Can a Leopard Change Its Spots?

Can a Leopard Change Its Spots?
Profile photo of Bryce McBride

Leopard_Spots_Wallpaper_0e3rxLast month an article entitled “The Lack of Major Wars May Be Hurting Economic Growth” was published in the New York Times. On first glance I thought the author, Tyler Cowen, was going to offer a standard argument for increased government spending. However, after reading the article I found myself agreeing with Cowen’s main argument, which he stated in the article as follows:

“The very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.”

This insight is supported by a piece I read a few years ago in The Atlantic magazine by Tim Kane entitled “Why Our Best Officers Are Leaving”. In the article, Kane looks at the problem of plummeting retention rates for high performing officers in the U.S. military. According to Kane:

The military’s problem is a deeply anti-entrepreneurial personnel structure. From officer evaluations to promotions to job assignments, all branches of the military operate more like a government bureaucracy with a unionized workforce than like a cutting-edge meritocracy.

The peacetime military (like other bureaucracies) too often rewards risk-avoidance in an environment where both clear objectives and accountability are absent. In the words of the blogger Charles Hugh Smith, the prime directive of any bureaucracy is to enforce the perfection of moral hazard’ where those making decisions suffer no consequences when the results of those decisions turn out to be disastrous.

However, Kane does make mention of a time when the military did embrace a more meritocratic ethos – World War II. When faced with challenges, troops and commanders showed initiative and engaged in creative problem solving. Perhaps most crucially, commanders were empowered to ignore bureaucratic personnel protocols and reward competence and initiative with battlefield promotions.

Essentially, combat provided both clear objectives and authentic feedback (in the form of casualties) that kept people focused on maximizing effectiveness and rewarding merit. (However, as we mark the centenary of the beginning of WWI, we should keep in mind that war is by no means a guarantee of this, as evidenced by the millions of soldiers who died following the unvarying battle plans drawn up by generals tucked away at headquarters well behind the front lines).

So, what is it about war (or simply the prospect of war) that makes governments and their bureaucracies (including the military) more effective?

Thinking on this, I was reminded of a review from The Economist (entitled “Revolutionary Fervour”) of George Cooper’s book, “Money, Blood and Revolution: How Darwin, and the doctor of King Charles I could turn economics into a science.”

In his book, Cooper argues that economic growth and social mobility are highest when the economy is highly competitive (Interestingly, he argues that in order to remain competitive an economy needs progressive taxation that transfers wealth from the rich to the poor to enable the poor to acquire the education and skills required to compete).

Linking this idea back to the ideas of Cowen and Kane, it would seem that war and the threat of war motivate bureaucracies (both civilian and military) to make good decisions and support competence by making them feel competitive pressure.

However, the truth is that even in peacetime governments are in competition with one another to both attract the capital, skilled workers and other valuable factors of production needed to fuel economic growth and use these gifts most effectively. Bureaucracies which feel some competitive pressure to use resources well and not waste them will attract additional workers and investors, resulting in growing economic growth and prosperity.

By contrast, governments and bureaucracies that do not feel such competitive pressure are more likely to waste precious productive resources. In the absence of external threats, bureaucracies tend to become more and more concerned with adherence to their own internally-generated standards and procedures, until eventually they are chiefly engaged in maintaining their own protocols. Needless to say, such bureaucracies drive away productive resources, resulting in slowing economic growth and growing poverty.

Looking at Ontario, it is quite clear that the current government resembles the latter more than the former. What sort of shock will it take for the government to realize that it is in competition with other jurisdictions to attract and best utilize the productive resources upon which prosperity depends? How bad will it have to get before the government and the public service unions see the need to, in the (paraphrased) words of Tim Kane, operate more like a cutting edge meritocracy than a government bureaucracy with a unionized workforce?

Can a leopard change its spots?

Profile photo of Bryce McBride

Bryce McBride is an economics teacher and writer currently living in Ottawa. He has published two books - Economics for Canadians and Workbook for the New I.B. Economics.

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