Steven Teles on Kludgeocracy
Apr 14 2014

Steven Teles of Johns Hopkins University talks with EconTalk host Russ Roberts about kludgeocracy, a term Teles coined in a National Affairs article to describe what Teles sees as the complex and unproductive state of political governance in the United States, particularly at the federal level. Teles argues that various rules and procedures in the Senate and the House allow politicians to slow down legislation in return for favors. Teles argues that both liberals and conservatives have an incentive to favor more transparency and a more streamlined governing process that would get things done.

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Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Apr 14 2014 at 8:08am

I am only about halfway through this podcast.

I always thought it was kludge like kloodge (kind of rhymes with luge) not like fudge.

[Hi, Kevin. I rarely commend Wikipedia, but in this case, I suggest Kludge at Wikipedia. I’ve heard this term pronounced both ways, but the most common way I’ve heard since the early ’70s has been in tech talk when working on computers regarding either jury-rigged rewiring or software, something you knew there was a better way to do but had no time to make elegant or efficient immediately. It rhymed with “fudge” or “sludge”–which I think may be relevant as a derivation. Clunky, was the effective meaning of the word. So, mix “clunky”–clumsy–with “fudge”–faking it–and you get the drift, in English. But how the “k” got into it is interesting and may explain the different pronunciations. No matter what the pronunciation, the opposite in meaning is “elegant”. Everyone agrees on the meaning, and that’s what matters.–Econlib Ed.]

Apr 14 2014 at 8:39am

Mr. Roberts:

The prior listener who left a comment, Kevin, got it right, at least in my experience. I’ve worked in the CA and AZ start-up worlds and I now work in a DC-area start-up; in those environments we use “kludge” (which I had never seen written-out) to describe an inelegant fix. The word always gets pronounced in a manner that rhymes with “rouge.” Incidentally, I never would have got the spelling correct.

Thanks for another thought-provoking podcast.

Apr 14 2014 at 12:25pm

I agree it is the meaning that matters. It was just one of those things… I kept re-pronouncing it out loud every time I heard someone use the word while I was listening.

Jim F
Apr 14 2014 at 3:37pm

Software developer for twenty years — author of a number of embarrassing kludges. But it is always pronounced klooge. Good podcast but the mispronunciation was cringe-worthy.

(In fairness the internet shows both pronunciation — but I know I’m right.)

A.J. Lenze
Apr 14 2014 at 4:40pm

I was a computer engineer for 15 years and used the term “kludge” embarrassingly often, but I and everyone I worked with (in Iowa BTW) pronounced it klooge. Ditto for engineering school in Indiana.

Apr 14 2014 at 5:28pm

Programmer since ’63, and it rhymes with sludge

One of the early class projects was the Kludge Compiler, so pronounced.

I claim historical precedence on the matter.

John Roesink
Apr 14 2014 at 6:24pm

Former *nix sys admin here and I’m going to throw in a vote for “klooj”. Even the Wikipedia entry cited by Ed ultimately converges to “klooj” with the Jargon File entry. Is there a more definitive source than ESR? He’s even been an EconTalk guest!

I also agree with the sentiment that meaning is what’s important and I would suggest that Mr. Teles is further off base in the meaning than he is in the pronunciation. A kluge is an ugly, temporary, “quick-fix” workaround… that works. “Temporary”, “quick” and “works” are words I’ve never heard anyone use to describe the federal government. I would go so far as to suggest that market solutions are closer to the spirit of the word kluge because kluges are expedient and, generally speaking, not centrally planned. If Mr. Teles wants to borrow a metaphor from computing I think he’s looking for something akin to code bloat. Sure it compiles (eventually) but the user experience is awful…

Dr. Duru
Apr 14 2014 at 8:37pm

I have always used “klooge” as well, but I can’t make a stand on what is technically “correct” or not.

Anyway, my main trouble with the podcast is that very little sounded unique to the U.S. or our structure of government. It would have helped to point to at least one current government on the planet that somehow has avoided the kludgeocracy. Otherwise, the concepts all make sense, even inevitable for any large institution.

It also makes sense that an extremely large institution can’t tackle all big problems at once, and maybe can only handle one big problem at a time. However, perhaps it doesn’t have to tackle everything at once when there are a lot of grassroots people in numerous organizations making change where it really counts in people’s lives.

Cowboy Prof
Apr 14 2014 at 8:47pm

Not a computer programmer here, nor can I barely use a cell phone. It is good to see a healthy debate over the pronunciation over the word “kludge” here.

My bigger concern is that “kludgeocracy” really seems like basic public choice theory. I’m not sure what is being added to the debate here other than a new term. An economic sociology of academia would now predict a spate of graduate students writing papers with “kludgeocracy” in the title in an effort to get on the newest academic trend.

Capt. J Parker
Apr 14 2014 at 8:50pm

Another great Econtalk. Teles clearly gets the idea that organized special interests have the loudest voice in Washington for example:

Guest: “And so, when you actually look at the universe of interest groups that we have, the universe of interest groups is essentially the mobilized force of those who already got what they want out of government. They want a little bit extra, or they want to push it up a little bit here or there, but most of what they are there for is to protect what they have already got.”

At least I thought he got it until he said this:

“I think you can look at some evidence like that, the fact that we’ve been pushing as hard, you know, conservatives and libertarians have pushed as hard as they have against carbon taxation hasn’t reduced people’s desire to do something about global warming. But we’re seeing it through all these incredibly complicated subsidies for electric car makers and attempts to put regulations on what kind of light bulbs people can use.”

Teles makes a cogent point about whack-a-mole government intervention. But, why does he assume it is the people’s desire to do something about global warming as opposed to the organized effort of electric car and compact fluorescent bulb makers?

Apr 14 2014 at 9:10pm

Great podcast so far( half way thru). BTW, the link at the top, to Steven Teles’s homepage, is broken.

[link problem fixed. Sorry about that.–Econlib Ed.]

Capt. J Parker
Apr 14 2014 at 9:32pm

@ Cowboy Prof
You said:

“kludgeocracy” really seems like basic public choice theory. I’m not sure what is being added to the debate here other than a new term.

My feelings as well. I think the new twist might be that Teles’ solution to Kludgeocracy is to lower the hurdles for new legislation to pass so that the old nonfunctional laws can be more easily cleared away. To my mind public choice encourages us to raise the hurdles for new laws and regulations so you have fewer bad ones to begin with. Of course that latter solution is a problem if you still believe in activist government even when you are mindful of all the problems it creates as Teles clearly is.

Apr 15 2014 at 9:39am

Finished this. Great discussion. Prof. Roberts, your line, “The Constitution isn’t really in play any more, except for a handful of certain kinds of rights” is sadly true, I’m afraid.

Regarding Teles’s “go big or go home” comments around ACA and Medicare, I don’t believe Obama was really concerned about getting single payer in this round. The left will continue to fight for it, and in another generation (give or take 10 years), they’ll make the case that “all the fixes we’ve done to the private, competitive healthcare system simply haven’t worked” and the will move toward single payer.

That will be very hard to fight against, because it benefits so many while costing them – directly – so little.

So, I’m glad Teles wants to be noble and “go big.” But politics doesn’t work that way these days.

Shawn Barnhart
Apr 15 2014 at 9:53am

I just ran across this, Intuit, the maker of Turbo Tax tax software, engaging in an “astroturf” campaign to prevent the government from streamlining tax filing. I would assume most Econtalkers would recognize the term, but because I can almost hear Russ asking me to define it, astroturfing is a term applied to a PR campaign in which an entity with a stake in an outcome orchestrates the campaign through third parties, making it appear that the campaign is “grass roots” while obscuring their own involvement to preserve the false organic nature of the campaign.

