Lessons from shutting down institutions in Eastern Europe.
This is a cross post from: https://250bpm.substack.com/p/meditations-on-doge
Imagine living in the former Soviet republic of Georgia in early 2000’s:
All marshrutka [mini taxi bus] drivers had to have a medical exam every day to make sure they were not drunk and did not have high blood pressure. If a driver did not display his health certificate, he risked losing his license. By the time Shevarnadze was in power there were hundreds, probably thousands , of marshrutkas ferrying people all over the capital city of Tbilisi. Shevernadze’s government was detail-oriented not only when it came to taxi drivers. It decided that all the stalls of petty street-side traders had to conform to a particular architectural design. Like marshrutka drivers, such traders had to renew their licenses twice a year. These regulations were only the tip of the iceberg. Gas stations, for example, had to be located at a specific distance from the street.
[…]
These regulations, and thousands like them, were never intended to be implemented. Nobody really expected marshrutka drivers to have a daily medical exam, and they didn’t. But by creating such a rule, the Georgian state immediately created a pretext for prosecuting the entire fleet of marshrutka drivers. To avoid this, the drivers had to pay bribes. So did the petty traders. So did the gas stations.
— Acemoglu & Robinson: The Narrow Corridor
One lesson, I guess, is that the tough approach, the ideology of “law and order,” the belief that more numerous and stricter laws lead to a stronger rule of law, does not necessarily work. In fact, the opposite can be true. Laws that are too strict can make it impossible for citizens to comply, and so, willy-nilly, they end up bribing police officers and bureaucrats.
The professions of police officer or judge become attractive, even if the salaries are low. In Georgia, the position of a police officer was being sold, and new law enforcement officers were expected to provide their own uniforms and weapons at their own expense. Police officers couldn’t stop taking bribes because they simply couldn’t survive on their official salaries. Conversely, the flow of money from bribes through the state administration created a strong incentive to introduce even more strict laws, which in turn generated even greater bribes.
But that’s not the main point I wanted to make. What I’m really trying to emphasize is that the Georgian state in the 1990s and early 2000s was extremely ineffective at delivering services to its citizens, whether justice, defense, electricity, or basic everyday security. The situation was dire, even by the already low standards of Russia at the time. Here’s what Andrey Illarionov, a former advisor to Putin, had to say:
There’s no comparing it to Russia. [...] It was truly a country in a state of collapse. An economic, political, social, legal collapse. A country where power was wielded by bandits in the literal sense of the word. A common occurrence was that when, for example, some more or less successful businessmen arrived in Tbilisi, they’ve sent armed men to accompany him so that he could travel those 15 minutes between the airport and the city without being kidnapped and held for ransom. And when some kind of godfather or mafia boss arrived, they were welcomed by the Minister of the Interior.
Unsurprisingly, between 1991 and 1994, the Georgian economy contracted by 77%. The country’s largest export was scrap metal.
Then, in 2003, the Rose Revolution took place, the first of the so-called “color revolutions”, and Mikhail Saakashvili became president with an overwhelming 96.2% mandate to reform the country.
Saakashvili is a colorful character: former Georgian prime minister, leader of the Rose Revolution, and president during the brief war with Russia. After his presidency, he obtained Ukrainian citizenship and became the governor of the Odesa Oblast. He later accused Ukrainian President Poroshenko of corruption, was stripped of his citizenship, and became stateless. At one point, he was arrested on a rooftop in Kyiv while his supporters began building barricades. Eventually, under President Zelensky, he regained his Ukrainian citizenship. He later returned to Georgia, got arrested and now he’s reportedly dying in a prison hospital, possibly at Putin’s behest.
That being said, his minister of economy, the spiritual father of the Georgian reforms, a former Soviet biologist and Russian businessman Kakha Bendukidze is no less interesting.
Generally speaking, libertarians do not occur in the wild in Europe. However, there exists a rare and peculiar breed: the Eastern European libertarian. His distrust of government does not arise from deep philosophical conviction or even a particular love of liberty. It comes from firsthand experience with the (post-)communist state.
“Someone complimented me on quoting Hayek,” Bendukidze recalls, “and I replied that I hadn’t quoted anyone. I had never read Hayek. I was quoting myself.”
Bendukidze began his business career in the Soviet Union, earning his first million during the Gorbachev era. He later became the CEO of Uralmash, a heavy machinery manufacturing company based in Yekaterinburg.
“When you own a vodka business,” Bendukidze says, “protection racketeers will come and take the vodka. With heavy machinery, it gets more difficult.”
But what protection racketeers can’t do, the state can. When Putin came to power, the purge of the disloyal oligarchs began. Oligarch Boris Berezovsky, then already in exile, remarked: “Bendukidze was not among Putin’s friends and understood sooner than others that everything would eventually be taken away from him… Bendukidze had far from exhausted his potential, but at that moment the Russian authorities did not need such talented people.”
