Government Spending...

Listening to NPR the other day, I was inspired to write about "Government Spending". Some don't want Government Spending, some do. Some think it's excessive, some don't. Some think it stimulates the economy, some think it is a wet blanket, due to the implied increases in debt, and resulting increase in  interest rates.

So my two cent's worth is illustrated as follows: Government spending is spending, so how can it be bad? "Stuff" - airplanes, reams of paper, ink cartridges, automobiles - the "stuff" never needs the money. What the money is for is to pay people - people who find and produce raw materials, people who convert raw materials into goods, people who ship goods to end users. So every time you hear "Government Spending", think "paychecks". Paychecks are for people - somewhere, somehow, some way.

So, if "Government Spending" results in paychecks, then how can any of it be "bad"? Why wouldn't we side with some, and just spend all we can?

In a word - competition.

This is what the spenders either don't consider, or don't tell you. How many times does government spending pay for someone to be "not productive" or how often is that paycheck provided to procure a deadbeat who is not adding value?

Here's an example. I recently returned from on overseas trip through one of our international airports, where customs was backed up. I had a two hour lay-over, and still missed my connecting flight to my US destination. Why? Because there were only a couple of Customs Employees to clear 4 international flight's worth of passengers, who happened to arrive, due to weather delays and such" at the same time. Maybe a bunch of people called in sick? Maybe there was a scheduling snafu with coverage being there for the anticipated arrival of the flights, but being let go before the weather-delayed jets actually arrived? Maybe there were union "problems"?

Now, imagine if there had been allowed, for the sake of example, a couple of competitive commercial contractors to provide this clearance service. And suppose that one ran a business model that was "free of charge", using only the government revenue for its services, and another one also had this government revenue, but also charged a premium for the faster clearance it was able to legally deliver, due to some innovative employee scheduling technology, scanning equipment, or some other innovation.

I would have opted to pay the fee to get through the quicker line. Many would have that day I was stuck in this line.

If enough people did this, then the "free" business model would, well, go out of business.

The point being that a free market has been established, in which there is competition, with government over-sight as to a fair playing field and the adherence to a minimum level of service quality. And the market has now driven the business model to develop those innovations and tools that would allow it to be competitive, and to succeed where some fail.

Typically, with 'Government Spending" we don't get to see that competition model enter into the provision of goods and services. If the government is incompetent or inefficient in its service model, there is nothing to prompt change, improvement or  innovation. It is, in effect, a monopoly, where only one source of provision is available.

And therein, is the gripe. The government may forever function inefficiently or incompetently, using dated technologies (or none at all) simply because it is a monopoly in that service category, and is not motivated by any competition to thrive or survive.

Granted, the government has to be the provider of some items, as we aren't going to float particular services out to the capitalist market places. In some case, though, there is room to challenge why some goods and services are not privatized, with the government providing oversight as to the fairness of the playing field and the provision of a minimum level of competent and qualified service.

Imagine two organizations within government having to compete with each other to provide a given service, with the one running the best business model, which adds the most value, as measured by actual customer choice and preferences, being the one which gets funded the next year. Why not?

I'd like to hear those that are yelling for less government spending to change their mantra. Nobody minds government spending, as long as it is efficient, effective, and subject to competition, somehow and someway.

And I wish those who want more spending would realize that to continue to throw money at archaic, broken provision systems, which have not been subject to some kind of scrutiny, with an eye to that provision being competitive and able to survive privatization intact, might be a welcome offer to the other side, in terms of gaining additional spending where the government does this provision really well.

At a time when private schools are more effective (based on test scores) than public ones at providing education, for example, it begs a visit into "Government Spending". May be a bad example, because the public schools have to take all the kids, the private ones don't, but...

It's not the spending that is the problem; it's the way of spending and the what of spending that is the problem.

If any spending is inherently unproductive and does not add value in excess of the spending, then competition should assure that the archaic way of provision dies out, in favor of greater efficiency, quality and competence at the same cost. This is just basic market mechanics, and it is sometimes missing in the general category of spending known as "Government Spending".

Let's think of "Government Spending" in these terms, rather than "too much / not enough". After all, all spending goes in someone's pocket. Let's just make sure that the pocket it goes in is working their butt off for their customer everyday, and trying to continually improve efficiencies and quality.

...I almost forgot this was here...

