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The VA Is Only the Tip of the Iceberg

Friday, June 13, 2014

Sibel Edmonds, a Turkish-American, was a pretty valuable person in the days immediately after September 11th.  She speaks Turkish and other Middle Eastern languages, so the FBI hired her and granted her a Top Secret National Security Clearance to translate reams of documents seized in raids after the terrorist attacks.  As reported by CBS News, Edmonds was shocked when she was told to take her time and not translate too many documents too quickly.  And if she was "too productive," she would arrive at work to discover documents she had translated the day prior to have been deleted.  The reason?  So the department would look overworked and under-staffed and could get their budget increased.

The scandal over the Veteran's Administration, forged waiting lists to support executive bonuses, retaliation against whistle-blowers, and just the overall systemic dysfunction of the bureaucracy is only the tip of the government iceberg.  It is unlikely, though, that similar situations - with less compelling story-lines - will get much media attention.  The story-line after 9/11 of documents going untranslated so the agency could look overworked was just too compelling for the media to pass up.  The story-line of veterans dying while on secret waiting lists - and even one committing suicide - are equally compelling, as they should be.

As I wade into this topic, let me respond right up front to what I imagine some might charge - that I taking tragedy and making it 'political'.

Guilty as charged, your honor.

There is no way a failure like this, in the fifth largest federal department by spending - no less than $151B (yes, billion) in 2014 - is anything other than political.  It is also tragic.  It is deeply personal to the veterans and their families.  But to turn away from the politics of this is to turn away from both the problem and the debt we owe to our veterans.

The problem at the VA is the same as the problem in that translation unit of the FBI.  It is the same problem that compels our neighbors to the south to cross the border illegally in search of work instead of waiting in a bureaucratic line that is not moving.  When we ask the government to design, publish, receive and process applications for government benefits, we guarantee the least amount of efficiency as possible is brought to the task.  Here is why:

Let's use information technology as an example:  As a middle manager in a private sector IT shop, let's say I am given $1M and 12 months to staff up an IT project, develop the system, test and field it.  Now let's say I bring the project online in 6 months, spending only $500K of the budgeted $1M.

I am an absolute hero.

That extra $500K goes to the company's bottom line, allowing the company to declare an increase in stock dividends.  That increase in dividends makes the stock look good to investors, who bid for shares on the stock market.  Their bids increase the share price, which is then multiplied by the number of shares outstanding to establish the 'market capitalization' of the company.  That increase in market cap makes the company look like a low risk to lenders.  The company takes out a loan to kick off R&D on a new IT project, creating a whole raft of new jobs in the process.  And guess who gets to lead that new project?

Now, what happens in the public sector?  What happens if I am a middle manager in an IT shop in a government agency?  I am given the exact same budget of $1M and 12 months to deliver a project.  We pull it off in 6 months and I return $500K to the department.

I am an absolute zero!

I just caused all kinds of horrible problems for the higher-ups.  We're coming to the end of the fiscal year and now they have to scramble to figure out how to spend that extra $500K.  Because if they don't - and you can bank on this - there's another department or agency out there circling what they think is a bureaucratic carcass.  In this world you are either predator or prey, and if you have money left over in your budget there are vultures with backlogs circling overhead.  I absolutely guarantee it - that would be the last project I ever see.

But we're not talking about my beanie with a propeller or my pocket protector... we're talking about the lives of those who have fought for us, so the stakes are all the higher, are they not?

As progress is being made on reforms at the VA, we have to remember that this is not an isolated matter, it is just a much more compelling story-line than the many other instances of exactly the same problem.  The reforms proposed - especially making it easier for the VA Secretary to fire corrupt and incompetent middle managers - are a step in the right direction.  But this whole mess is an object lesson in a much more fundamental principle - small government.

Because government employees enjoy civil service protections - which are necessary to avoid the politicization of the government workforce - the larger the government becomes, the more we see the human resources version of "moral hazard."

This is a term from finance.  It is used to describe what happens when governments are too quick to bail out financial firms.  That creates the "hazard" that the firms will take too many risks, counting on the government to bail them out if they go bad.  This only increases the likelihood of having to bail out these firms.  In government employment, human resources "moral hazard" describes how, with civil service protections, government employees are not only protected from politicization, but also from their own incompetence, and in some cases, outright corruption.

This has all been awfully negative.  Let me at least try to end on a positive note.  Government service is like any other part of society.  There are really good, competent people with a strong sense of self-respect who strive each day to provide the taxpayer legitimate value for the salary they are paid.  Because of the nature of government service, though - the human resources moral hazard - they are dragged down by pigs at the trough of the public treasury - who would be better as bacon on someone's breakfast table.  (And I am trying to end on a positive note here... man, this is hard.)

If we want the genuinely committed public servants to shine and not be sullied by the pigs as the trough, the answer is pretty simple.  Smaller government with less money.  The VA does not need its budget increased.  The new Secretary needs unfettered authority to clean up the pigsty.  And with less money, there will then be genuine competition for both competency and productivity.

We have seen these kinds of scandals before.  The GSA was the most recent.  Let's be clear: this isn't about which party holds the White House or Congress.  We have in the past, and will in the future, see scandals like this again under Republican and Democratic government alike.  Neither party is immune to the weaknesses of human nature in the presence of dollars with too many zeros after them to count.  The only question is how often, how big - and now, how tragic - will these scandals be?

The larger our government becomes, the more frequent, larger and more tragic these kinds of scandals will be.  If we want to see less of this we need smaller government.

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