actual things you would buy were somewhat cheaper than in say New York City. It was easy to get an excellent meal for ten dollars, and without much effort. My hotel room was $50 a night. The subway was cheap, and basically you could walk around and look at things for free. The National Museum was amazing, one of the best in the world and its art treasures cannot, in other forms, readily be seen elsewhere.
Much as I like Japanese food, I learned during this trip that I cannot eat it many meals in a row. This was the journey where I realized Indian food (!) is my true comfort food. Tokyo of course has (and had) excellent Indian food, just as it has excellent food of virtually every sort. I learned a new kind of Chinese food as well.
The summer heat did not bother me. I also learned that Tokyo is one of the few cities that is better and more attractive at night.
I recall wanting to buy a plastic Godzilla toy. I walked around the proper part of town, and kept on asking for Godzilla. I could not figure out why everyone was staring at me like I was an idiot, learning only later that the Japanese say “Gojira.” So in a pique of frustration, I did my best fire-breathing, stomping around, “sound like a gorilla cry run backwards through the tape” imitation of Godzilla. Immediately a Japanese man excitedly grabbed me by the hand, walked me through some complicated market streets, and showed me where I could buy a Godzilla, shouting “Gojira, Gojira, Gojira!” the whole time.
I came away happy.
My side trip, by the way, was to the shrines and temples of Kamakura, no more than an hour away but representing another world entirely. Recommended to any of you who are in Tokyo with a day to spare.
Now since that time, I’ve never had another Tokyo trip quite like that one. These days, and for quite a while, the city feels pretty normal to me, rather than like visiting the moon. Fluent English is hard to come by, but most people can speak some English and respond to queries. You can translate and get around using GPS, AI, and so on. The city is much more globalized, and other places have borrowed from its virtues as well.
Looking back, I am very glad I visited Tokyo in 1992. The lesson is that you can in fact do time travel. You do it by going to some key places right now.
My excellent Conversation with Sam Altman
Recorded live in Berkeley, at the Roots of Progress conference (an amazing event), here is the material with transcript, here is the episode summary:
Sam Altman makes his second appearance on the show to discuss how he’s managing OpenAI’s explosive growth, what he’s learned about hiring hardware people, what makes roon special, how far they are from an AI-driven replacement to Slack, what GPT-6 might enable for scientific research, when we’ll see entire divisions of companies run mostly by AI, what he looks for in hires to gauge their AI-resistance, how OpenAI is thinking about commerce, whether GPT-6 will write great poetry, why energy is the binding constraint to chip-building and where it’ll come from, his updated plan for how he’d revitalize St. Louis, why he’s not worried about teaching normies to use AI, what will happen to the price of healthcare and hosing, his evolving views on freedom of expression, why accidental AI persuasion worries him more than intentional takeover, the question he posed to the Dalai Lama about superintelligence, and more.
Excerpt:
COWEN: What is it about GPT-6 that makes that special to you?
ALTMAN: If GPT-3 was the first moment where you saw a glimmer of something that felt like the spiritual Turing test getting passed, GPT-5 is the first moment where you see a glimmer of AI doing new science. It’s very tiny things, but here and there someone’s posting like, “Oh, it figured this thing out,” or “Oh, it came up with this new idea,” or “Oh, it was a useful collaborator on this paper.” There is a chance that GPT-6 will be a GPT-3 to 4-like leap that happened for Turing test-like stuff for science, where 5 has these tiny glimmers and 6 can really do it.
COWEN: Let’s say I run a science lab, and I know GPT-6 is coming. What should I be doing now to prepare for that?
ALTMAN: It’s always a very hard question. Even if you know this thing is coming, if you adapt your —
COWEN: Let’s say I even had it now, right? What exactly would I do the next morning?
ALTMAN: I guess the first thing you would do is just type in the current research questions you’re struggling with, and maybe it’ll say, “Here’s an idea,” or “Run this experiment,” or “Go do this other thing.”
