Comment by nostrademons | Hacker News Reader

Comment by nostrademons | Hacker News Reader

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Large corporations are utterly dysfunctional too. The difference is that when a large corporation grows too dysfunctional, it's replaced by a small corporation. When a large government grows too dysfunctional, it's replaced by a small government too, but the process is significantly bloodier.

Robust systems are made up of interacting parts that tolerate partial failures. The reason the U.S. economy as a whole remains strong is because its least efficient businesses are continually failing, and their resources get reabsorbed by more competitive parts. When this ceases to happen (eg. the "too big to fail" banks in 2008, "what's good for GM is good for the country" in 1953), the economy as a whole becomes much weaker. There is no similar ablation process for the U.S. government - lately, there hasn't been an easy way to let parts of it fail while still preserving the government as a whole. This will likely lead to the collapse of the whole government, which is unfortunate. It can't avoid the dynamic common to all systems: the way to avoid total failure is to tolerate and adapt to partial failure.

The problem with comparing corporations with governments, is that corporations are (1) ephemeral and (2) have clearer measurable objective functions (profit). The government should do things that are inefficient and unprofitable. Note that services can both provide value and be unprofitable (they can generate value but not capture it). A corporation that needs to cut costs can layoff workers. A government that is dealing with large unemployment can't just do a genocide.

All of this is to say is that even though large corporations and large governments are alike, the most efficient solution for a corporation (bankruptcy) is not a good solution for government and so despite the inefficiencies we are sort of forced to accept them as the engineering realities of the situation. I fully understand large governments have large government problems, I just don't agree with the notion that having a smaller government is a solution and that the small government meme has largely been toxic to the detriment of the middle class.

There has to be a check on the inefficient and unprofitable things that a government undertakes, though, because otherwise all of the citizenry gets tied up doing inefficient stuff.

In theory democratic government is the check on this - if the government wastes too much money, the electorate is supposed to vote out their representatives and elect new ones that will cut the budget. (In this sense, Reagan-style conservatism is working as intended). In practice, this rarely happens, largely because the average voter is terrible about judging opportunity cost, and every expenditure seems worthwhile in a vacuum.

Depends on whose theory you're talking about. I never understood why budget cuts were the Republican rallying cry, because they're almost entirely meaningless when you mint your own reserve currency. If I could impart one thing and one thing only to every American, it would be that the federal budget does not work like a household budget, and the federal deficit is not a credit card. All of these appeals to overspending are just trying to gin up a very specific flavor of fear.

> and (2) have clearer measurable objective functions (profit)

This is a bit like saying that the goal of government is GDP per capita. Yes, both are important, and both are indicators of doing a good job at something, but what a business does is the most important thing: how does it adapt to reality and make sure it is always doing something useful enough to pay for?

Government doesn't necessarily do things people want to pay for, as then it might do much less stuff, but people do want to feel as though they're getting value for money from their taxes, and that the government isn't spending so much that taxes go up vastly and their currency is inflated so much their careful savings are wiped out.

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