Bendukidze sold his shares in Uralmash and moved to his native Georgia. And soon enough he joined Saakashvili in his attempt to reform the Georgian state.
They did a host of reforms, rising the economic growth to 7% yearly and Georgia, that was still in 100th place in the Ease of Doing Business index in 2006, soared up sharply and by the end of Saakashvili’s reign it was already in eighth place, among the most developed countries.
But that’s a story for another day. For the purposes of this article, the most interesting reform is the reform of the police:
The most visible, tangible, and celebrated reform was the abolishment of the Soviet-style road police, the GAI (State Automobile Inspection). Georgia’s road police had nothing to do with law enforcement and created no public good; its sole purpose was to extract bribes. To deal with the problem, in 2005 we fired all of the traffic police in Georgia, cutting 30,000 police from the payroll overnight. Following this extraordinary step, Georgia had no traffic police for some time. The fact that traffic did not become less orderly or unsafe was evidence that the system had been designed not for safety but rather to extort bribes from motorists.
(By the way, the quote comes from The Great Rebirth: Lessons from the Victory of Capitalism over Communism. If you want to know more about post-communist reforms in the Eastern Europe, straight from the horse’s mouth, that is, from the very people who implemented the reforms, then that’s the book for you.)
Very few of the dismissed traffic police were taken back into the service. Salaries of the new officers were raised by a factor of 15–40. It was essential for the new police to gain the trust and confidence of citizens. To ensure that they do so, every year they go through training and selection, after which the least efficient are dismissed and new officers hired.
To boost the public image of the police, new, transparent, headquarters were built. People in discos danced to the new police anthem.
Soon after the mass firing of the Gaishniks, Georgia had a new and modernized police institution. The share of the Georgian people that had confidence in the police rose from 5 percent in 2004 to an astonishing 87 percent in 2012, and Tbilisi became one of the safest cities in Europe.
Tyler Cowen interviews Jennifer Pahlka, founder of Code for America and co-founder of the United States Digital Service (check her substack), a person who has tried to reform the US civil service from inside, and asks:
[Do] we need something like DOGE? I’ve lived near DC for about 40 years of my life. I haven’t seen anyone succeed with regulatory reforms. You can abolish an agency, but to really reform the process hasn’t worked. Maybe the best iteration we can get is to break a bunch of things now. That will be painful, people will hate it, but you have a chance in the next administration to put some of them back together again.
Pahlka sympathizes, but regrets that the disruption did not happen in a more orderly way. Cowen suggests it could have been done gradually:
Just take government agencies and sidestep them. Create a new NIH, call it something else. […] In the meantime, we cut the budget of the current NIH, say, in half. […] Why not just keep on doing that? Create new things and destroy parts of old ones.
Pahlka is skeptical:
That does happen. That’s what we call the bureaucratic rigidity cycle. We haven’t, I think, been disciplined enough about dismantling the old when we create the new. I experienced that myself helping start USDS, the United States Digital Service.
It’s creating something new, but it still […] just had far less power than the existing infrastructures, CIOs of agencies, the procurement frameworks. That stuff has a life of its own and a power of its own. If you are creating these skunk works to disrupt the old stuff, it has to actually disrupt the old stuff. You can’t just add.
Compare that with what Mart Laar, the former prime minister of Estonia from the time of the post-soviet reforms, has to say:
Our insight was simple: It is not possible to teach an old dog new tricks. Old communist apparatchiki had based their entire careers on lies and deceit. It was unrealistic to expect them to change. The state apparatus inherited from the Soviet Union was unsuitable for implementing appropriate policies. Its preferred mode of command was phone calls from superiors; written law meant little and ethics nothing. Therefore, it was important to do away with the old attitudes and relations, as radically as possible. The ties with the Soviet past had to be cut for good. The more radical the change and the more people and politicians of the previous generation are replaced in the governing bodies, the more credible the reform and the greater the chances of success. My party won the election campaign in 1992 with the slogan “Clear the place!”
And of course, this is the same as Bendukidze’s “destructive destruction,“ a wordplay on Schumpeter’s concept of “creative destruction”.
The crux of the discussion is whether reforms should be done gradually, or in one sweeping go.
Here’s Estonia’s Mart Laar again:
With regard to the question of whether transition economies should opt for a “gradual” approach or “shock therapy,” countries that have attempted to carry out reforms slowly in stages have faced serious difficulties. The social price of the reforms has been as high as or even higher than in countries in which decisive action was taken, and at some point it has nevertheless been necessary to adopt policies containing elements of shock therapy.
Gradual reforms faced two major challenges:
First, when the consequences of the reforms began to affect people and the standard of living declined, an electoral backlash was almost inevitable. If the reforms were slow, they would remained unfinished by the time the new government was elected, which would likely stall or even revers them.
