Chris Dillow
Star musicians and your favourite Times writers at the Albert Hall
What should we make of the failure of the Home Office to operate control orders properly, the MTAS computer fiasco at the NHS, and Ruth Kelly’s climbdown on home information packs?
Almost everyone has one of two responses. Some say that these are isolated failures in an otherwise acceptable record, others that they are evidence of a general incompetence that has a simple solution – to put different backsides on Cabinet chairs.
Almost everyone is wrong. There’s a third possible reaction: that these episodes (and there are countless others) show that centralised hierarchy is a terrible way of getting things done. Policy failures aren’t due to having the wrong personnel in charge. Nor are they exceptions to the rule of general competence. They are the inevitable result of bad organisational structure.
There are four lines of thinking that tell us this. One comes from Friedrich Hayek. Knowledge, he said, is inherently dispersed. No single minister or boss can know very much, so decentralisation is necessary to maximise our use of knowledge. The collapse of the Soviet Union proved him right. This raises the question: if a centrally planned economy is a stinking idea, why is a centrally planned health service or educational system a good one?
The second line is the research into “cognitive biases” inspired by Daniel Kahneman, of Princeton University, and the late Amos Tversky. This has given us a long list of errors of judgment that even experts make. It’s been fashionable for economists to show that investors committed these errors when choosing and buying shares. But if investors can be systematically irrational, why should ministers and civil servants be any more rational, when they lack the investors’ advantages of big incentives, clear and immediate feedback and (we might add) high intelligence?
The third line is “transactions-cost economics”. Inspired by the Nobel prize-winning economist Ronald Coase and developed by Oliver Williamson, of the University of California at Berkeley, this compares the costs of doing things within the marketplace – the difficulties of assessing quality or of writing contracts – with the cost of doing them internally.
This research has revealed that the costs of internal organisation can be big. Staffan Canback, of the management consultants Canback Dangel, estimates that the operating performance of manufacturing firms deteriorates when it grows beyond quite a small size. And if this is true in manufacturing firms, how much more likely are they to matter in bigger organisations such as government departments?
One reasons why big organisations become inefficient is communication failure. Subordinates have lots of reasons not to tell bosses the truth. They don’t want to burden “busy” people with detail, or rock the boat, or be victim of “shoot the messenger” syndrome. The upshot of this was famously described by the late Kenneth Boulding: “The larger and more authoritarian the organisation, the better the chance that its top decision-makers will be operating in purely imaginary worlds.” Those photoshopped pictures of Patricia Hewitt dressed as Comical Ali tell a truth: that government has learnt little in the 40 years since Boulding wrote those words.
The fourth strand of thinking is the recent management literature, such as The Myth of Leadership by Jeffery Nielsen and The End of Management by Kenneth Cloke and Joan Goldsmith, arguing how counter-productive “leadership” can be. Hierarchy, they argue, stifles originality and creates an organisation with egomaniacs at the top and slovenly, dehumanised automatons at the bottom.
There is, then, a vast amount of economic thinking that enjoins us to be sceptical of large hierarchical organisations. For years, big businesses have been “delayering”. Sir Terry Leahy, who runs Tesco, claims there are only six layers of hierarchy between him and the woman on the checkout. How many layers are there between Patricia Hewitt and a nurse? Other businesses, such as Koch Industries in the US, are going farther, trying to replace internal hierarchy with “market-based management”, using internal markets rather than central command.
Customers too are recognising that hierarchy doesn’t deliver as well as more cooperative businesses. Verdict Research reports that the cooperatives John Lewis and Waitrose are Britain’s two favourite retailers. Waitrose’s sales are growing faster than those of other main food retailers. And in the City, hedge funds, most of which are partnerships, have been winning business away from more traditional, hierarchical fund managers.
It’s not just in the high street that hierarchy is being rejected. It’s also being rejected at the ballot box, with support for the hierarchical parties falling. Here, the political class is in denial. At the recent local elections in England, five out of six voters choose not to vote Conservative, mainly by not voting at all. And yet when David Cameron described this as a “stunning” result for his party, no one pointed out that he was talking rot.
What we see here is a pure ideology, as much so as any juvenile Marxism; I call it managerialism. The problem is not that the political class has considered the arguments against big hierarchical structures and rejected them. They haven’t even thought about them. There’s no evidence that the break-up of the Home Office was based in transactions-cost economics, even though this is how economists routinely think about mergers and demergers. And Mr Cameron said last week: “I don’t follow my party, I lead them”, as if leadership were a self-evidently good thing rather than macho posturing.
