Governments Have An Impossible Task

The American political response to crime is baffling. Violent crime is up as much as 50%. Shoplifting is no longer a crime in San Francisco. Almost recommended.

They seem to be missing an old thought. “A Liberal is just a Conservative who has not been mugged yet.”

I think the people have already begun to ignore the government completely. People know what to do to minimize their own problems.

Governments try to be helpers. In most cases the people would be better off without the help. It’s too intrusive and too costly

The other problem

The alternatives are not over-blessed with moral and behaviour standards. Other than the sign colour, their is not a lot to choose on their stated goals. That happens when you have no standards other than getting re-elected, and you use polling to decide what it is you believe. Each values their position more than their duties.

You have no idea how much most people would appreciate a leader with a vision who tried to get it to work for the people. The economic approach should be do what we can afford to do. The first step in that is to come clean on unfunded liabilities. Decades ago I asked a minister of the government what the unfunded federal liabilities amount to. He did his best to find out and told me later, “They don’t know and they certainly don’t want to find out.”

The known debt is about a trillion dollars in Canada. At the time, his estimate, and he had a financial background, was, the unfunded part was at least 3 times more. I doubt it is smaller than three times now. So four to five trillion is not out of the question.

The solution to that is don’t overpromise. Just like in sales. If you overpromise, you lose credibility.

The good thing.

Canada’s population is about a ninth of the United States. Yet their federal debt is 30 times higher. Perhaps our provincial debt makes up the difference, but I doubt it. California owes about $500 billion and has slightly more people than Canada. Their unfunded liabilities are staggering too. A year ago Forbes estimated the unfunded pension debt at a trillion dollars. There will be far more in other areas like medicare.

So Canada may not be doing so badly. Dubious, but possible.

Running it in a businesslike way

There is a thought in business that is seldom seen in governments. “Don’t do anything once unless you plan to do it forever.” Businesses are very cautious about adding overhead and commitments.. You can’t adjust to changing conditions if you have to much of either. Governments like to add commitments because it makes them look generous. It’s easy to be generous with other people’s money, and there is no limit switch that turns the processes off. Businesses that run out of money go bankrupt and disappear. Governments do not. That’s one reason why business people are so cautious.

Government is a far harder enterprise to run than is a business. The customers come to a business for a solution. They expect to pay for it. People come to government with the expectation of getting something for nothing. It’s easier to deal with customers.

Customers, mostly, don’t feel entitled.

Don’t establish a bureaucracy.

Bureaucracies eventually exist only to satisfy their own needs. The self licking ice cream cone problem. That was once attributed to the state of affairs at NASA. The Peter Principle is always good reading. One thought I recall is this. “Whether the mission contracts or expands the administrative overhead grows at a steady rate.” Somewhere around 5% annually.

That overhead never goes away on its own. An example. There was a position created in 1803 for a watchman with a spyglass to stand at the cliffs of Dover with a bell. Should Napoleon’s forces be seen crossing the channel, he was to ring the bell and alert the militia. The position was abolished in 1951.

We need leaders who know how to avoid problems rather than create infinite programs to solve them. In that regard I have noticed some foundations are willing to fund projects that cure a problem rather than spend money to ease the symptoms. I know of one in particular that has a policy to not fund amelioration of problems. If you have a sound plan to dispense with a problem, they are quite willing to participate with money and expertise.

The bits to take away

Don’t address the symptoms. Address the cause and eliminate the problem.

Measure what happens. If a program harms more than helps, stop. If you look at the value of President Johnson’s war on poverty you will see a multi trillion dollar expenditure that solved nothing and arguably made things worse.

The best incentive is to remove the disincentives.

Be more humble. Admit error quickly. The best managers are not right much more often than a third of the time. The one difference is good managers stop doing stupid things sooner. Win big, lose small.


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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to don@moneyfyi.com

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