Competitive Enterprise Institute Vice President for Stategy Iain Murray delivered these remarks at CEI’s recent policy panel discussion, “The Future of the Executive Branch,” on Wednesday, November 15th. For more details on and video of the event, see here.
For eight years, I worked in Her Majesty’s Government, in Whitehall.
The founding principle there had been for many years, in the words of Lord Jay, “the gentleman in Whitehall really does know better what is good for people than the people know themselves."
In the 1980s and 90s, that began to change.
The governments of Margaret Thatcher and John Major turned from privatizing state-owned industries to radically rethinking bureaucracy.
The Hayekian idea that markets contained more information than any room stuffed with clever Oxbridge classicists ever could gained sway.
Old governing structures were broken up to allow markets to function.
Perhaps most radically of all, civil servants were required to treat citizens not as no-nothings or supplicants, but as customers whose rights and wishes were to be respected.
This had an immediate effect on the relationship between citizen and bureaucrat.
Indeed, one of the things that surprised me most when I came to the USA was the arrogance of the average American federal employee. They constantly remind you that they are working for the United States - in a way that would have you mocked mercilessly in Britain if you pompously said you worked for the Crown.
So now that the President has asked for suggestions for restructuring the Executive Branch, it is worth looking back at that era in Britain and applying lessons, appropriately structured, to the Federal Government.
Why now? The President has only a brief window to carry out his restructuring.
It is something his base has demanded, yet much of it depends on Congress.
Congress holds the pursestrings, so it can restructure government through funding.
Yet in many cases, more fundamental reform will be needed. Laws will need to be rewritten.
After tax reform, government restructuring will need to become a priority, so the time to start talking about it is now.
Certain principles stand out from the British experience:
- Not all current government functions are essential, or indeed important
- What can be run in a non-governmental form should be
- Agencies are responsible to Congress for their spending
- Government should be simple and coherent, so duplicative or contradictory functions should be eliminated
- Markets know better than the gentleman – or lady - in DC, so they should refrain from picking winners and losers
- Powers granted to the Executive by Congress should be specific and limited rather than open-ended
Let’s take an example of each of these principles from CEI’s publication, Shrinking Government Bureaucracy.
First, not every government function is essential. The Environmental Protection Agency is a good example of this.
It runs a variety of programs, such as Healthy Communities and Smart Growth, which dictate to states what is smart growth or a healthy community. These should be state and local matters. The Federal Government should not be involved.
These functions are not essential.
It also runs programs like Environmental Justice and Environmental Education, which do not fit into the EPA’s mission to implement public health and safety laws, and which end up funding activists and indoctrination.
These functions are not important. There should be no place for them in the federal government.
The second principle is that what can be run in a non-governmental form should be.
Examples of these exist in a variety of national laboratories administered by the Department of Commerce, as either part of the National Oceanic and Atmospheric Administration or the National Institute of Standards and Technology.
In the 1990s, Britain realized that running national laboratories was not a good fit for government, so it privatized them as non-profit charitable trusts. The private laboratories have gone from strength to strength.
An example is the Laboratory of the Government Chemist, now LGC Group. On privatization, its budget was $19 million. Its current budget is almost $300 million. There is a lot more science being done at these laboratories now, and privatization is responsible for that.
Indeed, in Shrinking Government Bureaucracy I recommend not just privatization of laboratories, but of the entire National Weather Service.
The Goal of privatization is to improve services, not to abolish them, by making them more responsive to change and innovation.
If you want an example, the NWS only stopped issuing forecasts in All Caps in 2016. They had used capitals because they were originally sent out by teleprinters – typewriters attached to telephone lines – just one step up from Morse Code.
Specialized weather services like the National Hurricane Center and the National Environmental Satellite Service can be turned into non-profit bodies like the laboratories. Again, this would probably allow for more Science to be done at these institutions.
The next principle is that agencies should be responsible to Congress for their spending.
