Deloitte: the Western governments have to be transformed


The biggest auditor in the world Deloitte Touche Tohmatsu came up with opinion piece recently on how to deal with ‘The Gap’:

Western societies have over-committed their current and future resources… Money has been spent that hasn’t been earned, and promises have been made that cannot be fulfilled.

The Gap is popular known as ‘the trillions of dollars of unfunded liabilities’ in social services created over decades of piling up entitlement programs and hefty pensions and benefits.

Deloitte authors agree with Big Bureaucracy that just raising taxes and cutting spending is not going to be enough to take us out of the ditch (although it is more like a crater).

Structural changes in government and bureaucracy are needed:

In a world of mobile capital, trans-border exchange, heightened competition, and exponential technological change, many governments are mired in bureaucratic-age thinking. In order to close their fiscal gap, governments will also need to address the associated performance gap…

The bureaucratic barriers to change in the public sector greatly exceed those in the private sector — not due to mal-intent, but due to a culture of risk aversion and program protection, and as a systemic consequence of the way government has been organized since the early twentieth century…

Reform of the executive branch is needed and the goal is to produce better public value.

It is common sense: tax-payers want more for their money. Americans dig slogans like: pay less, get more. The private sector is always striving to achieve that goal. It is time for the career civil servants to follow.
For example, the HHS has a budget bigger than the Defense Department and yet half of the folks in the USA have to pay thousands of dollars for health insurance on the top of the taxes that feed to the bureaucratic monster.

The Obama Care just added over a hundred new bureaucracies to HHS. The result: the tax revenues will feed more government in hope that the new agencies will come up with ‘cutting the costs’ solution while costing billions of dollars to operate.

Instead of making the over-bloated HHS structure leaner the ObamaCare just loaded the monster with more bureaucratic weight. The US Department of Health and Human Services is so big it should be proclaimed as one of the wonders of the world: the most obese health bureaucracy on the planet.

Unfortunately the Deloitte paper does not give us any details on how and what specific bureaucracies should be transformed. It is basically an elitist blah, blah, blah. Also it is a bit creepy. It looks like the folks at Deloitte who know everything about the way the world runs are not ready to share details with us while talking about transforming the Western democracies.


However, the authors point very nicely the roots of the problem (why the western governments keep going forward stumping on the destructive path that leads to bankruptcy). Here are some of the best quotes:

Politicians prefer solutions in which there are no losers — but the current circumstances don’t auger well for any such win-win approaches…

Tuchman describes folly as a “process of self-hypnosis” in which political leaders cling to an established course despite mounting evidence of its risk. The dangers of the course are often stated but not acted upon, articulated in words but not translated into deeds…

Any change in how things are done represents a threat to entities that benefit from the status quo…

Future taxpayers do not yet vote, whereas current constituents do…

The party out of power is generally seeking to regain power, and as such, it will point out all the negative impacts of actions initiated by the ruling party…

A challenge for promoting the cause of fiscal sustainability is that it lacks a readily organized, devoted political constituency. Two mechanisms can potentially change that: a government commission and third party political activism.

Here is where I disagree with Deloitte: a government commission? Really? The oldest Washington stunt in the book! There are enough bureaucracies already whose job description is dealing with budget. How about just making those work before we create a new one?

Third party? Maybe. Although there are whole bunch of parties in Britain and they are still deep in debt.

Here is one disturbing quote:

When your political system punishes lawmakers for the doing the right things, it is broken…

Fabulous! But who decides what is right and what is wrong? What seems right for some may be perceived as wrong by many. Who has the authority to pronounce the system as broken? Deloitte?

Let’s stick to the freedom of speech approach and try to spread ideas – if they are good ones and make sense they may stick.

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