The American Interest
Policy, Politics & Culture
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Intelligent Design

New policies can’t work without innovation in governmental design.

Published on January 1, 2009

Insanity is doing the same thing over and over and expecting different results.
—Albert Einstein

When experts and pundits are asked what the next President should do, they typically respond with a list of policy suggestions, often mixed with stylistic and political pointers aimed at improving the chances that these suggestions will be well received. Few are likely to focus their answers on institutional change, which is all too easy to conflate with the yawn-inducing phrase “governmental reorganization.” Yet the neglect of institutional design is always a mistake, and never more so than in times of change and crisis. With few exceptions, it is all but impossible to devise and implement genuinely new policies without concomitant organizational design innovation.

Our own history makes this clear enough. A long list of profound challenges has summoned bursts of institutional creativity, the effects of which linger far longer than the occasions that evoked them. The inadequacies of the Articles of Confederation set the stage for the Philadelphia convention and a new Constitution. The electoral crisis of 1800 produced the 12th Amendment, the first significant change in the structures the men of Philadelphia had produced. In the aftermath of the Civil War, Congress and the American people ratified three amendments that resolved—at least in principle—our founding ambivalence between the people and the states as the source of national authority, between the states and the nation as the locus of citizenship, and between slavery and the equality proclaimed and promised by the Declaration of Independence.

We did not stop there. Recurrent financial panics in the last decade of the 19th century and the first decade of the 20th seeded the creation in 1913 of the Federal Reserve Board. The Great Depression produced a flurry of new Executive Branch and independent agencies, as well as the Bretton Woods international economic institutions in the wake of World War II. The onset of the Cold War spawned the Department of Defense, the National Security Council and the CIA. The growing monopoly of fiscal competence and power in the Executive Branch led the legislature to counter by creating the Congressional Budget Office. The terrorist attacks of September 11, 2001 led to the creation of the Department of Homeland Security and the reorganization of the U.S. intelligence system.

Genuine policy innovation does not always require the creation of new structures and processes. Some institutions do find ways to transform themselves from within. Perhaps the best recent example is the U.S. Army, whose established structure and modus operandi experienced not one but two rude shocks in Iraq. Not only did the Army need to develop new capacities to fight counterinsurgency campaigns; it also had to pivot from winning the war to a “nation-building” focus for securing the peace. Each required profound changes in doctrine, organization, personnel and training.

The Army’s capacity for self-reflection and innovative renewal should be a model for the rest of the government. The Army uses after-action reviews to assess, as honestly and bluntly as possible, what went right and wrong. It would be a quiet revolution if other U.S. government agencies did the same.

But they generally don’t. As bureaucratic as military organizations and the Department of Defense itself can be, these institutions are necessarily focused on outcomes, while many other government institutions seem focused on process. It is harder for process-habituated institutions to respond quickly and effectively to external challenges without the guiding hand of an institutional re-designer, but we desperately need such a guiding hand now, for signs abound that we are entering a new cycle of challenge and response.

The global economic meltdown offers the most obvious example. Take the Wall Street Journal of October 7, 2008, where readers found an article lamenting the European Union’s failure to arrive at a coordinated response to the crisis, and tracing that failure to the lack of institutions that could do for Europe what the Fed does for the United States. On the same page appeared a summary of a speech by World Bank President Robert Zoellick decrying the failure of the G-7 and calling for a more globally representative organization with greater capacity—including a new “steering group”—to forge coordinated policies. Elsewhere that same day, reports appeared of President Bush’s willingness to join with European leaders to forge a “new Bretton Woods.” Also prominently featured were scathing criticisms of the array of Rube Goldberg-style regulatory institutions that had proved unable to foresee and ward off the financial crisis, along with calls for radical institutional change.

The moral is clear: In challenging times, political leaders are drawn to institutional reform, not because they want to do it, but because they must. Our own era will be no exception. The question is not whether we will create new institutions in the next four, eight or ten years, but how, to what purpose, and with what consequences for the nation and the world.

A classic reason to create new institutions is to elevate the visibility and importance of particular topics. Whether well designed for its purpose or not (the jury is still out), the Department of Homeland Security reflected the new salience of a challenge many Americans had previously downplayed or entirely ignored. While pressure from teachers’ unions played a role in the Carter Administration’s push to elevate the Office of Education to departmental status, the move also coincided with rising concern about the performance of U.S. public schools. Not only did Jimmy Carter’s successor not fulfill his campaign pledge to abolish the Department of Education; it was Ronald Reagan’s Secretary of Education who pushed to publish Nation at Risk, a report that captured public attention and defined the agenda of education reform for years to come.

