November 28, 2001
From the desk of Mindles H. Dreck:Not the grinch
It occurred to me that the prior post makes me look a bit more grinchy than intended. This is no doubt a side effect of budgeting and compensation planning, which, this year more than ever, leaves one with a grumpy kind of "now how did he do that loaves and fishes thing?" feeling. So allow me to clarify:
Like Peter Drucker, I can imagine a world where the non-profit sector is growing rapidly and is in the vanguard of productivity in the world economy. My point is that before we can enter that world of throwing good money after good, the incentive structure of governmental and quasi-governmental agencies needs to be addressed.
A free private sector has its incentives clearly aligned with maximizing profit. Profits are the lifeblood of economic growth. Economic growth, new to the world in the last 150 years, is what has created the unfathomable increases in life quality for the world. Read the links in one of my prior posts on this, particularly this article. The trouble with the private sector is that it is practically amoral. Which is why we have laws that prevent destructive behavior in the pursuit of profit. Companies that are unsuccessful in producing profit (and thus promoting the general welfare) shrink and die, which improves the productivity of our growth engine over the long run - this is what Schumpeter called "creative destruction", or what I called "humility" below.
Like the private sector, the public and non-profit sectors are dogged in the pursuit of their goals. Like the private sector, they are bureaucracies which, all else being equal, seek to be larger. Charities, if deemed unsuccessful, will dry up. Unsuccesful public agencies and NGOs will not. Unfortunately, there is no profit governor to perform the necessary creative destruction. In the perverse logic of government, a decrease in growth is considered a cut. The mere acknowledgement of a problem (as opposed to a solution) justifies permanent funding.
The agencies I question in the post below have, at least on occasion, acted as if they a) value distributing aid themselves over having it distributed at all, b) value self-promoting sensationalism over general welfare and c) value their own models and systems over general welfare improvements. I argue that these actions indicate the incentive problems of the government and NGO sectors. Which are worth examining.
Posted by Mindles H. Dreck at November 28, 2001 05:23 AM | Technorati inbound links