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Archive for the ‘Government Inefficiency’ Category

I try not to pay much attention to the staffing decisions of President Trump’s “Boston-phone-book presidency.” Yes, I realize those choices are important, but my focus is policy.

As such, I don’t have any strong opinions on the ouster of David Shulkin, the now-former Secretary at the Department of Veterans Affairs. But I definitely have something to say about whether America’s military vets should be consigned to an inefficient (at best) and costly form of government-run healthcare.

We should never forget that the VA put vets on secret – and sometimes fatal – waiting lists. And then the bureaucrats awarded themselves big bonuses. That is horribly disgusting.

By the way, the VA scandals haven’t stopped.

Here are some excerpts from a report in USA Today.

A USA TODAY investigation found the VA — the nation’s largest employer of health care workers — has for years concealed mistakes and misdeeds by staff members entrusted with the care of veterans. …In some cases, agency managers do not report troubled practitioners to the National Practitioner Data Bank, making it easier for them to keep working with patients elsewhere. The agency also failed to ensure VA hospitals reported disciplined providers to state licensing boards. In other cases, veterans’ hospitals signed secret settlement deals with dozens of doctors, nurses and health care workers that included promises to conceal serious mistakes — from inappropriate relationships and breakdowns in supervision to dangerous medical errors – even after forcing them out of the VA. …The VA has been under fire in recent years for serious problems, including revelations of life-threatening delays in treating veterans in 2014 and efforts to cover up shortfalls by falsifying records.

So what’s the answer? How can we fix a dysfunctional bureaucracy?

The honest answer is that we can’t. Inefficiency, sloth, and failure are inherent parts of government (yes, the free market also is far from perfect, but at least there’s a profit-and-loss incentive that rewards good firms and punishes bad ones).

So it’s time to get the private sector involved. Though I noted in the TV discussion that not all privatization is created equal. If the government simply contracts with selected healthcare providers, that could be a recipe for cronyism since politicians would try to help their campaign contributors.

I much prefer the advance-funding model developed by Chris Preble and Michael Cannon, which would give active-duty service members added money, up front, to purchase a benefits package to cover future costs related to their military service.

For what it’s worth, former VA Secretary Shulkin, in a recent column for the New York Times, was very critical of privatization. But it isn’t clear whether he was referring to the contracted-out version or the advance-funding version.

I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans. …individuals, who seek to privatize veteran health care as an alternative to government-run V.A. care, unfortunately fail to engage in realistic plans regarding who will care for the more than 9 million veterans who rely on the department for life-sustaining care. …privatization leading to the dismantling of the department’s extensive health care system is a terrible idea.

But even if you accept that he’s criticizing the less-preferred from or privatization, he definitely likes throwing rocks in a giant glass house considering the VA received ever-larger amounts of money and generated a horrible track record.

As I said at the end of my interview, a private healthcare provider might get a contract via cronyism, but it still would be a better option for vets since that company presumably wouldn’t let them die on secret waiting lists.

And since the advance-funding option obviously would be for future veterans, we do need a better market-based approach for current veterans.

I’ll close by sharing a Politico article on the infamous boondoggle that got Shulkin in trouble.

Veterans Affairs Secretary David Shulkin’s chief of staff altered an email to create a pretext for taxpayers to pay for Shulkin’s wife to accompany him on a 10-day trip to Europe last summer, the agency’s inspector general reported… The report by Inspector General Michael Missal also claims that Shulkin improperly accepted a gift of Wimbledon tickets during the trip, and a VA employee’s time was misused planning tourist activities for Shulkin and his entourage. …the VA paid for Shulkin’s wife’s airfare, which cost more than $4,300.

This obviously does not reflect well on Shulkin. But the real scandal almost certainly is that the trip to Europe occurred. We don’t know how many bureaucrats participated and what supposedly was going to be achieved by this junked, but I’m guessing the total tab was enormous and the total value was zero. The fact that taxpayers also were saddled with the cost of Shulkin’s wife’s trip merely added insult to injury.

P.S. Since money isn’t unlimited, I think the focus should be on helping veterans injured in battle rather than providing lavish benefits to anyone and everyone who ever wore a uniform.

P.P.S. I mentioned in the interview that the VA is run for the benefit of its bureaucrats. If you doubt me, check out this double-dipping bureaucrat with the triple-dipping scam.

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The story of the private sector is that competition generates ever-more output in ways that bring ever-higher living standards to ever-greater numbers of people.