This sequence of events illustrates another important feature of institutions: Once created, they amplify the voices of those who care about their specific missions. They do so by enabling agency leaders to sit at relevant Executive Branch tables, by providing them an opportunity to deal directly with the legislature, and by giving outside advocates—interest groups, non-profit organizations and policy experts, among others—an address to which they can take their concerns and advice.

From the standpoint of democratic theory and practice, there is much to be said for using institutional design to multiply the number and variety of voices participating in the policy process. But, as with most things in life, tradeoffs arise: The more independence institutional voices enjoy, the more difficult but important it is to create a new layer of institutions to bring them together to make decisions. This can take the form of high-level coordinating mechanisms, such as the National Security Council, the National Economic Council and the Domestic Policy Council. It can also take the form of super-agencies that formally bring together previously separated entities (as the Department of Defense did in 1947 and the Department of Homeland Security did in 2004).

At the same time, constitutional democracies often use institutional design to insulate certain activities from direct political pressure. The U.S. Constitution, for example, mandates that Federal judges, once confirmed, hold office during “good behavior” and receive salaries that Congress may not reduce during their term of service. (By contrast, many state judges are subject to regular election and possible recall.) The Federal Reserve Board is an even more striking example. Members of its governing board are appointed to 14-year non-renewable terms, limiting the ability of the Executive Branch to change its membership rapidly and removing governors’ incentives to trim their policy sails in hopes of reappointment. Moreover, no entity in the Executive Branch is necessary to ratify the Fed’s decisions, and Fed chairmen have been known to take steps that displease the occupant of the Oval Office.

Any strategy designed to insulate an institution is bound to be controversial in a mass democracy. Officials with populist leanings often argue that fundamental decisions affecting the economy should be made through transparent democratic processes. The counter-argument is that experience dating back to the founding of the republic suggests that, for example, when interest rates and the money supply are set at the whim of transient majorities, economic growth and stability suffer; it is necessary, therefore, to pursue democratic ends with less than fully democratic means. It will be recalled, too, that the Founders vouchsafed the ultimate guarantee of American democracy in the least democratic of the three branches, the Supreme Court.

Change We Need

Institutions matter. They are neither sideshows nor side effects of more fundamental social realities: They are fundamental social realities. Institutions ensure effective cooperation by mediating and controlling differences. They constitute systems of formal constraints on both the ends and means of collective action. They shape decisions by how the process of deciding takes place as well as by the intended content of decisions. Institutions are also focal points for information, expertise and conversation, and they serve as sites of memory—of events that have shaped the past and of policies tried without success—a particularly valuable function in a political system with what seems to be a steadily decreasing attention span.

Because of the critical functions institutions serve—in essence, they are the collective cognitive infrastructure of society—they must keep up with the external environment, the management of which is their basic purpose. When institutions fall badly behind, they do not produce only random or episodic failure but generative and systemic failure. In short, when they are at far less than their best, they can cause all hell to break loose.

That, precisely, may well be the risk we are now running. For most of the past twenty years, we have witnessed a flowering of private initiative, economic innovation and cultural creativity in America. We have as a society simply outgrown or transcended many of our apparent problems from a generation ago. But we have not outgrown and transcended them all. Indeed, in sharp contrast to what has been going on in American society, government at all levels has become increasingly sclerotic and ever more misaligned with reality. Wherever we look today in the Federal government, we find mediocre, and in many cases failing, institutional structures across a broad array of functions. Through a program of bold reform, the new Obama Administration could get more bang for our government’s increasingly scarce bucks, and also send a credible signal to the people that the future won’t be business as usual. That program could be designed along three basic rubrics: fiscal redesign, deconsolidation and reduced polarization.

Fiscal Redesign. The meltdown of the U.S and global financial system offers the clearest example of the institutional malfunction that Congress and the President must end. Piecemeal tinkering will not work. Institutions that regulate lending, insurance and solvency must be reinvented as they were during the 1930s. And to secure vital international cooperation, President Obama will have to work with other world leaders to do for the first half of the 21st century what the Bretton Woods institutions did for the last half of the 20th.

