"The Firemen Get Fired First" (Why Non-Market Forces Tend to Suck)
"All my life I think I've been in the top 1% of my age cohort in understanding the power of incentives, and all my life I've underestimated them"
⁃ Charlie Munger
I stumbled across a useful idea for this moment in history. It helped me understand the clamor in the media and see past the headlines to the incentives driving things.
(This isn't intended to be a political piece -- simply one observation of how the world works that is currently relevant.)
When a company has fewer resources, it will cut off its LEAST important expenses and continue to provide its MOST valued services. (Least important expenses might be something optional like a party budget, the least productive employee, or the most underutilized tools.)
Good, great. That's how things get more efficient.
But when a government agency has fewer resources (or is asked if they could function with fewer resources), often the OPPOSITE thing happens.
When threatened with a budget cut, a government agency will cut its most valued or most visible services.
While tragic, this is also frequently hilarious.
Here are a few stories:
When the National Park Service was threatened with budget cuts under George Hartzog, they did not seek efficiencies but instead shut down access to the Washington Monument. After complaints from tourists about the shutdown, the budget was restored.
(In honor of this story, this tendency is often called Washington Monument Syndrome.)
When the (heavily subsidized) Amtrak allocation was under discussion, their move was to stop running the routes the members of Congress used — rather than the least-used or most unprofitable routes.
It is worth considering what the incentives look like from a government agency's point of view. How do they ensure they survive? How do they ensure they grow? How do they protect their interests? When do those leaders protect their team instead of serving the interests of their nation.
You can see some of the worst outcomes in these stories — not to improve, cut waste, or increase efficiency… the incentive is to display their value by removing their MOST valuable services. This is the organizational equivalent of a toddler's tantrum.
A more local example is “Oh, you want us to lower taxes? Ok fine, we’ll fire the firefighters. Still want us to lower taxes?”
That’s why I called this post “The Firemen Get Fired First.” When you see or hear this behavior, it is vitally important for clear-thinking people to reject the frame being presented and push back against any organization or person that implies there is no opportunity to improve their efficiency.
A friend of a friend of a friend has a friend who works at [Redacted Govt Agency] and does 1 hour of work per week. He has a “mouse jiggling” software and everything. I'm sure he is a lovely, kind, and (otherwise) ethical human being. But he has an intentionally deceitful, adversarial relationship with his employer (the US Taxpayer -- YOU).
What is the incentive for his boss to root out this waste and request more work? Or fire him for cause?
Consider that this is the guy being protected and enabled by the act of "closing the Washington Monument" or "Firing the Firefighters" — the leader isn’t doing the real work to become more efficient, they are throwing a tantrum until the perceived threat moves on.
The organization, as a system, will protect and defend itself by threatening to cease its most critical function rather than find and fire a guy who has a black belt in bureaucratic value extraction.
The feedback loop of efficiency and accountability is not there, and we cannot expect anything to improve without some incentive to do so.
To be clear, I’ve met many civil servants of upstanding moral character who are proud to serve their country and sacrifice much to do so. I’m sure more than 70% of our civil service is working hard to do a good job. And I’d love for them to get a raise. They should be honored, praised, and lauded. But there are turds in the sundae, and everyone should want those turds removed -- most of all the leaders we trust (and pay) to remove them.
The effectiveness of our government relies on a moral and ethical core in leadership. We, our journalists, and our leaders must learn to anticipate and attack the "Firemen Get Fired First" response when we see it.
Where this tactic wins, everyone loses. And in the realm of non-market forces, our thoughtful commentary is the means of accountability until the next election.
(For further reading, please check out The Systems Bible, which is full of even more hilarious accounts of systems misbehaving.)