Cut Programs, Not Systems
In demanding at last week's CPAC convention that GOP leaders strike $100 billion from federal spending, Tea Party activists are forcing politicians to go against their natural instincts.
If they expect to succeed, they need to understand the difference between a program, which spends money, and a system, which creates it.
We have all seen it: for every problem, politicians have a program.
When disaster strikes, politicians implement programs to aid the victims.
When public health is inadequate, they fund health care programs to fill the need.
When the environment is polluted, they mandate programs to clean it up.
Some of these programs are necessary, at least temporarily. But programs cost money. And sometimes there is not enough money to pay for all the programs we might like, especially as they accumulate over the years.
So where do we get the money to pay for programs? We get the money from systems.
Systems are different from programs. For example, for any problem, they are systemic solutions, and programmatic solutions.
A police force is a crime-fighting program. It doesn't pay for itself -- it requires a constant infusion of money. The crime it prevents might be said to pay its costs -- but police spend money to reduce crime -- they don't create new value.
Education is a crime-fighting system. By enabling people to provide for themselves, so that crime is less attractive to them, education pays for itself, at least partially.
Systems are wholes. Programs are parts.
Our bodies are systems. They combine a brain that can think, with a body that can act. That enables us to take an idea, and turn it into a physical reality.
Our constitutional democracy is a system. It enables the majority to make decisions, through elected representatives, within bounds set by the Constitution. The system creates a foundation from which stability, security, freedom, innovation, prosperity, and other qualities emerge.
Public education is a system. If well designed, it helps young people become vested with the knowledge and skills they need to support themselves, their families, and their communities.
The economy is a system. Businesses compete to answer a want or need, connecting a social desire -- a demand -- to a supply that meets the demand. Free economic transactions create net value on both sides of the equation -- a net profit for the business, and a net benefit for the consumer.
Systems create value. Programs consume it.
Every system has qualities that are absent in its parts. Systems create new forms of value.
When atoms and molecules join together in a cell, new value emerges: life. When cells join together in a human body, new value emerges: thought, consciousness, and everything that follows.
When people come together to meet their collective needs, new value emerges: families, communities, businesses, economies, nations, civilizations.
Each part in these systems imposes net costs. Those costs can only be sustained because, together, the emergent qualities make the whole system sustainable.
Parts do one thing well. Systems do many things well -- more than the sum of the parts.
Parts are specialized for one function -- atoms for building, cells for living, hands for holding, businesses for producing. Systems are optimized across many functions -- people, businesses, economies meet a huge array of needs, both physical and emotional.
If you judge the value of a system by one thing that it does, it seems inefficient. For example, if you want to fight crime, either through education or police, you will find a police force costs less than a school system per criminal act prevented.
But if you judge the value of a system by all the things it does, it often turns out to be much more cost-effective. A school system generates many outcomes, not just a less crime-prone populace.
Systems always pay for Programs
Parts can't pay for themselves -- ever. They lack the emergent qualities, the net value creation. The laws of thermodynamics rule.
Programs can only be paid for if they are part of larger systems, which generate the net revenues.
A tax program can't be paid for, unless it is part of an economic system, which generates the wealth.
A health program can't be paid for, unless it is part of a system which generates net health.
Programs are often necessary -- they meet essential needs. Often, they are essential parts of larger systems. But they cannot be paid for without systems.
Why seek systemic solutions?
Politicians focus on programs, because they are part of a political system that focuses them on re-election. They need to demonstrate they are advancing solutions to specific problems. Programs are proof points they use, to convince voters they are doing their jobs.
These programs are often very specific to highly-publicized problems. If people are hungry, programs give them food. If they are poor, programs give them money. If people are out of work, programs give them jobs. If disaster strikes, programs provide aid. If an enemy attacks, programs exact retribution.
But systemic solutions are often left behind. Instead of assuring that we have the systems to deliver ample food, jobs, prosperity, health, and safety, we spend our money on programs that aim to guarantee each of these, but without creating the resources to do so.
Programs persist. Systems evolve.
Programs have clearly-defined forms that don't change much over time. Like a police force, they are based on command-and-control.
Systems have evolving forms that adapt as conditions change. Like a natural ecosystem or a healthy economy, they are based on feedback-and-adaptation.
For that reason, programs grow obsolete, and outlive their utility. But systems -- if they receive feedback -- adapt and can live through many forms.
When should we choose programs, and when systems?
If a system and a program would accomplish the same ends, it is better to choose the system. Ideally, it can be self-funding, and accomplish not just one objective, but many.
A program is justified, if it reduces costs that would be incurred without it, and if no systems have been devised that would achieve these same ends. Programs are often necessary, if systems are not sufficient to meet social needs.
