Improving Program Design

Executive Summary

Federal programs are often a story of good intentions gone awry. Consider, for instance, the case of Supplemental Security Income (SSI) recipients who are also eligible for food stamps. Congress, hoping to improve service to, and participation of, those SSI beneficiaries, concluded that the Departments of Agriculture and Health and Human Services should coordinate the delivery of food stamps at Social Security Administration (SSA) offices. Subsequently, however, the General Accounting Office (GAO) found that this design resulted in duplicated efforts and poor service.

Another flawed program design is the federal student loan program which has guaranteed $142 billion in loans, paid $35 billion in interest, and lost $19 billion in defaulted loans since 1965, yet it generates hundreds of millions of dollars in profit every year for private corporations. Poor program design also contributed to lax federal regulation of the savings and loan industry, which will cost taxpayers some $300 billion before the crisis ends. More recently, the Federal Aviation Administration struggled to keep up with rapid growth in airline service because of serious institutional constraints, prompting some experts to recommend transforming it into a government corporation.

These experiences are not isolated. Many federal programs are badly designed, ill-conceived and fatally flawed. Innumerable bureaucratic horror stories publicized by journalists, pundits, politicians, and civil servants have unfairly turned phrases like “good government” into oxymorons. [Endnote 1] GAO has identified 17 federal programs as high-risk activities especially vulnerable to waste, fraud, abuse, and mismanagement.[Endnote 2] The Office of Management and Budget (OMB) currently has 104 programs on its high-risk list.[Endnote 3]

The number and severity of these problems has undermined the public’s trust in government. Perhaps not since the beginning of the Great Depression have Americans shown such little confidence in Washington’s ability to provide the service that the nation deserves. And, unlike Watergate, Iran-Contra, and other political scandals, the problem is not rooted in the episodic vices and failures of individuals. Instead, Americans are increasingly frustrated by the enduring deficiencies in our government’s structures and processes.

Often, government problems are rooted in the poor foundations upon which public programs are built– ambiguous goals, weak operational concepts, and careless implementation design. Now, both program design and program evaluation are enjoying heightened prominence with enactment of the Government Performance and Results Act of 1993. It requires the executive branch to produce both performance plans and performance reports; these requirements should prompt agencies to foster better program designs and more rigorous program evaluations.

Federal programs come in a wide assortment. Sometimes, the federal government provides cash payments to individuals, such as with Social Security. At other times, it provides benefits only indirectly, such as when it offers tax incentives for builders to construct low-income housing. The particular method of delivery of public service (e.g., direct subsidies, tax incentives, loan guarantees, regulations, etc.) should be tailored to the specific requirements and circumstances of the constituency to be served.

To be sure, political considerations, both in the executive branch and Congress, play a major role in influencing the shape and funding of most federal programs. Nevertheless, these programs also should be rationally formulated and designed. In fact, sound designs that are based on objective criteria could yield programs that are more likely to win administrative and legislative approval.

At present, the federal government lacks any systematic, disciplined approach to program design. In designing programs, officials all too often fail to anticipate the unintended consequences. Program evaluation in OMB and many agencies is less prominent than it once was. Yet we need broadly applicable techniques for designing effective, cost-efficient programs, especially in an era of fiscal austerity. We also should apply program design technology to existing programs as part of program review, evaluation, and redesign processes. In time, the objective criteria that we develop may help us better determine what services the federal government should provide, and what we should discontinue. The following are examples of such objective criteria:

1. Identify who benefits and how they benefit.

2. Define and evaluate alternate methods of program delivery.

3. Examine program compatibility.

4. Assess cost-effectiveness and efficiency.

5. Evaluate consistency with accepted management principles.

6. Ensure financial feasibility.

7. Determine feasibility of implementation.

8. Provide for program flexibility.

9. Institute performance measurement and program evaluation.

10.Build in cessation provisions.

Whatever criteria are chosen, the federal government needs to develop a formal discipline of program design. The National Performance Review recommends four presidential initiatives.

First, the President should direct the President’s Management Council to sponsor the development and publication of a comprehensive handbook that would address the strengths and weaknesses of alternative program designs. It should include a complete review of relevant literature, a compilation of existing federal programs, a discussion of different approaches, an assessment of comparative advantages, analyses of case studies, and model designs for program types.

