Chapter 1
The Next Paradigm
This may not seem plausible to those who are disillusioned by government, who view the institution as the perpetual problem, hopelessly dysfunctional, intractable, and ineffective.
At many times throughout our history, government has gotten it.
There have been robust periods during which government-sparked innovations informed private sector actions and energized private sector growth, not the other way around. There are numerous stories of an American public sector, from its perch of leadership, successfully applying new technologies and new organizational techniques to carry out its core public missionsâsuch as establishing and maintaining the countryâs infrastructure, providing for the nationâs defense, and delivering needed services and benefits to veterans and the poor.
Or, even, delivering the mail. This may come as a surprise while you wait and wait and wait on line to ship some socks to Saginaw, but the U.S. Postal Service has shown considerable innovation and creativity at some stagesârepeatedly refreshing its methods, from steamboat to locomotive to airplane, in order to continue year-round universal mail service.1 In the middle of the nineteenth century, it even used its buying power to repurpose the horse as a delivery Âvehicleâsubcontracting for the Pony Express, which circulated mail to the western states via land routes in half the time.2 That flourished for about 18 months, or until people gravitated toward another means of communication: the telegraph.
The telegraph itself was a by-product of government leadership. Federal, state, and local government support for waterways, highways, and runways has traditionally been critical to the takeoff of new transportation technologies, with vehicles ultimately emerging to exploit the new transportation grids. But investing in infrastructure has meant more than paving a road or digging a canalâthe government has been an active player in the research and development (R&D) sphere, enabling or designing new forms of infrastructure, notably those related to communications. In 1843, Congress provided Samuel Finley Breese Morse with $30,000 in seed money for an experimental 38-mile telegraph line between Baltimore and Washington, D.C. The experiment succeeded on May 1, 1844, when the first message was sent by Morse codeânews that the Whig Party convention in Baltimore had nominated Henry Clay for president.3
Throughout the nineteenth century, the U.S. Army pioneered in two areas of manufacturingâinterchangeable parts and Âmechanization âas it made guns and weapons in its factories as well as ordered them from those of contractors. These innovative techniques came to be known as the âarsenal system,â spreading from military factories to revolutionize old industries like sewing and create new ones like bicycle and automobile manufacturing.4 The military was ahead of the private sector curve in other matters. Consider the pension program for Union veterans of the Civil War, which has been called the first national welfare state program. An early case of âinformation overloadâ inspired the federal government to build a massive Pension Building in Washington, D.C., between 1882 and 1887, to be inhabited by clerks processing pension claims. The buildingâs architect, Montgomery C. Meigs, also invented an ingenious labor-saving deviceâa metal track on each floor along which office boys moved more than a ton of documents each day by using poles to shove baskets of paper that were suspended by rods.
Understandably, this history is of little consolation if you are still waiting on line at the post officeâor airport security or the Department of Motor Vehiclesâor worse, as we chronicled earlier, if you are waiting for word about your veteran benefits. Thereâs no disputing that American government, while accomplishing much that has gone unnoticed, has also rightly earned a good share of the cynicism and criticism that has come its way.
Its failures and foibles have given rise and fuel to the unyielding ideologues who loudly assert that smallerâand less engagedâgovernance is invariably the ideal. And when those cynics cite the Framers for support, thatâs not empty rhetoric. The truth is that our founders did focus on limiting the power of the federal government in the lives of Americansâand no one complained. For most of Americaâs first century, government played a tiny role in daily life. A diffuse country where most Americans lived on farms disconnected from one another had little useâand little desireâfor an activist, big federal government. When the distance your horse could take you was the circumference of most of your life, decisions in state capitals and Washington, D.C., had little impact on ordinary people. In the years just before and especially after the Civil War, that began to change.
