Volcker: Long Way to Go

THE DAILY FED

Volcker: Long Way to Go

The following unedited speech by Paul A. Volcker, the former chairman of the Federal Reserve Board, was delivered at a National Capital Area Chapter of the American Society of Public Administration awards ceremony last week. Volcker led the National Commission on the Public Service, commonly known as the "Volcker Commission," which was created in 1987 to look at ways to improve the civil service.

Honored Awardees,
Fellow Bureaucrats!

You are well aware that there are those who think we bureaucrats are -- or at least should be -- an endangered species.

My message tonight is that this is not true. The three that are being honored tonight--Eva Janie Fritzman, David Kessler and John Koskinen--are prime examples of why the breed will not die.

It takes people to run government, inevitably a lot of people. To do the job at all well requires professionalism, impartiality, strong ethical standards and a commitment to public service. And it requires leadership and courage, precisely the qualities represented by your three awardees.

I did not know Bill Medina. But it is obvious from what I have read and heard--it is obvious from the fact that his name is honored in this lecture series--that Bill Medina was an extraordinary civil servant. Here was a young man that brought energy and dedication to public service, and his concept of public service wasn't confined to his official job description. He was, among other things, a living example of the fact that diversity in origin and background is a continuing source of strength in this country. We need models of that kind.

This, I know, is not the happiest of times to be in civil service. There are those ominous polls that indicate that confidence and trust in government are at a low point. Only 25 percent or so think government can be counted on to do the right thing most of the time.

And we don't need polls to confirm what we know in our daily lives: the drumbeat of complaints in the press, the sense of growing corruption of the political process, the relative lack of interest in public service by most college graduates.

One line of analysis suggests that, for the United States, it's all a reversion to type. We are a country born out of resentment of central authority, the idea of the citizen legislator, and a certain respect for the spoils system.

But that is hardly enough. It's not good enough as an explanation of why there has been a loss of trust. It's certainly not good enough for entering the 21st century. Moreover, the United States is not alone in distrust of government. The symptoms are all over -- in Europe, where the administrative tradition is much stronger, even in Japan where the bureaucracy has historically had enormous prestige.

No doubt we all have ideas about what is happening. At a conference at the Kennedy School at Harvard a couple of weeks ago, there was an effort, in good academic fashion, to list and evaluate the causes. By the time I left, I believe the plausible hypotheses had reached more than 40.

Some of the explanations relate directly to disagreement about the role of government itself. Did the New Deal, the Fair Deal, the Great Society, the War on Poverty, finally overreach -- promise more than could be delivered? Was Vietnam an expression of national hubris, with the inevitable reaction of lingering disenchantment even today? What about deeper societal and technological changes?

Have the demands for openness and accountability -- government in a goldfish bowl -- reached the point that orderly and forceful decision-making has become ever more difficult, if not impossible? Does technology and the information overload, combined with a probing, suspicious and investigatory press, place almost impossible demands on administrators?

What about the globalization of markets, and all that implies for the loss of national autonomy, for the need for meeting international competition, and for the ineffectiveness of much, purely national regulation?

There is something in all of that. And they are things we can't change. The relevant issue, if we want to do better, is what we can change.

I have two strong candidates. First, there is the increasing role of money in politics, a matter that we will have to leave for another time--or at least to Senator McCain.

The second is the decline in professionalism, commitment and quality in the civil service itself, a matter over which we should be expert.

Thirty or forty years ago, it all seemed simpler. There was confidence--in retrospect, maybe too much confidence--in America's role in the world and in our capacity to manage the economy and meet our social goals. Consequently, government provided not just a respectable career, but a reasonably prestigious profession, even if the pay was restrained.

The idea of a professional civil service insulated from partisan politics was ingrained as a concept, even if there were lapses in practice.

There were elaborate efforts to assure competence, with selection and promotion based on merit, even if the procedures sometimes seemed so cumbersome as to defeat the purpose.

Expectations of career employment were encouraged and safeguarded. Stability and continuity were taken for granted--perhaps to a fault.

And I also think in the old-line departments at the center of government policy-making--the Treasury, the Budget Bureau, the Justice and State Departments--there was a strong responsiveness to forceful political leadership, as indeed there should be.

Now, it was never exactly heaven. There was a strong emphasis on hierarchy and control that stifled innovation. Bureaucracies tend to resist change, and commitments to established missions sometimes seemed to threaten fresh political direction. The bureaucratic tendency of defensive and self-protective behavior squeezed out too many of the more imaginative and energetic. And, as time passed and the world became more complicated, there was a sense that reform was needed.

That was the setting for the National Commission on the Public Service that, as I left the Federal Reserve in 1987, I was asked to chair.