Then when voters show their opposition to all this by not voting, the political class moans about apathy, confusing apathy with contempt.
But there are alternatives to managerialist politics. We could have flat-rate allowances paid to everyone rather than an administration-heavy welfare state; schools and hospitals could become worker coops; we could use demand-revealing referendums rather than look to “leadership”. The question isn’t: “Are there alternatives to managerialist politics?” It’s: “Why do people fail to even consider them?”
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it is a sad but true
Whitehall will never change -their is no incentive to do so they will continue to spend and waste- support inefective costly programmes and above all remain corrupt.
If you want an inside into how our BILLIONS are wasted read -
Simon Jenkins --'Thatcher &Sons'
The 'sons' being Major, Blair and Brown-
we are talking many many billions -ANd no heads have rolled as this waste is discovered- AND-those companes who have failed to deliver or produced the wrong product-failed for whatever reason- have simply been awarded a new contract................
If you want some investment advice -simply 'donate' to labout -the returns can be guaranteed!!
mike, oxford, england
I agree that a "none of the above" option should be on every voting form and available for every vote in the houses of parliament. But it would have to be decided at every level exactly what should happen when that option gets the most votes. As it surely would.
Ros, Upminster,
There is no fun (at least, with your pants on) quite like the fun of spending someone else's money. If you can persuade yourself that you're mummy, doing it for the child's own good, you get a moral boost as well.
Government is inept and usually corrupt because the ruling class do not care about the quality of the results. As long as the process shovels money into their pockets (compare MPs' salary and allowances with the median income) and those of their cronies, they're content to count expenditure. We have to pay.
The government has no money. It's our money they spend. It should not be beyond contrivance to develop a system (like an education voucher scheme) which combines the advantages of tax and spend (income redistribution, care for the vulnerable) with those of the free market, giving both choice and responsibilty to the people and reducing government power to interfere.
If any government had to compete in a fair market for the business, it would be bankrupt.
Michael Bruce, Selby, Yorkshire
The question isnt: Are there alternatives to managerialist politics? Its: Why do people fail to even consider them?
The question is why have Brits FORGOTTEN these alternatives? This is what they were doing for a thousand years, building hospitals and Friendly Societies and schools, including, yes, grammar schools, all of them privately funded and privately run with pretty good results given more than 95% of the public could read. Before decentralised management had a name, it was being successfully done. There is more about this at http://www.britsattheirbest.com
In the interim, while trying to recover the management styles everyone has forgotten about, why not send Parliament on a long vacation and have members work half time? It would do less harm.
Cat, Portland, Oregon, USA
We work in institutional dictatorships, public and private. Democratise them. I don't mean ''consultations.'' I don't mean ''consensus.'' I mean democracy - secret ballots on everything from policy to individual performance, top to bottom. The public consumers/customers to have their own secret ballots as well as the internal staff. All results to be published in full for everyone to see. And here's the beauty of it : if the organisation doesn't embrace democratism then ANY employee(s) can go ahead and organise secret ballots anyway. Is any organisation going to sack someone for being democratic? They'd better not. People are willing to die for democracy. Are the organisations? Certainly not.
Terry Daly, London, Great Britain
A long overdue debate on this matter, as many people know, will not take place as neither the vested interest nor the inexperience and low emotional intelligence of the political "elite" (better, deluded and hierachically disconnected - for they don't know the scale of what they don't know) can handle it.
"Almost everyone is wrong". Interesting the Manichean alternatives you attribute to the vast majority of your fellow citizens. I would suggest the many of us with the skills, experience and track record to both see and deliver better outcomes within the public sector can readily see other options. The core issue is that the "greasy pole, rubber chicken, run-it- by-committee" circuit by definition will always exclude the most dynamic, capable, open and bright. Our "can do" people do things: that add value. Our politicians are "Tier Four" players or worse, who destroy rather than add value for the rest of us.
Not hard to understand, therefore, why so few are engaged.
Colin George, Colchester,
Ministers inept? Whatever next. Just look at their CVs and think what enormous value they'd be creating in the private sector if their altruism hadn't led to devotion to the public sector. Goodness they hold on to jobs like nobody in corporate life. They must be good.