Second, the communist apparatchiks had their own agency. If reforms dragged on, they would have time to regroup, ally with organized crime, and recapture the institutions.
This is exactly what happened in Bulgaria, where the communists won the first election after the revolution:
In addition to the Communist Party retaining its power, the meandering path to reforms created a second feature of transition in Bulgaria: The former secret police, the best-organized institution under socialism, took control of parts of the economy, in particular the banking sector and the exporting business.
[…]
The takeover of the major exporting companies by members of the former secret police created a third feature of Bulgaria’s transition: the emergence of organized crime and its preeminence throughout the transition period. Members of organized crime started bloody gang wars over the contraband channels for selling drugs and weapons abroad, as well as for dominance over the energy sector. That dominance required the cooperation of the police and customs officials, which they secured through bribes or threats.
The struggle for dominance went all the way up to the former communist leadership and the leadership of the secret service. In one fight over lucrative Russian energy contracts, in October 1996, the last communist prime minister, Andrei Lukanov, was assassinated. […] Between 1996 and 2008, some 300 members of the Bulgarian mafia, including some political figures, were assassinated by rival factions.
At the time, it wasn’t clear whether gradual or abrupt reform was the better approach. Even reasonable experts like Joseph Stiglitz advocated for a slow transition, fearing an anti-democratic backlash.
Only in hindsight do we now know that countries opting for shock therapy, such as Poland and Estonia, ended up much better off than those that chose a gradual approach, like Bulgaria and Ukraine:
Anyway, back to the original topic, there are strong reasons to doubt that the lessons from the rapid and harsh reforms in Eastern Europe are applicable to the US, or indeed to any other developed country or organization such as the EU.
First, the institutions in post-communist countries were already dysfunctional, and in some cases, provided little to no value. Therefore, dismantling them was not particularly painful.
Here’s Saakashvili’s argument for closing down government agencies:
Let’s say we abolished the sanitary inspection. Nobody goes and checks if there are cockroaches in the restaurant kitchen… But will there be fewer cockroaches in the kitchen just because the sanitary inspection exists? We all know that the sanitary inspection goes there only to take bribes. And the owner, instead of spending money on improving the restaurant, on cleaning the kitchen — including from cockroaches — spends it on other cockroaches from the sanitary inspection. [The same applies to the fire inspection.] It would be good, of course, if we were such a disciplined supernation that the fire inspection would actually check fire safety. [But we are not.]
However, if an institution like sanitary inspection is functioning properly, shutting it down will cause real harm, leading to more infections and food poisonings. Abolishing fire inspection would result in more fires. This argument is even stronger for vital services such as healthcare, social security, or tax collection.
Second, the reformers in Eastern Europe were not acting blindly. They had a clear goal, an endpoint they wanted to reach: Namely, a state that would function much like the existing Western democracies.
Not so today. The civil service in western countries clearly struggles to keep up with the ever more complex and dynamic world. (If you want to understand the nitty-gritty details of that struggle read the excellent Pahlka’s book on the topic.) It clearly needs a reform, but nobody knows what kind of reform would work. Unlike in post-Soviet states in 1990’s, there’s no one to copy, no one to get guidance from. We are in experimentation mode.
So, short of disbanding institutions wholesale without a clear plan, merely hoping they’ll improve when rebuilt, what else can be done?
I’m confused about how this relates to DOGE. Is there any credible evidence of widespread corruption in the US civil service? It seems like most of our government costs are above-the-board payments to old people and doctors, and the biggest problems with the agencies are taking their mandates too seriously. I’m all for shaking things up at the FDA, but they don’t seem to be accepting bribes or working with the mob.
I wrote this after reading the Cowen/Pahlka interview. Cowen says: Maybe the agencies should be just shut down and rebuilt by the next administration? Pahlka: That would be too much chaos. Cowen: So maybe do it in gradual way? Pahlka: We’ve tried, it does not work. And my reaction was: “Oh my, I know these discussions from the 90′s.”
It was a cool natural experiment: A bunch of countries tried reforming at the same time, used different approaches, got different outcomes. So maybe there’s something to learn there.
Or to take the FDA example: You want to do a shake-up. How exactly would you go about that? Organizations are already in equilibrium. If you shake them, they just return to the previous state. Is the only way to shut them down and rebuild them from scratch? Or is there a less destructive, gradual approach? Again, we may get some insights from previous reform attempts, even if the problems don’t match in 1:1 way.
Congress should repeal Kefauver-Harris so that “treatment X has not been proven efficacious by a wildly expensive high church effort at proof” stops being a valid reason for the FDA to ban something (the way it is (and has been since 1962) in the status quo).
The FDA’s ban on “treatments of unproven efficacy” has never been coherent, never helped people, and slowed medical innovation way way way down.
