DRAFT Citations Require Edits v 7.

DAWN OF A WORKING GOVERNMENT

The Blood Moon Paper

April 15th, 2014

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Robert William Crawford

Edited by D. Douglas Titus, J.D.

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Crawford
*Peter Drucker
 Dedicated to the Memory
Of

John Kenneth Galbraith

and
Charles Wolf, Jr.

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2017 Robert William Crawford all Rights Reserved
 Dawn of a Working Government
A Means of Introducing Efficiency in Government &

Restoring Fundamental Constitutional Powers

For Representative Governments

Part One of Two

April 15, 2014

__

There are Three Ways to Effectively Execute an Idea: By Example, Example, or Example. *

The purpose of Part One of this paper is to state the problem, provide historic context, and a framework
of a solution. The purpose of Part Two is to present a politically realistic and practical execution plan.

Information technology revolutionized the world in the private sector. That same revolution may
now occur within government, to empower us to realize our potential.
The majority of problems are symptoms of root issues. The purpose of this paper is to address
root issues of government dysfunction - to not just identify the problems - but present practical
solutions.
Three basic factors present unprecedented opportunity to revolutionize government: 1)
information technology; 2) improved quality and standards of information; and 3) and an
understanding of how we may benefit from things weve learned that make business work, which
we may apply to government.
A system overview and historic context may allow us to see the big picture more clearly.

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The Paradox of Government. If all things ultimately arrive at a point of true contradiction, or
paradox (Graham Priest, Niels Bohr, Pierre de Fermat, Ludwig Wittgenstein), government is no
exception.
At its core function, representative government seeks to provide people freedom from
violations of their person and property by establishing a just rule of law (Aroney).
At the same time, laws - by definition - are restrictions of freedom (Pettit). A resulting
question is: what are practical ways that may efficiently resolve this paradox of government?
To which we must add, how may we efficiently deliver the expanded definition of government
that now includes the many goods and services beyond the original design of government?
The Constitutions Answer to the Paradox. One answer to the paradox is the U.S. Constitution.
The Constitution was based on ideas and practical means to address the most basic challenge of
the human experience: the tendency of people to act in self-interest (Powell).
The goal of the Framers of the Constitution was to create an enduring foundation of
remedies to address self-interest and other basic issues and challenges (Powell) of governance.
When we listen to their words today, the Framers speak to us across time. They remind us that
unless we defend the basic ideas of the Constitution and maintain the roof over the temple of
Justice we have inherited, our rights will erode and be taken from us (Madison).
The Constitution provided a way out of the paradox of government for the people of the
United States. People in other countries took notice of the example - more than 100 countries
have copied our Constitution since 1776.
The Constitution provides a brilliant framework to address basic issues of governance
and rights. The question then becomes, how may government efficiently deliver goods and
services which have expanded in proportion to industrialization? Ideas are only as good as their
execution.
An Important Idea. One of the most important - and overlooked - ideas in the history of
economics is that in the most basic terms, business and government have something important in
common: they both try to deliver goods and/or services (Charles Wolf, Jr.).
The central message of Wolfs genius landmark work is that governments and markets
have not been recognized for having much in common. But once we understand the similarities
between business and government, we may then use the hard-won ideas that weve developed to
make business work, and apply those ideas to government.
Wolfs profound observation gives us a starting point to apply ideas from business,
together with creativity, to make profound changes to government to right the increasingly
listing ship of state. According to most experts in academia, our survival depends on it - most
economists have little faith in the sustainability of complex systems. The discipline of
economics, however, when effectively applied, has demonstrated great power to solve individual
complex problems.

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A solution to the big problem, the survival of our economic system - as with any problem -
requires that we begin with faith that solutions exist. By combining faith in the existence of a
solution to root problems, effective analysis, planning, and politically realistic execution -
together with hard work - the discipline of economics has the potential to pay all of us
extraordinary dividends (Galbraith).

