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Institutions That Kill Enterprise

March 3, 2010

Animals long held in captivity fare poorly when released into the wild. Call it the Free Willy Curse. (Keiko, the famous orca, died a year after being released into the Norwegian Sea; sadly, he beached himself after bouts of lethargy and loss of appetite.) Arnold Kling argues that many government workers fear the Free Willy Curse:

…if I am totally dependent on my employer for a job (that is, my next best alternative is something with a much lower wage rate), then I must behave very submissively toward my employer. How many people are in such a position? Government workers strike me as an obvious example–many of them would be unable to earn as much in the private sector, particularly now. So they would tend to be highly submissive.

Fearing lethargy and loss of appetite in the open market, bureaucratic time-servers entrench, erect barriers, and obsequiously bow to their superiors in the GS 13-15 pay grade. They care less about serving their customers than they do about respecting the Chain of Command. Such elective submission reminds me of a post Scott Adams wrote back in November on the Dilbert blog. He said bad management spurs entrepreneurship:

Imagine a world where managers always recognized and rewarded their most capable people. It would be hard for a rational employee to leave a great job for a ten percent chance of creating something even greater. But leaving a boss who is Satan’s learning-challenged little brother is relatively easy.  And if the general economy isn’t serving up wonderful job opportunities at other companies (thanks in part to bad management) then you can see why people gravitate toward starting their own companies…Big companies with bad managers are the ideal breeding ground for entrepreneurs.

Google offers a lot of resources and free time to retain its talent because Page and Brin know their best engineers have an entrepreneurial itch. Some of these engineers still leave (I’m looking at you, Patri!) but some stay and instead work to develop their new ideas in house. Bad management inspires the entrepreneur, but the threat of exit also disciplines management.

But with governance, we see the opposite effect.  Let’s suppose there were an innovative, enterprising policy maker, fresh to the Beltway. As soon as he finds he is supervised by an army of morons and Captain Joy Kill, what will he do? Can he exit and start his own company to offer a better service at a lower cost? No, no. In government, bad management whips skill and effort into submission because that skill has no where to go. There is no threat of exit.

Over the last few years, the Free Willy Curse has gone viral. What is to be done?

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