Monday, February 20, 2012

Reagan's 28 year reign: Clinton as ratifier of Reagan

Now it is well recognized that the collapse of the financial system in 2008 had its seeds in the last years of the Clinton administration, when The Glass-Steagall Act regulating the financial industry was repealed, and congress refused to regulate derivatives. Both of these disastrous mistakes were pushed and supported by the Clinton administration.

What else? Well, welfare reform was a center piece of the 'triangulation', but I don't know enough about that to judge. Another very telling thing was the 'National Performance Review', otherwise known as 'Reinventing Government', led by Al Gore. According to this article on the subject, in 1994, I'm assuming after the loss of the House to Republicans, a 'Rego II' was added. According to the report it said "departments and agencies were directed to examine all their various activities and to ascertain which could be privatized, devolved to state and local government, or simply terminated."

Clinton and Gore didn't ask, 'What will make this system work best for the goals we have?' and then 'What resources will that take?' 'And if the resources are too much, is there a second best that is satisfactory?'

In other words, instead of trying to make government work effectively, they started with the premise that they needed to cut, and then imposed on people choosing what would do the least damage. And that seems to me a prescription for damaging government.

Talking to Federal workers at the time and since, they have viewed 'Reinventing' as a disaster that outsourced too much and weakened the effectiveness of government.

In other words, pure Reaganism.

1 comment:

  1. I am adding here a comment from someone who knows the functioning of the federal bureaucracy well:

    There is a problem of inappropriate categories. The bureaucracy wants on category: "Acquisition" with one process. The problem is that the same process cannot be made to fit "acquisition of commodities" and "acquisition of new technology". Prior to 1994 DoD was used to every acquisition being "custom". So aspirins were bought too expensively and new technology development was carefully audited because it was custom.. Post 1994, aspirins can be purchased efficiently but new technology is unaudited.

    I think that they are still in search of a "one size fits all" method. I don't believe that method exists. Commodities need one process. Completely new technology needs a radically different process, insulated from politically driven requirements change. What they need is to tailor the process to the situation flexibly, depending on how much is commercial and how much is custom. Then both types of acquisitions (and intermediate examples) can be handled most efficiently. A large corporation trusts its employees to make that tailored operation. The current bureaucracy often doesn't.

    I worked for government consulting firms in the mid 80s to the early 90s. In those days the government used the processes more flexibly. It used to be possible to secure aspirins or satellites with an appropriate model. What I saw was that people started to derive personal or corporate benefits by using the wrong acquisition model. A reaction set in that tried to make the process more automatic: less room for judgement. It doesn't work.

    I agree that cutting government makes it weaker and more open to private exploitation. Expensive custom toilet seats need not be acquired if there is someone to ask questions.

    What will make acquisitions work better? Strong management and oversight that is willing to exercise and enforce differences and distinctions in acquisition models between commerial and nearly-one-of-a-kind new technology items. In the early 90s the custom model was overused to rip the government off. Now the commercial model is overused to the same end.