The FDA’s ban on “treatments of unproven safety” should be much much cheaper, and slowly scale up based on the size of the N who have tried a treatment, and it should only involve an attempt to measure the lack of safety, so that informed consent can be brought to bare in specific cases, by a trusted clinician, about how much danger is “worth it” in a specific case.
Chemotherapy, for example, is often brutal, and the side effects can be fatal… its just that this is a clinical cost worth clinically paying in some cases, for some cancers, with some prognoses. It isn’t “safe” it is just “probably safer than letting the cancer run to completion, and hopefully better than alternative treatments that the doctors even know about, contingent on the specific personalized diagnosis, by one or more doctors, regarding a specific tragic situation”.
For some diseases, nothing can save you from “doctor has low skill”. Medicine is intrinsically dangerous.
The FDA is a fig leaf on this… and it is a very very heavy fig leaf, that mostly only mitigates anxiety in exchange for OCD rituals, even while the form and cost of the rituals harm science and medicine and technology and “the production of more consumer surplus for patients (by getting them highly effective treatments at competitive prices based on an economic race to the marginal cost of providing the treatment)”.
The rent on health is too damn high. The FDA needs more judges, and tort lawyers of high integrity, and economists, and data scientists running statistical clearinghouses… not more molecular biologists.
This would be a huge change, and it would also probably work.
According to ChatGPT total salaries to doctors in the US are 385 billion per year. On the other total healthcare spending is 5 trillion. That suggests less than 10% of US healthcare spending is payments to doctors.
The US healthcare system has an amazing amount of middle men that take their cut. The money flows are sometimes pretty intransparent. While most of it is technically legal, it’s not above the board in every sense.
In which senses is it not transparent or not above the board?
Let’s say you are insured with your employer. The deal between the employer and the insurance company is facilitated by an insurance broker. That insurance broker gets paid a fee that’s sort of transparent to your employer but probably not to you.
That insurance broker however also gets paid some bonuses that are not disclosed to the employer. The insurance broker also gets threatened with losing access to some insurance companies if they don’t recommend the insurance company when the insurance company wants it.
The insurance broker is subject to a bunch of incentives that the employer does not know about as they are hidden from the employer.
Apart from the things that are hidden from the employer, the fact that the insurance broker takes their cut of the transaction is also intransparent to most people, which makes them think about healthcare money going to doctors and not insurance brokers.
Functionally, the payments from the insurance company to the brokers that are in addition to the fee that the broker gets for the transaction (which is disclosed to the employer) are essentially bribes.
Thanks! Interesting example.
I would guess that this specific example is less and less a problem each year, as people and companies buy more directly their insurance (and other things).
For brokers serving small employers (e.g. firms with under 50 employees) a commission rate of around 4% to 6% of premiums (so likely not including extra incentive payments) is typical (numbers again from ChatGPT). It’s less for bigger employers, but it’s real money in the system.
People and companies buying insurance directly is helpful.
You have pharmacy benefit managers that got recently quite unpopular with politicians, so there’s also progress, but the system is really big and complex and at every point someone has an interested to take their cut.
Generally you have a system where a lot of money is flowing. Both patients and doctors often don’t even now how much money is flowing for a simple healthcare service.
One interesting aspect: The government does not set the prices for individual services in medicare. They are instead set by the AMA which is an advocacy organization. So inter-AMA politics determine which services get reimbursed how much and I would expect that there’s also plenty of non-above the board actions going on there.
“Doctors” was too specific, but the largest category of spending is hospitals (30%) followed by “physicians and clinical care” (20%), and 56% of hospital spending goes to healthcare worker salaries (presumably an even larger amount goes to salaries for non-hospital workers).
Healthcare spending being somewhat opaque is a completely different problem than government agencies taking bribes and using violence though. The breakdowns for where this money goes exist if you care to look for it, and you can try to solve the problem but it turns out that “obvious waste” isn’t one of the line items. Healthcare would be cheaper if we had fewer doctors, nurses and support staff, or paid them less, but we don’t do that because the average person doesn’t think that’s a good idea (for better or for worse), not because nurses will murder us if we cut their salaries.
Compared to doctors in Germany, doctors in the US spend a lot more of their time dealing with billing issues. If you ask the average person about whether it’s a problem that US doctors spend so much time on billing issues instead of patient care, if they are a bit informed about how the system works, they will likely tell you that the would prefer that the system works in a way where doctors have to spend less time on billing issues.
After the first Trump administration passed a law allowing drugs without FDA approval being given out under compassionate care, the FDA didn’t like it. They communicated that in a way that got the drug companies not to give out drugs under compassionate care. I think you can call that fear of government violence.
I think there’s probably plenty of things that go on in healthcare setting because someone says: “This doesn’t really make sense, but if we don’t do it we get problems with government regulation. And of course a bunch of other agents like insurance companies or malpractice lawyers that add complexity.”
