Indiana: Blueprint for Lean, Smart Government

WASHINGTON – President Obama, perhaps overwhelmed by the number and magnitude of the issues already piled up –the banks, GM, the Freddie and Fannie gigantic sink holes, two costly and controversial wars, the BP oil spill debacle and intractably high unemployment– has lost his initial drive.

We need a “Grand Strategy for America”

Whatever the plans might have been, we do not have a President convincingly selling a badly needed “Grand Strategy for America”. As for the existing Stimulus Plan, much less there than initially advertised. For instance, only a small portion of the funds allocated for infrastructure have actually been spent so far. Hence a more modest stimulus impact than initially advertised.

Unfortunately, no convincing great plan coming from the Republican Party either. And this is a shame, as the country needs a credible renewal strategy to rally around. America needs a bold blueprint around which Washington could create a consensus for viable economic growth strategies and for swiftly dealing with our gigantic, systemic fiscal imbalances. For instance, much has been said about producing a White House-led, brand new energy policy that would spur large investments in new, green, non carbon technologies. But the President, while advocating new energy technologies, has yet to present a “Plan” around which he could fashion a national consensus –a Plan that would encourage the private sector, in partnership with the Federal Government, to invest the billions of dollars that would be required to take America on a new energy path.

Good news from Indiana

And yet, while Washington disappoints, there are successful policy initiatives undertaken elsewhere in America. While the two national parties are engaged in posturing and repetitive, empty sloganeering, something is getting done in the heartland. Perhaps Yankee ingenuity is still alive.

Take Indiana for example. Mitch Daniels, formerly Director of the Office of Management and Budget in 2001 – 2003 for President George W. Bush, did not stay much at the White House. He left Washington and was elected Governor of Indiana as a centrist Republican. Now, Indiana is no wonder state. It is no super achiever in almost any category. Within the 50 states, Indiana is middle of the road or less, in terms of its economy and overall performance. No super technology centers or other hubs of innovation. When Indiana was hit by the Big Recession, it did not have extra resources to fight it better than other states.

Daniels balanced the budget

And yet Governor Mitch Daniels managed to accomplish in Indiana what almost none of his colleagues elsewhere where capable of. He overhauled public finances and cut spending. Big Recession notwithstanding, he did not increase taxes and in fact balanced the budget, something that almost no other state has come even close to in this historic downturn that saw revenue collapse in all states.

Daniels did not perform any magic. He simply started with the basic proposition that the state had to live within its means and that it might be possible to get more value for the tax dollars actually available. And so he did. By many measures, it would appear that service delivery actually improved in Indiana, with lower spending. All this means that careful stewardship and creative use of more limited funds is possible.

Sane fiscal policies: no panacea but a very good start

Again, balancing the Indiana state budget is not in itself the recipe for an economic boom. But this well crafted fiscal overhaul indicates that it is possible to eliminate or at lest reduce the drag on the nation’s wealth caused by large public debt and consequent high interest payments that together absorb bigger and bigger chunks of revenue, this way limiting the scope of productive public investments. Well, if something workable can be engineered in Indiana, then there may be hope for replicating this success at the national level.

Washington: bigger numbers, similar issues

True, the Federal Government in Washington must deal with much bigger issues of gigantic entitlement programs, (Medicare and Social Security), not to mention the largest defense budget in the world that needs to be funded at great cost or restructured, along with two expensive, ongoing wars. And so, the political compromises necessary to reduce and eventually eliminate the Federal budget deficit will be much more complex. But, while the Federal problems are larger in terms of dollar amounts, the basic pitfalls are very similar. Unsustainable levels of public spending are, well, unsustainable. Unless we want to go the way of Greece or want to live with a perennial gigantic public debt, a la Japan –a debt so large that it will choke future economic growth– we have to reduce spending.

Fort Wayne and high tech local government

But there is more from Indiana. And this time it is about both, improving the way local governments deliver services as well as lowering cost. The lesson, in this instance, comes from Fort Wayne, the second largest city in the state, until recently led by centrist Democrat Mayor Graham Richard. As Mayor, Richard, a businessman in private life, managed to creatively leverage high technology tools to vastly improve the quality of services, while cutting cost. He took advantage of pilot initiatives aimed at spreading the availability of broadband internet connectivity to create new e-government public services and to streamline existing ones in Fort Wayne.