There was, even then, a sense of growing crisis. We could attract a diverse and dedicated group to the effort--ex-senators and congressmen, cabinet officers, top business executives, and academics. And we produced a report. The report in fact received an award for typographical excellence. But of course the real issue was not how it looked, but what it said--and whether a decade later we made an impact.

We exhorted--God knows how we exhorted.

We argued the prime need for presidential leadership--for presidential support for the career service, for an end to bureaucrat bashing as an excuse for failed policies. And we felt we had a little head start in that direction! After all, President Bush was himself almost a "career" man.

We called for more attention to public service--its needs and its challenges--in our schools.

We urged to reinforce prestige and to emphasize merit, some special highly selective scholarship and fellowship programs.

We tried to recognize the need for more decentralization--for more autonomy for departments in hiring and firing and the setting of standards.

And there were three areas that we felt deserved particular emphasis--and that could be a focus for early and concrete action:

One, of course, was pay reform, including more realistic salaries at the top and methods of keeping them under review.

The second was a call for reducing the number of political appointees, which had reached 3,000 or so.

And finally, because reform would have to be a continuing process, we urged that Congress set up a new advisory committee on personnel to encourage constructive change and keep reform on the presidential and political agenda.

Well, there was progress on pay. We eventually got the advisory committee. And we stalled out on the question of limiting political appointees, but at least the issue began to be debated. I was delighted that it is the central point in a new report on presidential appointments, appropriately entitled Obstacle Course, sponsored by the Twentieth Century Fund just this year (So perhaps there is hope for the 21st century--or maybe the problem is solving itself by the increasing number of vacancies in the ranks of political appointees!)

But, there have been at least as many disappointments as victories. It was a sad day for me when, in the midst of campaigning, President Bush in effect retracted his support for keeping pay scales in line with the market by calling for a 5 percent reduction. President Clinton, in his Inaugural address, compounded the sin by choosing an old chestnut--a salary freeze--to dramatize his interest in spending restraint. And then, to further reinforce his bona fides as an economizer, said he would eliminate unnecessary commissions, namely the National Battle Monuments Commission (which I later learned had already been abolished) and our brand new Advisory Committee on the Public Service that had not in fact spent a cent.

In a larger sense, the crisis that we foresaw in the mid-1980s has only worsened.

I fully recognize the Clinton Administration has approached the problem from a different direction, starting with a crash National Performance Review, with its catch concept of "reinventing government" drawn from a popular book.

As a veteran of President Johnson's PPBS and Nixon's MBO and President Carter's zero-based budgeting, I must confess I had a certain skepticism about the ultimate success of a new administration setting out politically attractive new slogans for reform with, to my ear, too little respect for some of the traditional principles and concerns of public administration.

In the interests of full disclosure, I should tell you my father was an early and highly successful city manager; 60 or 70 years ago, he "reinvented" a couple of local governments to the point they were considered models. And perhaps that background made me a little doubtful that Messrs. Osborne and Gaebler had suddenly discovered all the answers, or that approaches useful in the private sector can be transferred uncritically to the public sector. Indeed, if there is one thing I have learned about administration in my career, it is that incentives, motivations, and criteria for success are fundamentally different, and should be fundamentally different, in the private and public sectors.

But I have come to realize that there are key elements in the Clinton Administration approach that, stripped of glitz and spin, have been long overdue. I won't measure success simply by reductions in staff when I don't know how many have been replaced (at higher prices) by contract workers. But testing government efficiency against private purveyors, emphasizing the idea of customer service, and, most of all, providing more room for departmental initiatives are fundamentally good ideas. And they seem to me the kind of ideas that are essential to adapting to the new world around us.

For all that work if the true test in the end is restoration of public trust, then, as all of you well know, we are still a long way from home.

To get there, I think some of the bedrock principles of the Commission on the Public Service--and of generations of reformers in years gone by--need to be reemphasized again and again.

• The central idea of a professional corps--with its implication of promotion by merit, of accountability to political authority but without partisan prejudice--needs renewed emphasis. And fair pay has to be part of the deal.
• We need a renewed sense of a "public service ethic," a code of conduct that emphasizes again the priority of the public interest and dedication to the missions set by the Congress and the president.
• We do need sustained presidential and vice presidential leadership--but we also need to recognize that leadership may in fact be diluted by too many political appointees of varied competence and agendas of their own and shorter attention spans.
• And, of course, we need to do a better job of recruitment, education and training -- including those at home with the new technologies.

We can be sure of one thing. Whatever the angst today, whatever the challenges of tomorrow, government is here to stay.

We can argue--we should argue--about the proper boundary lines of the public sector. We can speculate on what wonders (or horrors) new technology will bring.

But we will not be able to do without people--first-rate people, people imbued with a sense of mission, willing and able to devote a good share of their life to public service.

And all of us, inside or outside of government, need to recognize that simple fact.