Whatever the outcome of these discussions, one thing is clear: Unfreezing the credit markets and stabilizing the financial system will be an enormously costly undertaking. The deficit for the current fiscal year alone may well exceed $1 trillion, and the national debt is on course to top $11 trillion, double what it was just eight years ago. In these circumstances, controlling Federal spending will be more important than ever. Restoring pay-as-you-go budgeting and putting some teeth in it will be a start, but that is not nearly enough. We need more radical changes in rules and procedures.

One option, recently proposed by a bipartisan group that includes three former Directors of the Congressional Budget Office, would change the status of entitlement programs such as Social Security, Medicare and Medicaid. The new rules would require a review every five years to determine whether projected revenues and outlays are in balance. If they are found to be out of balance, Congress would be required to restore balance through revenue increases dedicated to these programs, benefits cuts or some combination of the two. After a severe financial crisis in the early 1990s, Sweden introduced a variant of this plan, and it has worked reasonably well.

Another option draws on the experience of the Base Realignment and Closure Commission, which has enabled the military to surmount NIMBY (i.e., “not in my backyard”) politics and shut down unneeded bases. The basic idea is straightforward: Once the independent commission settles on a list of proposed closures, Congress can vote it up or down but cannot micromanage the package through amendments. A similar logic undergirds presidential “fast-track” authority to negotiate trade treaties, which Congress can reject but cannot modify.

Suitably adapted, this concept could help break long-standing logjams in the fiscal arena. Here is one way it might work. Independent commissions with members drawn from both political parties could submit proposals in designated areas of fiscal policy. To increase the odds of bipartisan appeal, each proposal would require a three-fifths majority of the commission to be adopted. After the proposal reaches the floor, the majority and the minority would each have the opportunity to offer a single amendment, after which there would be a vote on final passage. This strategy of “empowered commissions” would change the incentive structure of members of Congress and reduce the opportunity for negative logrolling to undermine the prospects of proposals that would otherwise gain majority support.

Deconsolidation. Other institutional changes President Obama could adopt are less momentous but could still significantly improve government performance at modest cost. Reversing unsuccessful consolidations would be a good place to start.

When the Department of Homeland Security (DHS) was created, Congress and the Bush Administration cast a wide net. Indeed, they cast it too wide—much wider than suggested by the initial expert proposals for a such a Department. Including the Federal Emergency Management Agency in DHS, for example, made more sense in bureaucratic flow charts than in the real world. To be sure, FEMA has raised its game since the Hurricane Katrina fiasco. But as long as this agency remains buried in a department whose principle mission is fighting terrorism, it will not command top-quality management or adequate resources. As the Kennedy School’s Elaine Kamarck has argued, the best and simplest remedy is to restore the status quo ante—namely, an independent FEMA, an arrangement which performed well during the Clinton Administration.

Our nation’s public diplomacy institutions mark another instance of a failed consolidation. Secretary of Defense Robert Gates argued last year that, in waging and winning the Cold War, institutions mattered as much as people and policies. In the wake of the Cold War, we weakened not only our military and intelligence capabilities, but also the institutions of “soft power” that enabled us to communicate effectively with other parts of the world. The fault was bipartisan. During the 1990s, arch-conservative Senator Jesse Helms (R-NC) applied relentless pressure to abolish the U.S. Information Agency. He found partners in two successive Secretaries of State interested in bringing public diplomacy under State Department control, and in a White House eager to demonstrate that it was reinventing government. By 1999, as Secretary Gates put it, “the U.S. Information Agency was abolished as an independent entity, split into pieces, and many of its capabilities folded into a small corner of the State Department.”11.
Gates, Landon Lecture, Kansas State University, November 26, 2007.

Today, the United States finds itself engaged in new ideological struggles against authoritarian populism and Islamist radicalism. Opinion surveys show that we are on the defensive and losing ground. While inherently unpopular policies are largely responsible, our failure to build bridges to other peoples has made matters worse. What we are doing is not working. Simply recreating the institutions of the past is unlikely to make matters better, but neither will simply adding people and money to today’s flawed structures.

Our public diplomacy will remain weak as long as it is subordinated to the State Department’s traditional concerns—a fact that leading conservatives are readier to acknowledge than are most liberals. To give public diplomacy the clout it needs, we should create a new cabinet-level Department of Global Information and Communications (DGIC) and back it with the resources it would need to succeed. Its functions would include: training public diplomacy officers for embassies and consulates around the world; offering media and communications training for State Department officials and those other agencies that represent the United States abroad; jump-starting the study of critical foreign languages through a new National Security Languages Initiative; bolstering area studies, including creating new interdisciplinary centers and convening high-level conferences; sponsoring and conducting ongoing survey research on public opinion abroad; assuming responsibility for international broadcasting beyond pure news; expanding vital people-to-people programs, including exchanges of scholars, students and cultural institutions, expert American speakers abroad and English-language teaching; and launching a massive new translation program, the “American Knowledge Library Initiative”, designed to make the best of our thought and culture available abroad in critical foreign languages.