If we look again at the EPA, we can see that this is not taken seriously by the Agency. Its budget is so uniquely terrible that it is difficult to ascertain exactly what the agency is spending money on, why, and under what authority.
Lawmakers therefore cannot exercise adequate scrutiny over the agency. The OMB should work with Administrator Pruitt to produce a reformed budget, allowing adequate oversight by Congress.
The next principle is that government should be simple and coherent, so duplicative or contradictory functions should be eliminated.
Again, the EPA is a good example. Its regional offices duplicate work done by the Headquarters and by state environmental agencies. They can be abolished without compromising the EPA’s mission. The offices do play a role in emergency management in the event of a natural disaster, but those functions can and should be transferred to FEMA.
Similarly, the federal government collects huge amounts of data through a variety of statistical agencies, such as the Census Bureau, the Bureau of Labor Statistics, the Bureau of Justice Statistics, and so on.
At the very least, these data gathering functions should be consolidated in one office to minimize the burden of different agencies conducting simultaneous surveys. In all probability, many of these functions could be privatized or shut down.
The next principle is that markets know better than the gentleman in DC, so refrain from picking winners and losers
There are a variety of agencies that exist in order to pick winners and losers. At the Department of Commerce, the Economic Development Administration and the Minority Business Development Administration do this all the time.
The EDA is notorious for its bad choices. In Cedar Rapids, IA, it gave $35 million to build a new convention center projected to lose $1.3 million annually. In another case it backed a company with $2 million to open a new warehouse in Visalia CA to provide 250 jobs. The company promptly closed its warehouse in Brisbane CA, shedding 313 jobs.
The Export-Import Bank and the Overseas Private Investment Corporation similarly pick winners and losers, promoting Boeing at the expense of Delta Airlines, and so on. All of these agencies should go.
As for the final principle, that powers granted to the Executive by Congress should be specific and limited rather than open-ended, if our Constitution’s principle of enumerated powers is to mean anything, this is a given. Congress should not delegate open-ended powers to the administration in any case.
That is how regulation’s burden on the economy managed to grow to $2 trillion annually over the course of a couple of decades. For more on this problem, I recommend my colleague Wayne Crews’ annual publication, Ten Thousand Commandments.
So Congress should start delegating authority using sunset clauses and other automatic brakes. Yet in many cases, the genie is out of the bottle.
So specific reform is needed. One example should suffice.
The Securities and Exchange Commission was granted powers in the 1930s supposedly to help protect little old ladies from ruinous investments.
But that was in an era when electricity and telephone lines were only just being built. Today many people pay their electricity bill over a phone that doesn’t have a wired connection.
Information on markets and investments is available freely or affordably to anyone who needs it (albeit less affordably now for retirement investments thanks to the Fiduciary Rule).
The various SEC rules are now more of a hindrance than a protection. The SEC could be abolished with few repercussions. Cases of fraud could still be policed and punished by the Federal Trade Commission.
The SEC is a relatively mild example. For what can happen with a runaway rogue agency, look no further than the Consumer Financial Protection Bureau – where today we have heard the happy news that Director Cordray will resign at the end of the month.
If I’d like you to take way anything from this presentation, it’s that reform is possible, it can be presented positively, and that the time for action is now.
Applying the principles would go a long way to satisfying the public demand for a less burdensome and intrusive bureaucracy – and might even improve the remaining government services.
If reform succeeds, it could permanently change the culture in the federal government to one that is less obnoxious to citizens.
As CEI’s President Kent Lassman says in his introduction to SGB, a description of executive branch growth from a similar government exercise in 1937 remains relevant:
The Executive Branch of the Government of the United States has thus grown up without a plan or design like barns, shacks, silos, tool sheds, and garages of an old farm. To look at it now, no one would ever recognize the structure which the founding fathers erected a century and a half ago to be the Government of the United States.
Neither clarity nor efficiency in government has improved in the past eight decades. In fact, one could say today’s executive branch looks less like a barn and more like the metaphorical manure piled inside. It is long past time for to claim a shovel and start digging.