Fixing Social Security

This month's Mensa Bulletin has a section on "Bureaucratic Inefficiency." Readers sent in letters on the topic, and the last one printed contains what I think is a very interesting idea. Here is part of that letter, written by J. Fischer:

Government bureaucracies, being monopolies and able to enforce price increases at gunpoint, are not subject to such survival pressure except in extreme cases as revolution or invasion. Therefore, governments can bloat and expand until a major collapse occurs or it is overrun by a better-organized neighbor.

The closest thing to competition within government is what we have between our four military branches. That limited competition has driven many innovations. However, they would probably find claw hammers for less than $2000 if the branches were rewarded for uncovering waste in each other's procurements.

In general, where we can't privatize altogether, it would be interesting to fragment various departments and/or agencies into competing units organized so the weakest link would occasionally go bankrupt and be replaced.For instance, create four Social Security administrations. Let them compete for pensioners. Give each a dollar plus fixed overhead ratio for each dollar disbursed. If anyone, anywhere, reports fraud, charge the fraud against the loose agency's overhead along with a 10 percent finder's fee paid to the whistle-blower. Set the overhead ratio so two agencies make a profit from which to modernize, build reserves, and pay employee bonuses; the third breaks even; and the fourth loses money. Whenever one becomes insolvent, liquidate it and create a new one under new management.

I can forsee some potential issues with this, but overall, I think it is a novel approach. Most people who have worked in a government agency have seen plenty of waste, and this could be a good way to eliminate some of that. Efficiency and productivity increases are amazing things, because they allow you do make more money while actually lowering prices. Yet somehow, the government hasn't caught on to this idea. Does anyone evaluate or attempt to measure government productivity changes? I have never seen such a thing, but it may exist. We could have lower taxes and better government if competition would drive efficiency. But then what would the left and right fight about?