TCS Daily

A Challenge for Brad DeLong

By Arnold Kling - September 12, 2005 12:00 AM

"we should be surprised. FEMA is a bureaucracy. A bureaucracy is designed to keep functioning even when it is headed by a man who was suddenly told by his private-sector bosses to find a new job and whose only qualification is that he is the friend of a friend of the president...

It would be better for the country -- and for the Republican party -- if some way were found to ensure its future presidential candidates have some skill in public administration."
-- Brad DeLong


I hereby challenge economics professor Brad DeLong to a debate over the theory of Intelligent Design. DeLong's views of organizational behavior, which struck me as spectacularly naive, indicate that this theory is at the heart of our disagreement concerning the proper role of government.


I should state at the outset that I am not talking about biology, where a theory of Intelligent Design is posited to counter some aspects of the theory of evolution. On that issue, both DeLong and I would both be on the side of the evolutionists. I find it inexcusable that President Bush would suggest that the two theories ought to be taught side by side. Oh, I suppose that there is a college sophomore's philosophical case to be made on behalf of Intelligent Design. But the President was not speaking as a college sophomore or as a philosopher. He was speaking as a politician pandering to a religious bloc.


The Intelligent Design theory on which I propose to debate DeLong might be stated as follows:


An Intelligent Designer can create policies, programs, and organizations through legislative fiat and top-down administration that operate effectively in a centralized manner. Government agencies and bureaucracies are like highly-tuned cars, needing only good navigators and drivers to race them to their goals.


DeLong seems to believe in such a theory of Intelligent Design. I am a skeptic. I believe in the theory of evolution.


Large organizations, in the private sector and the public sector alike, are inherently dehumanizing to employees, clumsy, inflexible, and unable to handle sudden new challenges. In addition, public sector organizations are hampered by political constraints and the stultification that comes from the absence of competition. In the private sector, the pressure of competition means that the surviving large organizations tend to be slightly less dysfunctional than those that go out of business.


Robert Rubin as FEMA Director


DeLong wrote his column in the aftermath of Hurricane Katrina. He views the government snafus in New Orleans as an aberration, caused by the Bush Administration.


I wish that we could somehow re-run the history of the last three years with Bill Clinton as President and an administrator DeLong admires (say, Robert Rubin) as FEMA Director. My guess is that New Orleans after Katrina would have turned out approximately the same -- maybe a little better, perhaps a little worse.


In any event, as Investors' Business Daily pointed out, FEMA under President Clinton was hardly a reflection of superior public administration.


"Bill Clinton's choice to be Southwest Regional FEMA director in 1993 was even less qualified, earning his job handling disaster recovery of a different sort. Raymond 'Buddy' Young, a former Arkansas state trooper, got his choice assignment after leading efforts to discredit other state troopers in the infamous Troopergate scandal. If a storm like Katrina struck the Big Easy back then, Young would've been in charge. "


The Department of Homeland Security appeals to those of the Intelligent Design faith. It was created under the theory that the reason that government failed to prevent the 9/11 attacks was that it was not centralized enough. What we needed was a larger organization, with more missions and less ability to focus. As a hard-core Intelligent Design believer, DeLong believes that DHS could be effective with the right administrators. To skeptics (including many of its employees), DHS is a clusterf*** no matter whom you put in charge.


Generic Intelligent Design


Generically, Intelligent Design theory supports bigger government. Because you believe that centralized solutions can work, you argue in favor of them. Every time you observe a phenomenon that strikes you as less than perfect -- people without health insurance, people whose income fluctuates, people who are overweight -- you ring a bell and yell "Market Failure!" You presume that every social flaw can and should be addressed by government action.


It is not because I have faith in private corporations that I am opposed to Intelligent Design. Corporations have many weaknesses. Fundamentally, they are subject to trade-offs between economies of scale in production and diseconomies of centralized authority. That bookstores are filled with tomes on "management" is testimony to the impossibility of resolving such trade-offs flawlessly.


While I have little faith in individual corporations, I have more faith in decentralized market processes. For example, although I have no admiration for any oil company in particular, I believe that we will never run out of oil. I trust markets in the aggregate to send the right price signals to encourage development of alternative energy sources. We do not need the Intelligent Design of a government energy policy to achieve that objective.


The economist Russell Roberts recently wrote about a popular rhetorical question,


"the old question that asks why we can put a man on the moon but we can't eliminate poverty. Putting a man on the moon is an engineering problem. It yields to a sufficient application of reason and resources. Eliminating poverty is an economic problem (and by the word 'economic' I do not mean financial or related to money), a challenge that involves emergent results."


Roberts' important essay is a clear critique of Intelligent Design theory in economics. He explains that market outcomes, unlike the results of a moon launch, do not derive from a specific human intention. However, they are not purely external events, like a hurricane. Instead, market outcomes emerge from decentralized interactions among people.


DeLong vs. Intelligent Design


In his macroeconomics textbook, DeLong himself offers powerful evidence against Intelligent Design theory. He compares the standard of living in highly-centralized economies with nearby equivalents. Examples include North and South Korea, or East Germany under Communism compared with West Germany over the same period. The results clearly favor the more decentralized, liberalized economies over those that operate under Intelligent Design theory.


For the most part, however, believers in Intelligent Design are impervious to empirical data. The more government fails, the harder they want to try. If public education performs poorly, then spend more money or impose more centralization in the name of "No Child Left Behind." If Medicaid fails in its mission to ensure good health care for people on low incomes, then expand it. If pork-barrel public works projects contributed to the catastrophe in New Orleans, then appropriate billions for pork-barrel public works projects as "relief."


Is President Bush particularly bad at administration? I do not think that DeLong is in a position to judge, any more than I am in a position to judge whether someone is a good basketball coach. Just as I have never played or coached in an organized basketball league, DeLong has spent almost his entire career in a non-administrative position in a university setting where the organizational issues involve much less complexity and interdependence than is typically found in businesses or government agencies of equivalent size.


It seems to me that Intelligent Design Theory explains why DeLong is more favorably disposed than I am toward government intervention. I do not believe that one can mold a spectacularly effective government out of the clay of imperfect human beings. I do not believe it is possible for large organizations to behave as if they were the products of Intelligent Design. Private-sector organizations tend to function better than government organizations only because of the checks, balances, and evolutionary pressures supplied by competition. Social engineering by Intelligent Design is doomed to fail.


Arnold Kling is author of Learning Economics.


To see more of the extensive coverage of Hurricane Katrina from TCS, click here.


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