By contrast, the story of the government is inefficiency and waste as interest groups figure out how to grab ever-larger amounts of unmerited goodies, often while doing less and less.

In some cases, where government is doing bad things (stealing property, subsidizing big corporations, fleecing poor people, etc), I actually favor inefficiency.

Sadly, the government seems to be most inefficient in areas where we all hope for good results. Education is a powerful (and sad) example.

A story in the LA Weekly is a perfect illustration of this phenomenon.

A little more than a decade ago, something unexpected happened. The district’s enrollment, which peaked in 2004 at just under 750,000, began to drop. …Today, LAUSD’s enrollment is around 514,000, a number that the district estimates will fall below half a million by 2018.

Anyone want to guess whether this means less spending?

Of course not.

L.A. Unified’s costs have not gone down. They’ve gone up. This year’s $7.59 billion budget is half a billion dollars more than last year’s. …Today, the district has more than 60,000 employees, fewer than half of whom are teachers. …LAUSD’s administrative staff had grown 22 percent over the previous five years. Over that same period of time, the number of teachers had dropped by 9 percent.

If these trends continue, maybe we’ll get an example of “peak bureaucracy,” with a giant workforce that does absolutely nothing!

Based on his famous chart, the late Andrew Coulson probably wouldn’t be too surprised by that outcome.

There’s also lots of waste and inefficiency when Uncle Sam gets involved. With great fanfare, President Obama spent buckets of money to supposedly boost government schools. The results were predictably bad.

It was such a failure than even a story in the Washington Post admitted the money was wasted (in other words, there wasn’t enough lipstick to make the pig look attractive).

One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis. Test scores, graduation rates and college enrollment were no different in schools that received money through the School Improvement Grants program — the largest federal investment ever targeted to failing schools — than in schools that did not. …The School Improvement Grants program…received an enormous boost under Obama. The administration funneled $7 billion into the program between 2010 and 2015… Arne Duncan, Obama’s education secretary from 2009 to 2016, said his aim was to turn around 1,000 schools every year for five years. ..The school turnaround effort, he told The Washington Post days before he left office in 2016, was arguably the administration’s “biggest bet.”

It was a “bet,” but he used our money. And he lost. Or, to be more accurate, taxpayers lost. And children lost.

Some education experts say that the administration closed its eyes to mounting evidence about the program’s problems in its own interim evaluations, which were released in the years after the first big infusion of cash. …Smarick said he had never seen such a huge investment produce zero results. …Results from the School Improvement Grants have shored up previous research showing that pouring money into dysfunctional schools and systems does not work.

Indeed, I’ve seen this movie before. Many times. Bush’s no-bureaucrat-left-behind initiative flopped. Obama’s latest initiative flopped. Common Core also failed. Various schemes at the state level to dump more money into government schools also lead to failure. Local initiative to spend more don’t lead to good results, either.

Gee, it’s almost as if a social scientist (or anybody with a greater-than-room-temperature IQ) could draw a logical conclusion from these repeated failures.

And, to be fair, some folks on the left have begun to wake up. Consider this recent study by Jonathan Rothwell, published by Brookings, which has some very sobering findings.

…the productivity of the education sector depends on the relationship between how much it generates in value—learning, in this case—relative to its costs. Unfortunately, productivity is way down. …This weak performance is even more disturbing given that the U.S. spends more on education, on a per student basis, than almost any other country. So what’s going wrong? …In primary and secondary public education, where price increases have been less dramatic, there has been a decline in bureaucratic efficiency. The number of students for every district-level administrator fell from 519 in 1980 to 365 in 2012. Principals and assistant principals managed 382 students in 1980 but only 294 in 2012.

The conclusion is stark.

Declining education productivity disproportionately harms the poor. …unlike their affluent peers, low-income parents lack the resources to overcome weak quality by home-schooling their children or hiring private tutors. Over the last 30 to 40 years, the United States has invested heavily in education, with little to show for it. The result is a society with more inequality and less economic growth; a high price.

Incidentally, even private money is largely wasted when it goes into government schools. Facebook’s founder famously donated $100 million to Newark’s schools back in 2010.

So how did that work out? As a Washington Post columnist explained, the funds that went to government schools was basically money down the toilet.

It is a story of the earnest young billionaire whose conviction that the key to fixing schools is paying the best teachers well collided with the reality of seniority protections not only written into teacher contracts but also embedded in state law.