Business v. Government
Business. After the collapse of a government, in the midst of civil war, even within a state of
total anarchy, business continues to function (Schweickart). It has to: in order to survive and
meet our needs, we must exchange goods and services (Schweickart).
Few of us would claim the world of business to be perfect. Given that we must meet our
needs, however, and business must continue to function, we have created five basic ways to keep
business working:

1). Information Access; price information exists for both parties to a transaction, open
information relating to public companies exists, as do objective means which allow us to
determine the point at which a business fails, for example: when it runs out of money (Morris,
Schindehutte);
2). Standards of Information. We have reasonable accounting standards such as
corporate GAAP which we have the privilege to argue over and improve upon (Galbraith);
3). Failsafe Systems. We have created a system to assure that business continues to
function even when it fails: the bankruptcy system (Galbraith);
4). Performance Benchmarks. Businesses use performance standards and metrics; and
most important of all:
5). Personal Accountability (Galbraith). People are fired for incompetence and/or
negligence; public accountants lose their license.
Government. None of the five pillars which support business exist in government (Galbraith).
Not one. As any competent economist knows, any system without information access, standards
of information, a failsafe system, performance benchmarks, and personal accountability, will
become increasingly less efficient and ultimately fail (Galbraith). Most economists who have
performed post-mortems on the Soviet Union concur (Galbraith). They will explain that, unless
we take corrective action, we are next (Galbraith). History shows that over time, every
government has failed (Galbraith). Technology now presents an opportunity for our survival.
Background of Government Dysfunction. At the time our country was created, it was the dawn
of industrialization. Our society was almost entirely agrarian, and without exception, the Framers
of our Constitution were businesspeople who understood what is required for any economic
system to survive (Madison). Over time, industrialization had three basic effects on government
dysfunction: the concentration of capital; complexity; and the creation of the professional
bureaucrat (Galbraith). The effects of these changes over time were obscured by the rapid pace
of industrialization and historic events (Galbraith).

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The Concentration of Capital. Industrialization required the concentration of capital in order to
fund large-scale projects, like canals, railways and mining. To implement these projects, the
interests they represented and their concentrated capital increasingly influenced the political
process (Piketty). Because of the progression of industrialization, proportionate increases in
concentrated capital influenced the political process more than the original constitutional design
of a representative Republic (Madison).
This occurred invisibly over the course of time (Galbraith, Wasserstein). When those who
control substantial resources desire to influence public employees immune from the law, they
may work against public interest.

Concentrated capital, however, may work in favor of public interest

when those who control substantial resources apply it to repair the flaws of
government at a root level.
By addressing root problems, benevolent capital has the power to
prevent countless acts of malevolent influence.
Complexity. At the same time, as industrialization evolved, it compounded the complexity of
civilization (Galbraith). Increasing industrialization created a kind of fog of complexity within
which it became easier for public employees to hide acts of self-interest, acts on behalf of
malicious capital, and thus gain power and control over the people they were intended to serve
(Galbraith). This was done in four basic ways:
1). The creation of immunity from law through public employee union contracts, contrary
to the Constitutional prohibition of no special privileges or immunities (Galbraith);
2). The hiding of public accounting records (Galbraith);
3). An absence of accounting standards, which allowed government employees to further
hide and obscure financial transactions (Galbraith); and
4). The creation and expansion of the administrative court system (Galbraith).
Over time - and again - within the increasing fog of industrial and social complexity, two factors
had the practical effect of voiding the power of the Constitution - public employee immunities,
and the administrative court system (Galbraith):

1). Immunity from Law. If people in positions of authority, specifically, people in

positions of public service, are immune from the law, do we live under the rule of law
(Galbraith)? Can the Supreme Law, the Constitution, have any effect (Posner)? Public employee
immunities render even the Constitution effectively powerless (Posner). Public employee
immunity is thus the central cancer of the Republic (Posner).

2). The Administrative Court System. Dedicated scholars will correctly argue that the
administrative court system technically began with railroad-related issues in the latter 1800s
(Posner). However, the practical creation, expansion and widespread impact of the
administrative court system began because of error and historic circumstance in 1946 (Posner).

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 In 1936, the New Deal, and its expansion of government programs was proposed
(Abraham). No one knew how to implement it, so a 10-year study began (Abraham). It was
called the Administrative Procedures Act report (Abraham). In the APA report, no less than the
architect of the new deal, F.D.R., stated to the authors (Abraham; McNollgast) (paraphrase):

If you implement the proposed APA, you are allowing each agency to
promulgate, execute, and adjudicate law through their own administrative courts, within
each executive branch. This is a violation of the most basic principal this country was
founded upon: the separate powers of government. The definition of tyranny is the
combined powers of government.

The report, however, which began in 1936, was completed immediately after the end of
WWII in 1946 (McNollgast). In historic terms, it is likely that at the end of the war, the people
who created and were responsible for approving the APA may have been in a celebratory mood,
and simply wanted to return to home, life, and work. Despite dire warnings (McNollgast) from
the creator of the new deal, the APA was put into effect by the federal government (McNollgast).
Lower levels of government saw the federal government getting away with the creation and use
of the administrative court system, and copied the APA on an ever-expanding basis
(McNollgast).