I think the Intuit case is a perfect example of kludegocracy, especially so because it ties into taxation, which is often the absolute or proximate cause of so much of kludgeocracy. The idea that a near monopoly vendor of tax solutions is arguing for the continued complexity of taxation for their own profit seems to underscore everything wrong with kludgeocracy, especially if you consider the inherent complexity of the tax system as a great contributor to kludgeocracy — so many of the “simple” kludges to policy seem to be yet another tax tweak to promote “market benefits”.

I’ve often wondered why the IRS can’t create its own web forms and enable direct submission of tax forms. Even if they limit it to short form submissions only, it would cover a huge swath of Americans and greatly streamline tax processing by providing the data to the IRS directly — I would assume it would basically pay for itself in efficiency. I’m sure the anti-tax crowd is adamantly opposed to it because they would worry it would be compulsory and no longer allow them to pursue every last tax avoidance gambit, but in my mind that’s kind of the citizen complicity part of the kludgeocracy where people actively participate in it in the belief its to their advantage.

Mark Crankshaw
Apr 15 2014 at 10:10am

So again we have this feature of public opinion that show there are a lot of people who in fact are pervasive recipients of government assistance who believe that government is only helping poor and black people. That’s a common feature of public opinion

It appears to me that Mr. Teles has produced an ad-hominem attack upon those of us who don’t sufficiently appreciate all that government “does for us”. If you feel that way, evidently according to Mr. Teles, you must be a bigot and/or a racist.

I have another, and better explanation. I am a “pervasive recipient” of “assistance” from both the free market and from government. However, the experience of these two types of “assistance” is, from deep psychological perspective, entirely different.

Consider the billions of possible goods that I can purchase on the free market. Although I am constrained by time and money, within those parameters I have a vast number of goods and services available to me. I can select, and almost as importantly not select, those goods and services as I choose. For most market purchases it is I that is in control: I control the who, what, where, how and when. I can decide, on a whim and for any reason, to refrain or discontinue purchasing the overwhelming majority of the goods and services on offer on the free market. Where I cannot, my “appreciation” for those goods/services is not forthcoming even though I may “benefit” from them.

The entire market relationship is, therefore, deeply personal, tailored and suited to my individual tastes, desires, goals and aesthetics. What I buy (or refuse to buy) on the market is an expression of who I am and what I want to be.

Contrast this with the goods and services, the “assistance” mentioned by Mr. Teles , provided by the government. My relationship with the government is deeply impersonal. Nothing in that relationship, by definition, is tailored and suited to my individual tastes, desires, goals, and aesthetics.

Who is in control in the relationship with government? I am not in control any way whatsoever. My pathetic puny vote is as efficacious as flicking a light switch that’s not connected to a light bulb. Flick it as much as you like or don’t flick it, the result is the same. In my relationship with the government, I have no say, I am completely powerless and at the total mercy of the political powerful or the crowd, mob, and organized interests. And the powerful, special interests and the crowd are not particularly merciful.

The relationship with government is profoundly unsatisfactory. It is the equivalent of having what you read, the clothes you wear, what you watch on TV, or the music you listen to being dictated or imposed by others. It makes no difference if the dictation comes from powerful elites or from the “majority”. It remains a hateful imposition.

In my mind, the government is, and always will be cold, alien, authoritarian, distant and intent only on catering to the “them”. Perhaps for some, the “them” no doubt embodies racism or classism. However, it certainly needn’t–it needs no racial or class dimension at all to be deeply felt.

Whether or not any particular government “assistance” is a benefit or not is not even an issue. Makes no difference. The government, and everything it does, even on the odd occasion that it does good, will always be considered a second-rate, will always be unappreciated, and will always remain unloved. It will always be a source of suspicion, never a “we”, and always a “them”. Liberals may want us to think “We” when contemplating the government. However, given the nature of the compulsory relationship, impersonal, authoritarian, and alienating, a relationship by force, that is a tall order for all but “true-believers” in the Liberal statist faith.

Eric Hammer
Apr 15 2014 at 12:25pm

Thanks for the great podcast Russ. Always look forward to it every week!

One thing I found strange through-out the podcast is that Teles sounds as though he is very much in favor of silly legislation being removed, either to never be seen again or replaced with something better, yet his proposal does nothing to directly remove legislation. By removing some of the choke points or veto points you simply make it easier to pass new legislation, the goal of which depends on the interests of the legislators. That can go either way, and given the past shows very little in the way of attempts to repeal things through Congress, it seems an odd suggestion.

What would make more sense would be to advocate for a Constitutional amendment that would make every new piece (and old piece) expire after 5 years and require repassage. By making expiration of legislation the default choice legislators would have to actively work to keep things going, allowing for much easier removal of past mistakes by even a minority in Congress, or even just a president. When a bad law’s time comes, all legislators have to do is not reinstate it.

Apr 15 2014 at 12:57pm

Here is an example of bad kluge:
Study: Gas taxes are six times as effective as stricter fuel-economy standards

The CAFE and the Ethanol program are such a waste just so the politicians can hide the cost and trumpet the benefit. Politician will screw the rationally ignorant voters whenever it helps them. Both sides need to look at our own Politician as con men.

Apr 15 2014 at 6:14pm

Thanks for the discussion. Another discussion, where I’m left trying to decide if this fits into the public choice understanding, or if it’s one of those insights that’s so clear and elegant that afterwards I’m left thinking that must have been obvious, even if it wasn’t.

I don’t know if Eric Hammer’s suggestion of a mandatory expiration of all bills would work as well as he hoped, or if it would just result in everything getting reauthorized in Omnibus bills with regular government shutdown fights crippling everything good bad, and otherwise.

I like the idea of addressing the issue in some way, however. Perhaps something learned from the experience of Wikipedia – make laws easier to repeal than to enact. Remove of the filibuster option from legislation designed to repeal a program, for example, and leave it in for passing new programs, for example. Something to this effect might get the desired capability to remove Kludge while adding less problems than it solves. Perhaps.

David Zetland
Apr 15 2014 at 7:06pm

1) I’ve always said “kludge” as rhymes with sludge. Maybe a west coast pronunciation

2) Yes, this is public choice, applied. It’s also about logrolling, which has existed as a “theory” for longer.

3) Great example of why economists NEED to spend more time on politics, i.e., political economy.

3) Taxes are a nightmare (, but retirement is as well, and it’s NOT because of competition and choice — it’s because the government (a) interferes with regulations and requirements and (b) creates a “feeling” that private pension failures will be bailed out.

Apr 15 2014 at 11:11pm

The provision of services at the highest level of government has been a mess. We have spying on US Citizens, indefinite detention, a ridiculously complex tax structure, out of control regulation and massive bank bailouts. With a track record like this, I fail to understand why anyone would risk further consolidations of services with these people.

What really irritated me about the discussion was the repeated idea that minorities, mainly African-Americans are helped by central government. That is crazy. Every single thing mentioned by the author steals money from African Americans and gives it to someone else. The biggest of these are by far Social Security and Medicare. Black men have a slightly lower life expectancy than other groups. So all of their accumulated earnings is not available for their heirs but is being distributed to older women of European and Asian descent.

Jonathan Brown
Apr 18 2014 at 9:38am

Isn’t this just a restatement of Mancur Olson’s last book (

At the time Olson moved from trying to define why people get together in organizations to a worry that as political systems (especially representative systems) age they build up requirements for interest group interaction and “kludge” the system up. At the time is was an amazing insight. I think professor Teles is on to something but we should not ignore his antecedents.

