Thursday, October 20, 2005

Entrepreneurial Government: Take Out the Papers and the Trash

We have been commenting on the shallow nature of much of the political commentary that, taking its cue from the self-serving assertions of the Bloomberg campaign, has conflated "not being beholden to the special interests" with good government. Our perspective is that this "above politics" view serves to camouflage any real appreciation of how policy is actually made and underplays the importance of leadership style, temperament and ideology in the actual governing process.

One result of this analytical deficiency, especially in regards to Mayor Mike, is the inability of the analyst to not only develop a useful critique of policies that have been put in place but also of the policies that need to be promulgated in the future. One must start with two central questions: What is wrong with NYC government? and What kinds of policies will best address these perceived wrongs?

In our view city government suffers from a bureaucratic sclerosis that is melded to a dysfunctional civil service and municipal labor albatross. NYC government often tries to do too much and much of what it does it does poorly.

One case in point: The pick-up and disposal of municipal solid waste. Put simply, this task is done inefficiently and at too high a cost. In addition, the city actually has a dual system of collection since the roughly 13,000 tons of commercial waste is picked up and disposed of by private sector firms. This duplication actually creates an unhealthy competition between the two sectors for, if competition is going to exist, it should be to the benefit and not the detriment of the city.

All of this is clearly analyzed by Osborne and Gaebler in their seminal work, "Reinventing Government." The subtitle actually says it best: "How the entrepreneurial spirit is transforming the public sector." The point here is that public sector bureaucracies formed in response to, and as an antidote for, the growth of bureaucratic corporate structures in the age of industrialization.

These corporate life-forms, however, have long ago been transformed as the private sector has developed new ways to be creative and innovative, to be intrapreneurial if you will. Yet the unwieldy and hidebound public dinosaurs continue to rule.

In the case of the collection and disposal of NYC garbage, there are a number of ways to inject a competitive spirit into the process, a spirit that would allow for technological creativity to spawn as firms, competing to be more profitable, looked for novel solutions. This does, of course, presuppose the creation of a competitive environment much as Osborne and Gaebler highlight in their description of how the city of Phoenix made garbage collection more competitive and, as a result, less costly (pp.76-79).

Could the same thing be done in NYC? Why not? Could Mayor Bloomberg initiate and achieve this kind of policy innovation? It's possible, but given the evidence from the last four years it is hardly likely. Why is it unlikely? Because Mike doesn't seem to have the same entrepreneurial instincts for governing as he clearly demonstrated in his rise to billionaire status. His lack of any ties to the special interests, then (he certainly doesn't need to kowtow to the municipal labor unions), doesn't translate into bold innovative initiatives that would make city government, dare we say it?, more profitable.

Which is also precisely why the mayor's SWMP is such a failure. The mayor, lacking any clear policy vision and burdened with a propensity to rely on managers, becomes a prisoner of the bureaucracies he, as well as the city, would be better off to dismantle or at least streamline. If the billionaire mayor can't devise a creative privatization policy why do so many put so much credence in his private sector expertise? As far as this private sector experience is concerned, at least with Bloomberg, there's less than meets the eye.

Postscript: Recycling

There is no better policy area to illustrate the above points than the NYC recycling program. Here we have a command bureaucracy that is trained (Thorsten Veblen's term, "trained incapacity," comes to mind here) to basically pump and dump the garbage that is now tasked in a completely different function. The results show. It costs the Sanitation Department over $300 a ton to pick up the recyclables and, in the end, much of the material cannot be reused because it has been contaminated in the pick-up process.

At the same time we have a great example of a privatized recycling initiative: the NYS Bottle Law. Here we see how materials are brought to the transfer points separated and in relatively uncontaminated condition. That costs the taxpayers nothing and the recycling fees are essentially user fees.

Over two decades ago, when the City Council passed its first recycling law it included a provision to fund "buy-back centers" that would pay "cash for trash" to people who brought in designated materials for recycling. The original funding effort got caught in the Dinkins budget cuts and when an effort to revive the concept was made it was nixed by the Department of Sanitation because, "it would compete with the city's curbside program."

Here in a nutshell is the mindset we are talking about. The idea of competition is alien to these bureaucrats. In the case of buy-backs they were concerned that competition would siphon material from "their" program. Of course, this was precisely the point. With costs escalating and materials collected dwindling it was an opportune time to inject a little competition into the system.

In strange way the mindset is also replicated among the advocates of recycling who see the curbside collection program as akin to a religious ceremony. Purity is achieved through the ritual even if the results can't justify the costs. That is why these same folks, while advocating the expansion of the bottle law, are unable to envision how the creative use of deposits could eventually eliminate curbside altogether. That would get them into the profane area of privatization and, therefore, needs to be avoided like "traif" in Borough Park.