FTSE 350 shareholders, your loss is our collective........... .
Answers on an e-mail please. Best response gets a free retirement junkit to visit many of the world's despots, funded by a to-be-new resignation peer.
Carolyn, Edinburgh,
As excellent assessment. Our political leaders' are, sadly, only very ordinary people. Their current reputation lies in tatters for good reason; they are detached from the accummulative knowledge of those they lead, and for whose opinions they have a palpable disdain and disregard.
The 40th President of the United States (Ronald Reagan) so aptly surmised that 'the nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'
Tony, Toulouse, France
Take the sciences. Although still achieving isolated breakthroughs, British science is now a department of Government and has to produce instant success or go under. Has it always been thus? Frank Whittle could not get funding for his jet engine initially mainly because the person that he had to coordinate with in Government was secretly working on a rival system (with propellers). That such a fantastic idea as Whittle's should be subordinated to a single whim is absolutely disastrous. When Britain stopped producing men of independent means that had a scientific curiosity we lost our most valuable resource, we lost the diversity that large corporate ventures inevitably crush. When the purse strings are not in your hands then the presentation of a case is often far more important than an end result. Commit people to giving slick presentations, practiced at smoozing, encourage networking and then forget originality. Concept is an ugly word in Government, it interfaces badly with 'suits'.
Malcolm Turner, Alsager, England
This is a well researched case.
However, it overlooks the reflexive nature of many hierarchies, which can be better understood as self-organising systems, with preservation of the system as paramount. This may be unclear from the mission statement, if any.
Most of those enjoying privileges of office may prefer that to being possibly more productively employed at the work face. It can be difficult to override the human preference for the pleasant rather than the less so.
There is risk that systemic intellectual dishonesty may emerge in top heavy systems when mistakes are made. Covering-up and denial become optimal behaviour to protect those nominally in charge, although this may be presented as a need to show the department as never being at fault.
Small, local and tightly organised flat management structures seem to work best for those who have experienced the range of management solutions. Economy of scale can be accompanied by opportunity for waste or profligacy.
dr venables preller, Warminster, UK
Parkinson's Law of 1000 states that any enterprise employing more than 1000 people becomes a self-perpetuating empire, creating so much internal work that it no longer needs any contact with the outside world.
Then we have the "small is beautiful" consultancies which rail against "the economy of scale" gurus, and warn us of the dangers of the "laws of diminishing returns".
Status and salaries in all of the public sectors are dependent on organisational scale and budgets. The pressure therefore at the senior levels is to add staffing numbers, extend roles and grab more budget ..... not to increase effectiveness, efficiency and economy.
Most of the public sector operations wouldn't know how to, or care about recognising and rewarding real performance.
DAVID bROWN, Lundin Links, FIFE
It wasn't always this way, and I think you are looking too much at the negative. Yes, in some ways the present could be seen as a bad patch, but I'm sure there will be improvement. I believe a primary problem is that good government and spin are not a good mix. This is because the purpose of government is to serve the electorate and to be seen to serve the electorate; rather than what spin does which is to present the right impression, but then, when the truth comes out eventually it is seen clearly that some deception was apparent -- this undermines politics and government in the worst possible way, and I believe leads, regrettably, to ultimate opinions such as yours being seen by some as possibly plausible.
Christopher Hall, Sheffield,
I know that American politics isn't exactly a pargon of virtue. But one of the things I see here in the UK is the lack of connection between politicians and the voters in their constituencies. plus, except for the Councils, everything is decided in Whitehall. You need to farm out to more local entities some of these huge centralized departments. Start by requiring that MP's actually live in their constituencies. Then form regional levels of goverment and move some of the departments to them, with annual budgets.
Make the regional's elected positions(similar to American governors), this allows more local control over education, hospitals etc., thus giving people a reason to be interested in voting again. Also, having local people(regional) who actually understand the local people and their problems, running for the MP's jobs, instead of some bloke or lass from God knows where, being selected by the party leader.
Just a thought.
Joshua, Oxford, UK
"Don't confuse apathy with contempt".
In 5 words, Christ Dillow speaks for millions of UK non-voters. These are the people who beg for an additional box on the voting form enabling them to vote for "none of the above".