Administrative court proceedings, under each respective executive branch, have no

judicial oversight (McCubbins, Noll, & Weingast). Administrative judges often have no training
in law (McCubbins, et al.), and yet in some cases determine if people live or die. A critically
flawed - and unconstitutional - rule public employees have created for the administrative court
system, is that in order to make a constitutional argument, one must first exhaust the
administrative process (McCubbins, et al.).

Obviously, few people can afford the time, energy, and expense of being able to assert
their constitutional rights after exhausting all of the requirements of a rigged administrative court
system. (McCubbins, et al.). The practical effect of the exhaustion rule is that the administrative
court system is now a means by which public employees, immune from law, have managed to
deprive citizens of their Constitutional rights (McCubbins, et al.).

Nowhere in the Constitution may one find a stipulation requiring us to be financially and
spiritually exhausted or depleted before we may assert our constitutional rights, which were paid
for with the ultimate sacrifice: the lives of millions of people who suffered agonizing deaths.

Immunities and administrative courts created a rule of government (Davis). The Constitution was
designed to prevent both violations of law (Skowronek), first with the constitutional protection
that there shall be no special privileges or immunities; and second, the most basic design and
fundamental architecture of the Constitution which created separate powers of government.
Asymmetric Information. In addition to these first two factors of complexity - public employee
immunities and the administrative court system - having the effect of largely voiding the power
of the Constitution and the rule of law, the third most significant effect of complexity is what
economists call asymmetric information (Akerlof).

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 Bedrock economic theory tells us that any system consisting of two groups of people
stops working when one group no longer has information about how the system is truly
functioning and what is going on. An example of this asymmetry is the fact that public
employees now have unlimited information on the people they were intended to serve. Yet many
public servants often refuse to provide even their first name to their employers, the public,
assuring a total absence of accountability (Wolf).

Any economic system, whether called a business or a government, is a system (Wolf)

which relies on accurate information (Wolf). Without accurate information, any system becomes
less and less efficient until it fails by any objective measure (Wolf). If depriving citizens their
constitutional right to live under a rule of law is the second cancer of the Republic, inaccurate
information is the third most dangerous consequence of public employee immunity, and the
reason immunity itself is the first and central cancer of government. Immunity allows public
employees to misrepresent critical information and hide the money (Wolf). Again, the abuse of
power is the abuse of information and money (Wolf). Asymmetric information is the product of
public employee immunities and the professional bureaucrat.

The Professional Bureaucrat. The Framers of our Constitution and creators of our country were
people with considerable practical business experience (Mansbridge). They understood that
government must function as a business (Mansbridge), and could not operate at a continuous
loss. Thus, the systems of government the Framers created, and related laws, were based on
practical reality (Mansbridge).

Over time, however, the increased complexity of society resulted in the creation of the
professional bureaucrat without real-world business experience (Mansbridge, Galbraith).
Economists with often equally limited business experience frequently advise government
decision makers (Galbraith). Thus, government decisions are often disconnected from practical
experience and a realistic understanding of the world of business required to support the
existence of government (Mansbridge, Galbriath).
The disconnect of the professional bureaucrat from the reality of the critical importance
of accurate and symmetrical information - to ensure our collective survival - compounds and
perpetuates the dysfunction of government.
The Theoretical Solution. The abuse of power is the abuse of information and money (Smith),
which have been made possible by public employee immunities from law (Smith). Both abuses
now exist in government (Smith). And both may be eliminated. Never before in history has the
means existed for total transparency and accountability (Galbraith), as an antidote to the
increased complexity of government and the invisibly evolving threats to the Republic
(Galbraith).
History will likely regard with great curiosity how slow we were to recognize one
technological solution to these problems - a solution which has now existed for over twenty
years - the internet. This is an unprecedented social and political opportunity for efficient
governance.
The Execution of Ideas by Example. Guns, germs and steel have significantly changed the course
of history (Diamond), and resulted in the imposition of ideas and will on other people and