I think you’re still talking about something different from government workers taking bribes and working with the mob. The Department of Making It Hard to Approve Drugs making it hard to approve drugs because they, like a majority of citizens in this country, think it should be hard to approve drugs is a problem but not the same problem as corruption.
The public is too uneducated to know better. Even many in the FDA are too uneducated to know better because they are insufficiently interdisciplinary.
The question is: how should the handful of smart and good people react to this state of affairs?
I say: high level operatives within medical bureaucracies should understand the price theory of economics, the germ theory of disease, and have a working definition of jurisprudential integrity. If asked to do evil, they should educate in a face saving way, then disagree pointedly if that doesn’t work, then remonstrate, and, at length, they should resign and blow a whistle.
Broadly, they have a duty to correct the public, and elected officials, and anyone who is actually wrong… or at least they have a duty to not enthusiastically conform to the public’s stupid, and self-harming, and commercial-propaganda-based opinions in a totally blind and stupid way, and the opposite of their duty would involve going to work, later, for the mobsters, as political lobbyists for those mobsters.
Narrowly, if they weren’t just good bureaucrats but good medical bureaucrats, and they understood Koch’s Postulates and the real telos of public health systems, they would understand that Racism is not a disease with transmissible causative infectious agent that can be grown in a petrie dish and then physically put into a person to cause the person to “become Racist” somehow… and so they would never say things like “racism is a public health crisis”.
Regarding the correct name for the mobsters that BAD bureaucrats might eventually go to work for (until law enforcement properly cleans up a group of bad actors, investigating, prosecuting, and convicting some people people (who should generally get the presumption of innocence (at least by non-investigators, and non-DAs, prior to a procedurally correct conviction))) “a mobster” will often be called something like “the CEO of the City’s Sanitation Company who some allege has ties to organized crime” or some such. De facto.
Ideally, “oligarch” might be better than “mobster” since it intrinsically connotes venality (the pursuit of money for personal uses up to or past lines of propriety) and indicates the properness of “a general sense of suspicion by default” by normal people. Very few people are oligarchs, and oligarchs are weirdly powerful.
I think that a properly ordered society would contain some oligarchs, but only as one small part of a free society, with free markets, where the accumulation of personal wealth in hypothetically morally valid ways is a presumptive goal for the society. “The pursuit of happiness” and “the common wealth” are positive goods, and oligarchs are winning at that (insofar as wealth can cause happiness, which seems to be the case).
There can be good oligarchs (who commit no major fraud while vigorously pursuing validly selfish private benefit), and bad oligarchs (who violate just laws and/or coherent morality as they accumulate enormous wealth)… but also, having outright oligarchs run an essential bureaucracy (whose internal procedures inherently require jurisprudential integrity in its day to day administration) would sort of obviously be insane.
Yay for good oligarchs! But boo for bad oligarchs! And boo to the idea of appointing or electing any oligarchs as judges or public benefit administrators or bureaucrats who are funded by taxes (and often empowered to investigate and prosecute criminals).
If asked to do evil, they should do evil. Because I don’t trust the judgment of bureaucrats to decide what is evil, and we’d be better off with them following what elected officials tell them to do and not deciding to become a shadow government that slow walks everything they don’t like. This is where you get the deep state from.
You yourself mentioned claiming that racism is a public health problem. But consider how “evil” goes with racism. Failure to do something about racism is evil—in fact to some people it’s one of the worst evils possible. Calling racism a public health problem is an example of bureaucrats seeing evil and deciding that they just have to fight the evil by any means necessary.
If a officer (serving as a trusted component in a coherent social machine serving an important telos) doesn’t resign when their deontics are violated, then why the fuck were they even trusted with such power in the first place? Someone has to be the grownup. You can’t have “nothing but idiots and children” if you want good things to happen, on purpose, at scale, with high efficiency. The worst possible outcome is for actively bad things to happen, on purpose, at scale, with high efficiency.
I could write a long response, about “conventional morality that runs on vibes and makes sense to consumers of governance” vs “post-conventional morality that runs on logic and is necessary for producers of governance” but the succinct response is: you left out the MOST IMPORTANT PART of the instructions, which was to resign if the early steps of Saying No To Evil don’t work.
Given the context here (you voted to 0 so far, and me prone to writing too much) I’ve DMed you with a few more words, that might be specifically helpful <3
That’s not what I said.
Punishing companies for using explicitly legally available methods to give out drugs according to compassionate use is not the same thing as generally making it easy or hard to approve drugs.
The FDA did try to coerce companies not to do what congress and the president wanted companies to do by passing the compassionate use exception. That’s distinct from the general question of whether drugs should be hard or easy to approve. It’s not working with the mob, but it’s an agency intentionally working against the democratically legitimized institutions of congress and the presidency.
