This commentary originally appeared in Investor's Business Daily on February 3, 2017.
When a national problem becomes critical — viz., fiscal imbalance, natural disaster, education system underperformance, security threat, societal discord — there is the standard "Washington bureaucratic" way to solve it.
Bureaucrats are like politicians: They live by the mantra, "the art of the possible." They compromise, adjust, negotiate, balance all stakeholder interests, make trade-offs. Bureaucrats do what they think is doable — they settle.
Entrepreneurs and physicians don't settle. They identify the root cause of a problem, understand the difference between root cause and a symptom; and they treat the cause. Treating symptoms may give the perception of a solution but never the reality.
Bureaucrats do what they think they can. Entrepreneurs and doctors do whatever it takes!
In 1960, President Kennedy said we would put a man on the moon. The bureaucrats said it was impossible. You can almost hear them plead: "Maybe we could put a chimpanzee in orbit for an hour or two. Would that be an acceptable compromise?"
Entrepreneur-engineers in 1960 asked, "What will it take to put a man on the moon?" Then they built everything from innovative heat shields to new fuel mixtures. Nine years later, we took "one giant leap for mankind."
Following are some national problems that remain unresolved despite repeated political "fixes."
American corporations are moving their corporate headquarters to countries such as Ireland and the Netherlands. Such "corporate inversion" takes away jobs, money and prestige. Obama's "Washington" solution was financial penalties: Punish corporations who have already inverted and pass rules to prevent future inversions.
An entrepreneur would ask why companies invert? The answer is financial advantage, and the root cause is the U.S. corporate tax rate: 39.1% combined federal and state. In Ireland, corporate tax rates are 10% (manufacturing), and 12.5% for trading operations, with the highest at 25% for nontrading corporate income.
The entrepreneurial way to stop inversion of U.S. corporations is to reduce the U.S. corporate tax. If we were fiscally competitive, American corporations would have no reason to invert.
Health care in the U.S. has been in crisis for decades. Prices are unaffordable and people can't find a doctor. Health care spending is draining the national treasury, stealing resources needed for education, infrastructure and even the military. The Affordable Care Act is a prime example of how bureaucrats solvethings: They tighten their control through regulation.
When an entrepreneur asks why health care is sick, he finds the root cause is the very regulatory machine that claims it is the cure. By increasing its size and reach, the federal bureaucracy diverts more and more dollars away from care and drives providers away. The obvious (entrepreneurial) cure is to reduce the regulatory burden and stop the bureaucrats from overspending our money.
Repeal the ACA in its entirety and replace it with … nothing. Yes, nothing. Since the federal health care bureaucracy is the root cause, modifying but keeping it won't fix things. Eliminate it entirely. Get Washington out of the health care business and let the states provide health care. As Supreme Court Chief Justice John Marshall wrote in Gibbons v. Ogden 22 U.S. 1 (1824), "health laws of every description" are reserved to the states alone.
Health care and education have numerous problems in common, particularly dollar inefficiency: money spent that does not achieve the desired outcome. In health care, we spend trillions to get good health but do not get it. In education, we spend twice what Organization for Economic Cooperation and Development countries like Denmark, France, Germany and Japan spend. Yet these countries consistently score higher in math and language tests.
In fact, by any metric you choose, American schools are underperforming. Our 15 year olds scored merely average internationally in science and reading, and below the average in math. We are paying handsomely for an education system that fails our young people. Therefore, we are not getting requisite value for dollars expended.
What is a bureaucrat's answer to such dollar inefficiency? Tighten the federal grip on education, placate the unions, and tell parents what their children must learn. And oh yes, spend more money, most of which goes to federal agencies, consultants and union leaders, but not into a classroom.
How would an entrepreneur fix our failing education system? He would first ask the parents what they want. After all, the children are theirs not Washington's. Then the entrepreneur would put the levers of power — particularly money and creating standards — into the hands of the parents and the states, taking power away from the central authority. ESAs (educational savings accounts) are one good example of doing just that.
The standard bureaucratic approach to solve national problems has consistently failed. Americans are hoping that the "Great Disrupter" (Mr. Trump) will utilize a new, different, entrepreneurial approach — one that will solve problems and not settle for third-best.