Philip Whiteley's Blog

April 29, 2010

Nothing inevitable about bad management

Filed under: Uncategorized — felipewh @ 8:00 am

Finally, a columnist has covered the matter of management and service delivery in the public services – a question you would logically think would be centre-stage in an election debate, following years of massively increased state spending with questionable results.

However, Daniel Finkelstein’s column in The Times on 28 April puts forward a simplistic and fatalistic remedy of ‘choice’ as the driver of improved services. He overlooks the waste and errors in the private sector (remember the credit crisis?). It’s odd and frustrating that a subject matter such as how things are actually run should be overlooked or simplified in this way.

He makes a case that state planning failed in the Soviet system because committees can’t anticipate people’s preferences; better to run matters like a supermarket, where we have choice. The problem with this recipe is that it doesn’t translate well to areas where information on products is limited or dangerously misleading (investment banking, as we have seen); and in the public services there is the added problem that you cannot switch supplier as easily as in retail; moreover it really matters if a school loses in the competitive landscape. In UK schools there is already a huge degree of parental choice, based on catchment areas and house prices. It doesn’t force up standards; rather, just entrenches the differences between good and bad schools. Parents can smell the difference within 30 minutes of house hunting in a new town.

There’s nothing inevitable about bad management in the public sector. It was perfectly well managed in the period 1940-45, when the entire economy was nationalised (under a coalition government, note). There’s also a considerable amount of bad management in the private sector. Mr Finkelstein deploys the euphemism ‘creative destruction’ to describe the high failure rate of private enterprises. Yet this can actually be explained, much evidence shows, by appalling waste and poor judgement, particularly in merger activity, where projections of ‘cost savings’ are made using the financial accounts, which is 15th Century information technology. Neo-liberal, MBA-style management is a bit better than Marxist state planning, but not by much – and is actually quite similar in some of its dehumanizing assumptions.

A political party that recognised the importance of governance and leadership would have something genuinely original and useful to say.

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