Sunday, February 24, 2013

America – Land Of Enchantment


                                                                                                                       
(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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