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cultures. History, however, shows us that the most effective and lasting means of implementing
ideas is by example (Drucker).
When people and cultures see how they may benefit from an idea, they gladly put it into
practice themselves - at their own effort and expense (Howkins). Such is the basis of this
proposal - to create an example of change by the execution of one example. An ideal example is
a large and dysfunctional state agency: The Washington State Department of Social and Health
Services (DSHS) by the following means:
1). Removal of the Checkbook. The accounting function of government may be
managed by an outside accounting firm employing CPAs, with the accounting firm assigned to
the job rotating between top 10 firms every 3-5 years. This would be the equivalent of appointing
a trustee to manage a business bankruptcy (Deming).
2). CPAs. The administration of public funds through the rotation of top-10 CPA
firms is an alternative to unaccountable and unlicensed government bookkeepers, who are
promoted when they refuse to disclose financial information, and who create their own
accounting systems to obscure the disposition of public funds (Galbraith);
3) Conversion to Corporate GAAP Equivalence. Given the tendency of government
agencies to create their own accounting systems to obscure the use of public funds, the first job
of outside CPAs is to convert the books to a corporate GAAP equivalent for government, such as
that proposed by the Truth in Accounting organization based in Chicago, and their counterparts.
4). Transparency. Once accurate information is available from licensed and objective
CPAs, the accounting of the publics money may be posted on the internet. with five-element
detail of each line item expense: who, what, when, where, and why. It is difficult to imagine any
household or business being able to function without access to their own accounting records, and
yet public funds are the ultimate household and business accounts owned by the public;
5). Accountability. Reclaiming control of public funds will mean reclaiming control
of public accountability. With regained control of public funds, public employee unions will have
to agree to eliminate immunities. Public employee unions will no longer have absolute power,
and the ability to create immunities for themselves. Public control of funds provides leverage to
remove immunity from union contracts. A bedrock idea of the Constitution, accountability, may
be restored.
Public employee union agreements, which allow public employees to be immune from
personal responsibility and the law, significantly detract from the legitimate purpose, credibility,
and public image of organized labor. Greater public awareness of union immunities and their
impact on society may likely - and unfairly - substantially erode the image of organized labor in
general.
6) Performance Standards. Agencies must have objectively verifiable performance
standards (Wolf).
The Practical Solution and the Example.
Pro-active Strategy. While potential opponents of the innovations described herein are
predictable, a proactive, practical and politically realistic strategy has been developed to
implement the ideas within this paper. This is the purpose of Part Two of this paper.

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Net objectives: Within any government system, efficiency gains of less than 10% should be
considered a failure; 10-15% expected at a minimum; and over 15%, a success. The
psychological gain, however, of a successful practical example which demonstrates what may be
achieved in government reform: priceless.
The importance of executing an example of functional government cannot be overstated. When
one looks at a graph of increasing public employee immunities in the U.S. from 1776
(Rosenbloom), an inverse parallel line represents reduced voter turnout, and public apathy
(Rosenbloom).
The less relationship the public sees between their vote and the effect of their vote on the course
of public affairs, the more they have withdrawn from involvement (Rosenbloom) at an increasing
rate. In contrast to voter apathy, the popularity of gaming and sporting event (Rosenbloom)
participation is at an all-time high.
When we play video games, or attend a sporting event, the objective is clear. We have
information on the scoreboard which allows us to understand the progress of the game. The
information flow of gaming is symmetric - both sides have it (Akerlof). Most of all, the
information gives us a sense of power and control, which is a basic human need (Galbraith).
Presently, in representative governments worldwide, information flow is asymmetric. The result
is a continuous decline in government efficiency and constitutional power which takes an
increasing psychological and financial toll on us (Tanzi & Schuknecht). A system with
asymmetric information is not a sustainable system; the question is not if it will fail, but when
(Tanzi & Schuknecht).

The Dawn of a Working Government may occur through a single example -

by applying the solutions presented to a large and dysfunctional state agency:
The Washington State Department of Social and Health Services.
DSHS failed to account for $6B in federal funds in a single recent audit.
During the audit, DSHS employees destroyed records and refused to
cooperate with federal auditors. Although $6B was never accounted for, no
one was held responsible. The most defenseless people of the State of
Washington paid the price: the elderly, the disabled, and foster children,
among countless others.
Of the 43 highest liability cases against DSHS over a decade resulting in
more than $100m in claims against the state, not one DSHS employee was
fired, disciplined, or held accountable to the law. The human cost to the
defenseless victims, many of them children in foster care, is incalculable.
It is difficult to imagine any business or household able to survive in the absence of accurate
accounting records of its own money, or a business that is unable to hold employees accountable
to performance standards or the law. Yet isnt the government actually the publics largest and
most important business and collective household?