But there is a bit of good news. Some of the money helped enable charter schools.

there is a more optimistic way to interpret the Newark experience, much of which has to do with the success of the city’s fast-growing charter schools. …The reasons are obvious. Unencumbered by bureaucracy and legacy labor costs, charters can devote far more resources to students, providing the kind of wraparound services that students like Beyah need. An analysis by Advocates for Children of New Jersey noted “a substantial and persistent achievement gap” between students at charter and traditional public schools: “For example, while 71 percent of charter school students in Newark passed third-grade language arts tests in 2013-14 — higher than the state average of 66 percent — only 41 percent of students in Newark traditional public schools passed those tests.”

The Wall Street Journal also opined about this topic.

‘What happened with the $100 million that Newark’s schools got from Facebook’s Mark Zuckerberg?” asks a recent headline. “Not much” is the short answer. …The Facebook founder negotiated his gift with New Jersey Gov. Chris Christie and then-Mayor Cory Booker in 2010, and it flowed into Newark’s public-school system shortly thereafter. The bulk of the funds supported consultants and the salaries and pensions of teachers and administrators, so the donation only reinforced the bureaucratic and political ills that have long plagued public education in the Garden State.

The editorial explains that this isn’t the first time a wealthy philanthropist squandered money on government schools.

In 1993, philanthropist Walter Annenberg sought to improve education by awarding $500 million to America’s public schools. …But the $1.1 billion in spending that resulted, thanks to matching grants, accomplished little. An assessment by the Consortium on Chicago School Research on the schools that received funds reached a dismal conclusion: “Findings from large-scale survey analyses, longitudinal field research, and student achievement test score analyses reveal that . . . there is little evidence of an overall Annenberg school improvement effect.” The report did not explain why the campaign failed, but the reason is fairly obvious: The funds wound up in the hands of the unions, administrators and political figures who created the problems in the first place.

Fortunately, not all rich people believe in wasting money. Some of them actually want to help kids succeed.

In 1998, John Walton and Ted Forstmann each gave $50 million to fund scholarships for low-income children to attend private schools. More than 140,000 students have attended schools with graduation and college matriculation rates that exceed 90% instead of going to the failing schools in their neighborhoods. Earlier this summer, hedge-fund manager John Paulson pledged $8.5 million to the Success Academy charter-school network, where 93% of students are proficient in math, compared with 35% of their traditional public-school peers. His gift will allow more such schools to open. The financier Stephen Schwarzman and his wife, Christine, a former attorney, donated $40 million to help endow the Inner-City Scholarship Fund, which provides financial aid to needy children attending Catholic schools in the Archdiocese of New York.

Which is a good segue into the real lesson for today about the type of reforms that actually could boost education.

I’ve shared in the past very strong evidence about how school choice delivers better education results.

Which is what everyone should expect since competition is superior to monopoly.

Well, as explained in another Wall street Journal editorial, it also generates superior results at lower cost. Especially when you factor in the long-run benefits.

…a study shows that Milwaukee’s landmark voucher program will save taxpayers hundreds of millions of dollars. …the Wisconsin Institute for Law and Liberty, a nonprofit that advocates for limited government and education reform, decided to look at the relative cost and benefits of choice schools. And, what do you know, it found that students participating in Milwaukee’s voucher program will provide the city, state and students nearly $500 million in economic benefits through 2035 thanks to higher graduation and lower crime rates. …More education translates into higher incomes, more tax revenue and a lower likelihood of reliance on government welfare or other payments. Meanwhile, greater economic opportunity also prevents young adults from turning to crime.

Wow. It’s not just that it costs less to educate children in private schools. There’s also a big long-run payoff from having more productive (and law-abiding) citizens.

That’s a real multiplier effect, unlike the nonsense we get from Keynesian stimulus schemes.

P.S. School choice doesn’t automatically mean every child will be an educational success, but evidence from SwedenChile, and the Netherlands shows good results after breaking up state-run education monopolies.

And there’s growing evidence that it also works in the limited cases where it exists in the United States.

P.P.S. Or we can just stick with the status quo, which involves spending more money, per student, than any other nation while getting dismal results.

P.P.P.S. This is a depressing post, so let’s close with a bit of humor showing the evolution of math lessons in government schools.

P.P.P.P.S. If you want some unintentional humor, the New York Times thinks that education spending has been reduced.

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