Kevin Smith
Apr 21 2014 at 4:18pm

I did not find Tele’s approach very helpful beyond what we have – and strongly agree the correct metaphor is code bloat.

But – here is a solution that would help with his problem. Laws can be repealed with a 2/5s vote in both houses, and a veto can be over come with a simple majority. THat way it is easier to remove laws than pass them and should remove alot of cruft. Of course, this would probably end up being used for evil in ways I have not thought of, but hey at least it would get rid of some laws.

Ron Crossland
Apr 22 2014 at 10:15am

Intertwined, sticky, klunky, gummy, kludge. Everyone agrees the laws we have inherited from decades of good intentions derailed by special interest and biased negotiators (government and private) have resulted in a system that is far from optimal.

What I find fascinating about either far left or far right thinking is that there exists some golden mean, bounded by the ideology of either extreme, in which private or public actors will never look for advantage, and that all citizens of a state have equal enough opportunity to progress.

Better government systems exist than the US implements, but our idealistic notions that the one carved out 200 years ago is the best version for today is (charitably) nostalgic. And some corporations temper profit mandates with social concerns better than others. Many of the best examples of this are outside the US as well.

Apr 23 2014 at 1:01am

Yeah… I also cringed upon hearing the mispronunciation of the common computer science term. While wiki cites a few variations in diction, I’ve never heard it rhymed with fudge on the west coast in the last 15 years. Potato, po-tah-to, right?

Unfortunately there is a subtlety with using Kludges in software that I don’t think Mr. Teles caught from the definition. Kludges are used because of extenuating constraints (time, legacy decisions, cost, unreasonable managers, etc) that people don’t feel capable of changing. They often are inelegant and embarrassing but still generally the preferred solution to specific problems given constraints. This subtlety is as important to understanding Kludges as mutual harm is important to understanding externalities. Both are omitted from the Oxford definitions.

Like a few others, I think the term is inappropriate to describe large systems (tax law, retirement programs, health care, etc). It breaks down at that scale because it’s hard to argue any large system is a “preferred solution.” If anything, calling compromises “kludges” may help reinforce how much respect we sometimes owe policymakers for juggling so many truly difficult constraints. “Code bloat” I agree is a much, much better metaphor.

If you are interested in drawing wisdom from CS into econ to describe systems, I would highly recommend reading Eric S. Raymond’s “The Cathedral and the Bazaar” in which he argues that self-organizing, rational actors can build better, larger, and more responsive systems than “beautiful, elegant” centrally-managed cathedrals. The arguments would be persuasive to Mr. Roberts.

Apr 23 2014 at 10:33am

[Comment removed for irrelevance to the podcast episode content. Email the to request restoring your comment privileges. A valid email address is required to post comments on EconLog and EconTalk.–Econlib Ed.]

David Q
Apr 26 2014 at 12:05pm

I wonder if there is a regional preference for kludge rhymes with fudge vs. kludge rhymes with luge. I also wonder if there could be an era where the preferred pronunciation changed. From 1984 to 1994 on the West Coast I exclusively heard it rhymed with luge.

I was surprised no one mentioned Demosclerosis, a book about code bloat in government and in special interests.

– – –

The general bent of EconTalk listeners might not like Mr. Teles’s favortism toward certain government solutions, but I think it might be a case of Teles planting the idea of “public choice” in the minds of people who have favortism toward all government solutions. Such people might dismiss other authors as hopelessly libertarian or hopelessly conservative.

But Teles’ left-friendly presentation might allow the idea of public choice to sneak past the watchful dragons of political correctness.

The Vulcans have a saying for it: “Only Nixon could go to China.”

Jordan O.
May 2 2014 at 12:04am

So the U.S. government is just a giant game of Calvinball?

May 11 2014 at 2:34pm

I have not finished this podcast, but I am not very impressed with Teles’ admiration for social security as easy peasy, while considering actual investment as too hard for most people.

Social Security sure sounds easy, except I listened to a two hour radio talk show on how to maximize your social security.

When should you take it? You get different amounts if you wait or take it early.

Should you use spousal level or your own?

It did not sound “simple” to me.

I suspect Teles has no personal experience with SS except having it deducted from his payroll. (Also, note that while its “easy” for consumers, you may be passing some of the burden onto the businesses who have to collect it.)

These decisions seemed at least as complicated as choosing an mutual fund.

Now, on to “investing” where he pillories the difficult task of choosing a mutual fund…except he also mentions Index funds. And there also target retirement date funds.

So the market already provides two simple “fire and forget” choices that do not require much advise or education.

Comments are closed.


About this week's guest:

About ideas and people mentioned in this podcast episode:Books:


      • Public Choice, by William F. Shughart II. Concise Encyclopedia of Economics.
      • Privatization, by Robert W. Poole Jr. Concise Encyclopedia of Economics.
      • Airline Deregulation, by Fred L. Smith Jr. and Braden Cox. Concise Encyclopedia of Economics.

Podcast Episodes, Videos, and Blog Entries:



Podcast Episode Highlights
0:33Intro. [Recording date: March 12, 2014.] Russ: Our topic for today is a recent article you wrote for National Affairs titled "Kludgeocracy in America". It's an indictment of a particular set of problems that we have with governance in America and our political system. What is 'kludge' and why do you consider America a kludgeocracy? Guest: So, kludge is a term that comes from computer programming, and the Oxford English Dictionary defines it as an "ill-assorted collection of parts assembled to fulfill a particular purpose". A clumsy but temporarily effective solution to a particular fault or problem. It's hard not to see that definition as describing lots of what government today does. A lot of what government today does is an effort in the absence of being able to get rid of a lot of stuff we've already got, to simply add new things on top of what we already have, and therefore try to make what we are doing now consistent with what we've done before. The Affordable Care Act, which I supported and still grudgingly support now, is a pretty good example of that. We had Medicaid and Medicare and employer health care plans and SCHIP (State Children's Health Insurance Program) and all that other stuff, and then we added a bunch of new stuff on top of that in the Affordable Care Act because, in part because it was so hard to tear up all the stuff that we already had. And making all those pieces somehow fit together is complex for government to do. Right? A lot of the problems we've had with the exchanges are the result of trying to create a system to deal with all of that complexity. And it's hard for citizens to cope with or understand, and in some cases makes it hard for them to know who to blame when they have problems that seem like they can't understand, that they can't figure out what the source of it is or even who is responsible for it. Russ: So, what's the underlying cause of that phenomena? So, we understand why this happens in, say, the design of an operating system, a metaphor you use in your article. Or at least we see it happening there. Why did this particular piece of kludge, the Affordable Care Act, why did it have to get layered on everything else? Why didn't we just say, well, look, this current system is a big mess, and let's start from scratch and have a better one? Guest: Right. So in the article I identify a bunch of different elements of the cause of kludgeocracy, many of which I think did play out in the Affordable Care Act. First of all is simply the structure of American institutions. American institutions as we all learned when we were boys and girls, creates separation of powers, and that separate of powers, a lot of the original theory behind that is that it would constrain government. You would keep government from acting, because it would create all of these veto points. And in fact it does, and we've actually multiplied veto points on top. Our committee system within each branch of Congress has some extra veto points because we've got multiple committees. You might think that should just make it harder to do stuff. But what it really does, in the article I say these operate less like veto points and more like toll booths, where the people who are at these particular veto points are naturally interested in just stopping things. Usually what they are interested in is extracting a toll and saying if you want to get past the toll, here's the price you have to pay. And the price you have to pay in many cases is leaving everything we've already got in place, because those toll-takers are connected to interests who are invested in existing arrangements of government. And so this separation of powers designed to actually control the government is also simultaneously made it hard to undo or re-do aspects of government once they are already in place. Again, that's a kind of a paradox or an irony of our constitutional system, that it does operate to slow government on the way up, but it also arguably operates to slow government either on the way down or trying to simply change it laterally.
5:11Russ: So, let's make a distinction between--as you do in your article--size and complexity. So, liberals and conservatives in the big picture, political arguments that we have, whether it's a presidential election or for a particular issue like health care, tend to argue about--the things that get waved around are things like government is too big or government is not big enough or government should have a bigger role in this area. And your point is that it isn't so much that government is big or small. It's that it is complex and opaque. It's not transparent and it's not designed by anybody; it's emergent. So, as a result it doesn't necessarily lead to good policy in the area, just complicated, messy policies. Is that accurate? Guest: Yes. So, I think a couple of examples here are useful. The one that I think is most useful in making this distinction between thinking of policy in terms of big and small, and thinking of it in terms of complex and simple, is our retirement program. So in essence we have two parallel sets of retirement programs in the United States. We have Social Security, which whatever you think about it is from the point of view of the user incredibly simple. You work all your life; taxes get taken out. You retire; and checks start appearing in your mailbox. From the point of view of that you don't really need to know anything; you don't need to learn anything; you don't need to deal with a lot of complexity; that's simply how Social Security, at least the retirement part of Social Security, works. We also have a parallel system of IRAs (Individual Retirement Accounts), 401ks, all kinds of other complicated mechanisms for shielding savings from taxation that turn out to be very complex, very hard for individuals to understand. Anybody who has actually tried to look at their employer plan and try and sort through the dozens and dozens of mutual funds that they are presented with there will know what I'm talking about. And so we've got two separate parallel systems. The argument for Social Security is basically saying whatever level of retirement savings we want should be guaranteed through government. That's a much more simple, transparent way to do it. And it's also in some ways much easier to hold responsible. We actually know exactly how much government is spending on Social Security, whereas in the case of our parallel private retirement system, a lot of the costs are actually private, right? All of those people who feel like they have to hire a financial adviser to tell them what their allocation in their account should be, all the people who are busily reading magazines trying to get themselves up the learning curve about all these different mutual funds which almost always turn out to give them worse results than simply an index fund would, that's all real costs on people's time and anxiety at a period in which we are already overwhelmed with the complexity of society in general. So, again, I would distinguish that complexity/simplicity axis from the big-vs.-small government axis. Russ: I hate to disagree with the creator of the concept, but that doesn't strike me as a particularly good example, in the following sense. It's true that private investing is complicated. But that's because there are a lot of choices. We can debate, it's an interesting debate, about whether that's good or bad. I think it's good. Some people think it's bad. To me, the government part of it is fairly straightforward, right? We have the tax shielding of certain types of savings versus not other types, and tax shielding of certain kind of investments and not other types. And on the other hand, the Social Security system, I think, is quite complex and quite opaque. Most people don't know what they paid into it in their life. It's taken out automatically. It's true it's simple to receive, to pay the money and receive the check. But the governance part of it is not simple at all. For a long time, I think still, maybe it's just flip-flopped recently, but for a long time the money you paid in through your payroll taxes didn't go toward anybody's retirement, particularly. Some of it did, but most of it or a lot of it went to other things the government does. That's going to change; it will change soon if it hasn't already because the system won't have enough money to pay for the retirement; it will have to start tapping into direct taxation. So, to me--and then, how much you get paid is very complicated. It's a strange formula that most people don't know anything about. It's true they just get the check. So I want to disagree with you, and I want to suggest--take the example you gave in your paper, your essay, which is taxation. So taxation is unbelievably complicated. It does serve a whole bunch of special interests. And changing that is very, very hard for that reason. So, to me the retirement thing--there are intergenerational issues; there are issues about wealth vs. poverty; there's an implicit redistribution. But the real kludge is our tax system. Do you agree with that? Guest: Well, I disagree with the retirement thing, and I'll go back around that with you one more time. I don't actually think if you were to survey most Social Security recipients that they find it complex or difficult to understand. Today we almost always get a report from the Social Security Administration that tells us how much we've actually paid in and what our monthly retirement will be. And again, there is a complicated formula that determines how you get from your monthly earnings to your Social Security payment. But that's actually invisible from the point of view of the recipient. Right? That may be good or bad, but from the point of view of the recipient it's perfectly-- Russ: It's simple. I agree with that. Guest: Whereas the number of discrete decisions that people have to make over their lifetime trying to invest their 401ks or IRAs generally overwhelm their decision-making capacity. I think that's--and require them to fall into depending upon financial advisers, who they in many cases also don't have the information to be able to effectively supervise, either. Russ: But that's not a problem with gatekeeping or veto power, the separation of powers. That's a problem--to the extent it's a problem--with private choice. We could always make things simpler--we could change groceries to just have 4 things. You know--starch, protein, carbs, and fat, versus sugar. And that would make shopping easier. The issue that you are highlighting, which I think is very interesting, is the role the political incentives play for political actors in making things yucky. Guest: But I think the same point applies--you know, there's lots of political interests that essentially want to increase this pool of mutual funds from again essentially unsophisticated investors who are largely disaggregated from which they can get large investment charges that are in fact larger than you would get in any much more aggregated system. And I do think that the same basic political economy applies. Once you actually have these things in place, interest groups are almost better at playing defense than offense, right? Once you have those tax-sheltered savings in place, it's very hard to undo them because you have to go through every one of those veto points all over again to undo what government's already doing. And I think the same principle applies to the tax system. Now, in fact everything we're actually talking about here about retirement systems is in fact a feature of the tax system. Right? It's not a feature of some other--I mean, all of these are about tax sheltered savings, which is part of the general complexity of government and the multiple different aspects of tax sheltered saving. So we don't just have one; we don't just have 401ks. We have IRAs, we have Roth IRAs, we have all these other ones that are designed for education. That is, we have--even if you think we ought to shelter savings from taxation, we've done so in the most complicated and overlapping and difficult-to-understand way-- Russ: Agreed. Guest: that also, people don't really understand how these multiple tax sheltered savings systems actually interact and to get the maximum benefit out of them you generally have to pay for expensive tax advisers who tell you which of them you need to be using and how and how to maximize the benefit out of them. Russ: I totally agree with that.