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Currently, the tail is wagging the dog. Public servants currently hold the publics constitutional
rights and money hostage through self-created immunity from the law and by the intentional
misrepresentation and absence of accounting records.
Obtaining critical information will only be possible if people are held accountable. Public
servants will only be held accountable if we assume control of our money, and thus have the
leverage to eliminate unconstitutional immunity from the law, and the inaccuracies of accounting
information.
Fortunately, technology now presents us with the opportunity to fix root problems. Information
technology revolutionized the world in the private sector. That same revolution may now occur
within government, to empower us to realize our potential.

A critically important component of the execution strategy, detailed in Part

Two of this paper, is public communications. Media determine public
opinion. Connecting highly compelling, emotional, real-world human stories
to government dysfunction is essential for public support. Quality storytelling
and journalism is essential to transform the abstract facts of government
failure into compelling human interest stories ending with hope, an
opportunity for change, and overwhelming public support.
By applying a completely out of the box approach to improving government, and thus, doing an
end-run around existing political structures, we have an opportunity to address root dysfunction
with great efficiency.

According to the late great Peter Drucker, there are only three ways to execute an idea: example,
example, or example.
One effective example, the Washington State Department of Social and Health Services, may
result in a global domino effect for the benefit of all people, particularly the most defenseless.
In the same way the U.S. Constitution continues to provide a constructive example for the world.
#

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 References (edits in process)

Abraham, H. J. The judicial process: an introductory analysis of the courts of the United States,

England, and France (p. 314). New York: Oxford University Press.

Akerlof, G. A. The market for "lemons": Quality uncertainty and the market mechanism. The

quarterly journal of economics, 488-500.

Aroney, N. Justice McHugh, Representative Government, and the Elimination of Balancing.

Sydney Law Review, 28, 505.

Davis, K. C. Administrative law and government. West Pub. Co..

Deming, W. E. The new economics: for industry, government, education. MIT press.

Diamond, J. Guns, Germs and Steel: (1997).

Drucker, P. Innovation and entrepreneurship. Routledge.

Galbraith, J. K. The new industrial state.

Galbraith, J. K. Economics and the public purpose.

Galbraith, J. K. The good society: The humane agenda. Houghton Mifflin Harcourt.

Galbraith, J. K. The new industrial state. Princeton University Press.

Galbraith, J. R. Organization design: An information processing view. Organizational

Effectiveness Center and School, 21, 21-26.

Howkins, J. The creative economy: How people make money from ideas. Penguin UK.

Madison, J. Notes of Debates in the Federal Convention of 1787. WW Norton & company.

McCubbins, M. D., Noll, R. G., & Weingast, B. R. Administrative procedures as instruments of

political control. Journal of Law, Economics, & Organization, 243-277.

Morris, M., Schindehutte, M., & Allen, J. The entrepreneur's business model: toward a unified

perspective. Journal of business research, 58(6), 726-735.

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Pettit, P. Keeping republican freedom simple: on a difference with Quentin Skinner. Political

theory, 339-356.

Piketty, T. Capital in the 21st Century. Cambridge: Harvard Uni.

Posner, R. A. Constitution as an Economic Document, The. Geo. Wash. L. Rev., 56, 4.

Powell, C. Dialogic Federalism: Constitutional Possibilities for Incorporation of Human Rights

Law in the United States. University of Pennsylvania Law Review, 245-295.

Rosenbloom, D. H. Public administrators' official immunity and the Supreme Court:

Developments during the 1970s. Public Administration Review, 166-173.

Schweickart, D. After capitalism. Rowman & Littlefield Publishers.

Skowronek, S. Building a new American state: The expansion of national administrative

capacities, 1877-1920. Cambridge University Press.

Smith, J. Moralities: How to end the abuse of money and power in the 21st century (Rev. ed.).

Tanzi, V., & Schuknecht, L. Public spending in the 20th century: A global perspective.

Cambridge University Press.

Wasserstein, B. Economics and the Public Purpose. Harv. L. Rev., 87, 908.

Wolf, C. Jr. A Theory of Non-Market Failure: Framework for Implementation Analysis.

RAND 1978
Wolf, C. Markets or Governments: Choosing Between Imperfect Alternatives. MIT Press. 1986

Contact:
Robert Crawford
Robertcrawford777@gmail.com
(206) 478-3844 direct
701 5th Avenue #4200
Seattle, WA 98104

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People of practical affairs, who believe themselves to be exempt
from any intellectual influences, are usually the slaves of some
defunct or obscure economist.... The power of vested interests is
vastly exaggerated compared with the encroachment of ideas. -
John Maynard Keynes

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