Innovative bureaucrats?
by David Zetland (Via One handed economist)
Innovative bureaucrats?
The Dutch are fond of subsidies for arts, sustainability and… innovation.
These subsidies arise when bureaucrats with “topical portfolios” award cash to winners of various “promise to stimulate [topic]” contests.
On the one hand, I am pleased to see the government providing public goods, i.e., stimulating efforts to help everyone.
On the other hand, these programs tend to find the least-productive incentives to advance the “topic”
(My one-handed view is that this structure is wrong… keep reading…)
So the irony is that the bureaucracy in charge of innovation…
- …has permanent employment contracts and long vacations;
- …gains nothing from success but loses nothing from failure;
- …works in non-market areas where the lack of objective measures of performance leads to subjective choices of winners and losers; and
- …happily spews a meaningless whirlpool of jargon borrowed from strategic plans, conference videos, and social media #buzzwords.
If I was in charge of these topics, I would follow the new development model of “pay for results” by specifying the criteria for success and then rewarding the most successful efforts to reach those goals with cash and publicity.
This system would have nothing to say about who did the work, what angle they took, or how fancy their method. It would pay for results.
My one-handed conclusion is that governments should stop chasing “creative,” “innovative,” “smart,” or “sustainable” and just reward results.
What’s your experience on this topic?
From what I’ve seen of the world, and management attempts to rule the world around them, paying only for results would result in every one of the ills you’re ascribing to the agency now, plus you’d have a bunch of short-term hits that would become entrenched disasters if widely implemented.
Just a caveat, having worked for 7 years at a Dutch company.
In some cases it may appear that the Dutch have long vacations, but in reality they have “short” working days (8 hours is not normal in a lot of Western Europe) and are taking what we would consider compensatory time.
The American office worker habit of working 50+ hours every week and getting paid for 40 and no time off in trade is not normal.
I agree with JDM. Why should government be using the criteria as business? Shouldn’t government be a complement to business. Personally, I think the whole process is wrong – we should encourage arts (and all other innovation) via a universal basic income that would enable more experimentation. But if we don’t have that, I’m not sure your solution is a solution.
P.S. I think the entire concept of paying for results is wrong. People who innovating (or even scientific research for that matter) are by definition taking risks. Paying only for results is not encouragement, it is discouragement. The effort has a cost, covering that cost is what is needed. What the bureaucrats need to do is identify the most potentially valuable projects that wouldn’t be backed commercially. The ex-ante view is what counts not the ex-post view. The carrot at the end, might be continuing support based not necessarily on results but on demonstrated effort.
P.P.S. New discovery in general is as much furthered by discovering dead ends as by discovering breakthroughs. Those who only discover dead ends are also part of the advance of knowledge. The “science” of management seems has either forgotten this or never known it. I seem to remember once that it was said about an IBM manager when asked why he didn’t sack someone who made a costly mistake “I have just spent a lot of money teaching an important lesson, why should I let that knowledge walk out the door”.
My German associates would also take long vacations and worked OT. I would be there early and leave at 9 hours just to get out and walk around. Sometimes they would accompany me per my bosses instruction and geld passed to take me somewhere. Americans do not work properly and the umbilical cord to the office needs to be cut.
I have been writing on drugs and healthcare for a while. Covered the opioid epidemic, how it was fostered by business interests, showed the time line with the increasing amounts of deaths with the introduction of OxyContin, to 2018, detailed the misuse of the Junk and Porter letter in the NEJM to promote the abuse of OxyContin by doctors, Purdue, and industry alike, exposed the lack of government interference in this epidemic, the government payoffs, etc. This was all apart of government funded research through tax breaks, exclusivity in patents, and extensions of patents with “new and improved,” etc.
Who would have thought a $25 assembly of a plastic and rubber spring loaded devices with ~$2 of meds in each would cost $600 for a brace of these devises? Mylans EpiPens are a life saving device and it is painful for me, at least, to list to countless executives get up in front of the public and lie their asses off in an attempt to justify the R & D and the costs of manufacture, distribution, rebates to PBMs, etc. with a straight face. Teva’s had a generic version in place to supplant Mylan’s EpiPen. Mylan complained to the FDA, the Teva version could not be used in the same manner, following Mylan’s EpiPen instructions of use and therefore could not be classified as a generic. This in the midst of a shortage of lower cost delivery of meds to prevent death.
As we pretty much know, Purdue reaped $billions from deliberately addicting the US to OxyContin and I am sure EpiPen made a $billion or so also.
The US does sponsor research through liberal and easy tax breaks. Mind you, there are rules and procedures to follow. There is exclusivity granted for the new drugs researching the market as well as other product. There are standards for new and improved which lengthen patent exclusivity for drugs and also food products. Companies do recoup their investment costs with liberal policies. Furthermore, the government has put in place the 21st Century Cures Act which is regarded by many as giveaway to the healthcare industry.
And yes, companies should able to recoup some or much of their costs in bringing innovation and product to market. The World Health Organization released a technical report on bringing cancer drugs to market. It touched upon exclusivity, the return on R & D investment ($14.50/$1 invested), and how long it takes to recoup costs. You can read some of this later today. The median time for a company to recoup an investment of $750 million was 3 years and for a $2.8 billion investment 5 years. The charts are there and I will be posting one within the week depicting the rapidity of cost returns.
Jonas Salk was once asked why he did not patent his polio vaccine. Other than the fact, it was federally funded; his comment was: “Can You Patent the Sun?”
PS: My wireless keyboard is refusing to type once and a while. I may go back to hardwired product as this is very frustrating to me. Please excuse my typos. I think I caught most of them.