14:13Russ: Let's talk about the role of federalism. How does federalism lead to kludgeocracy? Guest: So, federalism is a term under which many sins occur. That is, it's very easy to talk about federalism without being clear about what you mean by it. And the classic, still, again, lots of us who took Intro to American Government will remember a distinction between layer-cake federalism and marble-cake federalism. This used to be a better metaphor when people ate marble cake, back when you and I were boys. But in a layer cake you just have one layer on top of another. In terms of federalism, you can imagine a situation in which states had a clear set of functions that they are running and the federal government had a clear set of functions they are running. So, for example, the federal government would be running health care programs and it would fund it all, would run it all; and the states would be doing education and they would fund it all and they would run it all. That is one kind of federalism. That is not our federalism. The federalism that we've been living under for at least the last 80 years is one of pervasive interpenetration of layers of government. So, think about Medicaid, as the simplest one. The Federal government pays about half of Medicaid, more under the Affordable Care Act. It sends--but it doesn't administer Medicaid; the states administer Medicaid--but it sends lots and lots of rules down to the states about how they are going to run it. That in fact is the modal form of government, for a huge amount of what government does. That's true of the environment--a lot of the actual implementation of environment is all at the state level except with pervasive government intervention. Education is in some sense an extreme example of this: even though it's run state and locally, the level of rules that go along with federal money is extraordinary. And as lots of evidence shows, leads to a kind of compliance mentality, because there are so many complicated rules that are being applied from the federal government down to the states that people are constantly worried that they are going to get on the wrong side of it. So rather than thinking about being innovative or doing things new, every time people think about that they are always worried that that's going to end up putting them on the wrong side of the line of some particular kind of government rule. So, I think federalism ends up--and then, of course, once we have these, what I call intergovernmental kludges, they are very hard to undo. And the tendency is to keep doing more of them. So the Affordable Care Act in fact was already an intergovernmental kludge with Medicaid; and because that's what government had been doing, that's what government had already been attempting and extending health insurance, the path of least resistance was to do more of it. And to expand Medicaid; and to do all of the exchanges through the states because the federal government didn't have the capacity or administrative capacity. That was all in the states. So once you start doing intergovernmental kludges, the path of least resistance in any case is to keep doing more of it. Russ: Yeah. The puzzle for me with the Affordable Care Act is why we didn't just expand Medicaid, which we already had in place, for people who couldn't afford health care or health insurance. Actually, I don't care about health insurance. It bothers me that we keep talking about health insurance. We really care about health care. Guest: Right. Russ: So we have a government system that already helps poor people. We're off subject here a little bit, but-- Guest: Well, we did. The biggest part of the Affordable Care Act was not the exchanges. It was the massive expansion of Medicaid. Now of course again this is another element of complexity because of our--and part of the complexity is introduced by the Supreme Court here--the Affordable Care Act expansion to Medicaid had to be voluntary for states, so the states that arguably needed, had the greatest need for an expansion of health insurance, like Texas, basically turned down the expansion. But it was a huge expansion and I think that was where the largest percentage of increase in health insurance coverage actually came from out of the Affordable Care Act. Everyone was talking about the exchanges because that was the sexier part and it had the Mandate and that's what everybody was focusing on. But that was not where the real kind of raw power of increasing health insurance coverage came from. Russ: But mentioning the exchanges reminds me of another aspect of the problem you mentioned, which is the role that the Federal government plays in, I would say corrupting, or running private enterprises while keeping the illusion that they are private. So, we have private insurance companies--which, they are already not so private. There's a huge amount of regulation that decides what they can insure, what they have to insure, what they can charge, whether they can operate across state lines, the cost of doing so, etc. And now we've gone and said, Okay, you can't offer certain types of--the Federal government said, 'You can't offer certain kinds of plans. Well, you can for a while. Maybe.' And there's a point where the profitability of these enterprises, how they are run, the losses are all [?] tend to be socialized. We've seen this in other areas. We see it with the banks. The banks in the United States are called private but in many ways they are highly regulated and in many ways they are favored and punished and everything else by the Federal government in ad hoc and sometimes legislative ways, but mainly ad hoc ways. Which, to me, is very destructive of the rule of law. So, talk about that issue, about contractors and private firms versus public provision. Guest: Right, so again, I think the entire story I'm telling here is in part a story of irony. A story of people trying to do one thing and getting, in some ways, the opposite. So, we can think about the ways that conservatives have attempted to control government. One of them was privatization. Now, of course there's multiple ways you can do things that are called privatization. Right? When the British privatized many of, at least some of the privatized industries basically what they did is they said: This airline company, British Airways, was a public company and now it's just like every other private company. Regulated just like every other private company. But lots of privatizations, most privatizations arguably were not like that. There still was an expectation that these firms had a social function after privatization. So the social function remained but the control of ownership shifted. Right? What you get out of that equation is regulation. Often pervasive regulation because you are still trying to perform some function that people think of as public, through a private entity. Now, the tendency in all those cases is to get exactly what you're describing, to get a kind of faux private sector. And so we see that in military contracting. Military contractors, most of them have a single or least primary buyer of their services and that's the Federal government, the Pentagon. Some of the largest consulting firms, especially around here in the Washington, D.C. area, their primary and in some cases the exclusive purchaser of their services is government. And I think some of that's come from the fact that conservatives thought that if we actually, even if we are going to perform, if some function is going to be considered to be social, if we can push it out into the private sector then that private sector will become a lobby for further privatization. But in many cases those private contractors become a lobby for the continuing socialization of the function, so long as they are the ones who end up getting the benefits. And you can multiply these things through multiple different areas, and I think that's one point where, just like I was suggesting that one way to solve the intergovernmental kludge problem is to create rules that force us to make decisions about whether this should be federal or state, as opposed to constantly trying to split the difference. In many cases between public and private we need rules that help us do that. Either something is going to be straight up government function, where it's clearly funded through taxation and then the money goes out through spending. Or, it's going to be straight up private and owned and firms are going to be able to go in and out of business. But it's whenever you end up getting this middle ground that you often end up getting what you describe as corruption, problems of rule of law. You get kind of corporatist arrangements. And all of those are very problematic but in a way they are a result of us trying to split a bunch of differences. Trying to get public action but with private actors. And that was a project that has gone on for a long time. I remember, we all remember reading, Charlie Shultze's little book, The Public Use of Private Interest, and then later on David Osborne's books talking about how government should be doing steering rather than rowing. I think arguably there is a good case that if government is going to do something, steer and row; and if it is not willing to steer and row, it ought to leave it to the private sector.