The DGIC would assume a significant role within the U.S. foreign policy bureaucracy. For example, its representative would be at the table during interagency deputies’ meetings, articulating the consequences of policy options for our standing in the world. As the Advisory Group on Public Diplomacy for the Muslim and Arab World argued in 2003,

while the United States cannot and should not simply change its policies to suit public opinion abroad, we must use the tools of public diplomacy to assess the likely effectiveness of particular policies. Without such assessment, our policies could produce unintended consequences that do not serve our interests.

In addition, a senior official of the DGIC would chair an interagency Policy Coordination Council on public diplomacy, with representation from the State Department, USAID, Defense and Commerce, among others.

This is not to say that consolidation of related functions in a single agency is always (or even usually) mistaken. There are many currently disjointed governmental activities that should be brought together, food safety being a clear example. Responsibility for the safety of the nation’s food supply is now spread among the Departments of Treasury, Commerce and Agriculture, as well as the Environmental Protection Agency, the Food and Drug Administration and the Centers for Disease Control and Prevention. Coordination among these entities, which possess varying powers and enforce diverse standards, is hard to achieve. In addition, the USDA is cross-pressured by producers who do not want the kind of inspections that would slow production and raise costs. The globalization of the supply chain has introduced a new level of complexity, as recent problems with salmonella-tainted Mexican vegetables and melamine-laced Chinese food products have illustrated.

This situation cries out for what many advocates have long urged—namely, a single, unified agency whose principal mission is to ensure the safety of the nation’s food supply. It is hard to avoid the conclusion that if the challenge of food safety had been elevated out of the muck of special interest influence and governed solely by the criterion of serving the public good, such an agency would long since have come into existence.

Reduced polarization. The rise of political polarization in recent decades has made it much more difficult for the U.S. government to work effectively. A multi-year collaboration between the Brookings and Hoover Institutions has mapped the scope of the phenomenon and has shown that while political elites are more sharply divided than the people, citizens are more likely to place themselves at the ends rather than in the middle of the ideological spectrum than they were as recently as the 1980s. With a smaller political center to work with, even leaders committed to bipartisan compromise have found it harder to come by.22.
See Pietro S. Nivola and David W. Brady, eds., Red and Blue Nation? Volume One: Characteristics and Causes of America’s Polarized Politics (Brookings Institution Press, 2006); and Nivola and Brady, eds., Red and Blue Nation? Volume Two: Consequences and Correction of America’s Polarized Politics (Brookings Institution Press, 2008).
The fate of President Bush’s 2005 Social Security proposal illustrates the difficulty of addressing tough issues under these circumstances.

It might seem that the only cure for polarization is a shift of public sentiment back toward moderation. The Brookings-Hoover project found, however, that changes in institutional design could help mute the consequences of polarization and might over time lower the partisan temperature. Here are three ideas, culled from a much longer list.33.
These proposals draw on Pietro Nivola and William A. Galston, “Toward Depolarization”, in Red and Blue Nation? Volume Two.

First, the judicial confirmation process has become poisonously adversarial. One response is to increase the use of bipartisan commissions to generate slates of nominees from which an administration would have to choose. This would reduce the president’s opportunity to fire up his base with strongly liberal or conservative picks and would limit his ability to transform the ideological makeup of the Federal judiciary.

True, on the face of it, this would be an unappetizing prospect for most presidents. One way to render commissions more attractive to an otherwise unreceptive White House would be to link them to a fast-track procedure: Judicial nominees selected on a bipartisan basis would enjoy expedited Senate Judiciary Committee hearings and be assured a prompt up-or-down vote on the floor. The use of Senate “holds” and filibusters would be ruled inadmissible. This would reduce the time, attention and political capital the White House would have to expend on the confirmation process, freeing up resources for tough legislative battles.

Congressional redistricting offers another opportunity for depolarizing reform. While population flows account for much of the growth in safe seats dominated by strong partisans, gerrymanders have probably accounted for 10–36 percent of the reduction in competitive congressional districts since 1982—not a trivial effect.