COWEN: If I’m thinking about restructuring an entire organization to have GPT-6 or 7 or whatever at the center of it, what is it I should be doing organizationally, rather than just having all my top people use it as add-ons to their current stock of knowledge?
ALTMAN: I’ve thought about this more for the context of companies than scientists, just because I understand that better. I think it’s a very important question. Right now, I have met some orgs that are really saying, “Okay, we’re going to adopt AI and let AI do this.” I’m very interested in this, because shame on me if OpenAI is not the first big company run by an AI CEO, right?
COWEN: Just parts of it. Not the whole thing.
ALTMAN: No, the whole thing.
COWEN: That’s very ambitious. Just the finance department, whatever.
ALTMAN: Well, but eventually it should get to the whole thing, right? So we can use this and then try to work backwards from that. I find this a very interesting thought experiment of what would have to happen for an AI CEO to be able to do a much better job of running OpenAI than me, which clearly will happen someday. How can we accelerate that? What’s in the way of that? I have found that to be a super useful thought experiment for how we design our org over time and what the other pieces and roadblocks will be. I assume someone running a science lab should try to think the same way, and they’ll come to different conclusions.
COWEN: How far off do you think it is that just, say, one division of OpenAI is 85 percent run by AIs?
ALTMAN: Any single division?
COWEN: Not a tiny, insignificant division, mostly run by the AIs.
ALTMAN: Some small single-digit number of years, not very far. When do you think I can be like, “Okay, Mr. AI CEO, you take over”?
Of course we discuss roon as well, not to mention life on the moons of Saturn…
Friday assorted links
1. An alternate model for training economists?
2. RIP Luis Fernando Verissimo. Borges and the Eternal Orangutans is a very fun book for me.
3. Chinese guy builds Cat World, Department of Why Not?
4. “Walking Tall?” (NYT). The husband did it.
5. AI progressed more quickly than superforecasters had expected. Green energy did not.
The history of American corporate nationalization
I wrote this passage some while ago, but never published the underlying project:
The American Constitution is hostile to nationalization at a fundamental level. The Fifth Amendment prohibits government “takings” without just compensation to the owners, and that is sometimes called the “takings clause.” Since the United States did not start off with a large number of state-owned enterprises, there is no simple and legal way for the country to get from here to there. Government nationalization of private companies would prove expensive, most of all to the government itself. More importantly, the strength of American corporate interests has taken away any possible pressures to eliminate or ignore this amendment.
The lack of interest in state-owned enterprises reflects some broader features of the United States, most of all a kind of messiness and pluralism of control. An extreme federalism has bred a large number of regulators at federal, state, and local levels, often with overlapping jurisdictions. Each level of government digs its claws into the regulatory morass, and not always for the better, but this preempts nationalization, which would centralize power and control in one level of government. That is not the American way.
A tradition of strong state-level regulation was built up during the mid- to late 19th century, when the federal government did not have the resources, the reach, or the scope to do much nationalizing. America developed some very large national commercial enterprises, such as the railroads, Bell (a phone company), and Western Union (a communications and wire service), which were quite large and far-ranging before the federal government itself had reached a mature size. At that time local government accounted for about half of all government spending in the country and the federal government had few powers of regulation. It wasn’t quite laissez-faire, but America could not rely on its federal government and this shaped the later evolution of the country. To handle these booming corporate entities, America created more state-level regulation of business than was typical for the other industrializing Western countries. That steered Americans away from nationalization as a means for distributing political benefits or disciplining corporations[1]
This policy decision to rely so much on multiple levels of federalistic regulation comes with a price. American failures in physical infrastructure have been the other side of the coin of American successes in business. A strong rule of law, combined with so many legal checks and balances and blocking points, has carved out a protected space for private American businesses. They can operate with relatively secure property rights. At the same time, those same laws and blocking points make it hard to get a lot of things built when a change in property rights is required, whether government or business or both are doing the building. The law is used to obstruct growth and change, and for NIMBYism — “Not In My Backward,” and more generally for giving any litigation-ready interest group a voice in any decision it cares about. Can you imagine a sentence like this being written about China?: “The [New York and New Jersey] Port Authority sent out letters inviting tribe representatives to join the environmental review project, inviting the Shawnee Tribe of Oklahoma and the Sand Hills Nation of Nebraska.”[2]
In America background patriotism sustains a rule by general national consensus, and so the American government doesn’t need extensive state-owned companies to build or maintain political support through the creation of so many privileged insiders. The American paradox is this: the reliance on the law reflects a relatively strong and legitimate government, but the multiplication of that law renders government ineffective in a lot of practical matters, especially when it comes to the proverbial “getting things done,” a dimension where the Chinese government has been especially strong.
