oversight or insight?

I once heard that governing is about doing as little as possible, making only the most subtle changes, allowing the machine to operate as naturally as possible. The premise being that something as large, interconnected and complex as a whole country (or planet) has more moving parts than any human can grasp, and big, hasty changes invariably lead to unintended consequences.

The American tax code is a great example. Every new law has a number of amendments attached to it because the legislators didn't think the original through, and then needed to react to loopholes they inadvertently created. The end result is an incoherent system, with no clear strategy or intent, and a massive and wasteful administrative process.

The last few months have caused many to demand greater regulatory oversight, be that antitrust, prisoner treatment, stem cell research, banking, automobile manufacturing, health care, or education. There's just one thing we know for sure that applies in all these cases. The government is the wrong place to manage it. They are not equipped with the insight, expertise, or management experience; they are utterly susceptible to external influence (lobbyists, lust for power, etc.); and finally as lawyers, they are incapable of simplicity and succinctness, the absence of which is of course the petri dish in which all loopholes and bad behavior are cultivated.

So if it's not about legislating oversight, what other options are available to the government? What do they have at their disposal? Well, other than a bunch of soldiers and tanks, it boils down to money - either giving it to someone or taking it away (taxes).

Making smart choices about where to spend these incredibly vast sums of money is not easy. We don't have to look farther than the first batch of TARP "grants" to know that the best laid plans of mice and men... I know we've been having an amazing discussion in the comments section of this post, but I still think as a matter of policy, the government should use money to motivate behavior that shapes results that matter, outcomes that are sustainable, and impact that is largely self-policing.

What can they to do motivate the right outcomes? I think we spend more time wondering about the how than the what, and in the case of the Feds, I don't think they should ever focus on the how - they simply don't have the time to know enough. Instead, let them focus on the whats.

With education, which what do you want? (!) Is it as simple as more and better graduates?

In banking, which what do you want? How about decision-making that demonstrates accountability of results 3-5 years hence (i.e. commissions/bonuses paid based on results in the future).

In taxation - a simple way of equitably collecting what's needed with no room to move - maybe a flat tax?

In transportation - people safely getting from A to B. The government should only pay for that outcome. Why is it concerned with the how?

This is an incredible over-simplification, I know. Being purely outcome-driven, and allowing the free market system to decide everything might not be perfect. But deciding (legislating) everything and being purely process driven isn't right either.

So I prefer the idea that the government should do as little as possible legislatively and as much as possible economically to motivate (and incent) outcomes, leaving the "how" to the marketplace.

Imagine for example if the TSA had not been formed, but instead the FAA had created an X-Prize
that built a system that ensured that people and baggage boarding an airplane did so with maximum safety and minimum intrusion.

I bet we would never have to take off our shoes, or wait in ridiculous lines as poorly-trained people attempted to look authoritative.