Barry Tyler, Slough, UK
The answer to your question, Chris, is simple - because we have no choice other than to put up with them. The available choices are pathetic, as their policies are all different shades of the same grey, so we don't vote or if we do it is as a protest for a party we know can't win in our ward. When government goes too far and millions protest, they take no notice - the Iraq war and road pricing are just two examples. It's pointless, so we throw up our hands in despair and get on with our lives as best we can and just put up with it.
If business was run like government the board would be sacked by the shareholders. The shareholders of government don't have that power - they are completely impotent. Worse, those elected pass laws to exempt themselves from legislation they don't like and they award themselves massive pay rises and huge pensions so that when we finally do get rid of them they're fat dumb and happy. Cynical? Me?
Brian, Farnham, UK
This is a well researched case drawing on sound findings.
Unfortunately, it overlooks the reflexive nature of existing hierarchies which can be better understood as self-organising systems with preservation of the system as paramount. This does not usually feature in the mission statement, if there is one.
Of course if you ask anyone enjoying privileges of office whether they might be more productively employed at the work face, any number of pretexts will be found for avoiding that issue.
Systemic intellectual dishonesty can arise in top heavy systems when mistakes are made. Covering-up and denial become optimal behaviour to protect those nominally in charge, although this is usually presented as being necessary in order to show the department as never being at fault.
Small, local and tightly organised flat management structures work best. Economy of scale goes with opportunity for waste, profligacy and incompetence.
dr venables preller, Warminster, UK
One possible way of changing the way we are governed would be to outlaw political parties. If MPs were all independents, then individuals would be elected on their own merits and not those of some idealized group. Our PM would have to be elected by the House of Commons as a whole and we could have elections there for other Chancellor posts such as Chancellor of the Exchequer. If people were chosen on personal merit as opposed to party affiliation, wouldn't this lead to better government?
Adrian Gilbert, Tonbridge, England
"For every folly of their princes, the Greeks feel the lash".
Horace : circa 30BC.
Surely it is a truism of the modern age ? Socialism IS central control.
Peter Bolt, Redditch, UK
Excellent piece. Most likely the devolution process applied to all of the UK is the only way of returning powers to smaller and more responsive county and local government.
So good luck to Alex Salmond!
John, Oxford,
the biggest problem in government is they DONT LISTEN
TO THEIR CUSTOMERS which is what supermarkets do
its not rocket science BUT MPS DONT LISTEN anymore.
george william taylor, hull, uk
Voting should be compulsory, with a 'none of the above' box. Those who fail to vote should be fined. The fines should be collected, and at the next election the act of voting would also entitle you to a lottery ticket to win the millions of pounds of fines paid by those who failed to vote last time. A self-funding carrot and stick system that would ensure near-100% turnout.
Dr. Keith Anderson, Durham, England
Surely the wise (5 out of 6 voters) have now written off government and decided that they are best ignored and we all go our seperate ways.
eddie reader, birmingham, uk
There's a fourth reaction. We increasingly live in a society where real people think and behave like the traditional caricatures of middle management. Everyone believes and expects that everyone else should work harder and be smarter than them.
Not sure about this? Next time you're next to a motormouth on a stalled commuter train, try a simple experiment. Tell him you work for a recruitment consultant and you know that the job of regional manager for the train company is open. Name a fat salary, then ask him what specific changes he would make if he got the job. If he says a single thing that makes the slightest sense, I'll come up to London and buy you a beer.
I happen to think that deep hierarchies often _amplify_ existing incompetence, although in the very worst of them, paradoxically, the clever people right at the bottom can operate unhindered in the interests of the customers! But getting rid of hierarchies doesn't address the basic problem.
Ian Kemmish, Biggleswade, UK
You only have to look around to see how hierarchy encourages and protects the inept. The boss who walks the shopfloor daily always gets a better company in return.
When Nissan first came to Britain in the 1980s to set up their plant in Sunderland they swept away the traditional British hierarchy with the managing director even eating in the workers canteen. The rest of the European car industry had to follow the lead or die and British car manufacturers in general chose the latter, aided and abetted by trade unions who always fought against change and dilution of their membership.
Large tiered organizations are always wasteful in their utilisation of resources and in the time wasted on internal communications. We put up with an inept government because no one ever stops to questions the way it operates or how it spends our money.
Geoff Howard, Cambridge,
The real situation for Britain in the medium term is much worse than depicted by this article.
