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The Business Edge
The Business Edge
The Preamble and Government Efficiency
This episode explores the intricacies of measuring government efficiency through the ideals embedded in the U.S. Constitution's preamble. We discuss the implications of redefining traditional metrics of efficiency, emphasizing the importance of social connections and comprehensive welfare in evaluating public services.
• Examining efficiency as defined by the preamble's objectives
• Importance of metrics that reflect social values
• The value added by social experiences in government services
• Discussing Social Security's implications on various generations
• Financial implications of efficiency versus welfare
• Role of AI in redefining governance metrics
• Call for a holistic approach to measuring government success
Speaker Bio
Dr. David Axelrod received his Ph.D. in Economics from Rutgers University in 1990, with the dissertation Three Essays on Latency in Economics and Decision Making. He has taught at Montclair State University. Previously, he worked in finance for twenty years as an economist, consultant and actuarial analyst, including positions with Falcon Management, Volvo Finance, and Crum & Forster. He has also produced research in health economics, and on the nature of choice and well-being. Dr. Axelrod provides holonomic consultation and workshops. He plays electric bass, and has released over a dozen albums of original music
A Preamble to Efficiency. Almost everyone agrees that government should operate efficiently and with little waste. That is the easy part. What is difficult is a consensus on the objectives of government, which are the standards of production by which we can measure efficiency and waste. In the United States, the basis for our federal government is its constitution. States the basis for our federal government is its Constitution. Fortunately, it was written with a formal declaration of those objectives in its preamble Quote we, the people of the United States, in order to form a more perfect union, establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America. Unquote this Constitution for the United States of America" Union, justice, tranquility, defense, welfare and blessings of liberty to ourselves and our posterity, ordained and established by the people of the United States.
Speaker 1:Any metrics by which efficiency is determined must include not only measures of those six objectives but also weight future consequences as well. This implies that something like the present value of future experiences of these goods with a capital G, and not just goods with a small g, would be included in such an objective function. Beyond this, we will require some commensuration of these six attributes through the dimensions of time and persons. These six attributes through the dimensions of time and persons. Since efficiency is measured by its distance from an ideal, such as Carnot's engine, the US government efficiency should be measured relative to the ideals found in the preamble. To paraphrase the Declaration of Independence, a decent respect to the opinions of our citizens requires that those discerning what is inefficient declare the measures which impel them to their determinations. If we are to benefit from a more business-like approach to running government, we will want to be able to understand the value added by each of these goods. A challenging task. However, we can see the way forward through the following exercise in calculating value added when going to see a movie.
Speaker 1:Calculating value added when going to see a movie. First, how much would you be willing to pay to go see a movie in a theater by yourself? Second, how much would you pay to go see the same movie in the same theater at the same time, but now with a group of friends? When I've asked students in my economics classes, it was about a $5 to $10 difference. Typically $5 to go alone. $10 to $15 to go with friends. To go alone $10 to $15 to go with friends. The imputed value of the movie itself is only about $5. The value added of having friends to go with was even greater than that. The implication is that a business-like understanding of economic measures such as GDP is dependent on accurately attributing value added based on the attributes in the preamble.
Speaker 1:Consider the implications for the value added of Social Security. One direct aspect is the longevity and well-being of those with little to retire on. Another aspect is that without this bit of a safety net, it would necessitate being employed longer. At first that might seem more efficient because it incentivizes more production. Yet as seniors work longer, there is a greater delay in young adults developing careers. As intervening generations wait as well. That foregone value added of human capital development has long-term consequences.
Speaker 1:Consequences Not only are there impacts on welfare. The increased intergenerational tensions impact the experiences of union, justice, tranquility and the blessings of liberty. Clearly there are many other policy and practical concerns on which we could elaborate. Financial issues such as debt and in particular interest paid on the debt must be part of the analysis. Yet we cannot ignore the essential criteria by which the Constitution declares is its purpose. Otherwise, the government may spend less, but at a higher cost to the people.
Speaker 1:Anathema to efficiency Relative to union tranquility and welfare, improvements in social relationships could lead to a greater GDP due to the value-added benefits. The implication is that the objective of maximizing financial profit, something often assumed to be the purpose for business, is insufficient for representing the objectives stated in the preamble. Given the expanding role of AI in business and government, what might it have to offer? Using chat, gpt-4-0 and the prompt suggest a set of metrics to measure government efficiency based on the standards in the preamble of the US Constitution government efficiency based on the standards in the preamble of the US Constitution. It responded with the following quote To measure government efficiency based on the ideals outlined in the preamble of the US Constitution.
Speaker 1:We can develop a set of metrics that align with each of the core objectives union justice, tranquility, welfare, aspect of the government's role and the metrics would need to reflect both the processes and outcomes associated with achieving them. Summary of metrics Union social cohesion index interstate cooperation Social Cohesion Index Interstate Cooperation Public Trust, criminal Justice Efficiency, equality Before the Law, judicial Impartiality, legal Aid Accessibility, crime rates, mental health, civic engagement, social unrest index, poverty rate, healthcare access, education quality, economic opportunity, defense spending efficiency. Cyber security resilience, veteran services, threat response time. Liberty freedom index, privacy protection, freedom of expression, political rights, generational equity, freedom of expression, political rights, generational equity, posterity, environmental sustainability, intergenerational wealth, education, cultural heritage preservation. These metrics, if measured consistently over time, would provide a comprehensive view of government efficiency in meeting the broad goals laid out in the preamble of the US Constitution.
Speaker 1:Unquote. This is what was recommended by ChatGPT-AI. While we might want to modify some of these metrics, this does demonstrate a reasonable starting point. Moreover, if we are going to embrace AI to help reduce waste and improve efficiency, this shows us an approach that it might use. Hopefully, the business leaders we rely on to improve government efficiency recognize the necessity to measure success relative to the declared purposes of the US government, as stated in our Constitution. Thank you.