Second, the Council should designate one or two agencies to test program design capability to determine its value and costs. For these pilot projects, agencies might create modest program design offices–staffed by individuals qualified in program design, management and evaluation–to help senior officials design new programs and assess existing ones.

Third, the Council should take steps to help Congress design better programs. It should work with the Congressional Research Service (CRS) so the CRS will include program design concepts in all of its relevant training materials. In addition, the Council should encourage CRS, GAO, the Congressional Budget Office, and key congressional staff to participate in program design training.

Fourth, the Council should commission program design courses to educate and train current and future policymakers, program designers, and managers. Such education might include short seminars, a longer residential course, the introduction of program design into existing management development programs, and offerings at graduate schools of public administration.

Endnotes

1. Ruby, Michael, “Rube Goldberg, R.I.P.,” U.S. News & World Report (August 16, 1994), p. 64.

2. See U.S. General Accounting Office, Reports GAO/HR-93-1 through HR-93-17, Washington, D.C., December 1992.

3. Budget of the United States Government Fiscal Year 1994 (Washington, D.C.: U.S. Government Printing Office, 1993), p. 107.

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[http://govinfo.library.unt.edu/npr/library/reports/pdexe.html]

Law School and the Design of Government

“I am not an advocate for frequent changes in laws and constitutions. But laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors.” — Thomas Jefferson

The power of a legal education comes from an understanding of how and why our government and our society came to be the way they are. For many years lawyers have designed American government and its institutions. Government so designed has defined much of American society. Laws, institutions, and programs crafted to solve perceived problems in our society have produced great benefits, but also enormous and often unintended consequences, from the costs of our legal system to the effects on economic behavior caused by our tax laws.

At least three questions need to be posed about any piece of legislation, whether in place or proposed: Is the problem being addressed well understood? Will the law solve the problem? What might be the law’s unintended consequences? This is the design perspective, independent of such issues as deciding upon the benefits and the beneficiaries of the legislation. The design perspective will not guarantee a better law, and better laws will not always triumph in the political marketplace. The conscious pursuit of better design in many disciplines is one of the hallmarks of our age, however, and should be applied to government as well.

There is no institution in either the executive or the legislative branches of the federal government that reviews proposed actions from the design perspective. State and local governments fare no better. All players in the political arena have an advocacy role, and inquiry into possible unintended consequences is not encouraged. Since all legislatures do indeed design legislation, we have by default both a design perspective and a design philosophy for government in America — but it is at best fragmented and at worst incoherent.

The design of alternative approaches to specific problems in governance has not been a subject of study in law schools. The schools of public policy and public administration have recently emerged to try to fill this gap, but the graduates of the law schools still fill the ranks of the decision-makers. Law schools already study the effects of past governmental actions and educate our future decision-makers. Law school students are the best candidates for training in analysis and design of laws and programs, since it is lawyers who have designed our government and continue to do so every day, in legislatures and regulatory agencies across America.

We can do a better job by reaching out to many other disciplines, and especially to the systems sciences and information technology developed in the last 40 years. President Derek Bok of Harvard addressed the need for redesign of the legal system in his President’s Report of 1981-1982 (Harvard, 1982) as follows:
“All graduate schools risk becoming captives of their professions, absorbed in preparing skilled professionals and seeking new knowledge for practitioners to employ. This preoccupation is understandable, since the acquisition and transmission of specialized knowledge are the central tasks of a professional school. But they are not its only tasks. A vigorous school should address the larger problems of its calling, serving as a conscience to its profession and a stimulus for change. In fulfilling this function, a faculty must be knowledgeable enough to speak convincingly to practitioners, detached enough to see the blemishes of their profession, skilled enough in research and analysis to explore each defect thoroughly & offer thoughtful suggestions for reform.” (p. 1)

President Bok then lists a number of specific problems:

“…For example, after a dozen years of teaching labor law and antitrust, I would argue that large areas of the law in each of these fields rest so heavily on sheer guesswork that no one can be confident that our rules actually serve the public interest…
“…I do question whether most of the legal marathons and treble damage suits that clutter the field are truly worth the money and time they cost. To test this judgment, I recently approached an old acquaintance — one of the country’s leading antitrust experts — and asked him whether he would dispute my claim that over half of all antitrust decisions have no demonstrable effect in furthering accepted economic goals. Instead of chiding me for speaking rashly, my colleague replied that he would push the figure up to at least 75 percent….
“…For example, numerous studies have found no reduction in accident rates resulting from the mass of regulations on work-place safety. And yet, the law grinds on in an unceasing effort to build a consistent body of rules from what are often unproven or unrealistic premises….” (pp. 4 and 5)

Although President Bok is directing his attention to the legal system narrowly defined, his conclusions are equally valid for the government beyond the courts. Where he sees the lack of resources available to judges to anticipate the impact of their decisions, one can read the lack of resources available to legislatures. He calls for someone to oversee and coordinate the governmental process, but admits that the political environment of the legislature precludes it from that role. His conclusion:

“No one feels responsible for the operation of the entire system or worries whether the different parts fit together in a coordinated whole.” (p. 12)

President Bok readily admits that we know too little about the effects of the laws we already have, about the costs and benefits of legislation. Without knowledge of the effects of laws we cannot begin to examine the approporiate role of law in society. His solution to this dilemma is found within the law schools, but he would include disciplines beyond the law:
“….Yet we ignore the social sciences at our peril, for their techniques grow steadily more refined. Business school professors begin to have more intricate theories of competitive markets that might help legal analysts predict the effect of changes in our antitrust laws. Scholars in schools of public policy and education develop more sophisticated methods of program evaluation that could help implement sunset laws or detect the secondary and tertiary effects of legal rules on human behavior….
“As yet, this work is largely overlooked by our great schools of law. One can argue that such studies are not the proper province of the legal scholar and that it is better to wait for social scientists in other parts of the university to do the necessary research. But experience shows how empty this observation is. Law professors cannot stand idly by and expect others to investigate their problems. Social scientists have not done much of this work in the past nor will they in the future. If the necessary research is to go forward, legal scholars must help organize it and participate in it, albeit with the aid of interested colleagues from other disciplines.” (pp. 16 – 18)

President Bok has called for a redesign of the legal system by lawyers with the aid of the social scientists within the university. Professor Simon, in The Sciences of the Artificial, 2nd. Ed. (M.I.T., 1981), calls for the development of a science of design applicable to all professional schools and to all professions. Professor Simon defines the artificial sciences as those disciplines that teach how to design artifacts that have desired properties — irrespective of whether the artifact is a bridge or a new medical device on the one hand, or a sales plan or social welfare policy on the other. This process of design is the distinguishing characteristic of the professions as opposed to the sciences. The sciences seek to learn to learn what is, and ask why. The professions seek to learn what might be, and ask why not.

In the words of Herbert Simon:
“In view of the key role of design in professional activity, it is ironic that in this century the natural sciences have almost driven the sciences of the artificial from professional school curricula. Engineering schools have become schools of physics and mathematics; medical schools have become schools of biological science; business schools have become schools of finite mathematics. The use of adjectives like ‘applied’ conceals, but does not change, the fact. It simply means that in the professional schools those topics are selected from mathematics and the natural sciences for emphasis which are thought to be most nearly relevant to professional practice. It does not mean that design is taught, as distinguished from analysis.” (p. 130)

Certainly medical schools are more involved in design issues than are law schools. Consider the different roles of medical schools and law schools. Medical schools teach would-be practitioners how to use the tools now available, but are also deeply involved in medical research: the analysis of diseases and the development of new tools for treatment in the future. Law schools teach would-be lawyers how to use the available tools, but are seldom involved in the analysis of public problems and the creation and discussion of alternative future public responses. Most doctors will not spend their professional careers developing new medicines, and most lawyers will not design governmental programs, but while medical students are exposed to the design process as a part of their education, law students are not.

