Lean Government

As I began to draft my first book (The Way Forward: Lean Leadership and Systems Thinking for Large and Small Businesses – you can purchase a signed copy here, or you can purchase a copy on Amazon, Barnes and Noble, or anywhere else books are sold), I posted the first draft of the introduction to my blog, inviting comments, criticism, and discussion. I found it was very helpful, not only in improving the introduction (which actually became the first chapter – I wrote a different introduction), but also in conceptualizing what I wanted to do with the rest of the book.

With that in mind, I have decided to share the first draft of the introduction for what will be my second book, which has the working title of The Way Forward: Lean Government.

What follows is that draft introduction. Please feel free to leave comments, criticisms, thoughts – whatever…

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When I first started outlining this book, I realized I had a number of assumptions about what would constitute ‘lean government,’ and I wanted to start without any assumptions at all.  As such, I decided to start not with a statement, but with a series of questions designed to take underlying assumptions out of the equation.

The first question I wanted to ask was ‘what is government?’

The dictionary definition of ‘government’ is, according to Google, “the governing body of a nation, state, or community; the system by which a nation, state or community is governed; the action or manner of controlling or regulating a nation, organization, or people.”

Why did I use Google?  I have a very thick copy of the American Heritage Dictionary on my desk, with a publication date of 1982.  I use it frequently to compare current definitions with the definitions of words from my youth.  I’ll likely use that dictionary at some point in this book, but for the purpose of this chapter, I wanted to use definitions that were as uncontentious as possible, so I started with Google.  We all have Google at our fingertips.  Not all of us have the 1982 edition of the American Heritage Dictionary.

My wife and I also have an old copy of Webster’s Dictionary in our library, and I’ve spent some time comparing controversial definitions between American Heritage and Websters.  It’s amazing how consistent dictionaries used to be with words, and how controversial definitions can be today.

Words are important to me.  I try to be precise with my language, and particularly if I am going to use a word that has a negative connotation.  A book with ‘Lean Government’ in the title is apt to be controversial, but I do not want the definitions of the words I am using to be controversial, so I started with Google in the hope of finding definitions everyone reading this book could agree with.

I’ve heard a number of people say that government is that through which people interact, but people can interact freely without government, so clearly that is not the case.  Without government, the strong can also force the weak to interact against their will, so it would seem that the essence of government is in accordance with the last part of the dictionary definition – it is that which regulates the interactions of people.

There are those who say that we do not need government, but I do not believe this to be the case.  In the absence of government, there is nothing protecting people from each other, and as soon as someone gathers enough strength to enforce their will upon others, that person becomes government – and a very bad form of government at that.

When we have children, they need to grow up before they can survive on their own, putting their parents in a position of governance, and it is for this reason that some of the oldest forms of government revolve around the family.  Clans competed against each other for access and control over natural resources, and to this day, governments compete in the same way.  Government then has a role in leading us in competition against other governments, and in protecting our access to the things we need to survive.

Boiling all of this down, I think we can settle on the following:  ‘Government’ is that which regulates the interactions of people, through the use and/or threat of force.

Another very basic question is that of, ‘what is an economy?’

As with the word ‘government,’ we can start with a definition, and Google defines the word ‘economy’ as “the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services; careful management of available resources.”

Note that the definition of ‘economy’ has nothing to do with money.  Money is nothing but a measuring stick we use to gauge wealth.  Like a battery, money can store wealth, making the transfer of wealth more efficient, but money itself is not wealth, and as such, when the government prints money it creates nothing.

An economy is the totality of everything people do that causes either the production, transference, or consumption of goods and services.

Pretty much everything we do causes either production, transference, or consumption of goods and services.  Even when we sleep, we cause wear on a pillow, a set of sheets, and a mattress.  Eventually we will have to replace those things, so even when we sleep, we are consuming products.

An economy is the totality of everything we do.  One might say that the people are the economy, and as such, when people talk about government controlling the economy, what they really mean, invariably, is that the government should control the people.

Once again, I think we have broken the word down to it’s true essence.  The ‘economy’ is simply put all of the people, and everything they do.

When we start to use the definitions of the words ‘government’ and ‘economy’ together, we start to get some sense of purpose, but note that an economy has no singular purpose.  

Each person in an economy has a purpose with each transaction they make, and the economy is nothing more than the conglomerate of all of those transactions.  As such, though the economy is comprised of purposes, it has no ‘purpose’ of its own.

