Monday, February 24, 2014

Good Government Fails Better

By Robert H.

Arnold Kling, channeling Megan McArdle, says that large firms need to fail gracefully:

large, established firm needs to fail gracefully. Be able to kill the project without killing the company. You might think of Coca-Cola’s recovery from New Coke, but the real graceful failures are the ones we never even hear about. A large firm that fails ungracefully is denying that it is in trouble (Megan uses the example of Dan Rather and Mary Mapes of CBS News, who put out a story based on a forged document and just refused to back down from the story.)

But that government sucks at this:

Government cannot do any of these things well. Think of Obamacare... Graceful failure? No, it is a big, ugly failure.

Maybe I'm missing something, but it seems like Kling wants large firms to fail gracefully because it insulates the successful part of the company from the dumb new venture, allowing the company to continue.  They have to "kill the project without killing the company."  If that's the standard, our government seems to be really, really good at failing well.   After all, if it's a survival game then America has reached a ripe old age.  The number of two century old private firms is not large.  America's killed a lot of bad ideas (and millions of their proponents!) without killing "the company."

More broadly, Kling acknowledges that different firms need to fail in different ways (for example, he thinks startups need to fail quickly so everyone can move on to new ideas), but rather then figure out how government needs to fail, he insists on judging it by the standard of corporations.  He doesn't explore how government's *should* fail, he just says government isn't good at failing the way good firms do.  I think that's a mistake.  Here's how I would complete kling's list:

An individual needs to fail with a fallback position. 
small startup firm needs to fail quickly.
large, established firm needs to fail gracefully. 
A government needs to fail non-catastrophically.  Bad governance can ruin economies, enslave millions, and, these days, kill billions.  Catastrophic failure of a government program must be avoided at all cost.  As a good rule of thumb, any failure members of the next generation only know about if they are particularly literate or into history is a good failure (barring significant propaganda). 
There is a great deal of ruin in a nation, and governments can do much that is merely bad.  The goal is to keep the bad to a minimum.  A small program with minimal effects can drag on, failing for decades, and that will, in the big scheme of things, not have a damned thing to do with whether a government is relatively successful or relatively terrible.  Good government often wallows in mere failure, what it avoids is catastrophic failure.
P.S. There's another blog post to be had unpacking Kling's assumption that Obamacare will "fail."

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