Again, Herbert Simon:
“…The professional schools will reassume their professional responsibilities just to the degree that they can discover a science of design, a body of intellectually tough, analytic, partly formalizable, partly empirical, teachable doctrine about the design process.
“…[S]uch a science of design [is] not only possible but is actually emerging at the present time. It has already begun to penetrate the engineering schools, particularly through programs in computer science and ‘systems engineering,’ and business schools through management science.” (p. 132)

The science of design in government can be approached at three levels of increasing difficulty and sophistication. First, by reviewing in detail the consequences of legislation and considering the possible consequences of the alternatives not chosen. This is the approach taken by Pressman & Wildavski in the book Implementation (Berkeley, 1973), and by articles in such specialized magazines as “The Public Interest.” Of all general-circulation newspapers, only “The Economist” takes a serious and continuing interest in the design of public programs and institutions. Analysis and attempted quantification are the hallmarks of this approach, but the disciplines in use are primarily the social sciences and economics.

Second, the twentieth century systems sciences can be brought to bear generally upon the consequences of legislation in an attempt to inform the legislative process. Charles Schultze, in his monograph “The Farm Subsidy Program — Who Benefits?” (Brookings, 1973), shows that the value of farm subsidy programs is capitalized into the value of the farmland growing the subsidized crops. When the land is sold, the seller pockets the capitalized value of the subsidy and the subsidy the buyer receives must be spent on a higher mortgage payment. The buyer will need money from an additional farm subsidy program in order to continue farming.

From the cybernetician’s viewpoint, the subsidy system is suffering from positive feedback, and must eventually crash. Another view, taken originally from medicine, is that the subsidy program is a form of addiction. A system exhibits addictive behavior if an increased stimulus is required to maintain the same response, whether the “system” in question is a single drug addict or a nation’s farm subsidy program. The lesson, still to be learned by most legislators, is that no government can afford to create programs that are addictive.

Jay Forrester, in Chapter 6 of his book Urban Dynamics (M.I.T. 1969), describes complex systems and lists seven characteristics of such systems: (a) counterintuitive behavior, (b) insensitivity to parameter changes, (c) resistance to policy changes, (d) control influence points, (e) corrective programs counteracted by the system, (f) long-term versus short-term response, and (g) drift to low performance. Virtually all of the major problems now facing American legislatures involve complex systems.

In the words of Ambassador Elliot Richardson:
“…We live in a time of ill-tuned response — of over- and underreaction, of counterintuitive effects. We have been frequently surprised, of late, at the extent to which systems we thought or pretended we understood — the domestic economy, the energy system, relations with the natural environment, for example — are not in faact under rational control. There is a growing awareness that the pattern of bold and confident action that contributed so much to our development may now be inducing unintended harm.” (The Creative Balance (1976), p. xxvii)

The design of governmental interventions must therefore take into account not only the problem itself, but the nature of complex systems. Are the obvious interventions likely to produce only a counterintuitive result? How much intervention is necessary to induce the desired change in a hyperstable system? Where are the system’s influence points? Which intervention is least likely to destabilize the system? How long will the system take to stabilize at new parameters? These are not questions usually asked while drafting laws and programs. Their answers are increasingly quantifiable.

All efforts at deregulation should be examined from this viewpoint. Destabilizing interventions in the airline industry have resulted in a decreasing emphasis on safety, and in the banking industry in increasing numbers of bank failures.

Third, the systems sciences include a number of more rigorous techniques such as linear programming theory, dynamic programming, computer simulation, queuing theory, and control theory. These and other more technical applications of the systems sciences have their place in the design of governmental responses.

For example, despite all the money spent on law enforcement via the Law Enforcement Assistance Administration, the recent decrease in burglaries in America is clearly attributable to the emergence of the “Neighborhood Watch” movement. This is because the LEAA monies were spent largely on ways of increasing the effectiveness of a fixed number of law enforcement officials, while the Neighborhood Watches enlist more people in the effort. The success rate of a would-be burglar in a neighborhood is influenced much more by having several daily patrols by laymen than by increasing the telecommunications sophistication of the single police cruiser that comes by once a day. This is a textbook application of one of the fundamental precepts of cybernetics, Ashby’s Law of Requisite Variety. Ashby’s Law states that only variety can control variety, and to be successful any regulating mechanism must have variety at least equal to that of the regulated system. Given a large number of would-be burglars, increasing the sophistication of the police without increasing their number was doomed to failure. The Neighborhood Watch system succeeded by increasing the number of the regulators while substantially decreasing their sophistication (no force, poor communications, no training).

The study of such laws and techniques should obviously not be a part of the required law school curriculum. The results of their application to social problems and proposed solutions, however, should be included in discussions of the design of government. If coursework in the systems sciences is made available to some students in conjunction with the law curriculum, so much the better.

The systems sciences must be distinguished from computers and information technology. Law school programs involving computers and information technology have generally included technological issues within the existing framework of the law. Issues such as privacy in an era of data banks, computer software as intellectual property, and the effects of electronic copying on intellectual property rights are but new wine in old bottles. The systems sciences, including cybernetics, systems analysis, and general systems theory, must join with the law as partners in the design of legislation, institutions, and governmental programs.

The following quotation from The New Yorker (October 7, 1985, p. 30) on the demise of Manhattan’s Westway captures well the frustration that most Americans feel when confronted with the institutions of government that now exist:
“Deeply embedded somewhere in our thoughts or wishes — no doubt in some corner of the brain that is immune to factual evidence — is the belief that public institutions and programs exist to serve public needs. In this perhaps naive view, the links of the chain of public action begin with the identification of a need of society, by, say, a civic-minded group; next, measures to meet the need are debated and decided upon; and, finally, some institutional arrangement is made, and people set to work. It’s hard to help noticing, though, that in actuality things proceed, as often as not, in quite a different sequence. In this other sequence, the chain begins with the institutional arrangement, and only then is a need sought out — a need that will justify the continuing functioning of the institution. In other words, instead of starting with a problem and looking for an answer one starts with an answer and looks for the problem.”

America’s societal problems are increasingly complex, and require governmental responses of equal complexity. The design of these laws, programs, and institutions requires all the skills that we can muster. In the past forty years the systems sciences have begun to develop a science of design. The potential of the systems sciences must be made available to lawyers. The law school is the most appropriate place to begin. It is not too soon.

Robert A. Knisely
November , 1985

Toward a Science of Program Design

Robert A. Knisely
Far Muse
Mathias, WV 26812

(Originally prepared for delivery at the ORSA-TIMS meeting
in Atlanta, Georgia, on November 9th, 1977)

Introduction

President Carter is correct in saying that the Federal government needs an overhaul, but too much of his current reorganization effort is focused on how the pieces fit together, and not enough on how the pieces work. A major part of his reorganization effort must be directed toward the redesign of individual programs, and the development of a more scientific way of designing programs in the first place.

Program design and redesign depend upon two things: first, an understanding (which we do not have) of how programs work, and second, a set of guidelines (which does not exist) for use in designing new programs. Given the explosion of governmental responsibilities and new programs in the past two decades, it is not surprising that there is no science of program design. It is time to start one.

Three Principles in Program Design

Three fundamental principles must guide any program design or redesign efforts for the Federal government. First, the people of the United States are not affected by departments such as Health, Education, and Welfare (HEW), nor by their constituent agencies such as the National Institutes of Mental Health (NIMH). People are only affected by programs, such as the Community Mental Health Centers program in NIMH within HEW. Departments and agencies are only an administrative convenience; they may provide centralized direction, planning, budgeting, evaluation, and so forth, but they have no direct contact with the problem. Therefore, the efficiency and effectiveness of each program is of primary concern. How programs fit into departments is not very important. For example, the departments of Interior and Commerce have been feuding for years about which should have jurisdiction over deep seabed mining, Interior’s Bureau of Mines or Commerce’s National Oceanic and Atmospheric Administration (NOAA). The two agencies have claims that are equally logical, but the jurisdictional squabble has certainly delayed the implementation of any program.

The second fundamental principle is that real improvements in efficiency (and probably in effectiveness) can only be achieved through substantial changes in the machinery of individual programs. Industrial productivity rises almost exclusively because of improved machinery and not through exhortation or exploitation of the workforce. Service industries, including government, are no different. The design and recurring redesign of the machinery of programs are the keys to more productive government. For example, Commerce’s Economic Development Administration (EDA) in all of fiscal year 1976 obligated $146 million for public works under its Title I program. In the last half of 1976 EDA funded $2 billion worth of public works under its new Local Public Works (LPW) Program, with no more than twice as much effort. The types of projects funded are quite similar. The difference is that the LPW program solicited applications nationwide and processed 25,000 of them in two months via computer, while the Title I program relies on applications that are “hand-crafted” over a period of years. The Congress and President Carter liked the LPW machinery well enough to add another $4 billion to the program in May of 1977.

The third fundamental principle is that the costs of government to the people, in terms of time, money, and aggravation are nothing but overhead. They do not add to the real productivity of this or any other nation. Like hospitals and law courts, government is a necessary evil, however necessary it may be.

Governmental intervention into the lives of people is therefore better the simpler, more precise, and cheaper it can be. Individual programs constitute the interventions, and it is the programs that must be designed as sparely as possible yet accomplish their goals.

The Federal Deposit Insurance Corporation’s best known program to prevent bank failures is a model of simplicity and precision: since everyone knows that the FDIC insures their bank deposits, “runs” on banks and the ensuing bank failures are prevented; the low cost of the insurance reflects the low number of bank failures. It is a beautiful program.

An Art, not a Science

Unfortunately, the design of Federal programs is not a skilled art, much less a science. It is an art practiced almost exclusively by civil servants and lawyers who work for the Congress, the executive branch, and the various lobby groups. Their attention is always focused on the problem at hand, and the government has grown like Topsy. No one in Washington compares programs across agency and department lines in terms of what they do and how they do it. We do not even have a language with which to compare them. For example, the Office of Revenue Sharing (ORS) in Treasury had 100 employees and disbursed $6.4 billion in fiscal 1976; in Commerce’s EDA, the Office of Technical Assistance (OTA) had 62 employees and gave out $11 million in the same period. Is ORS 355 times better than OTA because it disbursed 355 times as many dollars per employee? Of course not; the very question seems unfair. The only rejoinder, however, is that ORS and OTA are designed to different things differently; this is not helpful. If it is not fair to compare OTA to ORS, what programs are so similar to OTA that a comparison of, say, administrative costs and disbursements per employee would be fair? What does “similar” mean in the context of specific Federal programs?

Understanding How Programs Work

One must understand the programs that already exist in order to move program design from a rather primitive art form toward a science. One must begin with a list of today’s Federal programs, then compile a list of the generic types of programs, and finally sort that list into the types of design components that make up similar programs. In March of this year (1977) Senator Muskie’s Subcommittee on Intergovernmental Relations published the very first list of all Federal programs. This Table of Federal Programs lists over 2000 separate programs, was in preparation for over a year, and does not contain changes that occurred in 1976. Still, it is a start.

The list of program types is probably both finite and manageable, although it can only be developed via a thorough review and categorization of the programs in Senator Muskie’s list. The Federal government builds things, either directly or indirectly; gives assistance with more or fewer strings attached to governments, organizations, and individuals; promotes the use or conservation of resources; regulates both individual and corporate behavior; and so forth. Each category can be further broken down: different groups in America are given different forms of assistance, including advice (farmers), loans (small businesses), loan guarantees (Lockheed, among many others), grants (hospitals and universities), contracts (the construction industry) and tax preferences (almost everyone).

The program components involved vary by generic program type. For a grant program the components would include the following: regulations, guidelines, application forms, internal procedures, the management structure, review processes, field staff, external contracts, planning and evaluation requirements, audit procedures, and so one. The lists of components for all program types is finite and can be organized, although it is extensive to say the least.

Once similar programs have been disaggregated to their components, the efficiency and effectiveness of the components can be compared with each other. This is a very manageable task, in sharp contrast to a comparison, say, of revenue sharing with technical assistance.

From an understanding of how the same components function in programs of the same type (regardless of agency or departmental location), one can make specific recommendations for change, requiring desirable aspects of one program be in another, such as “every program granting money to public bodies upon application must require timely local publication of the fact and content of each application”. Further, one can seek to improve the program components, and hence programs, in terms of a set of specific indicators, such as applicant expense, processing time, staff time involved in processing, potential for arbitrary decision-making, accountability, or whatever.

In time, model components would be developed for each program type, and the task of creating new programs, and of changing old programs to reflect new conditions, would be greatly simplified.

Developing Design Criteria

Significant but not dramatic increases in efficiency and effectiveness of government programs will occur through “tidying up” existing programs after the analysis and comparison of similar programs and their components described above. Dramatic change will only occur when more efficient program machinery is chosen to accomplish the same objectives. For example, if a direct loan program can be changed to a loan guarantee program, the private sector’s interest in an accurate determination of each applicant’s credit-worthiness may tend to keep the program in touch with current economic realities. Less government time and money will go into loan processing, and perhaps the paperwork burden on the applicant will be reduced.

Where more significant savings are sought, the process of inquiry must begin with the problem to be addressed, not with the existing program or programs designed in the past around similar problems. There is an apocryphal story in Washington of a young attorney working on Capitol Hill some years ago who was asked to draft a bill to regulate some aspect of the airlines industry. He started by looking up and copying the law that addressed similar concerns with the railroads. Seeing some provisions that did not seem applicable to railroads, he did more research and discovered that the railroad bill had been lifted 75 years earlier by another attorney from a law passed early in the 19th century to regulate the canals. Justice Oliver Wendell Holmes said “in the law, an ounce of history is worth a pound of logic”. In program design, we need the pound of logic.

I have collected a few of the basic questions that program designers should ask themselves; there are undoubtedly many more. To start with:

(1) How good and how recent is our understanding of the problem or problems to be addressed? If we are not sure what we are trying to do, or if our program is aimed at the symptoms and not the causes of the problem, we won’t get very far. For example, the Office of Minority Business Enterprise (OMBE), started in 1972 in Commerce, has for years funded Business Development Organizations (BDOs) whose mission is to help people in minority communities start small businesses. The failure rate for all small businesses is 90% in the first year, so even if the BDOs’ success rate were three times the national average (which it has not been), they would still be wasting 70% of their resources.

Seeing the odds against this intervention strategy, OMBE recently started de-emphasizing the BDOs in favor of Minority Purchasing Councils that attempt to get contracts for minority-owned businesses that have survived the first several years. Although this new program strategy seems a big improvement, OMBE still does not know why there is so little minority entrepreneurship. Do the minority communities lack a history of entrepreneurship? Role models? Access to capital? Access to emerging technologies? People who can afford to take a gamble on a new business? People with managerial experience? Or has entrepreneurship changed so greatly since America’s major corporations were formed that there is no room left for anyone new — whether black, white, grizzly, or gray? Programs should not be designed around hunches or one person’s experience; they should be designed around the best problem knowledge we can get. Programs are expensive.

2. How is the problem addressed by other organizations, whether Federal departments, state governments, other countries or international organizations, or even corporations? Here the understanding of the program types outlined above would be very useful. For example, not all countries that grant patents do so after an examination of the novelty and merit of each invention. Several western countries merely record and file the inventor’s claim and the date and time it reached the patent office. In America about a thousand patent examiners, all of whom are scientists and one third of whom are also attorneys, decide whether ideas deserve patents. Our patent process leaves the inventor uncertain about the protection his idea will get for at least 19 months, keeps the thousand government patent examiners reviewing the work of others rather than inventing, supports the private patent bar handsomely, and costs a lot of money. It also does not provide very good protection for the inventor: Each patent that is challenged goes through a de novo review by law clerks and judges, and in about half the cases that reach the U. S. Courts of Appeals the patent is overturned. Choosing the winning side 50% of the time can be done blindfolded.

It has been said that the uncertainty of the 19 month “patent pending” period is a contributing factor to America’s relative decline in innovation during the past few years. Business does not like to invest in uncertainty. We are told that in some fields corporations are keeping new ideas as trade secrets and not patenting them at all. An increase in trade secrets is the best measure of a patent system’s failure.

While granting that the patent registration system may not be as suitable to America as our patent examination system, certainly the various patent systems should be systematically compared every so often. Perhaps we should adopt the system used in the Netherlands, where examination is done even more thoroughly than in America. The point is, without comparison, who knows?