Better government services delivered

And so, from health care to street sweeping, from quick pot hole response service to street lighting, from red tape reduction to education, Fort Wayne has become a laboratory for new policies aimed at improving the speed and quality of public service delivery, while reducing overall cost. Thanks to new internet based applications, citizens can transmit medical records electronically, classrooms are all fully wired, adults have access to internet based continuing education programs as well as smart system to manage remotely energy consumption in their homes. Average city permitting time was reduced from 48 days to less than 10. Fort Wayne was the first municipality to adopt “Lean Six Sigma”, a business management strategy originally introduced by tech giant Motorola that provides a method aimed at systematically identifying defects and introducing improvements.

Quality of life improved

The net result of all this is that the citizens of Fort Wayne enjoy significantly improved services, while the city shot up in the national rankings of favorite venues for new investments. And this is because superior internet connectivity, good and convenient services and a more tech literate work force are now among the top 5 selection criteria motivating new ventures to locate in one place as opposed to another.

After leaving office, Graham Richard created the High Performance Government Network and wrote a book titled “Performance is The Best Politics” on the subject of using technology to improve government services.

So: decline is not inevitable, change is possible

Well, what do we make of these examples? As a minimum, we can conclude that America is not on an irreversible course leading to terminal demise. The “decline” school of thought somehow postulates that all great countries at some point run out of vitality, they cannot cope with more energized new comers, (the Asian giants, in our case), and thus lose ground, either abruptly or more slowly, as the case may be. Looking at our mediocre economic performance, high debt and high unemployment, many think that America’s days as economic and political leader are over.

Indiana proves that there is room for creative ideas

But these examples from Indiana, a state that does not have any inherent advantage in terms of geography, resources, lavishly funded Federal projects, superior education levels or income, prove that there is still ample vitality and intellectual creativity in America. Whatever our current predicament, there is still ample room in America to aim high and to achieve a lot more with the human and technological tools we have.

It is a fact that Governor Daniels can fix Indiana’s budget, while visionary Fort Wayne Mayor Graham Richard could launch a successful, tech-based revamping of all public services, thus making his city a model to be admired and hopefully replicated elsewhere. As a minimum, these remarkable accomplishments prove that there is room for smart initiatives.

Lessons from England

Incidentally, we are also getting lessons on the aggressive adoption of deficit reduction strategies and new models for the delivery of public services from other countries, such as England. Until recently the UK appeared to be completely dominated by high spending welfare philosophies that would condemn it to fiscal choking and rapid decline. Well, not so. Surprisingly, after an inconclusive national election, contrary to expectations, under the Conservative Liberal-Democratic coalition, led by Prime Minister David Cameron and Deputy Prime Minister Nick Clegg, England immediately embarked on a brand new course.

Literally after a few days in office, the new coalition government announced what is by any measure an extremely aggressive spending cuts program aimed at drastically reducing the dangerously bloated deficit and public debt in the UK. At the same time, the coalition launched new ideas for the decentralization of services and the streamlining of existing ones, without eliminating traditional safety nets, such as a state run health service. So, if the seemingly welfare addicted Brits can have a dramatic change of heart, it is not impossible for Middle America to see the light and embrace a different model for its government, national and local.

Why are we stuck?

In all this, the really tough question is: “Why don’t we see more widespread –indeed enthusiastic– adoption of what we see in Indiana? After all, these are policies that should be regarded, in a politically neutral fashion, as “best practices”. The answer is probably in the ideology saturated climate that we have created, whereby only pure, orthodox –and thus, almost by definition, impractical– models can get a hearing from the ultra orthodox audiences that are now leading political debates.

Solutions come from intelligent pragmatists

Indeed, it is not an accident that the Indiana accomplishments have been led by non ideological, essentially centrist, elected leaders: Mitch Daniels, the Republican Governor and Graham Richard, the Democratic Mayor. Recently Daniels was criticized by Republican purists for having advocated a national “truce” on divisive social issues, so that Democrats and Republicans could come together in Washington and work on addressing the much more vital economic problems that literally threaten America’s ability to be a high income country and the leading world power. The very fact that some people think that fighting the good fight, now, on school prayers and gay marriage is really crucial, while the ship is taking in water, is a measure of the prevailing, ideology driven, misplaced priorities. The only hope is that at least some of the common sense being put to work in America’s heartland will spread around.

In short: we need more leaders like Mitch Daniels and Graham Richard.


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