by Adam Allouba*
Triumph of Hope Over Experience: Why Government Failure Should
Be No Surprise (Print Version)
Le Québécois Libre, August
15, 2011, No 291.
On the morning of Sunday, July 31, Montrealers awoke to a depressingly
familiar scene: the city’s infrastructure crashing to the ground. This
time, it was a 15-meter concrete slab that
suddenly fell from a tunnel that accommodates 100,000 vehicles on an
average weekday. The incident evoked
memories of 2006, when a collapsed overpass in a Montreal suburb
killed five and seriously injured six others. This time, while no one
was hurt, the same accident just 24 hours later would have surely
crushed several unlucky commuters. Public outrage was further stoked
when the government released a
2008 inspection report that labelled the tunnel’s state “critical”
and specifically warned that “pieces of concrete could fall into lanes.”
Montreal’s ongoing adventure in structural collapses illustrates a
broader phenomenon: the state’s incompetence. Granted, people also
suffer terribly as a result of
private-sector mistakes. But which sector is more error-prone? After
considering some particularly flagrant examples of government
incompetence below, I will offer some reasons why we should expect
the state to be inept. Conversely, despite its flaws, the private sector
has a variety of self-correcting mechanisms that make blunders less
The Ville-Marie collapse is only the latest in
a series of similar incidents that include the
ever-crumbling Olympic Stadium and, of course, the 2006 De La
Concorde overpass tragedy. The
inquiry report that followed identified
serious problems at the Ministry of Transport, including:
- failing to consider the structure’s “special nature” in its
- poor record-keeping, including half-complete files;
- failing to ensure compliance with its own inspection manual,
particularly in collecting data necessary to oversee the structure;
- ambiguous lines of authority among engineers and internal units.
The commissioners found that the ministry’s organizational culture
and work habits were in urgent need of reform.
Quebec is hardly alone in having infrastructure problems. In 2007, a
bridge collapse in Minneapolis left 13 dead and almost 150 injured.
investigation blamed a design flaw, concluding that “current Federal
and State design review procedures are inadequate to detect design
errors in bridges.” Indeed, 10 of the 14 state Departments of Transport
it surveyed had “approved bridge designs that were later found to be
deficient.” In 2006, a fallen ceiling panel of Boston’s “Big Dig”―which
finished a decade behind schedule and 570% over budget―crushed
a woman in her car.
Even if your roads are intact, problems may be closer than they appear:
In 2007, McGill University civil engineering professor Saeed Mirza
estimated that for Canada’s municipal infrastructure alone, the
infrastructure deficit―the difference between necessary and actual
maintenance expenses―had reached
$123 billion. South of the border, the American Society of Civil
estimated in March 2009 that $2.2 trillion in infrastructure
investments were required over the next five years. They noted that
governments had allocated less than half that amount.
Watching Your Money
When it’s not keeping our transportation system running, the state also
actively surveys the financial markets. It thereby protects the average
investor against scams. Right?
Not always―just ask the victims of Bernie Madoff, who may be history’s
most notorious financial villain. In 2008, his investment firm turned
out to be a pyramid scheme that bilked clients out of
up to $65 billion. No fly-by-night operator, Madoff admitted to
running the scam for almost 20 years, although investigators believe it
a decade earlier.
Government regulators investigated Madoff’s operations eight times
over 16 years and never found a thing―even after an industry executive
handed them a 21-page report that he had prepared, which concluded that
the firm was “the
world's largest Ponzi scheme.” Madoff himself professed to be
“astonished” at regulators’ failure to make elementary inquiries that
would have made it “easy” to uncover
the fraud. As one client
put it, “We're not just the victims of Madoff; we’re the victims of
the incompetence and irresponsibility of the [U.S.
Securities and Exchange Commission] SEC!”
Keeping You Safe
If there’s anything the government should do well, it’s keeping us from
physical harm. After all, isn’t the most common justification for the
state the need to ensure our safety? If so, the story has a few loose
Let’s take airline security. Confiscated nail clippers, forbidden water
bottles, mandatory ID, shoe x-rays―the government has left no stone
unturned in its efforts to make flying safer since 9/11. To ensure its
full control over passenger screening, Washington even
nationalized the entire industry shortly after the attacks. After
all, the private sector was not up to the task: in November 2001,
security contractor Argenbright Security’s screeners missed “seven
knives, a stun gun and a box labeled tear gas.” Months later, one of
their employees lost track of a man with apparent “explosive residue” on
his shoe, requiring thousands to be rescreened.
A decade later, screeners hired by the Transportation Safety
Administration have missed
a hunting knife,
a pair of 12-inch razor blades,
a 200,000 volt stun gun,
a bag filled with explosive material that blew up on the tarmac
a large gun in an otherwise empty bag,
a box cutter (the same implement used by the hijackers)…
To be fair, given the number of passengers screened daily, even a 99.9%
success rate would generate enough “oops” stories to keep journalists
busy. Unfortunately, the TSA is nowhere close. Last December, its
failure rate was reported to be
nearly 70% at certain major airports and “every test gun, bomb part
or knife got past screeners at some airports.” In 2006, undercover TSA
agents got bombs and explosives
past their colleagues on 20 of 22 tries and
Government Accountability Office investigators snuck bomb-making
parts past security at all 21 airports they tested. The head of
the House Homeland Security Committee later called these audits a “waste
of money” since there was no follow-up to determine why the
screeners had failed.