24:28Russ: Well, an interesting example of that would be education, where it's not at the Federal level, but at the local level, right? It's bizarre to some extent, we don't just take it for granted, but it's a little bit bizarre that government doesn't just fund education. It also provides it. It steers and rows, right? It doesn't do such a good job. I personally would like to see it stop rowing--or stop, I don't know what the right metaphor is. Guest: Well, rowing is the--yeah. Steering would be the kind of micro-regulation. Russ: Yeah; I'd like to do neither. I wouldn't mind if they funded the team and then said, 'Good luck; I hope you win the race.' Guest: And I think, well, look, in the article I basically say, there's a good argument for a national voucher. There's no real good argument for having arguably the states or localities involved in education at all. That is, there's no good argument for having property-tax funded things for this. We ought to have straight up vouchers funded through income tax and then people get to, you know, would get to choose in a market of private providers. That would be a pretty simple way to deal with these things, and it would also be a simple way to deal with all of the distributive problems we have of having thousands of different taxing jurisdictions that are funding education. But instead we've been trying to do it through complicated mechanisms like all these different funds that the Department of Education distributes to the states, all these complicated adequacy lawsuits that keep going through all these state courts. They are all basically an effort to solve a distributive problem where there is actually a fairly simple, straight up mechanism, which would be to move to a system like national vouchers. Which, again, I would support. I'm not sure you would support. Would you? Russ: I'd prefer it to the current system. But I think it's always an issue of which is better and which is worse. I think what's fascinating about your article, what made me think about lots of applications, is there are so many problems where the government says, some politician says, 'This isn't working well, so I'm going to propose this solution.' And so often I look at it and say, 'The reason it's not working well is you did this thing before. Why don't we get rid of that thing?' And the answer is because that thing benefits some people and nobody wants to change that. So we do layer this stuff on top. I recently tweeted that the Common Core, which is the idea that there should be common things that people learn in school, is a horrible idea. In my opinion. There is no reason that the Federal government should be deciding what should be in the Common Core. But maybe it's not a bad idea given that so many schools are not responsive to their students and the parents and don't teach very much. It may be this is a way around, outside, excuse me, an end around the fact that the current system doesn't respond very well to students and parents. But why wouldn't we fix that problem? Why are we always trying to solve something that's already--you know, another one would be something like the high cost of medical care. Well we are pretty confident--I'm pretty confident--why medical care is so expensive and why health care insurance is expensive. We know a lot of reasons. It's things like mandated things that insurance has to cover. And it's the underlying cost. The underlying cost tends to cover the fact that people pay with other people's money, and when you do that, people want to buy more than they otherwise would. But we like those features of it. So we leave those in place and we try to find a way, an end around, to solve a problem, that usually causes a new set of problems we've got to fix. Guest: The one thing I would actually say on that--again, if you are trying to figure out why there is a durable bias against undoing stuff we are already doing and creating space to do something new or to simply solve the problem by getting rid of the thing we are already doing, again, I think the veto points thing helps with that. But the other thing is we know about interest groups, especially in a system with as pervasive in interest groups as we have, is interest groups usually form not in anticipation of government action, but in response to government action. That is, the elderly were not really organized before Social Security. They got organized as a consequence of Social Security. Russ: I agree. Guest: And so, when you actually look at the universe of interest groups that we have, the universe of interest groups is essentially the mobilized force of those who already got what they want out of government. They want a little bit extra, or they want to push it up a little bit here or there, but most of what they are there for is to protect what they have already got. And therefore that also creates a durable bias against undoing things. Because the people who might want something new are generally likely to be relatively unmobilized, whereas the people who more or less like what we are already doing are much more likely to be mobilized. Right? So all the people who might benefit from a big national voucher system are likely to be unorganized. In fact are unorganized. And all the people who are benefiting from the complicated set of federal grants that go to school jurisdictions, the ones whose job is related to sorting through all of them and unpackaging them for localities, they all know exactly what their interest is in government and they are all organized here. A lot of them in Dupont Circle. The same thing is true of the student loan system. There's lots of easier ways to deal with that than the complicated system of tax-sheltered savings and other kinds of things we have where you could just straight-up increase the Pell Grant system and get rid of everything else we've got, but we have a whole system here in One Dupont Circle, which is two blocks from where I am sitting, from all the people who both understand our existing complicated system of higher education financing and their living depends on that existing system. So again, our political system has a bias toward what's already being done that's both in terms of mobilization and in terms of our arrangements of institutions. And if you want to do something about it you have to either change that bias of mobilization or change the bias of institutional arrangement.
31:08Russ: So, let's talk across country for a minute. When I get depressed about crony capitalism, or, say, some particular aspect of it--let's take agricultural price supports, or the sugar quotas, which benefit a handful of families in America and make them really rich or make me really poor--it doesn't make me really poor; it means I pay a slightly higher price for things, for sugar. And as you point out, those of us who pay a slightly higher price for sugar aren't really well organized and never will be. The effects are small. They are dispersed, as Mancur Olson understood, that this is going to make it likely that [?] quotas persist. But I look at that and I say, well, it's a small thing. It's not a big thing, compared to, say, I don't know, Argentina, where if you are a friend of the ruling family you might get a monopoly, etc. But then I start to think, maybe the glass is half empty here in the United States, too. The paper today has a story that New Jersey is not going to allow Tesla, the auto company, to sell cars directly to consumers, because the dealers in the state don't like it. They make a lot of money; they give a lot of money to politicians. The auto dealers, they are going to block that everywhere. And so consumers are going to be punished with fewer choices. When I look across and then I say, well, sugar is small but help bailing out the banks, that was big; that distorted our capital; forget the transfer of money--the distortion of investment decisions, capital allocation, is kind of horrifying. Having a lousy school system, kind of horrifying--not so good for the next generation, and reduces I think economic mobility and so on. So, why is it that our system has so many of these phenomena, so many of things that benefit small groups get locked into place and then the status quo persists, compared to other countries? Or do they all have it? I mean, we're supposed to be a democracy. Is it just that: Well, it's a democracy that works pretty well. And last point: As a classical liberal, I like to believe that the Constitution used to protect us from this. The Constitution isn't really in play any more, except for a handful of certain kinds of rights. Not for economic stuff. So, it's a free-form game and the people can bite into the system and take a slice for themselves. We'll keep doing it. Guest: Right. So, let me--those are three questions so let me see how I can sort through them. One, the cross-national story I think is a little complicated. My colleague, Adam Scheingate, wrote his first book--it was called The Rise of the Agricultural Welfare State, and it's a comparison of agricultural in the United States, Japan, and France. And so one of the things he says is, so it is a little depressing to look at things like sugar subsidies and that thing. But if you want to see really depressing, look at France or Japan. Like, look at corporatist systems. Russ: Rice. The price of rice in Japan, 10 times the world price. Guest: Right. And so the reason for that is that, you know, again, I remember when I was a boy, when I was in college, I was a journalist and I was covering--I got a great job where I got to cover all these obscure parts of the Federal government. And I'd go into the Department of Agriculture, and it seemed like a wholly-owned subsidiary of a bunch of farmers, right? That's nowhere near what it is in France and Japan, where literally the farmers basically own the government. And so if you look at the United States, we did actually get the Freedom to Farm Act (Federal Agriculture Improvement and Reform Act of 1996), back in the 1990s. And that was problematic; it wasn't perfect, but France and Japan have never gotten anything with that much deregulation. And there actually was a pretty amount of deregulation in the Freedom to Farm Act. The clawing away of the subsidies didn't really last, right? But the deregulation of what we do in farming actually did. And I think one of the lessons for that is that our system is all gummed up with interest groups and with disproportional mobilization. But all of those veto points that I mentioned that stop action from occurring are also entry points. They are places where you can start getting something going. You don't have to get everybody to already to agree to get things moving. You can get a hearing going in Congress, right, to start trying to get people sensitized to the issue. Right? There's lots of that kind of stuff that does introduce the kind of element of dynamism into our system. And so, if you--one of the books, especially people who are interested in these things, need to read is Frank Baumgartner and Adam Jones's book, Agendas and Instability in American Politics. And one of the things they say is the pattern of American governance is one where you get long periods of stability--which are consistent with the kind of iron triangle story that we all learned when we were kids. But then sudden wrenching changes, where suddenly interest groups that seemed indestructible suddenly are put on the back foot. And I think that's partially because of the dynamism of our institutional system, the same thing that locks [?] things down, it keeps changes from happening. Helps you in many cases attack special interests. The real problem is our political system has limited parallel processing capacity. There's only so many things that it can handle in attacking existing interest group arrangements at any one time. So, I do think that in some ways ideas do have some relevance, probably more than a standard public choice account would make you think. That a lot of these special interest arrangements are actually vulnerable to exposure. But there's only so much capacity our political system has in it at any one time to expose the fact that, you