Monday, June 09, 2014

Buffett on Government, No It's Private

Brad Delong posts Warren Buffett's lessons learned:

My most surprising discovery: the overwhelming importance in government business of an unseen force that we might call “the institutional imperative.” In business school, I was given no hint of the imperative’s existence and I did not intuitively understand it when I entered the government business world. I thought then that decent, intelligent, and experienced civil servants managers would automatically make rational government business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play.

For example: (1) As if governed by Newton’s First Law of Motion, an government agency institution will resist any change in its current direction; (2) Just as work expands to fill available time, government corporate projects or acquisitions will materialize to soak up available funds; (3) Any government business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of government consultants peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.
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