But a program should always be embedded in a system, so that the system can cause it to adapt. Otherwise, its costs will invariably outpace its benefits, and it could even undermine the systems that create value more sustainably.
Often, we need both programs and systems to solve problems. To prevent poverty, we need both a healthy economic system, and a program to provide relief in the face of tragedy. To prevent crime, we need both an educational system to build capable people, and a police force to punish the irresponsible.
But it is unwise to divert funding away from a system, in order to fund a program. The first creates value, the second only spends it.
It is time to unite businesses and activists -- from the left to the right -- behind systemic solutions
To be healthy and prosperous over the long term, society needs a healthy environment and economy, and the systems that support them. Businesses and activists, from the left to the right, need to support these interdependent systems.
The point is not to eliminate $100 billion in funding for one set of programs or another. The point is to focus first on the underlying causes, so that we can cut and spend intelligently, and systemically. We need to take a systems approach to solving problems. Instead of relying on expensive programs, design public policy systems, that create net value for society.
Republicans and Democrats should not just blindly support or oppose programs. Instead, they should acknowledge their limits. If we need programs -- police to fight crimes, jobs for the unemployed, health services for those in need -- we need healthy systems that generate the support that pays for those programs.
Entitlements are not systems -- they are programs
Social security used to be part of a system -- one that generated wealth and security, paying for itself. Now it is a program. So is Medicare, Medicaid, the Farm Bill, fossil fuel subsidies, clean energy subsidies, unemployment benefits, the military industrial complex and myriad more. These huge programs produce few of the resources they need to sustain them. Instead, they extract value from the two truly productive systems that remain: the natural environment, and the economy.
If we continue to steal value from the economy and the earth, we will undermine the two systems that must be healthy, to pay for any programs we desire.
Systems for the GOP -- and Democrats -- to support
Cutting $100 billion is a nice populist idea to advance. It has a good ring to it: a hundred billion is an even number that's easy to remember and sounds like a lot.
But if we cut programs that are essential parts of the systems that sustain us -- the economy and environment -- then the costs will exceed the benefits.
Instead, we should seek to replace expensive programs with smarter systems, so that we create sustainable health and prosperity.
Our tax program -- which penalizes income, savings, and jobs, should be replaced by a revenue system: by shifting taxes to things we don't want, like pollution, consumption, and waste, we can kill three birds with one stone.
Our military program -- which has sent our soldiers across the planet to fight fires with even more fire -- should be part of a larger peace-building system that cultivates freedom and prosperity, so that we can preserve our military resources for when war is truly necessary.
Our unemployment and jobs programs -- which depend on subsidies we won't be able to long afford -- need to be part of a system to restore education and innovation to the levels needed for our children and theirs.
All this takes more thought than can be expressed in a populist slogan to advance a simplistic program: to cut $100 billion from whatever programs and systems lack the political power to protect themselves.
The GOP is heading for disaster if it cannot look beyond slogans, and devote the careful, collaborative, bipartisan thought needed to develop systemic solutions.
The Democrats are no better. Both need to learn. Only we can teach them. When will we? When we need to, but can't? Or right now, when we can?
Follow Bill Shireman on Twitter: www.twitter.com/Future500
What I find amazing is that in a nation of such incredible wealth, why aren't more of our programs shifted off to sustainable ways of being paid for, like through foundations and endowments, rather than relying on tax payor money year after year?
For example, if every community had trust funds--governed locally--to support the construction of local public schools, and every contributer to that fund received massive tax credits, in a generation or two we could practically eliminate the need for higher property taxes and those constant school bond elections.
So, I agree we need long-term-comprehensive-thinkers (a rare find in Congress), but I disagree that cutting somewhere--anywhere--is a bad start. Starving the failing system is the only way to make way for a new, sustainable, replacement system.
Personally, this sounds more like the "government can't create jobs, government doesn't create wealth" nonsense coming from the right.
Of course this is more akin to how humans were most likely designed to survive as a species. That is, in relatively small groups with everyone working towards the common goal of survival. Everyone shares in the outcome (Survival) with those contributing the most value obviously being rewarded with more leisure, abundance, leadership, etc. (Read: "money" for today's equivalent of providing these things) The real problem with basing it all on currency is that it can be horded, stolen, manipulated, etc., ect. Where as abundance is simply a way of keeping score while you're living that can't be horded and passed on after you're gone. It's obviously more complex than this simple explanation but hopefully you get the gist of it. It's not however, "socialism," as the ignorant are so fond of labeling it.
Tragedy is everyone sees inefficiencies of the current 'System'; except people who should be reforming their 'piece of the System'.
For example:
All see inadequacy of education; except majority of teachers and their unions.
