May 31st, 2013

Paul Volcker to Ezra Klein:

Those schools [of public administration] are not as strong as one would like to see them. Public administration has not been in fashion for decades. Many schools have turned to what they call policy. Everybody likes to talk about big issues of war and peace and how we take care of poor people and what we do about other social problems in the United States or elsewhere.
They do all this talking but they too seldom know how to implement what they’re talking about. I ran into a wonderful quotation from Thomas Edison. He said vision without execution is a hallucination. We have too many hallucinations and not enough execution.

Characteristically, Volcker isn’t just complaining, he’s launched – at the age of 85 – an initiative to do something about it, the Volcker Alliance.

I don’t have an axe to grind here but the RBC has a strong enough connection to schools of government and policy studies for this take to be worth discussing.

An anecdote about the elder von Moltke and the Prussian General Staff of 1870. According to Michael Howard (The Franco-Prussian War, p.62). Moltke ran the victorious campaign against France, controlling an army of 850,000 men, with a staff consisting of fourteen officers, ten draughtsmen, seven clerks, and 59 other ranks. (It wasn’t responsible for supply, run by a larger organisation under the Quartermaster-General). This tiny cadre worked because Moltke had trained all the staff officers attached to the corps in the field in his methods, so everybody was working in the same economical style. Moltke had solved the problem of strategic control of very large forces that had bedevilled Napoleon with the Grande Armée, a very blunt and unwieldy instrument compared to the smaller and more manoeuvrable armies with which he had triumphed at Marengo and Austerlitz.

I worked for 32 years for a high-minded international organisation that when I left had still, after 60 years, failed to establish a filing system.

18 Responses to “Volcker on policy studies”

  1. byomtov says:

    A version of this problem exists in business as well. Too often, a leader will be proclaimed – usually by himself – a “visionary,” who then avoids all responsibility for justifying the vision, or making it reality. Indeed, the vision may change from day to day, driving subordinates nuts.

    I think this sort of thinking is part of what leads to the cult of the CEO and the, IMO, vast underrating of the creative contributions, as well as the plain hard work, of lower-level employees to successful companies.

    • Kurzleg says:

      Or, a CEO heralded as a visionary gets the credit and a vast majority of the monetary rewards that would not have been possible without the sort of administrative or operational expertise practiced by those in the trenches. In some cases, a CEO may be the one who brought in the managers who did the hard work of making procedures uniform, etc. to achieve the efficiency or performance increases that created to success, and so that CEO should get some credit for that. But only some.

  2. koreyel says:

    This tiny cadre worked because Moltke had trained all the staff officers attached to the corps in the field in his methods, so everybody was working in the same economical style.

    Probably true. But it misses the bigger picture: The tiny cadre worked because power wasn’t intensely concentrated at the top.

    The definition of Populism is: A political philosophy in which wealth and power are more equitably distributed. Systems built that way are more robust, more creative, more happy, more virile. The problem with America (and the world in general) is that we have an economic system built on concentrated wealth and “trickle down”. What is wanted is a world built on distributed wealth and “trickle up”. You want a measure of how totally screwed the world is? Everyone knows about “trickle down”, whereas I just made up the phrase “trickle up”. A phrase which runs in complete opposition to the way the world is run by hyper-manicured bumpkins like Bernanke and all the rest of the “Davos man” cadre.

    Did you see that recent article on central bankers in the Times?

    So far, the results of these activist central banks have fallen short of expectations. “I’m not sure why we’re not getting more response,” said Donald L. Kohn, a former Federal Reserve vice chairman who is now at the Brookings Institution. “Maybe we’ve made some progress in identifying some of the causes, but it’s not fully satisfying why we have negative real interest rates everywhere in the industrial world and so little growth.”

    They can’t figure out why their low interest rates and monetary expansion policy isn’t working(!)? That’s because they are so incestuous interbred on the same stinky academic economics and charts and bullshit that they don’t realize that those policies only feed the upper 1%. As implemented now, printing money is just more trickle down. Printing money and giving it away to the bottom 90% would be an example of “trickle up”. And who on this Planet of Austerity Apes, with an ounce of authority, is standing up for that? No one.

    What was it R. Buckminster Fuller said? Oh yeah:

    “We are powerfully imprisoned in these Dark Ages simply by the terms in which we are conditioned to think.”

    The problem is the terms in which central bankers, politicians, academic economists, the media are conditioned to think. It is inherently positioned around “trickle down”. LIke the proverbial gold fish they don’t sense the milieu in which they are conditioned to think. Until we learn to think in terms of “trickle up” nothing is going to change. All “recoveries” will end up impoverishing the middle class even more and concentrating wealth at the top even more and everyone in power scratching their Harvard heads and wondering why…

    • Pamela D says:

      Hear, hear! The financial industry and the government are shuffling and supporting these “toxic asset CDOs and MBSs” of shaky mortgages, when if they’d simply go down to the grassroots level and re-write the terms of every up-to-date mortgage to market rates (including reducing the principle–because the banks that caused the bubble should share in the costs) and if they’d do the same for every behind-in-payment mortgage holder, then the whole economy would benefit, as homeowners would be able to stay in their homes and contribute to the economy, and the CDOs and MBSs would suddenly become whole again, benefiting the banks and financial institutions who own the securities.