You should note that although the United States has not so many state-owned enterprises, the American government still has ways of expressing its will on business, or as the case may be, favoring one set of businesses over another. In these latter cases it can be said that American business is expressing its will over government through forms of crony capitalism, a concept which is spreading in both America and China.
The United States has evolved a subtle brand of corporatism and industrial policy that is mostly decentralized and also – this is an important point — relatively stable across shifts of political power. America uses its large country privileges to maintain access to world markets and to protect the property rights of its investors, usually without much regard for whether they are Democrats or Republicans. For instance the State Department works hard to maintain open world markets for films and other cultural goods and services. Toward this end America has used trade negotiations, diplomatic leverage, foreign aid, and also explicit arm-twisting, based on its military commitments to protect allied nations in Western Europe and East Asia. America already had successful entertainment producers, it just wanted to make sure they could earn more money abroad, and that is why the American government usually insists on open access for audiovisual products when it negotiates free trade treaties. Yet in these deals there is not much if any explicit favoritism for one movie or television studio over another, or for one political alliance over another. Democrats are disproportionately overrepresented in Hollywood, but Republican administrations protect the interests of the American entertainment sector nonetheless. It’s about the money and the jobs, not about shifting political coalitions. You’ll note that the independence from particular political coalitions gives the American business environment a particular stability and predictability, to its advantage internationally and otherwise.
[1] See Millward (2013, chapter nine, and p.222 on chartering powers).
[2] That is from Howard (2014, p.10).
Contemporary TC again: Let us hope that I was at least partially correct…
Deport Dishwashers or Solve All Murders?
I understand being concerned about illegal immigration. I definitely understand being concerned about murder, rape, and robbery. What I don’t understand is being more concerned about the former than the latter.
Yet that’s exactly how the federal government allocates resources. The federal government spends far more on immigration enforcement than on preventing violent crime, terrorism, tax fraud or indeed all of these combined.
Moreover, if the BBB bill is passed the ratio will become even more extreme. (sere also here):
Don’t make the mistake of thinking that immigration enforcement is about going after murderers, rapists and robbers. It isn’t. Indeed, it’s the opposite. ICE’s “Operation At Large” for example has moved thousands of law enforcement personnel at Homeland Security, the FBI, DEA, and the U.S. Marshals away from investigating violent crime and towards immigration enforcement.
I’m not arguing against border enforcement or deporting illegal immigrants but rational people understand tradeoffs. Do we really want to spend billions to deport dishwashers from Oaxaca while rapes in Ohio committed by US citizens go under-investigated?
Almost half of the murders in the United States go unsolved (42.5% in 2023). So how about devoting some of the $167 billion extra in the BBB bill to say expand the COPS program and hire more police, deter more crime and to use Conor Friedersdorf’s slogan, solve all murders. Back of the envelope calculations suggest that $20 billion annually could fund roughly 150 k additional officers, a ~22 % increase, deterring some ~2 400 murders, ~90 k violent crimes, and ~260 k property crimes each year. Seems like a better deal.
How to fight Harvard
You could support institutions of higher education that deviate from the standard orthodoxy, such as the University of Austin, the departments of economics and law at George Mason University, or Francisco Marroquín University in Guatemala (disclaimer: I have affiliations with all three).
Or how about right-leaning podcasts and YouTube channels? They too compete with Harvard, and very often they have more influence on how people actually think. Comedy is another institution that often is right-leaning. I’ve also spent significant time with the leading AI models, and find they are considerably more centrist and objective than our institutions of higher education.
