Why Is The Government So Wasteful?

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0:00 Intro
01:06 Inefficiency
10:29 Lobbying & Interest Groups
17:07 The Military
21:09 Outro

Sources:

The Constitution Of The United States
Interest Groups In American Politics - Anthony Nownes
Program Budgeting - William West

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Links:

[realryanchapman]

Notes:

I didn't talk about fraud in this video. Here's the scoop:

We think we lose around 50-70 billion a year from fraud, most of it healthcare fraud. That's significant. But it's easier to measure losses from fraud than losses from inefficiency or from waste related to lobbying and interest groups. It's also the easiest to understand. If the government has a big pot of money and relatively loose security around that pot, people will take advantage and steal some (by claiming disabilities they don't actually have, for example). Increasing security helps solve the problem. I watched a podcast by The Office Of Inspector General that said - as of 2019 - we have 1600 people working for the OIG to 'root out fraud, waste and abuse' related to healthcare. That seems like a low number to me. I also suspect that if we made reforms that made our government more competent and brought more talented people into government, they'd be more motivated to stop fraud and would find more elegant ways to do it.

This video did not go into why governments are more wasteful than private organizations (no profit incentive, not spending their own money). My focus was more specific. I said: given that it is a government (which assumes we're not thinking about privatizing whatever the government is doing), these are aspects of that government, and things that are happening in that society that are causing inefficiency and waste. I considered this a subject that most people do not want to spend long watching (books about budgeting problems, for example, don't exactly fly off the shelves), so I had to made decisions about what to include and what not to include in order to keep the runtime down and reach a broader audience.

It's also worth saying that I didn't mean to imply that other governments around the world aren't wasteful, or that the US has the most wasteful government on the planet. When I said things like 'X makes the government uniquely wasteful, ' I meant that the government is highly wasteful in a manner that's distinct to the US. Not that the US is more wasteful than anywhere else. I try to make my phrasing as clear as possible and anticipate how I might be misinterpreted, but I'm still learning.

Another point that I wish I brought up: politicians are also incentivized to be friendly and accommodating towards lobbyists because they (in the last 50 years or so) tend to seek work in the lobbying field once they're out of office, which is called the 'revolving door.' If politicians, while in office, develop friendly relationships with lobbying firms, one would think that would facilitate finding work there upon retirement. Again, there could be a temptation to pass legislation suggested by the lobbying firms that isn't necessarily a good use of money or in the public interest, if it seems like it will give said politician a path to a lucrative career once they're out of office. It's something that's hard to prove, but is regardless widely seen, even within Washington, as a big issue.

One last thing: if you want to do your own research on what I talked about in the second half of this video, I'd suggest looking up 'rent-seeking' and 'the logic of collective action.'

- Ryan

[BenjaminMarshallScienceMan]

As a jet engine mechanic for the military, I see this every day, and it's so frustrating.

I accidentally break something while assembling an engine, say I bent the probe of a thermocouple, or scratched the sealing face of a metalic seal. I go to supply to pick up a new part and see that that thermocouple is priced at $1700, or that metal seal is $4000. Also mind you that the engines I'm working on are nearly 50 year old designs, we're not talking about cutting edge stuff. As an amatuer machinist, these are parts that I could replicate for dozens of dollars without the aid of billion dollar factories that military contractors possess.

At the same time, the military can't find the funds to replace lead drinking water pipes on base, or tear down barracks and dormitories riddled with black mold.

It really makes you think about how much further that $773B budget would go if we paid normal prices for things, or how much of that $773B we could save and spend on things like our education or healthcare, or infrastructure. I'm practically in a state desperation at the thought that our government will never accomplish anything noteworthy with these constraints. It has genuinely made me never want to work for the government again after I get out.

[davidwestwater]

Isn't it a wonderful world when someone can come out of nowhere on YouTube and just blow your mind with the clarity and scholarly integrity of their work

[MarkusBohunovsky]

Here is how this worked in practice, when I had a small software company, and we got requests for bids from government agencies: The rules and processes you had to comply with in order to submit your bid and to complete the project once you won the bid were so onerous and cumbersome that we quickly realized that we needed to bid 4-5 times(!) higher prices than we would have done for the same project for a private client. Keep in mind, I am not talking about rules to make the software safer or more useful or equitable, or anything like that. The rules were ONLY designed to allow the agency to prove that they were not overpaying for their software. We had to hire extra people, just to stay on top of the rules process, rather than just write the software. (In reality, this pretty much disqualified all small companies, as large consulting firms like IBM had entire departments on staff, just for these kinds of processes, and since they had no competition, they made it worth their time by hugely overcharging the government clients.)
So, the processes that were set up to ensure governments weren't being overcharged (or gave contracts to their buddies) resulted in the exact opposite; namely that they had to pay multiples of what any other client would pay.
Distrust is EXTREMELY expensive!

[gunterdapenguin]

That "American taxpayer's lobbying organization", lobbying for efficient spending that would benefit a broader group, actually sounds like an amazing idea and someone should definitely do it - I'd subscribe

[Fabrizio_Ruffo]

My father worked at a dry dock once. The part numbers for all the items they used on the ship had different military designations from their civilian counterparts. Some of them were because the military had special requirements that the civilian ones did not, such as a military bulldozer needing to fit a non-standard size battery used by all military vehicles, thus requiring a modified battery compartment and door, different from its civilian counterparts.