The economy not only lacks purpose, but it also lacks morality.  People have purposes, and in a free society, each of us gets to decide what purposes we will pursue.  Similarly, people have morals, and any economic system will reflect the morality of the people living within it.

The basic premise behind socialism is that the people are not moral enough to live under free market economies, and as such, under free markets a small number of people will end up with all the wealth.  There is some truth to this: in a free market, production tends to follow a pareto distribution, in which the square root of the participants produce half the output.  Income tends to follow production, and as such, income tends to also follow a pareto distribution as well, causing income inequality.  I would not call such a system ‘immoral,’ but there are those who do.

The most fundamental difference between a free market system, and a socialist system, is that in a free market, someone can only increase their income by producing more of what society demands.  In other words, income follows value.  Under socialism, someone can only increase their income by persuading government to give them more relative to others, independently of what they may or may not produce.  In other words, there is no correlation between income and value.  With no correlation between what someone produces and what they earn, people tend band together with others into identity groups, with the goal of producing less while earning more.  Free market economies, then, will tend to grow value, whereas socialism will tend to destroy it.

Since an economy is nothing more than the sum of everything everyone within a society does, we can separate all economic actions into three types: voluntary, involuntary, and coerced.  Government, then, can have one of three purposes in relation to the economy, with everything it does: 1) to ensure that interactions are voluntary, or 2) to ensure that involuntary interactions occur, or 3) to modify, through coercion, the interactions people voluntarily make (such as with tax breaks).

Let’s look at the definition of another word: exploitation.

Google defines ‘exploitation’ as “the action or fact of treating someone unfairly in order to benefit from their work; the action of making use of and benefitting from resources.”

There is no question that in a free market, businesses exploit labor in the sense that they make use of and benefit from labor.  Such exploitation follows the second definition of the word, and I would hope we would all agree that there is nothing wrong with making use of labor, as long as labor is used in a manner that is fair.  We could say, then, that government has a role in ensuring that the use of resources, and particularly labor, is ‘fair’.

What is ‘fair’?

Google will not give me a definition of the word ‘fair’.  Apparently some words are considered too simple to need to be defined, but I want to avoid assumptions, so I will use the American Heritage, which says (I’m only listing the relevant definitions – ‘a sky free of clouds’ is not relevant), “free of favoritism or bias; impartial; just to all parties; equitable; consistent with rules, logic, or ethics.”

One way to look at the word ‘fair’ is how we use it in relation to games.  We say a game is ‘fair’ when we have an agreed upon set of rules that everyone plays within.  Life, of course, is not a game, so the word ‘fair’ in relation to our everyday lives is a bit more complex, but ‘fair’ would still relate to a set of known, agreed upon rules that are logical and ethical, applied impartially, without favoritism or bias.

It’s the word ‘ethical’ that gets us into trouble.  What is ‘ethical,’ and who gets to answer that question?  

I believe we have a two party system largely because we have two competing ways of answering the question of ‘what is ethical?’, particularly in relation to wealth.  Should we focus on ‘fair’ in terms of how much wealth people have, or in terms of how they got their wealth?

Those who focus on ‘fair’ in terms of how much wealth people have, are focusing on equity, or equality of outcome.  Those who focus on ‘fair’ in terms of how people get wealth are generally happy to see income inequality, provided the inequality is caused by processes deemed to be ‘fair’ – those who produce the most earn the most, for example.

Some people are OK seeing some level of income inequality as long as the level of income inequality is not ‘too high,’ which leads to a further possible question: “what is ‘too high’?”.

It is difficult to define subjective terms.  The most objective way to do so is to leave those definitions up to each individual, and doing so requires a system in which each individual is free to make such decisions on their own.

We could vote on how to define subjective terms, but doing so is not very pragmatic, as the population tends to go back and forth between political parties, and changing the rules every four or eight years creates problems.  The economy does best with consistent rules…  Voting to define subjective terms is also divisive, as we saw in the elections of 2016 and 2020.

As government grows, it necessarily has to define more and more subjective terms in the running of a larger and larger portion of the economy.  A free people will tend to believe they have the right to define subjective terms for themselves, and will balk at the notion of having government defining those terms for them.  When elections become overly divisive, that is a clear indication that government is too big.

Our government is too big.

There are those who believe that totalitarian democracies (such as Democratic Socialism) are ‘fair’, but understand that all a totalitarian democracy does is to ensure that people pursue their self-interests through political mechanisms, rather than through economic mechanisms.