All see the corroding influence of money in elections; except TV stations and main stream media.
All see corrupting influence of money and lobbyists; except present and former politicians.
All see major shortcomings in healthcare; except doctors, hospitals, pharma, and their trade groups.
All see the lack of ethics in deceitful mortgage lending and paperwork; except the banks.
All see the destruction of the environment; except the polluting industries.
All see cost and the delays in the judicial system; except judges and lawyers.
All see the non-sustainability of Social Security and Medicare; except AARP and most
seniors.
All see the harm of creative-accounting; except Wall Street and the Accountants' Association.
And the list can go on and on.
Our country cannot be productive and excel, if it is not efficient; however way one may slice or spin the inefficiencies. It is time each segment of our economy and "System" take an honest look at itself and, with no further excuses, reform itself even if it means short-term pain. Unless all of us are prepared to sacrifice all of us will go down together and "higher-up the pole one is, the harder the fall."
"We cannot eat our cake and have it too."
A program as defined for Social Security, Medicare and UnemploymeÂnt insurance is a plan of action for achieving something. A system of procedures or activities that has a specific purpose. Social Security's plan of action is to pay in a small amount each paycheck into the Federal Insurance ContributiÂon Act for Social Security and Medicare so you will have a retirement benefit and medical benefits when you retire, so it takes care of your children under eighteen if you die and so it takes care of those who become disabled for the rest of their life.
The government spent the surplus money they required us to pay in for Social Security from every paycheck since 1983, so now you call it a program that extracts value from the economy because the government needs to pay it back.
Higher income taxes are necessary to pay back and substain the programs the workers have paid for and still want.
It's a common fallacy to believe that this is the way these programs are funded but it's not the case. The SS you're paying in today is funding the PROMISE of SS for those that came before you. Those that come after you will be funding yours. One of the reasons why this system, once promised not to ever exceed 2 or 3% of the working generations' annual income, now costs 15% of each worker's income. Unless you make over about $110K annually. Then it becomes progressively less percent of your income until it becomes insignificant if you make enough. Most don't, and never will. And of course, it's not means tested for receipt. Instead of being a safety net for those truly in need, all receive it, even if they're billionaires. As if nothing else about our nation and its infrastructure that enabled them to amass billions of dollars for themselves enters into the equation anywhere. Perfect example of a system that needs some tweaking to perfect it.
You also say, "Social security used to be part of a system - one that generated wealth and security, paying for itself. Now it is a program. So is Medicare, Medicaid, the Farm Bill, fossil fuel subsidies, clean energy subsidies, unemployment benefits, the military industrial complex and myriad more. These huge programs produce few of the resources they need to sustain them. Instead, they extract value from the two truly productive systems that remain: the natural environment, and the economy."
How can you lump Social Security,Medicare and unemployment benefits together with oil subsidies and the Military Industrial complex?
The workers have paid their own contributions into Social Security and Medicare. The government requires the employers in most states to pay unemployment taxes for the protection of the worker.
What kind of deal is this? You want to get rid of all the elderly's programs now that it is time for the boomers to use them.
Social Security is an insurance mixed with a retirement plan. It is what it is called, Social Security.
If I tell an in convenient truth - like the fact that these programs don't pay for themselves, and that today's parents did not earn the payouts they are receiving - then I open myself up for criticism, because, if I support social security, I am not supposed to acknowledge this truth, I'm supposed to ignore it.
I'm done playing that game, and it's time all of us were. If we want security for seniors, perhaps we should stop blocking genuine thought, and develop a system that will enable it.
Medicare is closer to a pay as you go proposition, with little in reserve. But it's also a SYSTEM to keep old people from going broke under the cost of medical bills. What's the social benefit? We keep old people alive and relatively healthy because it contributes to the social system.
Your dichotomy between programs and systems is troubling. In the long run taxes must match expenditures, with some borrowing for balancing long term conditions by the government. Calling taxes a program is meaningless, because our SYSTEM is that we will create wealth each year and tax some of it to pay for collective purposes. The program aspect only comes into play when we pick A over B for more tax or C over A and B as deserving less tax. I agree modify the tax schemes as you say to reduce unwanted behavior and increase desired behavior. But then question how we got to any position. Right now I'd say tax programs were distorted by lobbyists for your members in the Fortune 500.
At $14T, the debt now equals GDP. When running deficits of more than a trillion a year, it will not take long for the fiscal mess to reach crisis levels. Meanwhile, we're debating about cutting just $100B from our spending when the annual problem is over ten times that amount.
I'm pretty clear on how we got into this mess. What I'm unclear about is how we get out of it. As interest rates rise, the interest on the debt will begin to consume all the financial oxygen in the government room. Then what?