Coyote Blog

I am on vacation and had not really intended to post but I wanted to quickly comment on one of the arguments used to push back on the DOGE effort. The Democrats, who historically have been real masters of managing the media, have had a pretty flat-footed response to DOGE and have floundered for any sort of messaging that offsets the near endless revelations of stupid spending that DOGE is finding. Most of their protests just look like hysterical defenses of the indefensible.

But the argument I have heard recently that is more likely to resonate with the Democrat's traditional (read: sane) base is something like "we are all for explorations of government efficiency but think it needs to be done in a much more measured and careful way." Unfortunately, for anyone with any experience in organizational cost cutting, a "measured pace" is another way of saying "let's move slow enough so the antibodies in the system have time to kill us." As a result, if anything, I think DOGE is moving too slow.

Way back when I was a newly minted MBA with a less cynical view of how organizations work, I was employed by consultant McKinsey & Co to do cost cutting studies. McKinsey had a pitch to clients where they said that simple-mindedly mandating across-the-board cuts was stupid and destructive. Instead they advocated for a process, I think it was called EVA but it was 30 damn years ago and I cannot remember, to carefully look at every process in the company, to redesign the process, and then cut headcount based on implementing the better process. They would say that the only way to cut staff was to first cut the work that employees had to do first.

As a over-educated and under-experienced consultant, this sounded great to me. It made logical sense as the most thoughtful way to go about cost and headcount reduction, and really it still does make sense in an academic vacuum. It just feels better doing a detailed analysis that leads to 10% less needed staff rather than simply at the outset demanding a 10% across-the-board staff reduction (it also demands orders of magnitude more consulting hours, but that only occurs to the current more cynical version of myself).

But in the real world, one often does not have this luxury. First, going into such an analysis can take many months, all through which the organization knows cuts are coming and productivity plummets. It is effectively pulling off the Band-Aid really slowly. Second, the only way to do this analysis is to have the cooperation of the staff that is about to be cut, a tall order in many real world situations where the staff is ready to fight you (and especially when the staff is organized into unions to fight you). Third, you really don't necessarily get much innovation through this process. By the way, all these problems are squared and cubed in a public vs private context with powerful unions and constant media spotlight.

When I was fresh our of mba-school, I thought just whacking 20% of the staff without analysis was the dumbest thing in the world. But having tried to change and manage organizations, I have changed my mind. Necessity is the mother of invention, and sometimes just getting rid of 20% of the staff and having to make do is the ultimate in necessity. In a reverse of the McKinsey formulation, you cut the work that has to be done by cutting the staff. This approach is fast, and there is no way for the anti-bodies to organize to fight the change when the change comes fast enough. Rip off the Band-Aid, get the required savings, fix problems where you went to far later.

The DOGE efforts are doomed at some level no matter what because so much of Federal spending is programmed by law. It is going to take legislative changes and a better budgeting approach out of Congress to make big changes. But I do think there is staffing efficiency to be had but DOGE is not going to get there alone either**. At some point Trump is going to have to just pick a number and say that in 30 days, every department has to cut their staff by that number. Nothing else is going to work. Nothing else usually works in the private world and it certainly is not going to work in the government where the antibody strength is the highest.

Which is not to say that what DOGE is doing is not valuable, because it is. The constant string of factoids and revelations are going to be the PR air cover that larger cuts via legislation and/or mass layoffs are going to need.

** Postscript: it is useful to keep a few numbers in mind to see the difficulties with the DOGE process getting their promised savings. Yes they can keep finding million dollar examples of stupid spending to be cut. But to get a trillion dollars in savings -- an almost unfathomably large number -- requires a million individual cuts of a million dollars each. The other thing to remember is just how large the federal workforce is. As I pointed out the other day, the 75,000 that took Trump's early retirement package seems like a lot, but it is well under just the normal annual 6% turnover in the federal workforce.

The Federal civilian workforce is something in the range of 1.8 million people. From this study, 6% seems to be a reasonable estimate of annual attrition among Federal employees, or about 108,000 a year. In that context, the 75,000 signed up for buyouts is nothing. It could easily be made up almost totally of people about to leave or retire anyway. I don't think we are accomplishing anything unless we take at least a 20-30% whack out of the government work force, or from 350,000 to 500,000 job reductions. Anything short of that is almost pointless.

Now, it certainly could be Trump is planning much larger layoffs and the buyout is his way of saying, "look, I gave you a chance to leave voluntarily and you didn't do it." In the book (not the movie) the Godfather, Vito initially offers the holders of Johnny Fontane's contract $10,000 to buy him out. When they refuse, he ends up offering them $1,000 and a date with Luca Brasi. Perhaps that is the next step here.

