Warren Buffett once said that when a brilliant management team tackles a business with a bad business structure, the bad business structure defeats the brilliant management team. He easily could have been talking about federal government. We are already well into the 2020 presidential campaign with two dozen Democrats running, or considering a run, all of whom believe their great leadership skills could fix the government.
Unfortunately, whoever prevails in 2020 is likely to disappoint supporters. The core flaw in the federal government is that the people in charge are not allowed to make sensible choices. I witnessed this firsthand, because the company that I ran, Pitney Bowes, dealt extensively with the federal government, collecting about 25 percent of Postal Service revenues on its metering devices and processing about 8 percent of 200 billion pieces of mail.
{mosads}I witnessed at least three separate problems: regulations that cripple the government’s ability to take necessary actions; reporting that makes it impossible to assess government performance; and poorly drafted and excessively detailed laws and regulations.
When Pitney Bowes entered the bulk mail processing business, the Postal Service was receptive to the company building a plant in Atlanta because the Postal Service had severe capacity constraints and time-consuming environmental reviews would have meant 10 to 15 years to build an additional facility. Pitney Bowes relieved the Postal Service’s Atlanta overload problem in a few months, because the company did not have the same regulatory burdens.
Congress has mandated accounting practices that make it difficult for ordinary citizens to assess government performance. For example, to make the federal budget deficit look smaller, Congress ordered the Postal Service, an off-budget organization, to pay an additional $5 billion per-year payment over 10 years for retiree health benefits, instead of the normal 30- to 40-year period over which the obligation is due. Private-sector companies could not be forced to record a liability over an obviously artificially short period, and would be punished for questionable accounting practices if they did so.
New laws and regulations grow so fast and are so voluminous that companies have trouble keeping track of them prior to passage and giving sensible input to legislative staffers. A former law school classmate mentioned in passing to me a poorly-conceived environmental provision buried in a 1,000-page 1990 law. The provision, designed to force large employers to get most employees to take public transportation or carpools to work, failed to take into account that employees actually might need their cars to call on customers. This law was too detailed and rigid in defining compliance. Fortunately, that requirement was eliminated a few years later.
Philip Howard’s new book, “Try Common Sense,” makes a powerful case that virtually every federal government program is broken — not because the goals are unnecessary, but because no official or citizen is allowed to take responsibility to make practical choices. Even the president lacks the authority to do what everyone wants — for example, to expedite permits for needed infrastructure.
America is drowning in red tape. Federal laws — now totaling more than 150 million words — stifle ingenuity, micromanage American life and leave us with decrepit infrastructure, failing schools and needless obstacles in the path of entrepreneurship, among other outcomes. They even prevent the U.S. government from delivering its own services properly, as I witnessed.
The solution, as Howard argues in his book, is not complete de-regulation. Most Americans want clean water and oversight of worker safety, for example. The solution is to run government the way all successful institutions have been run: by giving people responsibility to do certain jobs and holding them accountable for their performance.
When the abuses of power were exposed during the Watergate investigations of the early 1970s, Congress’s response, which eventually became more standard practice at all levels of government, was to enact extremely detailed laws and regulations because of the pervasive distrust and fear Watergate engendered.
Laws would not only provide goals and guiding principles but would tell everyone, officials and citizens alike, exactly how to comply. Until then, there were no thousand-page rulebooks. Laws were shorter, and officials were usually kept within bounds by other officials and courts who acted as checks and balances.
Government is broken mainly because it’s mindless. Officials are not allowed to use judgments. As Howard argues, regulation should set the boundaries of acceptable conduct, not control our daily lives with one-size-fits-all rules. He proposes a return to an old approach: “Radically simplify law into goals and guiding principles, and give designated officials responsibility to meet public goals sensibly and fairly. Give other officials responsibility to judge how they do.”
What’s missing in public debate is how Americans can make sensible choices again — to roll up our sleeves, use our initiative, and create the opportunities and jobs on which our communities and economy depend. Instead, law micromanages American life and creates a straitjacket on official decision-making.
America does not need extremist, detailed solutions proposed by either party. It needs a 2020 vision that allows all Americans to be practical and fair again.
Michael Critelli is CEO of MoveFlux Corporation and retired chairman and CEO of Pitney Bowes.