(3) What known program design options, and what conceivable program design options can we think of? This step requires both research and imagination. The bases for the research are described above, but the imagination must come from a number of creative people with varied backgrounds — not only is a lawyer likely to create a different program than a civil engineer, but a civil servant in one department will begin the design process from his or her own experience, which will be quite different from that of someone from another department. For example, the goal of more energy-efficient household appliances might be sought through tax incentives, voluntary industry standards, mandatory industry standards, or consumer labeling, depending on whether the program designer is in Treasury, Commerce, the Federal Energy Administration, or the proposed new Agency for Consumer Protection. Another possibility, which like several of the above interventions is now underway, is to convince America’s largest purchaser of household appliances to make buying decisions based on life-cycle costing (purchase price plus operating and maintenance costs) rather than purchase price alone. If a manufacturer is guaranteed one very large contract, he can afford to design and manufacture a more energy-efficient appliance, and sell part of his production directly to consumers. Since the Federal government’s General Services Administration (GSA) is by far the largest purchaser of most household appliances, an innovative little program at the National Bureau of Standards called ETIP (the Experimental Technological Incentive Program) has been working with GSA to see whether large government purchases can pull better technology out of producers.

(4) What are the probable consequences, both intended and unintended, of the various program design options? People designing programs are seldom aware of the vast range of consequences that even a small program can have. Multi-disciplinary design teams, knowing the designs that have produced positive or at least hopeful results in the past, should spend time hypothesizing unintended consequences. A famous example is the dramatic increase in schistosomiasis in Egypt that followed the construction of the Aswan Dam. The dam provided the ideal environment for the snail that carries this debilitating disease. An example closer to home was the surprising preference of the local powers in some unreconstructed rural Southern counties for the food stamp program over the old commodities distribution program. Most people in the North thought the food stamps far more liberal and humane. In 1968, while travelling in upstate Louisiana for the Office of Economic Opportunity, I found out that the food stamp program (a) enriched the local storekeepers, (b) permitted both the hiring of white clerks and the firing of Black warehousemen, and (c) was driving the poorest of the poor out of the state. They could not afford the minimum cost of the food stamps, and their source of commodities was shut off. I dare say that few of these consequences were uppermost in the minds of the major sponsors of the food stamp legislation.

Benefits of a Science of Program Design

Here are a few of the conclusions that might emerge from an analysis of program design independent of subject matter:

(1) Loan guarantee programs should be preferred over direct loan programs, as mentioned above.

(2) Tax incentives can induce behavior that would be almost impossible to coerce bureaucratically. An example is the recent tax incentive that allows a write off for added construction costs that make a building accessible to the physically handicapped.

(3) Adding relevant requirements as conditions of large existing programs is a very simple and precise mechanism. This was used to eliminate billboard along interstate highways.

(4) Precision targeting and Federal control may have to be sacrificed so that a program will have immediate impact, as in the case of the two public works programs discussed earlier.

5. A program aimed at one set of problems may learn from the history of a similar program or programs aimed at another set of problems. America is presently beginning to exploit systematically the living resources of the sea. Present day exploitation is done by fishermen in small vessels with little government aid or counsel. Today’s mariculture is in striking parallel with the agriculture of the 1880’s and 1890’s when governmental intervention in farming began in earnest. Much has been written about the effects of these programs on today’s agriculture. Unless we understand what happened to create agribusiness and then apply the lessons learned, we are condemned to create maribusiness, to paraphrase Santayana. If we recognize that categorical grants, block grants, special revenue sharing, and general revenue sharing are only points on a continuum of Federal control over the expenditure of Federally collected revenues, we may be able to tailor programs to our perception of the recipients’ readiness for responsibility, and not solely to the fashion of the day. We may even find other points on the continuum.

Next Steps

The development of a science of program design could be undertaken either within government or by a university or other institution. If it is done within the government, access to information will be easier and the experience gained in doing the research will be available for applying the results. The project should be housed in the Office of Management and Budget (OMB) because only OMB has a government-wide perspective, only OMB can set standards for program design components, and because OMB is now a major participant in program design as an art form.

What is needed is a small office that will perform the analysis of program structure, review and comment on the design of new programs, and oversee the review of the design of older programs as an adjunct to President Carter’s reorganization effort.

Conclusion

The ultimate choice among program design options is a political one, not very susceptible to the rational process. It would be encouraging, however, to see the thumb of rationality weigh more heavily on the scales of decision-making. Decisions cannot help but be improved with the knowledge gained from a comparative study of program types, their strengths and weaknesses, and their past successes and failures. When Federal programs are being designed, there should be room at the table for someone familiar with many program designs, for as the psychologist Abraham Maslow once said, “if the only tool you have is a hammer, you tend to see every problem as a nail”.