I still think my first reaction to the Left's pushback on DOGE's probe of the spending of USAID and later other government departments was on target:

Which led to this meme (it's an old standby but under @boriquagato
influence I am dipping my toe into meme creation:

As an aside, I am fully supportive of addressing real privacy abuses found in the DOGE process, though having these concerns come from the party and the media complex that spent the last four years trying to leak Donald Trump's and other rich people's tax returns and whose first response to these privacy concerns was to dox members of Musk's analytical crew makes me skeptical this is the real concern. For government workers, "privacy" means keeping secret bad or stupid decisions. Remember this one (which was again about covering up spending)?

Some of the questionable redactions, by contrast, are charming efforts at bureaucratic butt-covering. Lisa Page, for example, was discussing with Peter Strzok the challenge of having an intimate meeting in Andrew McCabe’s conference room, given the size of his grand new conference table. “No way to change the room,” Page texts in the version provided by Justice. “The table alone was [REDACTED]. (You can’t repeat that!)” Hmmm, what classified, top-secret, national-security information could possibly have been redacted? The blacked out bit, it seems, was a simple “70k.” The DoJ—and can you blame them, really?—didn’t want Congress to know they were in the habit of spending $70,000 on a conference table.

Update 2-17: DOGE is seeking access to IRS systems with taxpayer data. As loath as I am to slow this effort down, I think we need to hear about some strong controls before this proceeds.

But having thought about this longer, I think this is about more than just money. It is also about class. Just listen to how the cool kids in the media talk about Musk's group of young weirdly-nicknamed geeks. This is fairly typical:

He was speaking specifically about a Trump executive order that decrees that the Department for Government Efficiency can force federal agencies into firing four people for every new hire. “Who the hell voted for Mr. Musk?” Begala raged. “Who the hell voted for—excuse the phrase—a guy who calls himself Big Balls? A 19-year-old kid going in there and trying to fire cancer researchers and scientists and teachers and agricultural specialists. It’s, it’s appalling.”

This is moderately hilarious from a) a party who still has not told us which unelected people really were making decisions behind the curtain for a senile Joe Biden; and b) an individual (Begala) who wielded immense power and influence across all departments of the Clinton Administration. The department staffs in DC are 99.99% people who are both unelected and unconfirmed by Congress. The issue is not that they are unelected, the issue is that they are "the wrong sort." I am reminded of the British aristocracy in the 19th century that would tolerate almost any sort of governmental incompetence or malfeasance as long as the people were "the right sort" -- meaning of their class.

The mention of Victorian England reminds me of another way that class is likely involved here. In the English aristocracy the oldest son inherited the title and often all the land and income (which was entailed to the title). This left little for any additional sons, so an income had to be found somewhere for them in a profession that did not require them to sully themselves with "trade" (daughters were handled a different way, through the marriage market). Reading for the law was an acceptable profession for a son with brains, and the army or navy were outlets for many. But most families needed a way for their sons without too much brains or ability and not militarily inclined to make a living. A position in the Church was often the solution.

Modern American blue-blood parents are no different -- they need a way to secure a living for their kids who won't or can't land a job in the modern elite career choices (law, consulting, investment banking, or a sexy startup). Unlike in Victorian times, the military or the Church are no longer preferred elite options? So what to do with your 22-year-old gender studies major? The parents need her to get an income and they need her to do it in a context that they can proudly report to their friends -- Paul Begala does not want to tell his friends that his son's job is maintaining distributor pricing lists ** (anyone who does not believe the latter criteria should have been at my Princeton or Harvard Business School 25th reunions).

The solution? Get them a job at a non-profit, the modern American version of going to the Church. As Arnold Kling noted once, non-profits tend to have much higher status than do for-profits. And without competition they don't have to carry the same performance standards as for-profits. And they are incredibly susceptible to trading a position for your kid in exchange for a nice donation.

The employment rosters of non-profits and NGO's are stuffed with the children of privilege. So much so that there are many non-profits that seem to do nothing EXCEPT employ and pay the travel expenses of 20-something kids from rich and/or influential families. I have been writing about the non-profit scam for years. As I wrote then:

From my direct experience, I would go further.  There is a tranche (I don't know how large) of non-profits that are close to outright scams, providing most of their benefits to their managers and employees rather to anyone outside the organization.  These benefits include 1) a salary with few performance expectations; 2) expense-paid parties and travel; 3) myriad virtue-signalling opportunities; 4) opportunities to build personal networks.  This isn't just criticizing theoretical institutions -- people I know are in such jobs in these organizations.

