2012/10/06

Wasteful budgets and reforms of rotten institutions

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Think Defence raised the Question "Has the MoD Too Big a Budget?" and remarked
Too much money encourages waste and actively discourages efficiency. The scale of waste in the MoD over the last few decades is truly staggering.

Maybe if the Army had a smaller budget it would not have spent a billion quid on FRES without putting a single vehicle into service, or the RAF spending several billion on Nimrod and of course, the recent F35 switcheroo that has wasted the equivalent of 10 years running costs for RFA Largs Bay.
*economist's point of view*
Well, from an economist's point of view the budget isn't the key for this. It's the perception of the budget. Decision-makers with a sense for the scarcity of resources (because of cuts, for example) tend to expend their resources with more care.
*/economist's point of view*

Now how could a government with a rather steady (or growing) political demand for military power possibly induce this perception of scarcity into armed bureaucracies? Training (indoctrinating, if not brainwashing, a distaste for waste into public servants) and institutional culture help a lot. Not all countries are blessed with an efficiency culture in any of their armed bureaucracies (actually, almost none). To re-train a ministry's public servant force against the bureaucracies' tendencies is difficult, slow (= will last a generation) and prone to fail.

There's another possibility, though: Cut them so much it hurts. Again and again. Finally, if you've cut them so small they become impractical, destroy* what's left. Never allow them to feel well-funded.
This doesn't sound like it allows to meet "a rather steady (or growing) political demand for military power", right?

Well, there's the charm. You can still reconcile both by having multiple, parallel armed bureaucracies. Found them with a fine budget, then cut it, cut, cut, cut, torture the bureaucracy and finally when it becomes impractical due to small size destroy what's left, send the employees home or to work in some non-armed bureaucracy. They will always feel the pain, will always lack the resources and will always be focused on doing the best they can with what they have.

They might also collapse in their morale and just give up - fatalism in a bad way. Then destroy the armed bureaucracy outright, so the other parallel bureaucracies' public servants understand: The only option is to focus on making best use of what they get.
By now, some readers may be reminded of a certain rule of thumb of some billionaire, who famously advocated to destroy 10% of a corporation every year in a perpetual creative destruction and recovery process. Well, there' another -much more interesting- parallel:

Rotten institutions (say, Italian army of the 1930's) are so extremely difficult to reform that it rarely happens at all. In the case of the old Italian army, it would have been possible to build a marine corps, a colonial army corps and air force parachute troops as parallel and hopefully better new ground forces, and after a while the army could have been destroyed. It could have been replaced with a new army whose leadership would have been composed of more NCOs and officers from the parallel ground forces than the old army. The new institution could have replaced the old, rotten one - hopefully with a better institutional culture. Later on, air force paratroops, colonial army corps or marine corps could have been destroyed once they show signs of inferior institutional culture.


Governments rarely do such a thing. The few attempts that resemble the described procedure were rather about building up more ideologically aligned forces (NKVD, Waffen-SS, Fedayeen, Republican guard etc) than about building a more efficient alternative.
Radical approaches that involve actual moves against institutional inefficiency are unpopular. Many people are conservative in their thinking, as "they don't like experiments" and rather tolerate mediocrity or even lesser performance. Low performance bureaucracies are furthermore often adept at disguising their failures with shiny uniforms, displayed pretences and disinformation. An existing bureaucracy furthermore has its lobby, while a not-yet-existing bureaucracy hasn't.

The concept of redundant multiple bureaucracies with a predetermined life-cycle of raising, cutting and finally destruction will thus never see practical application, that's for sure. Well, for the reasons mentioned above and because it's a rather crude concept that's not going to convince more than a few people, ever.

Nevertheless, it's interesting to think about the "Has the MoD Too Big a Budget?" problem and the inefficiency of armed bureaucracies in general along these lines.


*: I chose the word "destroy" instead of "disband", or "dissolve" very intentionally in order to signal a radical and decisive approach to a very resistant problem. .

3 comments:

  1. Thanks Sven, its most definitely an interesting subject because after decades of 'reforms' we seem to keep repeating ourselves

    ReplyDelete
  2. Interesting take on the regeneration cycle though 100% destruction and total devastation of the budget might be a bit too extreme and lead to self destructive behaviour.

    After all, if all 3 services start fighting over a shrinking budget pie, won't that encourage thinking that the other 2 services are enemies instead of co-partners in the defence of the realm? Or if people start to think that you're going to kill their department anyway, why not indulge in scorched earth behaviour?

    10% regeneration is fine. 100% can kill your armed forces, especially if the new force to take over from the old one runs into teething trouble.

    ReplyDelete
    Replies
    1. Why should they fight over resources? The decline of their budget would be pre-programmed, fighting as known between services today would be rendered pointless.

      "(...)runs into teething trouble."

      As if established armed bureaucracies were always effective...
      Keep in mind, an alternative has to be better, not to be perfect, in order to be superior.

      Delete

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