Of course, incompetence on this grand a scale leads to a single,
inevitable question: Does anyone have Argenbright’s number?
Why So Incompetent?
Some may dismiss these examples as a few particularly flagrant
illustrations of the maxim that no one’s perfect, but there are
systematic reasons behind the state’s dramatic failure.
Not My Problem!
What did the government do after the overpass collapsed? After we
learned that you could probably sneak an elephant past security? After
Bernie made off with all those billions? Well, besides the shelved
inquiry reports and soaring rhetoric, nothing much. No one was fired. No
bureaucracies were dissolved. No budgets were cut. In other words, the
government was never penalized. Sure, the occasional
cabinet minister is forced to resign, but given their short tenure,
how often are they really to blame? And while you could always sue, the
not subject to any law unless it specifically provides otherwise. In
other words, the state is literally above the law until it chooses not
to be. And even if it does have to pay out, the government doesn’t have
to worry about running out of (our) money.
Even worse, government is often rewarded for its mistakes. For
SEC failed to catch Bernie Madoff because it was underfunded and
understaffed. The result has been
large increases in budgets and employee levels. A failure to keep
our infrastructure intact, a failure to detect
tainted food, a failure
to teach children to read―each proves that the government body
concerned needs more resources and responsibility, not less.
Now consider the private sector. Many investment firms refused to do
business with Madoff because his returns were “suspicious”
or even “impossible.”
Unlike the SEC, they had a strong incentive to detect the fraud, since
falling victim to it would hurt their business or even get them sued.
The victims of Canada’s mini-Madoff, Earl Jones, allege that the Royal
Bank’s negligence inadvertently enabled his
fraud. If so, the bank, unlike its public-sector counterparts, will
be liable for its errors. And, of course, when mistakes happen in
private business, heads may roll. When was the last time a civil servant
got fired for a serious mistake?
Whose Fault Is It Anyway?
Another reason for lower government competence is a lack of expertise.
The senior management of a private firm is hired specifically to run
that business. It normally includes people with technical proficiency,
managerial know-how and other skills required for a corporation
operating in that field.
In the public sector, whatever group voters happen to elect (they are
of lawyers) is expected to be expert in everything that the government
does―which is pretty much, well, everything. Food inspection, drug
regulation, highway maintenance, fishing quotas, scientific research,
military operations, trade policy, and beyond: politicians need to be
good at it all. Of course, like anyone else, they haven’t the slightest
clue about most of these fields, which means that government is mostly
delegated to civil servants with specialized training. As a result,
voters have no one to hold accountable―politicians aren’t really running
things, and bureaucrats certainly don’t answer to the public.
You’re Fired… and Hired… and Fired…
A third issue is the sheer impracticality of holding the public sector
accountable. The state is responsible for so much that hardly a month
goes by without news of some significant government failure. What do you
do if you like the way the state handles issues A, B and C but not X, Y
and Z? At most, changing government will get you another team with
different strengths and weaknesses but not one that’s good at everything.
Private firms focus on one thing, or maybe a few. Management either gets
it right and stays, or gets it wrong and answers to disappointed
shareholders. And while they often fail to take a sufficient interest in
who’s managing their companies, problems with shareholder democracy (like
lack of engagement) pale in comparison to those inherent in
democracy. The result is that when a mistake occurs, nobody is
Out of Sight, Out of Mind
A final reason for government failure is over-centralization: reliance
on a single legislature, a single regulatory body, a single cabinet of
ministers, etc. If the law on, say, telecommunications was last updated
20 years ago, it will stay frozen in a pre-Internet age until Parliament
gets around to reforming it. If a new class of drugs doesn’t fit in the
current regulatory scheme, patients will go without until the regulators
pass amendments. With the speed at which societal, technological,
economic and other changes occur today, it is impossible for the state
to keep up. What’s worse, if you don’t have the political clout to grab
someone’s attention, your issue may be so far off the radar that it
simply never gets fixed. Conversely, the private sector can respond much
more quickly, as cutting-edge businesses adapt to new developments. Even
if only a few firms adjust their practices, they are the ones that will
do best. Eventually, their competitors will either move in the right
direction or get left behind.
It Doesn’t Have to Be This Way
Is it any wonder that bureaucratic mistakes induce laughter or anger,
but rarely shock or surprise? People expect the government to slip
up―they just figure that it’s better than those greedy businesses trying
to fleece us. But for all the above reasons―and
more―we should actually expect worse results from the state. No
matter how well-intentioned, competent and intelligent the people who
work in the public sector, failure is simply embedded deep within its
nature. Instead of trying to make government work better―instead of
trying to fix the unfixable―we should accept reality and transfer its
functions to the private sector.
Adam Allouba is a business lawyer based in Montreal and a graduate
of the McGill University Faculty of Law. He also holds a B.A.
and an M.A. in political science from McGill.