The spending that DOGE is going after at USAID and other departments likely threatens the income of a number of under-qualified elite kids. So I will update my meme:

**Footnote: I will proudly tell the world that my son's first job out of college was indeed maintaining distributor pricing lists for Ballast Point beer. Trying to optimize profits across the matrix 100+ sku's and scores of distributors is a great real world skill building entry-level job that so many of the change-the-world-before-I-am-25 college kids currently eschew.

Postscript: If you want the blank template for the Astronaut meme updated for DOGE, I share it here.

This was originally posted on 2-1-25 but was lost in a  server update. 

Trump's first few weeks have been a mix of good and bad for this libertarian, all against a backdrop of horror at how Imperial the presidency has become.  But as of today, perhaps the most destructive and stupid initiative has begun:

Because we are all tired of those fentanyl-toting Canadians crossing the border illegally.   I mean, we all saw the Proposal and know how all those Canadians are trying to cheat US immigration law.

Seriously, this is beyond awful -- and not just because of the threat of retaliation, though that is real.  Even if all the affected countries roll over and accept these modified tariffs without response, this is still a terrible step for the US.  No matter how Trump and his very very small group of protectionist economist friends sell this, this is a tax on 300 million US consumers to benefit a small group of producers.   I don't have time right now to give an updated lesson on free trade -- that will have to wait for when I am not on vacation.  But I will offer a few ironies:

• After campaigning hard on inflation, Trump is slapping a 10-25% consumption tax on foreign goods.  That is a straight up consumer price increase for a variety of key products including much of the lumber we use to build homes, a lot of our oil and gas, a lot of our grain and beef, and many of our cars and appliances.
• Much of this inflation is going to disproportionately hurt Trump's base.  No one is going to care much if a Hollywood actor has the fair trade coffee they buy at Whole Foods go up in price, but Trump voters are going to see a direct effect of this on prices at Wal-Mart.
• Republicans have spent 4 years (rightly) condemning Federal and State governments for the economic disruptions of COVID lockdowns and restrictions.  While some of the inflation of the last 4 years was due to ridiculously high government deficits, another major cause was the COVID supply chain disruptions.  And now Trump is voluntarily recreating them.

The only small hope I have is that Trump is steeped from his business career in a certain style of brinksmanship bargaining that consists of taking an entirely destructive and irrational position in hopes that they folks on the other side of the table will back down and give him more than he should.  My son won poker tournaments like this because he would do so much crazy stuff that no one at the table wanted to challenge him.  I have always said that I don't think Trump is a particularly good business person -- he has run business after business that has failed.  But he is a good negotiator, and has exited numerous bankruptcies with his creditors giving him far more than one would think was necessary.

So I am sure his supporters would say that this is no different from the Columbia situation, when the Columbian president backed down quickly on not accepting repatriation of Columbian nationals under a storm of Trump threats.  Perhaps.  But even if this stuff is reversed, it is incredibly destructive because it is almost impossible for businesses to plan and make long-term investments when something so fundamental as tariff rates is changing so quickly and arbitrarily.

But there is yet another harm.  I know some folks are exhausted with the idea of American exceptionalism, in part because it has been a 75-year excuse to send our military bumbling around the world intervening in every conflict large and small, frequently overthrowing states only to have the replacement be even worse.

But there is one part of American exceptionalism that is important -- our example and our persuasion is a key support beam in upholding two great benefits for humanity -- free speech and free trade.  Every government official anywhere is a potential tyrant (if you think that is extreme, I would argue that this exact fear was one of the fundamental founding ideas behind our Constitution).  And tyrants want to have their opponents shut up and they want to shift economic activity to reward their supporters.  They love censorship and protectionism.

As such, in every country of the world, there is a tremendous headwind against free speech and free trade.  There is some natural gravity affecting government behavior that if there is not a constant, visible pressure to maintain free speech and free trade, they begin to be undermined.  And at least since 1945, the US has been the primary source of that pressure (one might add the UK to this, at least once upon a time, but looking at them now that is pretty much over).

Over the last 10 years, it has been incredibly depressing to see the US start to lose its commitment to free speech, particularly on the Left which has here-to-fore been the natural home of its defenders.  Trump and his supporters say things that seem like a positive step in returning to free speech, but I am a cynical man and I fear that we may only see censorship shifted to different topics rather than actually eliminated.  Time will tell, and I will have more on that later.

But in the case of trade, it is the Right in the US that has been the natural defender of free trade.  To see the Right not only abandon the defense of free trade, but actually start ramming torpedoes into its sinking carcass, is perhaps the most depressing part of Trump's order.