oversight

Improving Management for More Effective Government: 50th Anniversary Lectures of the United States General Accounting Office, 1921-1971

Published by the Government Accountability Office on 1971-06-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

    IMPROVING MANAGEMENT
FOR MORE EFFECTIVE GOVERNMENT
                                 UNITED STATES
                           GENERAL ACCOUNTING OFFICE

                                SE? 15 19/J

                                LIBRARY SYST£M




               50TH
       ANNIVERSARY LECTURES
              OF THE
           UNITED STATES
     GENERAL ACCOUNTING OFFICE

            1921-1971
   ~~we;~-GAO

    LrBRAll-' ~ -r
   IMPROVING MANAGEMENT
FOR MORE EFFECTIVE GOVERNMENT




               50TH
       ANNIVERSARY LECTURES
              OF THE
           UNITED STATES
     GENERAL ACCOUNTING OFFICE

            1921-1971
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                                      µJ9.!"0:L
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ll'Of ala b7 U. Saperlutelldent of Dooamerul, I] .S. OOYerllmOllt Prtntlo1 O!!lce
               Wubiorton, 0.0., 20(02 - Price S2.7S (paper COVM)



                                                 I ••1        17
Foreword

    The year 197 l marked the 50th anniversary of the creation of the
United States General Accounting Office. Established by the Budget and
Accounting Act, 1921, the new office was empowered to perform numerous
functions to strengthen the financial system of the Federal Government.
      In recognition of its first 50 years of operation as an agency in the
legislative branch of the Government and of the broadening scope of its
operations, a series of lectures for the GAO professional staff was held
throughout 1971. These lectures were delivered by recognized leaders from
many fields, including government, indusrry, education, economics, law,
accounting, and the press. The underlying theme of these lectures was
"Improving Management for More Effective Government," a theme of
great importance to the General Accounting Office with its ever-expanding
concern with eval uating and improving Government operations.
     The most significant part of our responsibility for financial manage-
ment surveillance throughout the Federal Government is the audit of
agency management activities. We devote the largest pan of our profes-
sional staff time and energy to this vast a1·ea of responsibility. Our primary
objective is to provide through this work useful information for the Con-
gress in carrying out its legislative and oversight responsibilities and for
agency management officials, all to the end of more efficient, more eco-
nomical, and more effective Government operations.
      Basic to our system of operation is the availability to our professional
staffs of the most current and independent thought on management con-
cepts, systems, and controls, as well as the evaluation of program results.
Increasingly, in recent years we have sought assistance from other parts of
government and from industry and the academic comm unity in expanding
our capabilities. To further this end, this series of SOth anniversary lec-
tures was held, and the compilatio n of the lectures in book form is intended
to preserve for continuing future u:;.:. and study the excellent presentations
that were made.
     This book also includes an article that describes the important role
played by the Insticute for Government Research, a predecessor of the
Brookings Institution, in the evolution of the Budget and Accounting Act,
1921. In the 50 years that have gone by, recollections abouc this role have
faded. We are indebted to the Brookings Institution for preparing a paper
for inclusion in this book to fill this historical information gap.




                                                       Comptroller General
                                                       of the United States

                                                                           111
              House Concurrent R esol ution 309

   Whereas June l 0, 1971. marks the fiftieU1 anniversary
of the signing of the Budget and Accounting Act, 1921, and
   v\lhereas such Act provided for the creation of the Gen·
eral Accounting Office, under the control and direction of
the Comptroller General of the UniLed States. as an estab-
lishment indepenclem of the executive branch responsible
to the Congress, and
   Whereas during the fifty years since iLs establishment the
General Accounting Office has contributed significantly lo
the development of improved m anagement in the Federal
Government and has been of valuable assistance to the
Congress with respect to determining the manner in which
the Federal departments and agencies have carried out the
mandate and the intent of legislation governing their ac-
tivities: Now, therefore, be it
   Re.wived by the House of R cprrscnl.alivcs (the Senate
concurring), That the Congress o{ the United States ex-
tends its congratulations Lo the former and present officers
and employees of the General Accounting Office on the
occru;ion of the fiftieLh anniversary of tliat Office; and be it
further
   R esolved, That as it is fitting and proper lO commemo-
rate the fifty-year history of the General Accounting Office,
the month of June l 97 1 is designated for ceremonies appro-
priate to such commemoration.
The Comptro/{er Genernl, Elme1· B. Staats, opens the first ussion of GAO's
50th anniversary prnceedings on June 11, 1971, at the West Auditorium, New
State Department Building, Washington, D.C. Seated on the platform are the
Deputy Comptroller General, Robert F. Keller; tlu: firsl Jpt:ake1·, George P.
Shultz, Director, Office of Managr:menl a.nd Budget: ancl GAO division directors
and regional managers.