know, the sugar subsidy has all these perverse distributive consequences and simply enriches a small group of people. The political system has space for about one of those focusing events at any one time. But it has a hard time doing all of them at once. Russ: Yeah, but it's not just the political system; it's also our brains and our media. I've often wondered--the Washington Post might write an expose on the sugar issue; I'm sure they have. Every once in a while there's an article about some similar thing, some embarrassment. That's the daily fare of a good investigative newspaper. So they run that article and you might read it as a citizen and you may get a little bit outraged and upset; and then, you've got other things on your mind and eventually it slips below the surface again. What would happen if every day--every day--the front page of the New York Times or the Washington Post, etc., harped on one of these issues. Would it make a difference? You'd think it would. There would be some shame eventually. Guest: Well, this one I'll give--one of the things, if you look, and I really do recommend your listeners read Baumgartner and Jones's book. One of the things they show is these moments when you get sudden disruptions in the political agenda are characterized by things where you've read story after story after story that's going up, that's having the features you are talking about. So again if you go back and look at what ended up crushing nuclear power in the 1970s, it was that you got these scandals, that people kept writing story after story about problems of nuclear safety and flaws in the regulatory system. This is not like a one-day story. This is something that dominated the media agenda that then members of Congress felt like, they were constantly worried that they were going to get caught on the wrong side of this issue. Even if you go back and look at tax reform in the mid-1980s there's arguably a story like this, that there were constant stories about how GE (General Electric) wasn't paying any taxes, or all these big companies weren't paying any taxes. You could keep writing story after story of the wealthy-company-not-paying-any-taxes kind of feature. So I think the thing that really distinguishes those moments when you really get the capacity for major destructive force are when those things become more than just a single day story, but they become a full-on scandal and sort of media feeding frenzy. And you do see these things. These things do happen, and I think they are a regular feature of our political system. But they depend upon ideas. Somebody has to be able to take that particular scandal and put it into a larger framework so people think that this isn't just some individual but this is about a structural problem with our agricultural system or our nuclear power system; there has to be a policy entrepreneur there who is willing to kind of ride this thing and coordinate that kind of scandal. And there have to be government officials who are sort of waiting to be able to do something and then this is their moment. I think that's what characterizes the periods in which you actually do get some capacity for government to destroy things it's already doing as opposed to just layering things on top. The real danger in a lot of these cases--and there's a great book that I really recommend by Eric Potashnik called Reforms at Risk--and essentially what it does is it says--you know we had all these books in Political Science in the 1980s that were about, oh, hey, you know, Mancur Olson had told us that government just basically serves the organized and screws the diffuse interests. But we'd had all these things government did in the 1970s that didn't seem to be characterized like that. You think about trucking deregulation or airline deregulation. Russ: That's right. Guest: A bunch of those areas, government actually did something very negative to a concentrated interest. Now the problem is, that happens because you get these feeding frenzies, because suddenly everybody's talking about how wealthy the airline industry executives are getting off of a monopoly industry structure, and how much this is driving up prices for consumers. And so you get this brief moment where everybody's focused on that and they exist and the incumbents are disadvantaged. The question is what happens after that. So in the case of tax reform, we actually did radically simplify the tax code in 1986, because there was this brief moment where everybody was focused on that. And everybody was--and the public or members of the Congress were worried that they might actually be held responsible if they voted against tax simplification. But once you did it, then everybody moved on to the next thing; everybody moved on to focus in on something else. And it was easy for all the interests that had lost before to come back, claw back, come back out of the woodwork. Russ: Yeah. Guest: One other example. The counterexample that Potashnik gives is airline deregulation. So, airline deregulation worked in part because it literally destroyed the strongest supporters of airline regulation. Look at the first people who went to the wall and got bankrupted by airline deregulation: it was airlines like Eastern Air Lines that had the worst cost structure. Which is why they wanted regulation in the first place. So, if you can actually get these simplifying mechanisms that actually destroy the people who are advocates for the previous kind of corporatist arrangement, then you've got some capacity to actually make that stick and keep a relatively streamlined system in place. Russ: Yeah, that's fascinating. The downside, or the pessimistic story about that, to me, is Dodd-Frank. Here you had this incredible, what should have been an incredible watershed moment. The abuse of the fiscal system by the banks, and somehow a regulatory thing was put in place that doesn't seem to have solved any of the underlying problems. I partly blame my profession for that, it's willingness to say that all these things were necessary and not require more evidence from people who said they had to be done, these bailouts, couldn't have been done in a different way. I find that to be remarkable. Although I have a little bit of hope that the next time it happens, maybe, maybe politically it will be difficult to do what they did before. I guess we'll see.
44:06Russ: Now, a lot of our discussion so far could lead a listener to think that we are talking about what is sometimes called the 'ratchet effect,' that things get put in place, they are hard to get rid of. So some people have argued that's why government keeps getting bigger; there's not much of an ability to make it smaller. But you argue that both liberals and conservatives should dislike kludge. Explain why that's the case. Guest: So, I guess on the one side, on the liberal side, one problem with kludgey policies is that citizens often don't recognize that government is in fact doing anything for them. So again we have this feature of public opinion that show there are a lot of people who in fact are pervasive recipients of government assistance who believe that government is only helping poor and black people. That's a common feature of public opinion. Now part of that is because the actual hand of government in helping them pay their mortgage, helping them send their kid to college, etc., etc., these are all things that people experience, especially the middle class often experience as private, because the hand of government is hidden even though it's there through subsidy, through regulation, through market structure, and through everything else. And so part of my argument is liberals would be better with simpler, more straightforward, more visible forms of government because it would make clear to citizens the degree to which their social welfare is dependent upon some kind of muscular role for government. On the other hand, I think where conservatives are concerned, it becomes hard, actually, for people who want to get government out of particular areas, when government is sort of everywhere and nowhere it's like trying to stab gelatin to the wall. You just can't do it. You can't get the thing--your target is too hard to get ahold of, when government is all over the tax code, it's all penetrating our system of private litigation-- Russ: The health system. Guest: and everything else. Russ: I love when people say, Well, we know private health care is a bad idea--look how expensive it is in the United States. [?] We could try it. Maybe we'd see how expensive it is. But don't call what we have now a private system. Guest: Right. And so the other thing of course is that we end up having--in some ways it's actually very hard to say that you're a supporter of private enterprise when so much of private enterprise is in fact, you know, are basically as you described it before, basically public utilities. Or have been rendered into public utilities. I think in a way it would be a lot better if we had a governmental system in which some things were just big dumb stupid things where government was just moving money around, doing relatively simple tasks that only it can do; and then left the private sector on its own. That would be a much easier private sector to defend than the kind of private sector we have today. The other thing is, I think arguably that kludgeocracy is a lot more expensive. That big, complicated multi-layered systems are in fact forms of taxation. Now they don't go directly through the Federal government budget. But they all end up imposing costs on private actors. They make goods more expensive. Those are all forms of extraction. But they are hidden forms of extraction that are hard to mobilize against. And so what I basically say in the article is that ironically by pushing down on the capacity of government to do things transparently through taxing and spending, we haven't gotten rid of the demand for government. We simply constrain one form of its supply. So, like a down pillow, you push it down in one place, the feathers all push up somewhere else. And I think that's essentially what's happened with some of conservative and libertarian efforts to control government, is by pushing down as effectively as they have on taxing and spending, every[?] come up through private litigation, mandates, regulation, and all these other devices. I think you can look at some evidence like that, the fact that we've been pushing as hard, you know, conservatives and libertarians have pushed as hard as they have against carbon taxation hasn't reduced people's desire to do something about global warming. But we're seeing it through all these incredibly complicated subsidies for electric car makers and attempts to put regulations on what kind of light bulbs people can use. We ought to actually think about loosening up on the one form of government that we actually know best how to measure and control, which is taxing and spending, while putting more constraints on these other forms of government that we haven't actually figured out how to control. Or even understand. Russ: Yeah. Another example would be the minimum wage, which is--economists debate whether it reduces jobs or not, which I find shocking. But it's a fact; we don't agree. And the alternatives are things like increase the earned income tax