Thursday, October 28, 2010

A Note on Fraud

I'm for it.  Well, OK, that's having a little fun with how I write things, but I do have a real point here.  Which is that if you want something -- if you want government to do something -- you're going to get some waste, fraud, and abuse.  (I assume this is true in the private sector as well, but that's not my bailiwick, so I'll refrain from trespassing).

I've never found the right pithy way to say this, but it's something like this: Fraud is strong evidence that something you want is actually happening.  The iconic example for me has always been the Pentagon scandals during Ronald Reagan's presidency.  Sure, Reagan should have exercised tighter control over the bureaucracy, and sure, it was a good thing that whatever abuses were uncovered were stopped and punished if possible.  But people elected Reagan, and Reagan wanted a bigger military, and, well, that's what you get.

Granted, not all fraud is a sign of something good happening.  The occupation of Iraq seemed to produce an unusually high ratio of fraud-to-success.  But usually, it's an excellent indicator.  And of course, whether the thing indicated is something "good" or not depends on one's perspective...1960s-1970s welfare fraud was a signal that government was really trying to help poor people, which was only a good thing if you wanted such policies, just as not everyone supported Reagan's defense buildup.

Of course, I raise this in the context of my earlier post today about voting, in which I said I'd be glad to have a lot more people vote even if it means that a few of them are voting from the graveyard.  My conclusion?  The lack of real evidence of actual voter fraud is probably a good sign that we're not doing enough to promote voting.  The big Obama-era example is the negative one from the stimulus.  I don't have the citation at hand -- I seem to remember it was Matt Yglesias, but my apologies to whoever made the point -- but the gist of it was that there hasn't been nearly enough waste, fraud, and abuse in the execution of the recovery act.  That's exactly correct: the lack of waste, fraud, and abuse is a good sign that there hasn't been enough focus on getting the economy back in gear and producing jobs.  (Of course, in the case of economic stimulus, it's also not always clear that "waste" is actually a bad thing, since the whole point is to get money out there). On the other hand, the myriad abuses and likely abundant fraud and waste in counterterrorism under George W. Bush was a good sign that the government really had made that a priority,

Hey, I'm not saying that we shouldn't prosecute fraud, or that we shouldn't try to have government programs run efficiently, legally, and properly.  I'm just saying that in the real world, fraud is going to happen, and waste is going to happen, and it's most likely to happen in the areas in which the government directs resources.

(If only I could find the correct pithy wording, and I got famous enough, this is the one I'd want to be Bernstein's Law.  Why famous?  Because of one of Polsby's Laws: Famous words migrate into famous mouths).


  1. Why use the unintended, but likely, consequence as your indicator, when we could try to think of indicators of the things we want directly?

    So, don't use the relative lack of stimulus fraud to say that the stimulus didn't work: use data on what the stimulus was supposed to do. I think that, on average, you'd find the same things, but not always. You note the Iraq example as a high fraud-to-subtsance one, but what about a low one. Social Security fraud, for example. I don't mean number fraud; that's a real problem. But I mean the primary goal of the program: mailing checks to old people. And, as far as I know, the instances of mailing out checks that are "undeserved" is very, very rare. As for waste, it only employs 62,000 people to deal with 37% of the federal budget. I'd say that's very little waste. Does the program work, though? Well, that depends on what you think it should do.

  2. Here's an attempt at pithiness: "The effective priority of a government program varies directly with the amount of waste and fraud associated with the program."


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