First, Americans moved west in earnest, and we became a continental nation with a larger set of concerns. New lands needed to be managed, and a country with grand ambitions needed infrastructure that only the government could help bring about such as the transcontinental railroad and the aforementioned telegraph. Second, the country was undergoing a rapid period of industrialization, with millions of American moving from farms to cities, from the fields to factory floors, and from mom-and-pop farms and shops to large corporations, very similar to what China is experiencing today. The rise of companies like Standard Oil in the last third of the nineteenth century, followed by U.S. Steel and others in the early twentieth century, began to concern many Americans. Those Americans saw those companiesâ apparently unlimited economic power, and saw a society rapidly changingâand not always for the better. The independence, imagined or romanticized, of the yeoman farmer toiling in his fields gave way to millions of Americans working for companies built on the management principles of the dayâhierarchical, top-down, and largeâor losing out to those large entities in the marketplace. Crowded slums, oppressive sweatshops, dangerous factories and mines, forced child labor, companies exercising monopoly power, and harmful products being churned out by these factories were exposed by the crusading muckraking journalists of their day.
More needed to be done to limit the unchecked economic power of the new breed of big businesses and banks. At the time, however, American governmentâof any kindâdidnât appear to be ideally equipped for such an assignment. On the local level, urban bosses dominated the politics of rapidly growing cities and were predominantly focused on divvying up the spoils of power, ignoring the needs of their residents in much the same way that businesses ignored those of their workers. Things werenât operating much better at the federal level. In the early 1870s, the federal government employed just 51,020 civilians, of whom 36,696 were postal workersâand there, too, a spoils system rewarded political cronies and party hacks with the few government jobs. Nor was the federal government on the cutting edge of technology, especially as compared to the private sector. Consider the typewriter. In 1887, a report published in the Penmanâs Art Journal noted that typewriter usage had proliferated in the private sector to such an extent in less than five years that the instrument had gone from curiosity to critical infrastructure âin almost every well regulated business establishment.â5 In contrast, the federal government had failed to incorporate the productivity tool at all.
It would take considerable time for the technology gap to close, but on the management front, pressure built for something to be done, to enable the government to take a more constructive role in limiting unchecked economic power. Then came the thunderbolt event of 1881, the assassination of President James Garfield by Charles Guiteau, a political supporter angry about being denied an ambassadorship.6 That inspired progressive reformers to fight for a regularized and bureaucratized government where officeholders were insulated from politics. With this new âcivil serviceâ in place, government became more professionalized and ready to act.
In 1887, the Interstate Commerce Commission was established, the first major attempt of the federal government to oversee the national economy. The bill creating the commission, signed by President Grover Cleveland, stemmed from the widespread belief, especially among western farmers, that railroads were systematically abusing their power, in terms of setting rates on shipments. Railroads had to set âreasonableâ rates and, in an effort to curtail corruption, were restricted from giving preference to any person, company, location, city, or type of traffic. Three years later, with Benjamin Harrison in the White House, the federal government took another major regulatory action, the Sherman Antitrust Act, passed to bust up the big monopolies.
These were the first national accomplishments of the emerging progressive movement. And by âprogressive,â donât think of how itâs used in Washington today, as a euphemism for âliberalâ and a description of the political philosophy of many in the Democratic Party. The progressive movement of the late nineteenth and early twentieth centuries was not a partisan effortâit flowed through both political parties. It carried along Republicans like Teddy RooseÂvelt and Democrats like Woodrow Wilson, and it had devotees in small towns and big cities. But it united its adherents with a vision of a government that was brought up-to-date: a massive, hierarchical, bureaucratic enterprise to check the massive, hierarchical corporations. The progressive push set the stage for the twentieth century to be the bureaucratic century, in both the private and public sectors.
But again, it didnât all happen at once. While the first decades of the twentieth century saw the birth of new federal agencies (such as the Department of Labor and the Federal Trade Commission) and even the passage of important new laws to protect workers, regulate the quality of food and drugs sold, and oversee banks, it took the trauma of the Great Depression to create the building blocks of the federal government we know today.