Note that I just combined two words that are not generally used together – ‘totalitarian democracy’.  Many people do not believe a democracy can be totalitarian, but I am separating the power government employs from how that power is controlled.  To the degree that Democratic Socialists want the government to have total control over society, this is a totalitarian system, in spite of the fact that it is one that is supposed to be run through democratic means.

The more power a government has, the more important control over government becomes.  As the importance of government control grows, the levels of corruption employed to get, or to maintain power over government tends to follow.  As such, the more power a government has, the more likely it is to use that power in corrupt ways, and the less likely it is to be run by democratic means.  Joseph Stalin understood this when he said, “It is not the vote that counts, but who counts the vote.”  Because of this, the ‘Democratic’ part of ‘Democratic Socialism’ tends to be a sham.  There also seems to be a correlation between the cultural diversity within a society, and the level of government it can employ without becoming overly corrupt.  The more diverse a society, the more corrupt government tends to become, and the less ‘Democratic’ control over government tends to be.

Totalitarian systems tend to be corrupt, whether they are ‘democratic’ or not.  Corruption is incredibly wasteful, making all forms of totalitarianism the opposite of lean.  This book, by necessity, rejects totalitarianism in all forms.

Let’s talk about this concept of some people earning ‘too much’.

When Steve Jobs invented the iPhone, suddenly people could put a powerful computer in their pocket, bundled along with a music player, a camera, a phone, a navigation system, and a bunch of other things.  Buying a music player, a camera, a phone, a navigation system, and a portable computer, all separately, would have been far more expensive than just buying an iPhone, so everyone who benefitted from the creation of the iPhone (and the other smart phones that followed) has had their lives improved by Steve Jobs.

Steve Jobs also saw his life improve.  Steve Jobs made a lot of money off the iPhone, and yet if we take the totality of wealth and improvement smart phones have created, Steve Jobs kept just a tiny fraction of it.

Steve Jobs pursued his self-interest in the economic sphere, and in doing so, he created wealth.  All of society benefitted from the wealth Steve Jobs created.

We are surrounded by things people create, out of economic self-interest, to improve their own lives.  Electricity, automobiles, the theory of relativity, pasteurization, penicillin – all of these things were created and/or improved by people looking to improve their own economic self-interest.

I have no problem with someone like Steve Jobs earning billions of dollars.  He earned that by creating value for others.

Compare that to political self-interest.  If a voting block asks that the rich be taxed at higher rates, and that the money raised be given to the poor, government may then take from one group (the rich) and may give that money to another group (the poor), but no wealth has been created.  This is at best a zero-sum game, transferring wealth from those who created it, to those who did not.  In practice, very little of this money actually goes to the poor.  As Thomas Sowell has shown, we spend enough money on programs ‘for the poor,’ when we combine federal, state, and local efforts, that if we simply took that money and gave it to the poor, it would be enough to move every household in the lowest 20% of income earning households, into the top 20% of income earning households. We spend enough on programs ‘for the poor’ to literally make the poor rich, and yet we still have the poor.  Say what you will about the ethics of redistribution; the efficiency of such programs have been horrendous.

That’s not to say we should not help the poor, but in this book I am going to make the argument that we have to help the poor in ways that actually help the poor, and I am going to define ‘helping the poor’ as doing things that, to the degree possible, make them not poor.

We need to dispel the notion that poverty is something that needs to be explained.  Mankind started out in poverty, with hunter-gathering societies who were quite literally a bad storm from death.  Thomas Malthus noted as recently as the early 1800’s that for all of human existence (up until that time), populations had always grown faster than food supplies, leaving 90% of all human populations, in all nations on Earth, in a perpetual state of slow starvation.  During Malthus’ time, the typical British farm worker lived in conditions not materially different from that of a Roman slave.  And Britain was the wealthiest nation on Earth at the time, and by a wide margin.

We are all born cold, naked, and hungry.  That is our natural state.  As such, let us dispense with questions about what causes poverty, and instead ask “what causes wealth?”

People do not starve in the United States.  There are people who die of things like anorexia, but that is caused by a desire not to eat, and not by a lack of access to food.  Americans may talk about ‘food security,’ but we have replaced starvation, as a national health crisis, with obesity.  Our lives are immeasurably better than the lives of even the rich of Thomas Malthus’ time, and that is true in America for the rich and poor alike.  What we today call ‘poverty,’ in the United States, generally involves lifestyles that 100 years ago would have been called ‘rich,’ and that would still be called ‘rich’ throughout most of the world today.

