Total Government Outsourcing
A drastic application of a tested business technique: Outsourcing
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those who want to solve the economic problems of the country and
improve the standard of living of the people; it is for people
looking for solutions.
IF: We could double the country’s GDP?
THE ROLE OF GOVERNMENT
Government Responsibility: the power of the peoples' representatives to take decisions.
In any free country the people have the power to govern, through their representatives. For example, in the U.S., the "Powers of Congress" are explicitly enumerated in the U.S. Constitution (Art. I, Section 8).
This responsibility includes the power to make laws for carrying into execution those powers.
Government Competence: the ability and competence of the people who carry out government programs.
The question of competence has generally been handled "by default". Once the elected representatives had voted to initiate a new government program, they automatically assumed that they (usually one of the government offices) could competently carry it out. If interested in history, you can click on: A bit of History and Data.
The first example of government outsourcing is in the US Constitution itself (Art. III, S.2). The founders realized that not every judge might be impartial. To avoid the situation where a private citizen could be criminally condemned by a corrupted judge, they established that the verdict in all criminal cases would be delivered by a jury. These people would not be employed by government and presumably would have no ulterior motives.
Their decision indicates that they believed that "outsourcing" constituted a citizens' defense against the possible corruption of government officials.
While complete nationalization has been tried (and failed) many times in many countries, no country has tried the opposite: complete privatization. Even countries like the U.S., which are criticized by some for their "capitalism", allocate only part of their human resources to wealth creation.
For example, currently in the U.S. more people work in various levels of governments than work in the good-producing industry. Some industries have been nationalized, others have been regulated out of business and, at the same time, the "Obamacare" massive legislation is in the process of nationalizing a large percentage of the US economy.
On the brink of Economic Collapse
During the last 200 years
we have delegated more and more to government.
Government Size is measurable in the resources it uses: such as assets, expenses, currency, future wealth (debt) and human resources.
Government has a tendency to grow and historically it has continued to grow. It uses more and more human resources to create bureaucratic, non-productive, service-oriented jobs. It started two hundred years ago with about 550 people elected to the federal government.
Today the federal government uses (i.e.: removes from production) almost 5 Million people (Source: US Office of Personnel management). At all levels of government, over 20 Million people in the US (Source: US Census Bureau) are employed by governments and their contribution to wealth creation is limited.
Over 20 Million bureaucrats in a work force of 121 Million is a significant amount. It is more than the total amount of goods-producing employees (Source: U.S. Bureau of Labor Statistics).
These 20 Million people are using the existing infrastructure, products and services, but are not contributing to wealth creation, apart from their ability to spend their own salary. In a competitive environment (i.e. when creating profits for their bosses) they could be providing the same services and also directly contribute to wealth creation through their work. If they were, then the GDP would double, tax rates could be reduced and government revenue would greatly increase!
The human resources dedicated to wealth creation have been exploited by governments which are non-competitive in the services they offer and compete unfairly in the salaries they pay.
Public Service Unions have no real counterpart to deal with and have unreasonably increased the salary of bureaucrats, with respect to their counterparts in the private sectors.
Public service efficiency and motivation are low. We are not able to measure the efficiency of bureaucrats, far less increase it.
We can do much better
We measure the wealth of a nation not by the number of people employed, but by the wealth people create. That’s the GDP.
Wealth creation works both additionally and exponentially: Not only any new idea, product or service increases the nation’s wealth, but there is an exponential component: every new idea, product or service can be used by someone else to produce more wealth. This cycle repeats itself over and over.
Wealth Creation Exponential Growth:
A Classless society?
Many people have a dream of a "classless society" in which people are evaluated and respected for their ideas and the work they are doing. In many respects and in a large measure we have achieved a better society with respect to a century ago. However, because of the increasing compensation disparity between private and public sectors, we are creating a new class division between the people who produce wealth and the people who administer the environment for them.
The gap between these new classes is becoming of Orwellian proportion.
At the same time, we are not using the full potential of our human resources. We even have more people out of work.
Finally, because we are operating far from the optimum in the STING curve, the economies of the industrialized nations are not growing at the rates they were growing in the 60's, even though we have incredibly superior technology, better tools for production, improved and cheaper comunications and improved personal productivity.
Total Government Outsourcing aims at eliminating these problems. It also aims at reducing corruption, reducing waste and costs, improving quality of service and improving the efficiency and the motivation of the people currently working in government, by "outsourcing" them to the private sector.
Because of the exponential features of wealth creation, the addition of a large number of people to the private sector work force (for example, 18%) can double the wealth being created (GDP) with advantages for all, but especially for the poor, the jobless and the disadvantaged.
Private businesses are missing much of the potential of our national human resources, which currently work in government.
The cost of a non-competitive government
The public sector margins (Budgeted amounts in addition to prime materials, salaries, administration and marketing – if any) go into expansion of bureaucracy, duplication and often unwanted products and services (See Figure 6). Essentially, the Public Sector tends to grow itself. Bureaucracies tend to deduct from the GDP.
The private sector margins go into taxes and profit. The goal of the private sector is to maximise profits. Profits are re-introduced in the market, thus produce more wealth and add to the GDP.
WHAT IF: We could balance the Federal budget every year? Reduce inflation to zero? Stop the devaluation of the dollar?
WHAT IF: We could drastically reduce the opportunity for public service corruption?
WHAT IF: Government bureaucracy could be reduced to practically ZERO and its 22 Million workforce transformed into new, efficient, customer-friendly, wealth-producing businesses?
WHAT IF: Every Public Sector Union could become a Private Sector Union?
Here is How
Government budgets and services do not necessarily need to be cut (as a result of this particular idea), but ALL of the human resources in government should be outsourced. However, elected politicians would maintain their full decisional power, as representatives of the people.
The Total government budget amount for the year should be set as a percentage of the current GDP. Politicians will be able to only appropriate that amount for government programs. Incidentally, they should deal only in percentages of the budget for each program, not refer to explicit amounts.
Only elected positions should be paid a salary directly by taxpayers. Government bureaucrats would disappear (including personal secretaries of politicians): They would become employees and contractors of private companies.
What politicians cannot do personally should be outsourced through a public bidding process and paid according to the agreed budget allocations. No political appointments should occur (nor positions created) outside the elected positions enumerated in the Constitution.
From the very top level, a management company should be hired though a public bid, to manage the outsourcing of government programs to other companies through similar public bids.
The TGO Model:
An example of privatization of one particular sector of the economy:
Where to go from here: