Last Monday, I woke up knowing I had a rough day ahead of me; I had to deal with government contractors. First, I had to go to both the California DMV to renew my registration, and then to the Los Angeles Vehicle Processing Center (VPC) to pick up my car from Italy.
I'm no fan of the DMV. I believe it is a model of government inefficiency. It's only redeeming feature is that my local DMV shares a parking place with my favorite breakfast place. Combine this with the fact that wait times are up across California, and I dreaded the day ahead of me.
I arrived at 7:45. I waited in line for 15 minutes before they opened, got a call number, and within twenty minutes I was at a window registering my car. Beginning to end, the whole experience took about forty minutes, and the DMV helped almost fifty people in that time, if not more. Three employees helped me: two were very friendly, and the other was quick and efficient, handling almost all the vehicle registrations by himself.
After eating my eggs benedict, I went to the Los Angeles Vehicle Processing Center. For Soldiers deployed overseas--in places like Italy or Germany--the government ships their cars over to them. The Vehicle Processing Center is where soldiers pick up or drop off their cars.
Despite having ample personnel--I counted at least half a dozen within eye sight--and despite only four customers to serve--only one of whom was in front of me--I waited over an hour to talk to someone. And I had even called them to let them know I was on my way. Once they called my name, it took fifteen more minutes to process my car. Throughout my wait, I watched the workers walk to the front, shuffle papers, and then return to who knows where.
The employees who had processed the car didn't clean the windshield where their stickers left residue. They also somehow lost the screws for my license plates. (In fairness, Juan, the employee who finally helped me, was amazingly friendly and clearly the hardest worker in the joint. Without him I would have lost it.)
What can we learn from this? In all honesty, not much. These are two isolated incidents, and I consider anecdotes the worst way to prove a point. I could easily have walked in at slightly different times and had reverse experiences. But I want to provide a moral anyways.
Government employees, contractors, and investment banks are all inefficient for the same reason: lack of competition. Conservative economists (Bernanke, Paulson, Greenspan, etc.) uphold the free market as the ideal form to foster competition. I agree. Take the DMV. Who else can provide your registration or licensing? No one. They have a market of one, and no pressure to perform.
When government contracts out their job, though, you now have a market of one contracting to another market of one. In the case of the VPC, they don't have to worry about customer service because they have a long term contract with the government. It's customers, the military, have no alternatives. Contractors, like the VPC, Kellogg Brown and Roote, and Booz Allen Hamilton, thrive off these long term contracts and the lack of a market place.
The DMV is terrible. And contractors are somehow worse.
Tomorrow, we plan on recapping the recent spate of military contractor news, including KBR's Iraqi draw-up, and how, in the world of military contracting, rape is now legal.
Some subtle disagreements. First, AAA does vehicle registration through the DMV, and it is amazing how quick a private company can do what the DMV can’t.
Second, on competition, we don’t have any. Most markets have two or three major companies, and then smaller companies. This isn’t competition. Liberterians, conservatives, small governmentistas, University of Chicago economists believe the market can solve our problems, but they don’t believe the government has a role in referring the market, and making sure it stays a market, not a monopoly.