What’s seen in the US is not the same narrow issue of “there’s widespread corruption and bribery at existing government services”. But it’s an issue in the same broad class of “government services don’t seem to be doing what we want them to, and we have no clear way to fix that”.
Which is why the post-USSR approach of “slash and burn” might be applicable. Sometimes the only real way to shed inefficiency is to destroy an existing system and build it anew.
It’s something free market capitalism often does natively, by the way of competition. A well oiled, well regulated market can only tolerate this much corporate rot. But government services face no such pressure, and many governance tasks aren’t the kind that you can create a free market for.
“Slash and burn” is inherently a perilous approach, because destroying old systems pisses stakeholders off, the old systems might still provide value, building anew is expensive, and there is no guarantee that a new system will be more efficient. Which the post goes into. But if everything else fails?
Why don’t you include Russia as a data point? I think they did shock therapy but it didn’t go well.
I think corruption and waste depends a lot on culture, not just whether you do shock therapy or not.
This. Shock Therapy in Russia went so bad that it led to one of the worst quality of life drop in history, not related to war, and memetically innoculated whole generations from the ideas of free-market democracy, eventually leading to the current quasi-fashist state waging a war with a death toll in multiple hundreds of thousands. And even now, during the afformentioned war, people still manage to claim that at least it’s not as bad as the 90s.
In this sense, reasonable experts such as Joseph Stiglitz were completely vindicated.
Because it isn’t (yet), at least for those lucky enough not to be drafted, or living in the border regions.
Sure, the 90s could’ve gone better, but I doubt that anything could’ve stopped the KGB from ending up in power. Yeltsin was far too clueless to prevent that.
True. And I think it speaks a lot about how bad the 90s were if several years of drop in a labor force, neccessity to bribe people to join the army and harsh sanctions by all the developped world is a cake walk compared to them.
I am no expert, but AFAIU, in the Russian case there was an economic reform, but no political reform:
The parliament elected in 1990, before the parties existed. It was filled with communists and hasn’t been dissolved.
The civil service remained as it was. Yeltsin: “It would have been disastrous to destroy the government administration of such an enormous state. Where it was possible to put in experienced ‘old’ staff, we did.” This is the classic gradualist argument, as seen elsewhere.
Old secret services from the communist era persisted.
The result was a relatively isolated group of economic reformers around Gaidar and at the same time takeover of the economy and state by apparatchiks, secret services and organized crime. Kind of similar to the Bulgarian example in the article.
I’m also no expert :/
To be honest, all I really know is that Wikipedia articles, e.g. Privatization in Russia, claim that the economic shock therapy allowed a small group of Russian oligarchs to buy up all the state assets, and this ruined the Russian economy and standards of living.
The story I heard (admittedly, I don’t remember the sources) has always been that post Soviet Russia was corrupt and wasteful in part due to economic shock therapy, rather than that “the reform had been too limited” (only economics, not enough politics).
Do you have any reasons (or sources) which might convince me this story is wrong?
It’s a complex topic, nobody is going to tell you for sure. But having lived through the period, although in Czechoslovakia, which handled it much better than Russia, I do have some intuitons. In essence, you are going to reform the economy. You are going to open the market. Arbitrage opportunities will abound. You are going to privatize. The entire economy will be up for grabs. Everything is going to be super fragile and exploitable for a while. At the same time you have the secret service inherited from the communist era. Communists were tough on crime, so people who would otherwise be mobsters often ended up in secret services. So you have this well-organized quasi-criminal network, endowed with the power of the state. And the secret policemen attend the same parties as the communist politicians who still form a majority in the parliament. Those guys are going to decide on what the law will be. No way that can go wrong.
If the problem seems to be former members of the secret police and siloviki gaining a lot of power (in politics, business, or organized crime), why is the solution a very fast dismantling of government services?
State run industries and services in the USSR were definitely problematic, but on average, they probably weren’t worthless, since the USSR did have enough industrial might to rival the West. My (potentially wrong) intuition is that privatizing or dismantling them very quickly could lead to the loss of important services for the people, and sources of revenue for the government (e.g. the oil and gas companies). It could empower a small number of people who buy up the privatized corporations, potentially worsening the “well-organized quasi-criminal network, endowed with the power of the state.”
Oh, they haven’t had an option. Once private property of the means of production wasn’t banned any more, people started doing all kind of things to get their hands on the state property. Here’s Yeltsin in 1991: “Privatization in Russia has been going on for a long time, but wildly, spontaneously, often in criminal fashion. Today we have to seize the initiative.”
As for the government services: Yes, that was one of the points I was trying to make. Saakashvili could only shut down the traffic police because it did more harm than use. If Doge tried to do the same thing, traffic chaos, traffic jams, pain and eventually electoral backlash would follow. Reforming functional institutions is much harder than reforming dysfunctional ones.