Few Western democracies draw up their parliamentary districts in so patently politicized a fashion as do U.S. state legislatures. Parliamentary electoral commissions, operating independently and charged with making reasonably objective determinations, are the preferred model abroad. To be sure, foreign commissions typically permit something that the Supreme Court’s “one-man, one-vote” standard has effectively outlawed: districts of varying population size. If that flexibility existed, it would facilitate the weighing of additional criteria such as considerations of contiguity and conformity with existing community or jurisdictional boundaries. Still, this does not mean that nothing can be done to improve a dysfunctionally politicized process.

Given the Supreme Court’s reluctance to enter the thicket of redistricting controversies, any changes will be up to the state governments. In recent years, voter initiatives and referenda in four states—Washington, Idaho, Alaska and Arizona—have established nonpartisan or bipartisan redistricting commissions. These local efforts have struggled to solve a complicated riddle: how to enhance competitiveness while respecting other parameters—such as geographical compactness, jurisdictional boundaries and the natural desire to represent “communities of interest.” Iowa’s approach, where a nonpartisan legislative staff has the last word, is often cited as a model, but it may be hard to export to states with more demographic diversity and complex political cultures. Arizona has managed to fashion workable, empirically based standards that are yielding more heterogeneous districts and more competitive elections.

A third depolarizing reform would promote the participation of less ideologically committed voters in the electoral process. Some observers do not view the asymmetric power of passionate partisans in U.S. elections as any cause for concern. Why shouldn’t political decisions be made by the citizens who care most about them? Aren’t those who care also better informed, and doesn’t their intensive involvement indicate that the outcome of the election affects their interests more than it does those of non-voters? While this argument has a surface plausibility, it is less than compelling. Although passionate partisanship infuses the system with energy, it has built-in disadvantages, including the roadblocks it erects against problem-solving. Many committed partisans prefer gridlock to compromise, not a formula for effective governance.

To broaden the political participation of less partisan citizens, who tend to be more weakly connected to the political system, a number of major democracies have made voting mandatory. Australia has done so, using small fines for non-voting but escalating for recidivism, with remarkable results. The turnout rate in Australia now tops 95 percent, and more than ever citizens regard voting as a civic obligation.

Near-universal voting under such circumstances does raise the possibility that a bulge of casual voters, with little understanding of the issues and candidates, can muddy the waters. Nonetheless, the inevitable presence of some “donkey voters”, as they are called in Australia, is more than offset by the civic benefits of higher turnouts. Candidates for the Australian house have gained an added incentive to appeal beyond their partisan bases. One wonders whether members of Congress in the United States, if subjected to wider suffrage, might also spend less time transfixed by symbolic “culture war” issues that are primarily objects of partisan fascination, and more time coming to terms with the nation’s real problems. At least campaigns continually tossing red meat to the party faithful might become a little less pervasive.

The United States is not Australia, of course. Although both are federal systems, the U.S. Constitution confers on state governments much more extensive control over voting procedures. While it might not be flatly unconstitutional to mandate voting nationwide, it would surely chafe with American custom and provoke opposition. But American-style federalism has some compensating advantages, including its tradition of using states as “laboratories of democracy” that test reform proposals before they are elevated for consideration at the national level. If a few states experimented with mandatory voting and demonstrated its democratic potential, they might smooth the way to consideration of the idea on the national level.

The American people know that everything made by human beings—including their political institutions—is imperfect. They can accept imperfection. What infuriates them is the typical pattern of denial that anything is wrong, followed eventually by an epidemic of finger-pointing that thwarts a sober assessment of what is needed to put things right. The American people can accept some delay, too, for delay can be less dangerous than haste. What they cannot, or at any rate should not, accept is delusion—the highly improbable idea that genuinely new and better policies and outcomes can emerge from institutions that are unchanged, unexamined and unreformed.

1.
Gates, Landon Lecture, Kansas State University, November 26, 2007.
2.
See Pietro S. Nivola and David W. Brady, eds., Red and Blue Nation? Volume One: Characteristics and Causes of America’s Polarized Politics (Brookings Institution Press, 2006); and Nivola and Brady, eds., Red and Blue Nation? Volume Two: Consequences and Correction of America’s Polarized Politics (Brookings Institution Press, 2008).
3.
These proposals draw on Pietro Nivola and William A. Galston, “Toward Depolarization”, in Red and Blue Nation? Volume Two.

William A. Galston is a senior fellow at the Brookings Institution, where he holds the Ezra Zilkha Chair in Governance Studies.