Self-Service Savings

The theory seems to be that automation is a bad thing because it eliminates good jobs. Inefficiency, however, simply isn't good public policy.
by | March 2, 2011
 

Remember when Tom Sawyer had to paint Aunt Polly's fence? He did it by getting some free help. Government can save too; all they have to do is ask citizens to provide free labor.

Sound crazy? Think again.

When your grandfather went to a gas station, he'd tell the attendant how much gas he wanted and it would be pumped for him. When your grandmother went to buy groceries, she'd tell the clerk what she wanted, and the clerk would scurry about for her items.

Today, you pump your own gas. You fill your own cart too, and might even scan your own items at an automated checkout station.

Self service has transformed both these industries. Through a change in technology and process, you can lower your payroll costs dramatically and still get the job done.

Self-service saves. But is the public sector making good use of this technique?

In some cases, yes. Many government websites now allow for basic self-service transactions to be done online, like registering a vehicle. But in too many cases, rather than embracing automation to reduce labor costs, government seems to prefer keeping workers on the payroll.

Compared to the private sector, government's efforts to squeeze out labor costs seem tepid. Consider the many private industries in which personnel costs have been radically diminished: Bank transactions at the ATM instead of with a teller; business correspondence done on a computer instead of typed by a secretary; ahd comparison shopping for cars online instead of relying on a salesman. In industry after industry, technological innovation has squeezed out labor costs.

The magic of technology is its ability to allow an ordinary person to do what only professionals could do in the past. Thanks to blogs, everyone can be a publisher. Thanks to eBay, everyone can be a retailer. The past 15 years have seen revolutionary changes to the way the American economy generates value.

Government often resists this shift. Consider automated toll collection. Since it reduces collection costs, you would think states would want to encourage widespread access to the electronic transponders. But as late as 2009, Massachusetts was charging a hefty $29.95 for a transponder. It took massive backups at the tolls over the Easter weekend that year (and the political firestorm that came with it) to convince the board to eliminate the fee. (Savvy Bay Staters had long gotten their transponders for free from New York, which worked equally well on Massachusetts toll roads.)

The theory seems to be that automation that eliminates good public-sector jobs is a bad thing. But inefficiency simply isn't good public policy.

There is a story often told about economist Milton Friedman. He touring a public works project where laborers were digging with shovels. He asked his government host why they didn't use heavy equipment. He was told that this way the project provided more jobs. "Then why don't you have them use spoons?" Friedman replied.

To be fair, the public sector has taken some creative approaches to eliminating labor costs. Home confinement for low-level offenders using ankle bracelets and other monitoring avoids the cost of prison confinement -- it is essentially do-it-yourself incarceration. After a slow ramp up, the IRS is getting there with automated filing, which reduces errors and the costs of handling all that paper. One of the more remarkable technology success stories is the burgeoning use of drone aircraft, avoiding the cost (and risk) of using human pilots.

In too many cases, government appears to operate much as it did 50 years ago, at least in terms of how it uses labor. Police and fire are more or less the same. Public schools now use high-tech whiteboards instead of blackboards, but the brick and mortar classrooms with the teacher in front is the same labor intensive model your grandparents knew.

Again, there are exceptions. Florida's virtual schools give a hint of the potential for online learning. The Washington, D.C., Sweepercam program allows public works employees to automatically generate parking tickets, leveraging the output of existing employees through technology. My library allows me to check out my own books. These are nice, but aren't we only scratching the surface?

This isn't about squeezing more from individual employees, by the way. Indeed, that is the irony of the self-service revolution. By inviting shoppers to fill their own cart, there is less work for staff. And as a bubble of retirement-eligible workers loom, self service doesn't have to mean layoffs.

Self service represents an unexploited opportunity to governments at all levels. With some creative thinking, public leaders willing to make it a priority can squeeze out labor costs without putting the squeeze on public employees.

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