I think we agree that US government institutions are functional and shouldn’t be dismantled or privatized completely. My intuition is that this was true even for the USSR (minus the traffic police maybe). Dismantling and privatizing government institutions very quickly in Russia didn’t stop people from the old communist government regain power and influence, it only worsened the economic situation.
Cases of genuine reform and improvement of processes, both in government and the private sector, tend to take the form of upfront investment of resources to overhaul systems, deploy new infrastructure, train staff, etc. which then lead to efficiency savings in the long run.
(Sticking to Eastern Europe, Estonia’s “e-government” programme involved significant upfront spending but radically simplified and reduced the costs of large parts of their government, as well as enabling growth of private businesses. Or for US examples look at the roll out of the UPS ORION route optimization system which cost something like $250m to roll out, but now saves $400m in fuel a year).
The problem with DOGE and other similar ideologically motivated attempts to cut government is that they instead cut the funding first, and leave the agencies to work out how to do their job with decreased resources. If you’ve just fired 10% of the federal workforce the people remaining don’t have the slack to consider ways to improve their systems, they are just struggling to keep the current system from collapsing. So you end up with something that costs less, but is providing you with less outputs per dollar of inputs. And doing these things in a messy and rushed way as they have been adds chaos and inefficiency to the system.
Not disagreeing with you, just a funny detail: The e-government thing in Estonia was at least partly motivated by the need to fight corruption:
-- Joel Burke: Rebooting a Nation: The Incredible Rise of Estonia, E-Government and the Startup Revolution
Not as pronounced in Georgia, but Saakashvilli, speaking of weeding out corruption at customs, does mention that “models are now working at customs.” It’s software that does the work.
I just want to note another data point about reforming institutions which was postwar Iraq. De-Baathification was an explicit policy undertaken to explicitly remove and replace members of the government associated with the Saddam affiliated Ba’ath Party, and it’s generally considered a failure and having lead to a lot of sectarian violence, the rise of ISIS, and generally contributing to an ineffective government afterwards.
It’s a somewhat different situation since that was more of an ideological project, but is I think notable and relevant.
Umm, do you have a cite or example of someone saying that NUMBER of laws is the key to law and order? All the discussion I’ve seen has been about enforcement of major categories of misbehavior, and addition of fairly broad, unspecific norms that are not currently in law.
In many places, the fine-grained detailed regulation and legislation is a different pathology, more pseudo-technocratic, not ‘law and order’.
Don’t read to much into it. What I meant was that common naive attitude like: “Are people are doing X? Let’s punish it by law. Are they still doing it? Let’s punish it some more.”
The issue in Eastern Europe being described seems to more fit the “rule of law” vs “rule by law” phenomeon, often used when describing authoritarian regimes, and particularly China. Where the law exists as a tool for the state to deploy at its discretion, not a consistently applied set of rules that limits them.
Generally the solution to this is not fewer laws, as that also leaves the authorities with great discretion, but to have strong counterbalancing institutions like an independent judiciary, press, opposition parties, etc. that will force them to act within the law.
Looking at the source of the first quote in the post, this, shortly after, is interesting:
I thought people considered National Partnership for Reinventing Government (NPR) to have been generally successful. I think the important difference to DOGE is the goals of the NPR: “work better, cost less, and get results Americans care about”. DOGEs only KPI is seemingly the nominal dollar amount that was cut with no regard for impact or trade-offs.
>Not so today. The civil service in western countries clearly struggles to keep up with the ever more complex and dynamic world. (If you want to understand the nitty-gritty details of that struggle read the excellent Pahlka’s book on the topic.) It clearly needs a reform, but nobody knows what kind of reform would work. Unlike in post-Soviet states in 1990’s, there’s no one to copy, no one to get guidance from. We are in experimentation mode.
>So, short of disbanding institutions wholesale without a clear plan, merely hoping they’ll improve when rebuilt, what else can be done?
It’s not just a question of “where would we need reform?” or “what kind of reform would work” but “what kind of goal are we seeking to get out of reform to begin with?” which is where a lot of the contention comes from. Political discussions in general get very heated and we tend to assume that the “other side” reform ideas aren’t working towards the Better Goal but to the Evil Goal. Having a target like the West which was just clearly better in their eyes makes for a somewhat more agreeable point than some generic reform idea.
As for DOGE in this process, a lot of left leaning people do the thing where they think it’s working towards the Evil Goal. Part of that is generic partisanship, but I do think part of that is on Musk constantly wading into culture war shenanigans and overselling his work. I can’t read minds and I can not know their intentions if it’s towards a mutually agreed upon Better Goal, a Better Goal that I don’t agree with but makes sense or an Evil Goal most would agree to be bad like corruption, but it does no favors when he’s on TV making unkeepable promises (like claiming Social Security benefits will increase) or he’s constantly taking sides in heated cultural debates that generates more opposition and thus distrust from the opposition.
