(Another
in the series of essays on balancing the budget.)
I
recently had a problem with an appliance, so I did what the manual
said and called the number for service. It was an “800” number
so it didn't cost me anything except my time. Unfortunately the
technician on the other end,i
although he spoke English, had a thick accent and communication was a
real problem. The tech was in Indiaii
and the appliance company had farmed out its service. Outsourcing
was far less expensive for them than hiring Americans to do the job.
In fact, that procedure is quite common and saves a whole lot of
money. And, as you know, in free enterprise, entrepreneurs are
always looking for ways to save a buck.iii
If
outsourcing makes sense, though, isn't it time the government tried
it? I don't mean in any kind of limited way, like printing our postage stamps. I have in mind outsourcing the majority of the US
government. Before you dismiss this idea out of hand and make it a
source of ridicule, hear me out.
One of
the greatest expenses in any business or industry involves the
salaried staff who perform the work. Not just their salaries, but
their health care, pensions, vacations, sick time, and other fringe
benefits. And they need a place to work. Usually it's an office
building in an area where many of them live. That's generally an
urban center with high rental scales. So that's another part of the
cost of the bureaucracy – one we take on each time we establish a
new set of regulations and a new bureaucracy to administer them.
And, unfortunately, we do that all the time.
The
buildings in which they work require maintenance staffs which adds to
the expense. As do uniforms, laundry, maintenance materials, guards,
and the like. Of course the employees will need conference rooms,
cafeterias, toilets, and facilities to park their cars, and these
will add to the rental costs.
Some
learned economist will suggest that it would save money if the
government built and owned the work facilities, however in addition
to all of the expenses of renting, apart from the rent itself, the
government would take on the cost of land and the various costs of
building, including the construction crews and their expenses. And,
of course, that includes fringe benefits, as well as what various
groups – legitimate and otherwise – manage to skim off the top.
And
the land and buildings will have to be removed from the tax roles –
another of the costs of hiring people to run the government. But you
have to spend money to save money. Of course you don't always save
money. The government doesn't really know how to do that. That's a
negative perspective though, and it's better to be positive. The
government really knows how to spend money. I'm positive of that.
However
our concern is saving money. And one way to do that is to outsource
much of our government. There's no reason why most of our
bureaucracy's charge couldn't be handled by men and women outside of
our boundaries – in India, perhaps. For a single price – and
with many departments we'd probably get a discount – a large amount
of our work could be done without overtime costs or fringe benefits.
They may not be perfect for the job – they may not know how to
botch our government as well as local bureaucrats – but they'll
learn. And we won't need service workers to help those employees, or
buildings to house their efforts.
Certain
functions would have to be retained, of course,iv
but those will primarily be those that are demanded by the
Constitution, like defensev
and taxation. They're not our favorites, but our Founding Fathers
gave us the responsibility for handling them.vi
They even wanted us to have governmental officials, like
Representatives and Senators, however they had higher hopes for them
than we do. In any case, no other country would want them, so we're
stuck. I'll have more to say on that issue next week and after that
I'll discuss a few other ways to save money and to enhance revenues.vii
With
the government lowering its employment roles there would be a
temporary rise in the unemployment roles, but fairly soon wages would
go down and private enterprise could afford to hire more workers.
With lower wages, people would have to remain in their jobs longer before retiring,
increasing American productivity and lowering Social Security
payouts. The birth rate would also probably decrease making the cost
of health care less.
And
with a larger available work force we won't need to outsource as
much, which will mean that more Americans will have jobs, pay taxes,
and buy consumer goods. We're on our way to a healthier economy
already.
[Happy Purim]
Next
episode: “Go Tell It On The Mountain” – The rule of
law.
i He
said his name was “Roger” but I suspect that that's not the name
to which he answers when among friends. I'd guess that it's his nom
de phone, imposed on him by the appliance manufacturer in
the hope of convincing consumers that the service was local.
ii Although
it's not the focus of the movie, “The
Best Exotic Marigold Hotel” gives a glimpse at outsourcing.
iii That's
about 55 rupees.
iv Delivering
the mail in Keokuk would be difficult (but not necessarily
impossible – see future postings) by a mail carrier in Mumbai.
v We
have the responsibility for our own defense so the military should
be retained. We have, however, used mercenaries before and that
possibility shouldn't be off the table.
vi Many
of our other activities were taken on by Congress or the courts
because they thought it “right” (or politically expedient). The
courts sometimes make up the law to suit their beliefs, even if
there is no Constitutional basis for their position. Examples
include Lochner v New York and Roe v Wade. Legal scholars question
whether either has any basis in the Constitution, irrespective of
the decision.
vii Not
just raising taxes, though that's a good start.
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