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Transcript

80/20 the government : Time to start cutting deeply

Podcast version

There are those who believe that government is a force for good. There are those that believe government CAN be a force for good. There are those who don’t care. There are those who think a little bit of government is fine. Lastly there are those who call for the complete elimination of government.

Put us in the “a little bit of government is fine” camp. This position is called “minarchism”. We believe a civilized society is a minarchist society, by definition.

If the government, be it headed by a king, or a president, feels that it must compel the citizenry to comply with the use of excessive force (beyond say, what is outlined in the Bill of Rights) it is hard to say that a country, or state, is “civilized”.

We are far from a civilized society in the United States, and for that matter pretty much anywhere in the world. The crony classes, which have embedded themselves in governments since antiquity have, over the last century or so metastasized.

We say crony “classes” because there are different types of cronies preying on the general populace. There are titans of industry who amass incredible wealth at the head of giant companies that only exist because the American taxpayer funds these companies. These can be defense companies, insurance companies, banks, all sorts.

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Then there are people within these companies that know that the taxpayer funds their livelihood but are for the most part innocent. I don’t think anyone’s going to get on the guy helping to put together the Abrams tank for instance. (At least we wouldn’t).

There are heads of government agencies, and their friends at the top who do well in government, but do far better once they leave government and work for the companies and industries they used to regulate. Places like the FDA, USDA, NIH, etc. all have revolving doors where industry people do tours and then leave and cash in at Pharma or wherever because of their connections to regulators.

There are the politicians on the take who are always looking for a little legal graft. Consider that Congress may still trade on very impactful legal inside information that had we traded on would have put you or me in jail. That’s a nice way to capture Alpha, as traders put it*

There are a myriad of other types of cronies. But perhaps the most draining and exploitive of the American taxpayer, by virtue of its size, is the administrative state.

We are not just talking about the “deep state”, the senior folks at the Defense Department, Justice, CIA etc, but the army of underlings who dominate Northern Virginia, southern Maryland and beyond. (Coincidentally the wealthiest part of the USA.) This is the core of the beast.

Every single person who has spent any time living within the government employees around our nation’s capital has some story of abuse.

When I got out of school and went to work in Fairfax County I began to hear stories of the life of the “gov”. One I heard over and over was that there were people in agencies that were totally incompetent, but since they were pretty much impossible to fire, were just shifted around departments infinitely. Sometimes it even got to the point where employees actually showed up for work and read books at their desks instead of doing any work. (This story was told to me just at the dawn of the Internet. These people are on their phones now.)

In the years since I’ve heard worse. Now doubt if you live Washington metro you have too. At least in the old days the government employees had to come into the office. Now 94%(!!!) do not. (Not that this is such a bad thing really for the rest of us. Traffic is slightly better going into DC these days. When I went in for meetings just post-Covid it was almost a breeze.)

The point is that government can be cut, by a lot. It can be cut deeply. This can be done with basically no impact on the American taxpayer to the downside. Indeed such cuts would only have an upside for the vast majority of Americans. Of course the administrative state won’t like it. Imagine being paid well, with lavish benefits, oodles of time off, with essentially very little accountability and then being told that you had to find a way to survive in the economy that most Americans live in. A land where pensions are mostly long gone. Where time off is often compromised if one has a job with any responsibility, where one must still work if there is an inch of snow on the road, where one can be fired at any time. That, my friends is the equivalent of being relegated to hell for many of these government employees. The regular economy is where tax revenue comes from. It’s not any place to have to make a living - at least not for many of the broad government employee army.

Don’t get us wrong. There are lots of great government employees. We are friends with some of them. Heck, we wouldn’t know what was going on in the bowels of “govland” were it not for these friends. Many are deeply dedicated to their work. Some even work long hours.

Additionally it’s fair to say that at least a solid portion of these people do really important work. They often provide value to the US taxpayer. But we would also say that the 80/20 rule applies to most of administrative government. It’s probably fair to say, at least given our experience, that 20% of the people in many of these agencies do 80% of the work and create 80% of the value (when it is created) for the taxpayer. This 20% is essentially the meat of the government.

The other 80% of workers (and we don’t really know, maybe it’s 85% or 75%) could probably be culled for two reasons.

One because they just should be. They don’t provide value for the taxpayer, for whom they are supposed to be working. And two, because AI as it is RIGHT NOW can probably do most of the work that many people within day-to-day government do, at essentially no cost, or nearly no cost. AI shouldn’t only impact workers in the private economy. It should make government more efficient so that perhaps the tax burden on the people in the private economy can be reduced.

A very lean, efficient, limited government makes sense and represents a much more civilized path for the American people. The old, tired, top down 20th Century state just doesn’t make sense anymore and it’s too expensive.

So Mr. Musk, Mr. Ramaswamy, get to it. Save us some money. Let’s fundamentally restructure government as we have known it. Now is the time.

*If you want to trade like the incrdibly successful Nancy Pelosi use this tool which tracks her moves.