But most parts were 1:1 identical, and only had different part numbers because they were painted olive green from the factory, and/or for the sake of keeping everything filed away in the same catalog. A simple fluorescent light-bulb, identical in every way to a civilian light-bulb with the same rating, would cost more than double the price or sometimes more, for no other reason other than it being a military light-bulb.

[MrSpherical]

It’s a pleasure to watch due to the clarity of articulation in your content. And refreshing topics, that actually matter, that don't get media light. Thank you Ryan!

[PaulTraverse]

I grew up near the Argentia US Naval Station in Newfoundland, and when it was decommissioning I remember going with my father for a public liquidation sale of a lot of office furniture. I remember seeing an office chair (which we ended up buying and I used for years) that had a tag on it reading "Not Cost Effective To Repair". There was literally 1 screw loose on one of the arm rests. That always stuck with me.

[stephenjenkins]

Great work again Ryan - in such a polarised world it’s refreshing to see and hear complexity rationalised in such a balanced presentation.

[Zarith]

This might be my favorite video of yours! Thank you. One interesting thing I have heard is a huge waste of money in many government sectors ( primarily military) is how departments will have an allotted budget for a year, and if they perform well without needing to use the whole budget it will get slashed the following year(to be less wasteful).

In a tragedy of the commons scenario the department will of course only think about itself and frivolously spend up to the allotted budget just to ensure they get at least the same budget the following year.

[communist_kirby]

Good video. The key takeaway for me is that the "checks and balances" portion is creating some inefficiency itself and not reducing it, like it should. One would think that constant oversight by both other agencies and the public would reduce the likelihood that a hotel room costs $3k/night or a submarine costs 5-10x what it should, but it doesn't, specifically because of the rules and regulations imposed on the government itself. For example, the "use it or lose it" rule in budgeting is huge.

[MrLuigiFercotti]

When I worked for the USN I saw some serious money wasting. One example was seeing an aircraft flying around doing touch an goes. I asked a guy next to me if someone needed to get some training or seat time in. No he said, they are burning off fuel so their fuel allotment would not get cut next month. Let's not forget the added wear and tear on the engines and airframe which has major costs as well.
Another was when a coworker was telling me about an avionics upgrade that the Navy brass and operators did not even want, but was told by congress to do it anyway. We're talking about several million per aircraft. I'm sure the equipment supplier contributes to their congressman, heavily.
Then there is how my spouse had stint in the University of California system and how a project that might take 6 weeks in the private sector would take 6 months at US. Not because of any particular process requirement, but that there was no particular urgency to actually get anything done, and zero consequence for not doing so. In fact there were staff that seemed intent on slowing the process down. Maybe you would like to hear that there are multiple IT departments running incompatible software. Or simply that there were people who seemed to have no function other than occasionally go to meetings which resulted in nothing (see above) other than to fill up the day so they could collect a paycheck. In conclusion, we surmised it was nothing more than a welfare system for UC graduates (90+%) who probably would be making lattes for a living at nowhere near their government salary.

[edwinhuang]

So basically to oversimplify the whole video:
In an attempt to keep our democracy democratic, we created an inefficient government that creates a bunch of waste.
There are 2 methods the a organization can use to approach a problem:
Method 1: Let the employees use their brains to solve our problems. We may put guidelines in to try to help, but those guidelines are just recommendations. We may also put some rules that the employee can't break, but the employee should still have a lot of control over how they solve this problem. (Ex: Average small and/or midsized restaurant)
Method 2: We will put rules on how to do this thing every step of the way. They can't deviate away from the rules, even if it is more efficient to just deviate from it sometimes. (Ex: McDonalds)
Sometimes it's more efficient to do method 1, sometimes it's more efficient to do method 2.
The majority(AKA the bigger group) doesn't feel like lobbying not despite its large numbers, but due to its large numbers that everyone believes everyone else will go ahead and lobby, and the opposite is true for smaller groups. Due to this the people making the decisions may only be exposed to arguments in favor of the smaller group(Sometimes at the expense of the bigger group), which isn't helped by the fact that the smaller group may already have arguments and counterarguments prepared to support things that favor the smaller group.
Our military is a whole other mess to explain in terms of wastefulness in this video due to our military maintaining state-of-the-art tech. To best explain it, it's by a case-to-case basis.
In an attempt to reduce wastefulness, we support actions that will help increase wastefulness.

Edit: And I just got to the last part of the video, which shows a summary of the video.

[gregoryhunter]

Another banger video thanks for putting out such quality stuff. I feel spoiled to live in a time when this kind of content is so readily available

[h.ar.]

This is perhaps one of the best channels I’ve come across recently. Not only am I going to binge-watch all your videos, but also I’ll be tuning in to your future content!

[AngelaPeckMLD]

Wow, that was so helpful to learn. And so well researched, thought out, and broken down. Thank you.

[nyariimani]

Super Brilliant! Thank you for this. Once again, really insightful and interesting.

[aaronstypes]

I've seen a number of your videos and I wanted to thank you for doing such a great job--specifically, for discussing issues in a factual way without perceivable bias, which is a huge virtue. The very fact that I cannot tell where you yourself stand on issues and what your opinions are, is a very huge (and difficult) accomplishment. Blatant bias is what everyone else is doing, so thank you.

[ardweaden]

Underrated video. It-s not often a youtube channel would provide you with an insight that was never obvious to you, even though it's rather simple and clear in its reasoning. Yet you seem to be able to do it with almost every video.
It would be interesting to compare some "efficient" governments to the US. Singapore is probably the best example.

[GetOzProtocol]

I love how nonpartisan this content is. You’re crushing it sir.