credit, or paying some kind of wage subsidy. But those come out of budget, so it's much more attractive for politicians to just mandate that the private sector pay more. And it's a tax. It's a hidden tax. To me, most of the tax falls on people who lose their jobs or won't find jobs or won't get training because of this tax. It's clearly--even if you think government should do something to help low-wage people, this is not one of the best ways to do it. Guest: Right. And again, I think this is one of the ironies that the piece tries to put out, is that the only form of government that we actually know--literally down to the penny, we know exactly how much government is spending. We know exactly how much it is taxing. That's all in the Federal budget; you can take a look at it. You think about the system of private litigation--the estimates people have of how much is being distributed through private litigation, just think about disability, the American Disabilities Act. People have incredibly wide ranges of a sense of how much we are actually spending through the American Disabilities Act. People have almost no sense of what the actual distributive effects are--who is actually benefiting from that form of regulation. That's true of most of the places where we've tried to deal with some social problem through litigation as opposed to through other mechanisms. The same thing is true of regulation of which the minimum wage is one; we know exactly how much the Earned Income Tax Credit is costing us, but the estimates of who is actually paying the minimum wage and where, and what the incidence of it is, those are all pretty complicated and therefore hard to get people to actually focus on. Russ: Yeah, and it's really hard to tell somebody: You don't have a job because of this. Because you can't show it. It's not necessarily true. And so the people who would normally be against it don't realize that it's affecting them necessarily. Guest: Right.
51:39Russ: Now, while we were talking, I just kept thinking about the Affordable Care Act again. I apologize for coming back to it again. But it is remarkable how many people supported it when they didn't know what was going to happen. They just said, 'Well, we'll figure it out. We'll work it out.' It's not going so well. And yet, you and others--I don't see anybody saying it was a mistake. And part of that I think--some of it is obviously reputation; it's hard for people to admit they made a mistake. But I think the other issue is, there is an awareness that there isn't an easy replacement. And so, yeah, 'it's not great but it's better than nothing' is, I think, a common attitude. Is that fair? Does it capture your view? Guest: That would probably actually be a pretty good summary of my attitude. Russ: Yeah, that's what I figured. Guest: So, one of the things is that we do know that the major expansions of social insurance and health care were in moments when one of the parties happened to get an extraordinary majority in the Senate. So I think part of my attitude was: If we are ever going to get close to universal coverage--and I know you've got issues with that, and should we think about health insurance or not, and that's fine. But my attitude was: If we are going to do it, this is about the only time we're going to be able to do it. Now, again, you can have some questions about whether we should try to do it or not. But that was my guess. Now, again, I would have rather have done it in a different way. But some very smart people thought that this was the only way that you could get through the eye of the needle. Now, part of the play I make in the article is that in fact I think actually there is a good argument that the House's version of health care was simpler than the Senate's. Now, again, a lot of people had disagreements about it. But the Senate's ended up being a lot more complicated in part because of the feature of the filibuster. One thing going back to my model of veto points, one thing the filibuster does, it doesn't just stop action. Right? It means now you've got 10 extra people all of whom have to get paid off, or bought off, in order to get past the toll. I think that's what happened in health care. You had 10 extra basically Democratic Senators who all--and the obvious view, the cornhusker kickback that happened in Nebraska was one example of that. Somebody saying, I'll let you get past the toll but you've got to pay a big cost for this. And lots of the things that really would have destroyed existing interests in health care were exactly what that last 10, those marginal 10 Senators wanted not to touch. And so I think there's a good argument that it was really hard to do anything that was going to tear up anything from the roots, and I think that's true for Republicans if they were trying to do tax reform. If you look at what Dave Camp proposed, you try and get that through the Senate and you are going to find that even if Republicans had a filibuster-proof majority, those last 10 Republican Senators would often be the ones who would be most likely to want to protect the interests that somebody like Dave Camp was trying to undo. So I do think that one thing we have to do in order to really get at this phenomenon of government complexity is to get rid of some of these mechanisms that were designed to keep government from acting but now basically have the function of making it hard to undo what we've got in place.
55:21Russ: We've got about 5 minutes left. Let's close on that. Because one of the things I learned from your article is the possibility that some of these features that I've always thought were features are actually bugs. And I think that's a really, really interesting insight. So, my first thought is: I like filibustering. That's fabulous. It slows things down. I like gridlock. I like, as a small-government guy, I like things that make it hard for government to get stuff done. And your point is that, yeah, so when government does get stuff done there are lots of people who get paid off. So, do you think--was it culture? Was it social norms in the past that kept people from exploiting these veto points? What happened in the post-WWII era that made government grow so dramatically in the United States and that allowed this kludge to happen? Right? We have different--obviously there are different periods of American history where government is relatively small. But starting around--you could say 1945, you could say it's after WWI, you could argue it starts with the Great Society--somewhere along there, people didn't have any hesitation about collecting those tolls at those toll booths. That seems to me to be a big part of the problem. If you are on my side. If you are not on my side, you think it's a plus. But I think you make the point pretty persuasively that even for people who like bigger government, it's the wrong way to do it. Do you have any thoughts on why government, why these toll collectors have suddenly been more aggressive? Guest: So, what--again, I think the argument I would make that I think is especially of interest for people of a libertarian mindset, who generally tend to be the most supportive of what they think of as the original Constitutional design, is that that Constitutional design is probably very good for a people who have a relatively modest expectation for what the Federal government is going to do. But once you actually get a mature set of government functions--and I think the question of how did we end up expanding government so much in that period is probably beyond my ability to explain-- Russ: Oh, come on. You've got at least 4 minutes left. Guest: But I think the important point is that once you actually get that shift in public expectation, our Constitutional system in a way, the opposite of the way that libertarians would want. Any government system is going to develop a fair amount of new functions, and a desirable one is going to be destroying stuff we've already done at the same time as it's adding new things. There's going to be both destruction and creation simultaneously. And our system is wired up for creation and not very good at destruction, and that's why you get kludge. And I think part of it is, if you think about lots of the things, when there are moments when government action was going to occur, how did it happen? Well, in lots of these cases, as I use in the case of intergovernmental kludges, you know, in the period in the 1950s and 1960s, even going back to the 1930s, a lot of the expansion of the social welfare state had to happen through the states, through funding state governments rather than being done straight up centrally. And that's because at that time, Southern Senators controlled Congress; and they insisted, they said, Okay, you can have your bigger government but you are going to have to cut, you are going to have to make sure South Carolina runs it so we can make sure that black people don't get welfare payments--just to be really blunt about it. And the same thing was true of urban political machines. Urban political machines were in places like Chicago and New York City; said, Okay, you can get your bigger government but you've got to cut us in on the action. And I think that's a feature of our federalism and separation of powers that meant in this moment when government was expanding, it expanded in all these complicated ways. And the other point I make in the article is, the kind of myth[?] of the private market caused us to try to find ways when we were going to expand government, when there was public demand for that, to do it in ways that seemingly cut private actors in on the action rather than having government do it fairly straightforwardly itself. And so, I think that the plea I would make to libertarians and conservatives is that they need to really re-think how the institutional features that they associate with our Constitution function once you have a mature government. And the challenge is really: how do you undo what that government is already doing? All those mechanism like separation of powers and the filibuster may work the opposite of the way that they generally think they do. Russ: And what would be your plea to liberals? Guest: My plea to liberals I think would be to be willing to go big or go home. That is, to say that we're going to stop kind of negotiating with ourself and trying to figure out ways to do government by cutting private interests in on the action. I think that was a lot of what happened with the Affordable Care Act. We should have been willing to say straight up that we want Medicare for all. Medicare is complicated and it's problematic, but it's not nearly as complicated as what we ended up with. And that one way or another we are going to end up getting blamed when the complexity of these things making us look bad, like it is with the exchanges. And we ought to be willing to go out and straightforwardly say to the public, Here's what we want; here's the social justice justification for it; and maybe we'll lose-- Russ: Here's the cost-- Guest: And maybe we'll lose; and either we can make that claim to the public in a transparent, direct way, or we should just accept that we are not going to win and we should just accept that we are going to wait and fight another day.

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