If you look at the date of the last post, it is apparent that I have not had much passion for this, but motivated by a call to my office, I have deleted a couple of older posts after reviewing them, and will put up a thought as a new one to perhaps get this started again. I suspect the call was motivated by some earlier comments, which I have removed as perhaps being a bit stronger a statement of a position for purposes of illustration, than I had intended.

We are in the campaign season for elections this fall across this country of ours. I am not going to presume to offer any wisdom or insight regarding the candidates or the process, except to share an opinion that one needs to participate.

Write your Congressman, your Senators, your Governor, your State Representatives, your President. Write them once in a while to let them know how you feel about what is going on in your day-to-day activities that is either positively or negatively impacted by the job they are doing, or not doing. Get out and cast your vote.

Get involved, participate, inform, and share your views with those who are supposed to be in a position to consider those views as they go about the task of governance for us. Our representatives employ people who's job it is to identify those issues and positions that are resonating with the public, good or bad. If the resonance is high enough, they must take action, react, consider, or face the consequences next election cycle.

The other option for these folks is to react to media coverage, but the media has its own concerns and agendas related to being a for-profit company (usually), concerned about generating sales and revenues, and managing costs, in order to continue being a viable media company. This does not always assure "fair and balanced" coverage, but assures a tilt towards that which will happen to sell a bunch of whatever they have to sell to pay reporters and cover their travel expenses, etc.

Sometimes these objectives don't really reflect the magnitude and gravity of the resonance that some actions, positions, and issues of the government have with regular folks just like you and me. 500 letters to a state representative on a given topic will get heads turning. A recent example of this is the development and evolution of the HHS Department of the Federal Government regarding some recently implemented policies, and the evolution of these in response to public reaction via letter-writing, phone calls and e-mails.

Some thoughts on "Six Sigma"...

As previously promised....

The hypothesis here is that each and every process, whether it be pouring a cup of coffee, coloring in a coloring book with crayons, or precision machining a steel forging, operates most efficiently when it operates within its inherent capability. Furthermore, that inherent capability is determined by the make-up of that process and its design. And lastly, a process may be made to operate in excess of its capability, but only by careful tending and oversight, which then becomes the basis of investment in improving the process capabilities.

That's all there is to it. Really.

Here's the shorthand sketch. Suppose you have a bar that has to be sawed to length. And let's say that the product designers require that bar length to be 8" long, with an allowable tolerance of +/- 1.0" of length.

It can be demonstrated that the process then is as follows - setup a backstop or a bar stop on the far side of the saw blade set to 8" from the blade. Advance the raw bar stock under the blade until it hits the stop, and start the saw. When the cut is complete, move the bar to the "finished" basket. Repeat.

Common sense might tell us that for this process, given the generous tolerance, one need not even check the bars - the inherent process capability is well with the required tolerance. In fact, a statistical study could be performed looking at the variability of the length of the bars, and establishing the odds of the finished length of the bars being within or outside of tolerance. The term "six-sigma" refers to a capability range that is +/- 3 standard deviations about the mean of a sample size of process results, given an established target. The area under this curve corresponds to the probability that given the sample and the range, that the next sample would fall outside of this range; about 1 in 3.6 million or so for +/- 3 sigma.

Now, imagine if the required tolerance is +/- 0.001". The process looks the same, however, in order to verify the conformance of the finished product, each part would have to be checked. If a part is too big by 0.001", it might be possible to slightly adjust the stop, clean off its face, and attempt to re-work the non-conforming part. If the part winds up too short, it must be discarded, or it must be inventoried as raw material for another shorter part. If the part is OK, then it is placed in finished goods.

Look at all the activity (read that - cost) that has been added. There is the measuring, the sorting, the inventory and its management, the segregation of scrap and the establishment of a yield for the material (in order to make 30 parts, you have to have enough material to manufacture 60). This is inherently wasteful when compared to running the process within its inherent capability.

So what's the answer? As a start - use the "waste" caused by running process under a "control" model to justify improving the process or replacing it with one that runs under a "capability" model. Design or create a process that is capable, and assure or verify conformance, rather than controlling or creating it.

Secondly - challenge your design engineers to create designs which utilize the capabilities of the processes at-hand, and demand that they cost into their projects capability improvements required to generate designs and products which exceed the available capabilities. Burden the design projects that demand excessive capabilities with the costs of creating those capabilities. You would be surprised at how innovative your engineers will become when this requirement is enforced. It will cause better and more realistic business decisions to be made.