It is far from obvious that the ideas of Harvard will play such a dominant role in shaping the future of America. And given that is the case, why choose a destructive “solution” that will impose so much collateral damage on America’s future?
In other words, this is not necessarily a losing battle, and thus you do not need to try to burn Harvard to the ground. Nor must you despair that true reform is impossible. True reform can occur elsewhere, most likely on the internet. There is indeed something to be said for getting back at Harvard. But it can’t be about them losing—you too have to win. Like it or not, it’s time to start building.
My Conversation with the excellent Jennifer Pahlka
Here is the audio, video, and transcript. Here is the episode summary:
Jennifer Pahlka believes America’s bureaucratic dysfunction is deeply rooted in outdated processes and misaligned incentives. As the founder of Code for America and co-founder of the United States Digital Service, she has witnessed firsthand how government struggles to adapt to the digital age, often trapped in rigid procedures and disconnected from the real-world impact of its policies. Disruption is clearly needed, she says—but can it be done in a way that avoids the chaos of DOGE?
Tyler and Jennifer discuss all this and more, including why Congress has become increasingly passive, how she’d go about reforming government programs, whether there should be less accountability in government, how AGI will change things, whether the US should have public-sector unions, what Singapore’s effectiveness reveals about the trade-offs of technocratic governance, how AI might fundamentally transform national sovereignty, what her experience in the gaming industry taught her about reimagining systems, which American states are the best-governed, the best fictional depictions of bureaucracy, how she’d improve New York City’s governance, her current work at the Niskanen Center, and more.
Excerpt:
COWEN: Does that mean we need something like DOGE? I’ve lived near DC for about 40 years of my life. I haven’t seen anyone succeed with regulatory reforms. You can abolish an agency, but to really reform the process hasn’t worked. Maybe the best iteration we can get is to break a bunch of things now. That will be painful, people will hate it, but you have a chance in the next administration to put some of them back together again.
Maybe it’s just in a large country, there’s no other way to do it. We have separation of powers. The first two years of DOGE will seem terrible, but 8, 12, 16 years from now, we’ll be glad we did it. Is that possible?
PAHLKA: I don’t know what’s going to happen. I do think this is the disruption that we’re getting, whether it’s the disruption we wanted. The question of whether it could have been done in a more orderly manner is a tough one. I just feel sad that we didn’t try.
COWEN: Are you sure we didn’t try?
PAHLKA: I don’t think we really tried.
COWEN: The second Bush presidency, people talked about this, what we need to do. Al Gore — some of that was good, in fact, reinventing government. We’ve been trying all along, but this is what trying looks like.
PAHLKA: Yes. I think reinventing government happened at a time when we were just at the beginning of this digital revolution. It was trying with a very 20th-century mindset. Fine, did well within that context, but we don’t need that again.
We need 21st century change. We need true digital transformation. We need something that’s not stuck in the industrial ways of thinking. I don’t think we tried that. I think the efforts have just been too respectful of old ways of working and the institutions. There was really not an appetite, I think, for what I would call responsible disruptive change. Would it have worked?
COWEN: Is there such a thing?
PAHLKA: I don’t know. [laughs]
COWEN: Say you’re approaching USAID, where I think the best programs are great. A lot of it they shouldn’t be doing. On net, it passes a cost-benefit test, but the agency internally never seemed willing to actually get rid of the bad stuff, all the contracting arrangements which made American Congress people happy because it was dollars sent to America, but way inflated overhead and fixed costs. Why isn’t it better just to blow that up — some of it is great — and then rebuild the great parts?
PAHLKA: It’s so hard to say. [laughs] I’ve had the same thought. In fact, before inauguration, I wrote about the Department of Defense. It’s the same thing. There’s a clear recognition by the people in the institution, as you saw with USAID, that this is not okay, that this is not working. It’s just strange to be in an institution that large where so many people agree that it’s not working, from the bottom to the top, and yet nobody can make really substantive change.
Of great interest, obviously.