Let A Thousand Nations Bloom

From Bloomberg:

Confronted with monthly debt payments of 4 billion euros, [Prime Minister] Papandreou, while at the January 2010 gathering of the World Economic Forum in Davos, Switzerland, suggested a strategy that ailing companies often pursue when fighting for survival: selling prized assets. The most valuable treasures that Greece has to offer are its 6,000 sun-soaked islands, which, along with luxury properties and other land the government controls, might fetch a healthy premium on the open market…

The trouble is that the labyrinthine federal, state, local, military and religious regulations, decrees, laws, proclamations and edicts have made it almost impossible for anyone to sell anything, because no one can agree on who owns what.

Ezra plays stooge and asks:

People say that the government should be run more like a business. So imagine you are CEO of the government.

Oh. Okay.

Your bridges are crumbling. Your schools are falling apart. Your air traffic control system doesn’t even use GPS. The Society of Civil Engineers gave your infrastructure a D grade and estimated that you need to make more than $2 trillion in repairs and upgrades.

Wait, if we’re going to think of government as a business, as is our wont here, then why be prudish about the thought experiment?

First MBA Prez, Now Case Study

The difference between a CEO and POTUS has nothing to do with a willingness to indulge in Keynesian fantasies. Of course Ezra knows POTUS can assassinate the competition. Leave that aside. A set of institutional constraints, encouragements, and privileges guides the behavior of each position in very different ways. And these are differences in kind not degree. To state the libertarian obvious, you can’t pretend to play CEO of US Gov  because your revenue base depends on systematic compulsion.

But I understand you’re tired of people making that point. So I won’t elaborate. Instead let’s talk about businesses and what they do. They provide goods and services to their customers. Who controls a business? Yes, the CEO and others down the flowchart, but ultimately the customer does. If you can’t provide a product that is worth more to the customer than the price they’re willing to pay, then you’re not going to last. In the end customers control the business by expressing their dissatisfaction through the power of exit.

If governments were controlled by their customers, they would have strong incentives to decrease their operating costs as much as possible.

But governments aren’t controlled by their customers. Certainly not in authoritarian regimes. And not even in democracy. Yes, citizens are able to express their dissatisfaction through non-market institutional channels. They exercise voice. They vote. But the rub is that the citizen is less a customer and instead, as of late, increasingly an employee. Democracy is government controlled by the employees.

What does a business controlled by employees look like? Public schools. Employee-run firms tend to promote policies that ensure job security over productivity. They favor any policy that increases the number of jobs, unproductive or not, and they oppose any measures which reduce the number. Job security and advancement through seniority mean more than how effective you are. To fire any employee is nearly impossible. Costs are ignored in favor of maximizing size. And if the resistance to higher prices or taxes has any strength, they happily spend more than they take in. Customer service is poor, at best.

With each redistributive transfer payment, more citizens are put on the payroll. Why even bother to show up for work? Vote and get your paycheck instead.

What’s more is that, with an employee-run organization, you don’t even have to ask the customer how he wants to spend his money. Instead, ask other employees how to spend it. It’s easier. Let’s go back to Ezra Klein’s urgent report to the CEO:

The Society of Civil Engineers gave your infrastructure a D grade and estimated that you need to make more than $2 trillion in repairs and upgrades.

Are these engineers customers? Or employees? Who controls this business? Why don’t we ask the customer what he wants?

Patri has an article up at Reason on letting the states serve as experimental laboratories in social policy. He focuses on the de facto legalization of marijuana in California:

Now, any libertarian must raise a cup, pipe, vaporizer (or whatever) to finally seeing a little bit of progress in the demented War On People Who Use Some Kinds Of Drugs. Combined with the resurgence in research on medical uses of psychedelics—which often find positive benefits—it looks like this may be the beginning of a positive shift in America’s drug policy. Slow, partial, and late, but in the right direction.

Change, however, often causes backlash, and we need to be prepared with the right arguments to make sure that the right lessons get drawn from this experience.

This takes the Seasteading Sink or Swim contest to a whole new level. The BBC is reporting that the Rooskies are building floating nuclear power plants that will be able to provide enough electricity and warm water for 45,000 people. According to the story, these eight monolithic nuclear flotillas will be able to stay at sea for up to twelve years while they drill for oil near the North Pole. Watch the video here or read more at the BBC.

Courtesy of BBC

Claims to sovereignty over the Arctic and its oil are hotly contested, with Russia, Canada, the U.S., Denmark, Norway, Finland and–am I missing anyone?–all tip toeing around each other. (Here’s a 2007 NYT op ed on the subject. Old Marginal Revolution here.) Two interesting facts:

• Between 1958 and 1992, Russia dumped 18 nuclear reactors into the Arctic Ocean, several of them still fully loaded with nuclear fuel.
• Floating nuclear power plants were suggested in the United States during the mid-1970s.

Hat tip Alexis Madrigal.