Faced with a society in which at least one in four Americans were without work, Franklin D. Roosevelt said, âIt is common sense to take a method and try it: if it fails, admit it frankly and try anotherâbut above all, try something.â He and his fellow New Dealers tried many thingsâsome worked, some did not. But what they did do, without any argument, was remake the way in which Americans thought about the role of government. The New Deal doubled the percentage of the national economy devoted to government, and led to an alphabet soup of new government agencies: the SEC, FCC, CAB, NLRB, NRA, WPA, and CCC.7 World War II then accelerated the growth in the size and scope of government as the nation mobilized for war. Government spending jumped from $9 billion in 1940 to $98 billion in 1944âthe year Americans landed at Normandy. Rationing of certain foods and other essential goods such as gasoline, metal, and rubber was instituted. While industries were not nationalized, the government took an active role in directing the economy through a range of government organizations such as the War Production Board; the Supply Priorities Allocation Board; and the Office of Price Administration, which implemented new price controls on goods. Once victory was in hand, the most direct controls on the economy mainly abated; what remained was an enlarged defense establishment (what President Eisenhower would later characterize as the âmilitary-industrial complexâ), the New Deal agencies and programs, and the large bureaucracies to carry out their missions.
Though the two parties found much to fight about in the postwar years, there was a basic consensus about the role of government for much of that time: economic security would be provided to people through rule-bound bureaucracies, which, whatever their faults, would be fair and equitable in their treatment of people. As present-day government reform gurus David Osborne and Ted Gaebler put it: â[The government] delivered the basic, no-frills, one-size-fits-all services people needed and expected in the industrial era: roads, highways, sewers, and schools.â Similar to those in the private sector, these large organizations had to collect and organize millions of records, without the computing power that we have sitting on our desktops and bouncing around in our pockets today. The result was an apparatus that, for the most part, was a âgovernment of clerksââtens of thousands of them. At times, it could be maddening dealing with the red tape, but in an era that moved slower and in which large, impersonal, hierarchical organizations were the norm, it was accepted: if you waited to go to your bank for the three hours it was open on Wednesday to make a deposit, you were not necessarily shocked that you had to do the same for a passport or marriage license. As the economy boomed and tax revenue continued coming in, this system worked. And from the GI Bill to the Interstate Highway System to federal home loans to the space program, the postwar government did amazing things that helped to create an American golden age.8
But that was short-lived. As America encountered more turbulence in the 1960s and 1970s, trust in government plummeted. Historians have long debated the core causes of that decline, though thereâs no denying it was a time of traumatic, transformative events that shook peopleâs belief in institutions of many kinds: from the struggle for racial equality to the assassinations of the Kennedy brothers and Martin Luther King Jr. to the stunning lack of transparency throughout the war in Vietnam and the investigation of the Watergate affair.9 Parents whose children were drafted into a conflict of unclear purpose and no defined end certainly had cause to lose some faith in the government. But, so, too, did those who were simply sending their kids to school, in hopes of a better future. There was a growing belief that government was no longer delivering the requisite results in the areas of education or employment. As the National Commission on Excellence in Education found in its seminal 1983 report, A Nation at Risk, SAT scores had been on a steady decline from 1963 to 1980, about 13 percent of all 17-year-olds were functionally illiterate with the rate as high as 40 percent in some minority communities; and the number of students needing remedial math courses in colleges and universities jumped by 72 percent from 1975 to 1980.10
Even high school graduates with passable skills found good-Âpaying jobs in short supply. The factories, foundries, and plants that powered the postwar boom in the Northeast and Midwest started to chase cheaper labor and sunnier climes in order to keep up with global competitorsâtaking jobs with them. A quarter century that saw rising incomes across the board came to an end in the early 1970s and was replaced with stagnating incomes for households even as women left the home and entered the workforce. Oil shocks and inflation battered the economy, and modern-day muckrakers exposed the problems with the air we breathed, the wat...