Beware the Department of Government Efficiency

Private and public sector organizations seem very similar. They both deliver goods and services. They both employ people, assets and technology to do that.

But they have vastly different goals.

Private sector organizations focus on one thing: making money lawfully. The singular nature of that goal affords them tremendous clarity when making decisions. As I used to say when I was a corporate financial analyst and executive, profit ultimately trumps everything.

Market capitalism is all about efficient allocation of resources. The marketplace lets private sector organizations value their costs and benefits relatively easily, reducing or eliminating uncertainty. Competition ensures the valuation is dispassionate. Anything that can’t be traded (e.g., public goods, like air or water) is, incorrectly, assumed to have no value. But correctly priced or not, the value is clearly defined.

Private sector organizations get to choose their customers. Somebody wants one of their goods, but serving them is too difficult or expensive? Sucks to be that potential customer! The company needn’t care, so long as there are enough other fish in the sea.

They also benefit from what economists call creative destruction, recently popularized by Zuckerberg as “move fast and break things.” While widely considered a recent development, it’s been part of market capitalism since the get go (it was critical to construct the transcontinental railroad back in the 19th century). Risky? Sure. But getting to market first is so valuable, both financially and in long-term market dominance, that it’s generally worth the risk.

Public sector organizations are completely different. Their goal is to provide goods and services that cannot be valued in a marketplace, reliably, to everyone. How much is national security worth to you? Or plain old community safety? Freedom to practice your beliefs the way you want?

Making public sector financial decisions is enormously more complex than what the private sector does. Which provides more value to the community, guns or butter? I spent decades in both worlds, and I used to pine for the clarity I had in the private sector when wrestling with the choices coming before the San Carlos City Council.

What’s worse, when there’s no marketplace to value things dispassionately, there’s no easy way to get people to accept which things are worth more than others. Instead, our personal priorities remain unequilibrated, leading to endless political arguments. The best we can hope for are decisions that don’t negatively impact too many people.

Do you want a justice system that only serves the well-off, or affords them special advantages? I doubt it, and many Americans who dislike how our supposedly wealth blind system actually works would agree with you. What we want is a justice system that treats everyone fairly and equitably, regardless of their circumstances.

We also want equal access to public goods and services. Even if the cost of serving us is higher than what it might cost to serve someone else. We don’t want our access to be denied because we’re too expensive or too undesirable a “customer.”

Sadly, history is filled with examples of that kind of rejection happening. All the ones that come to mind are terrible: slavery, Jim Crow, segregated public schools, “no Irish need apply” (a common sign on shops in 19th century America), etc.

And creative destruction? Other than their stockholders, employees and business partners, does anyone really care if Facebook, SpaceX or Tesla implodes? But our local, state or federal government? That’s a different story. We would each be harmed if public safety or public infrastructure — or, worse yet, the rule of law — was severely compromised, or disappeared.

Without an awareness of these fundamental differences, the Department of Government Efficiency is bound to cause far more harm than good. Mostly by restricting the supply of public goods and services to those it is efficient or desirable — to those in power — to support.

I wonder who the wealthiest man on the planet will put in that category?

Mark is a former mayor of San Carlos. He currently spends much of his time writing for the website make-america-smart-again.com. You can follow him on BlueSky at markolbert.bsky.social.