      We have a word for “trickle up” economics: Growth.

      • Betsy says:

        Yeahbut we “can’t” do that, because it would benefit some minorities. And you know how they are lazy and stealing from the deserving rest of Americans.

    • DGM says:

      I might add that Molkte had the advantage of railways and the telegraph which made it possible to keep track of large, widely dispersed forces to an extent impossible for Napoleon. Poor Bonaparte had to actually be with his troops to know what they were doing.

    • James Wimberley says:

      Koreyel: “The tiny cadre worked because power wasn’t intensely concentrated at the top.” I may have this wrong, because Howard does not explain exactly how the Prussian General Staff worked, but my understanding is that Moltke’s power was concentrated and effective because it was limited in ambition. Orders were concise and limited to objectives and routes of movement and supply. The recipients were given latitude as to how to go about carrying them out, and to use their own initiative. The encirclement of Bazaine’s army at Metz resulted from the decision of a mere brigade commander, Major-General von der Goltz – a graduate of the General Staff – to attack the retreating French at Borny, against the wishes of the doddery army commander Steinmetz.

  3. Toby says:

    Wasn’t Peter Drucker writing about stuff like this years ago? It is years since I read him, but maybe he should come back into fashion. He passed away in 2005.

    Reading his Wikipedia bio, it is easy to see why he has become obscure:

    …. Drucker’s writings [were] marked by a focus on relationships among human beings, as opposed to the crunching of numbers. His books were filled with lessons on how organizations can bring out the best in people, and how workers can find a sense of community and dignity in a modern society organized around large institutions.

  4. Mike says:

    Man who worked and lived in the glass house of “socialism for the rich” government should not throw stones at academia.

    • Betsy says:

      That’s silly, even if you accept the first premise of your syllogism as true. Someone who saw problems on the inside of one org can’t make a prescription for how to fix them kin another org? Cam’annnn …

      • Mike says:

        Given the disturbing trends in the corporatization and privatization of education — and the failure of capitalism and its financial system to create a sustainable model without government handouts, all while preaching to the 99% that they need to be self-sustaining — I’d say my point is precisely on target.

        • Ebenezer Scrooge says:

          I don’t know if Volcker knows what he is talking about or not. But I do know that Mike’s argument is in the nature of an ad hominem. He is also conflating the failures of a set of institutions with the shortcomings of an individual who is at most loosely associated with the institutions whose failures he is alleging.

          Betsy is right–there is no valid connection between Mike’s premises and his conclusions.

  5. SamChevre says:

    And this is how you get the DMV problem

    As Keith Humphreys notes in that piece, the VA DMV he went to was horrible. The one I go to–in another large, fairly poor city in VA–is great. It’s the only DMV I’ve ever gone to where the security guards are actively helpful (they function as if their main role is to help people figure out what to do.)

    For me, this is where so much of government (and large organizations as well) needs better management. Why can’t the Arlington DMV work as well as the Richmond DMV?

    • Ebenezer Scrooge says:

      Much of your question is answered by James Q. Wilson’s great book: Bureaucracy. (It specifically discusses DMVs.) But it is concerned with a somewhat different question: how the (legislative) charter of an agency affects its performance. His book doesn’t account for the distinctions among branches of the same agency, all of which presumably have the same charter.

  6. Ralph Hitchens says:

    The acme of the elder Moltke’s General Staff system was, perhaps, the 9-page operations order that launched Operation Barbarossa, the largest military campaign in history. Praise of the German model should be tempered, however, by recalling that graduates of the War Academy & the General Staff were well-schooled practitioners of tactics and the operational art, but (by and large) absolute strangers to strategy. Their competence was wasted going down whatever primrose paths their deranged sovereign or fuehrer chose to send them.

    • James Wimberley says:

      Yes. You could also cite the Schlieffen Plan of WWI and Pearl Harbour. But it’s a trivial point against Volcker to repeat the truism that good execution doesn’t make up for bad policy. His argument is that the current hidden problem of US government is poor execution. I infer that looking at past organizations that worked – even in pursuit of bad or even evil policies – is useful. Trust, training, morale.

      Another interesting example is French railways. Postwar these have been heavily unionized, and the union old-line Communist. But the cheminot philosophy on running the system is the opposite of British Trotskyites like Arthur Scargill. The trains have to run on time; that’s what passengers are for.

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