You can’t have perfect PR, there will always be people who are angry just to be angry but people who truly believe in a positive reform should understand that your belief isn’t enough. You have to sell it to people, not just the idea of reform itself but trust in you and your implementation, and having a clear explicit and workable goal to move towards helps with that a lot.
Most of the time when people talk about “government waste” what they actually mean is “government spending money on things I disapprove of”. When right wing lawmakers talk about money wasted on apocryphal transgender mice, they aren’t asking about how many transgender mice were generated per dollar, but the existence of the supposed project. Or one of the most frequently cited examples of government ‘waste’ is overseas aid, which is often very effective at fulfilling its aim, but its not an aim they agree with.
So in practice arguments about government waste tend to be ideological arguments in disguise, which causes people to be distrustful of them.
That’s part of the PR topic! Musk seems to have done a fine job marketing himself to the right wing aligned people, but “people who are predisposed to support you” are rarely the ones you actually need to convince. The main opinions you see will be of your friends and it feels good for them to cheer you on, but good PR strategy knows you often need to ignore your friends. It’s the fence-sitting moderates and more friendly “enemy side” people who are willing to say “Well that man is ok at least” who while relatively small in number are the kingmakers in a divided topic.
The targeting of more respected spending like foreign aid such as PEPFAR, his obsession with giving ridiculously incorrect savings estimates, constant framing of everything within the culture war, and barely disguised idealogical arguments as you point out is a breeding ground for generating the hostility and pushback from people who might have otherwise been more friendly.
True: whitehouse.gov.
This is tangential to the main point so I don’t want to go too deep into it. But since you raise it, that link doesn’t show evidence of the original claim Trump made in the State of the Union, which I as referencing. Which was specifically: “Eight million dollars — for making mice transgender. This is real.” (https://www.pbs.org/newshour/politics/transcript-president-donald-trumps-2025-state-of-the-union-address)
The link shows roughly $8 million spread across a number of NIH-funded projects that involved administering hormones to mice to investigate specific medical outcomes. These include topics relevant to transgender patients (e.g., immune responses under hormone therapy https://reporter.nih.gov/project-details/10849830), but also other populations with atypical hormone profiles. The largest grant ($3.1m) https://reporter.nih.gov/project-details/10891526#description is about asthma disparities that occur between cisgender men and women, with trans women mentioned in the context of distinguishing hormonal and chromosomal factors.
This is importantly different, because Trump’s original claim relies on the absurdity heuristic to make the research sound worthless (since mice do not have gender identities). It’s simply false to say the aim of the experiments was “making mice transgender.” That was not the goal of any of the studies, and the researchers involved would almost certainly say that’s a meaningless concept in the context of lab mice.
This seems symptomatic of a wider pattern in these kinds of arguments about government spending. The original claim is phrased to sound so absurd anyone would agree it’s waste. But it reduces to a more specific and controversial claim where there would be a difference in opinion about whether it’s valid use of government money. So “waste” = “spending I disagree with” again.
The main reason of the hardness of the crash of Ukrainian is the large share of advanced defense industry (which almost ceased to exist) in the GDP in 1990, as well as advanced civilian industries which were reliant on their partners in other Soviet republics. Belarus, which had similar economy structure but smaller share of defense industry in particular, which maintained economic ties to Russia and which implemented even less reforms and even more gradually than Ukraine, weathered better in the 1990s and might provide a counterexample to this thesis (even if the end point long-term is awful).
Also, both Bulgaria and Ukraine are further from rich Western/Northern European markets. Poland in particular borders Germany, which provides all kinds of benefits. Even then, Polish and Bulgarian GDP per capita were similar at the moment of their EU ascension (2004 and 2007 respectively). I do not exclude that Bulgaria had their own self-inflicted problems but you have to compare against Romania and Hungary to demonstrate that!
The premise of
In America, the equivalent stupid rules actually are enforced, which makes them much worse: they would be less harmful if the institutions were as dysfunctional as those of the post-Soviet Eastern Europe in your post. Increasing levels of corruption[1] drastically, and making it a cultural norm, would ameliorate this, and might be almost as effective as abolishing the agencies that make the regulations while being less easily reversed.
Which I like to call “the people’s deregulation.”
Could you kindly provide some examples of what you’re talking about?
I’m not American per se, but am interested in hearing about these dysfunctional rules.
Sure, this is a mainstream enough observation that I’m gonna point you to Ezra Klein et al’s new book, Abundance. My ideal solution involves much less government action beyond getting rid of the imposed rules, and would go significantly further in deregulation (delenda FDA, for example), but I agree with most of the problems he lists.