I’ll look at one kind of poverty in this book, in particular:  homelessness.  Homelessness is not really a poverty issue, so much as a mental health and addiction issue.  Suffice it to say that homelessness programs that don’t reduce levels of homelessness will be rejected.  Sorry, California…

Socialists say we should work ‘for the betterment of society’ rather than for our personal self-interest, and a number of societies tried to do just that throughout the 20th Century.  At least 100 million people were killed by the governments of such societies.  It turns out that working for our own, personal (and familial) ‘self-interest’ is a natural part of the human condition.

How do we define what is ‘for the betterment of society’ anyway?

Google defines the word ‘society’ as “the aggregate of people living together in a more or less ordered community.”

A society is not a thing, but an aggregate of things – literally an aggregate of people.  An economy is not a thing either, but an aggregate of things – literally the aggregate of everything all of the people do.

If we allowed each person in society to define ‘betterment’ for themselves, and to pursue their own definition of that word however they wish, provided they do so in conformity with established rules, society would, in the aggregate, be better off.  I mean, seriously – if everyone IN society is allowed to better their own lives, as they see fit, by definition society is better off.  How better to define ‘for the betterment of society’ than to call it ‘that which makes society better off’?

We might deal with ethics the same way, allowing each individual to define what is ‘ethical’ for themselves, as long as they live their lives in a way that acting on their own ethics does not harm other people.

I think we can wrap all of these definitions together, and can all agree that ‘lean’ government is that which provides and enforces an economic framework within which people pursue their own, individual interests.  I would further hope we can all agree that the leanness of government can be determined by how well the people are able to pursue their own, individual interests.

The next question we should be asking is “what should the governing body of a nation, state, or community do?”, and that, really, is the question this book will answer.  There are several foundational principles I will use in answering that question, the most contentious of which I discussed above.  These principles are:

  1. The primary purpose of government is to protect people from encroachments upon their individual liberties.
  2. The closer government is to the people, the more responsive it will be.  Governance should always be applied as locally as possible.
  3. Government should be operated by some democratic process (such as within a Democratic Republic), but it’s role at each level should be specifically defined.
  4. The people living in a specific area are the best qualified to decide how that area should be governed.

I am also going to define governance at a number of different possible levels:

  1. The household.  Each family unit runs its own households based on its own rules.
  2. The neighborhood.  
  3. The city, town, or village.
  4. The state.
  5. The nation.
  6. The world.

Based on the premise that governance is more responsive when it is more local, we would want government to become ever smaller as it goes up from the individual to the world.  A world government, for example, if such a thing were to exist, would have but one purpose – to prevent war between nations.

Nations exist to do those things that cannot be done locally, such as national defense, the negotiation of treaties with other nation-states, and the regulation of conflicts within the various states.

The state is the most important unit of government, as it is both large enough to organize large infrastructure projects (like building roads), and small enough to be responsive.

Local government handles all local matters – zoning laws, cultural issues, etc..

We don’t generally think of neighborhoods as government units, but housing associations make rules to protect the property values of the houses within the neighborhood.

And then finally, we get to the individual household, and the individual family.  People should generally be free to live their lives, however they see fit, provided they allow others to do the same.

Another important factor is the ability for people to vote with their feet.  When children grow up, at some point they no longer want to live under their parents’ household, and they move out.  That’s voting with their feet.  If a family decides it does not like the local schools, and moves to a location that has better schools, that’s moving with their feet.  If the taxes and living conditions in California are such that large numbers of people want to move to Texas, that’s voting with their feet.

Those who want totalitarian systems understand the concept of ‘voting with your feet,’ which is why they fight to have everything done at the highest levels of government possible.  Totalitarians don’t want people to be able to move out from under government mandates they do not like, and as a consequence, they want governance applied at as high of a level as possible – where government is the least responsive to the people.

Totalitarians don’t want the people to be able to do what the people want to do.  What totalitarians want is control, and though people almost universally want to be free in their own lives, I am constantly amazed by the willingness of people to allow others to be controlled.  All forms of totalitarianism violate the concepts of lean, and will be rejected in this book.

This book is not just about government, but about lean government.  As such, I will be looking at each level of government, and discussing its proper role, in terms of maximizing value while minimizing waste.  

This book will read as a kind of free market manifesto…

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