If five out of six voters chose not to vote Conservative in last month's English local elections,hardly anyone can have voted Labour.Nevertheless,the Government described the result as a great springboard for the future.Rot comes in many varieties Mr Dillow and such a reaction to a huge electoral rejection is rot in almost pure form.
Tony Blair is typical of the real issue with managerialist politics in Britain today - pre-politics he never ran anything and as a result,still regards a trapdoor as a springboard and will certainly not regard the NHS IT project as a fiasco.How many FTSE chairman would survive a similar situation in the private sector ?
Michael Beiley, Billericay,Essex, UK
I could not agree more, but this is another useless article that says all the right things and then fails to provide clear examples of what needs to be done. If you propose to "privatise the NHS", you should say so clearly and unequivocally. Only then will you realize that the problem is not in the management, but in the managed. Only when the British voter decides that this is no way to run a country will anything be done. Saying that Cameron is wrong is disingenuous; it is those that voted him there that are wrong, he is just doing what he said he would do.
Frederick Davies, Oxford, UK
Post-code prescribing is the problem with localism. When I started in the health service you could go and see a local council member and persuade him that you needed extra staff in the laboratory. Since then there have been countless reorganisations of the health service and we soon learnt that the only way to make things happen was to do it and apologise later, rather than ask permission. Central government control has made this approach impossible - result: no innovation. The truth is you can't have both equality and improvement. For everybody to be equal things have to be levelled down.
Terry Hamblin, Bournemouth,
This is a very good piece. Politicians who might hold these views in the conservative party are keeping quiet in order "not to rock the boat" and because, if they did choose to say something, they would be described as delusional angry reactionaries. By the way, there is a great book, which points in a similar direction, entitled: "The Welfare State we are in".
Alex, London, UK
The argument for centralisation is this: either way, we will be blamed for anything that goes wrong; so if we keep control, at least we'll only be blamed for things we have control over.
Until there is a political consensus that people have a right to bad government - so that if some places are worse run than others, that is a good thing - centralisation will continue. It killed the Roman Empire and what was good enough for the Romans should be good enough for us.
Joe Bruno, London,
Very tempting ideas. I've been flirting with them myself in the last few years. But let's go further. Why to have a central political plannig system (e.g. parliament), when web-based voting systems allow to have referendum on any given topic, for less money, than we pay for the "pro-s". And taxes. Why do we give it all to central bureaucracy for disposal? Let's give it to local authorities, who should spend it for local issues first (decided by us), and give the rest for "higher causes". For representative issues, I admit, we could use some "faces", but they should act as spokesmen, not in their own authority
Roland, Budapest, Hungary
When Tesco learn to fill its shelves and keep availability as high as Morrisons it can progress in The Grocer rankings from its lowly place. The obsession with supermarkets in Britain is unique and reflects the paucity of experience on the part of journalists of anything but grocery shopping. The real world is far more complex than running a bloated retail outlet......maybe Tesco should "care" for its customers 24 hours a day and entertain their children ?
TomTom, Leeds, Uk
Although the thought is there ithe ideas are not named. The names are 'Public Choice' and 'Competition.
When the government runs things we are deprived of choice/competition. Without competition we ignore the natural rule "Survival of the fittest" so we move from one universal idea that fails to suit everybody to another which also fails to fit everybody. See economic literature on Public Choice, and Competition as offerred by Institute of Economic Affairs or good bookshops.
The answer is that the government should govern everybody equally under the law and stop doing anything directly that can be done by the private sector.
Brian Gilbert, Hampton, Middx
How about giving the electorate the opportunity to disambiguate apathy from "contempt": an official abstention?
Or, as I prefer to put it over "contempt", a vote for "None of These".
Best regards
Nigel Sedgwick, Beaconsfield, UK
I haven't the slightest doubt about the diseconomies of scale. I research the banking industry where everyone know there should be substantial economies of scale. But these rarely surface in statistical analysis. My conclusion is that they are off-set by diseconomies of scale. Economies of scale tend to be technical - eg spreading the cost of a computer system over a large number of customers. Diseconomies of scale lie in the hazier areas of coordination and control.
However, my concern in applying such thinking to governement is that a small group of idealogues, say in education, can blight the lives of many children. There must also be tranparency and competition.
Geoffrey, Sydney, Australia