Leadoff speaker at the ]urie 11 50th a.nn.iversary prnceedings, George P. Shultz,
Director, Office of Management and Budget.

                                                                               v
                                                                                    I
                                                                                    I

                                                                                    I



                                                                                    J
Other speakers at the 50th anniversary proceedings on June 11 at the West
Auditorium, New Statt: Department Building. From the left: Dr. Robert C.
Weavt:r, Professor of Economics, City Urliversity of New York; Elmer B. Staats,
Comptroller General; Russell E. Train , Chairman, Council on Environmt:nlal
Quality; and Robert F. Keller, Deputy Comptroller General.




A portion of the audience listening to the nnnive1sary• lectt1res given rn the
West Auditorium, New State Depm·tment Building, June 11.

Vl
Contents

                           110JCCt                     Spealwr              Page

From the PerS"pective of the
Ex.ecutive Branch

    View., on lmpru"ing ~l anagernent fo1·   George P. 'hull1
    More UTecli\"c Govc1 nment               DireClOI , Office or
                                             Management and Budget
         Di~u~~ion                                                             7
    Improving the .\Ianagement of            Ru~ell E. Train                  13
    Emi101unemal Program\                    Chairm.in. Council on
                                             l:.11\ironmcntal Quality
         Di~cu~sion                                                           20

From the Perspective of the Fonner
Governm~t      Executive
    Leadershi p Ev;ilu:Hion in Large-        James E. Webb                    25
    Scalc Efforts                            Fom1c1 :\dministralor
                                             N:nional Aeronautics a nd
                                             Space \dmini~tration
         Oiscms1on                                                            35

    Management of Urban Programs             Robert C \ Veaver
                                             Profet.,or of Economics
                                             Cit} Um,er,it} of "l:ew York
                                                                             55

    \sse~smcnt of l:.ffort.\ J'o Assist      O;n id E. Bell                  59
    Underdeveloped .\reas                    Executive Vice Pr~ident
                                             T'he Ford foundation
         Oiscm~1on                                                           68

From the Perspective of the
Legisl.ative Branch

    The General Accounting Office            Chet Holifield, Chairman        77
    and Lhe Congresr,                        Commillee on Government
                                             Operations, House of
                                             Representatives

                                                                             vu
                          Subject                      Speaker               Page

       New Problems of Accountability for     Elmer B. Staats                  85
       Federal Programs                       Comptroller General
                                              of the United Stares

From the Perspective of the
Judiciary
       The Lawyer in Governmem                Judge Harold Leventhal          101
                                              District of Columbia
                                              Circuit Court, U.S.
                                              Court of Appeals
           Discussion                                                        115

From the Pe1·spective of the
Private Sector
       Three Paths in Search of the           Alexander B. Trowbridge        119
       National Interest                      President
                                              The Conference Board
           Discussion                                                        127

       What Is New in Management Sciences     H. M. Boettinger               135
                                              Director of Management
                                              Sciences, American Telephone
                                              an<l Telegraph Company
           Discussion                                                        148

From the Perspective of the
Economist
       ignorance in Government ls Not Bliss   William Gorham                 ] 57
                                              President
                                              The Urban Institute
           Discussion                                                        169

       The Construction and Use o[ Produc-    John W. Kendrick               175
       tivity Measures for Federnl Agencies   Professor of Economics
                                              The George Washington
                                              University
           Discussion                                                        185

From the Perspective of the Press

       Improving Public Understa nding of     Hugh Sidey                     201
       Government Affairs                     Chief, Time Life
                                              Washington News-Bureau
           Discussion                                                        210

Vlll
                         Subject                            "ipealter            Pag~



From the Perspective of the
Educator

    The C.row1ng of Public Exccuti\C'\           I l.1 rlJn Cleveland             2li
                                                 P1c"de111
                                                 I ni' l'I \it' of Hawaii
         Di~c u'~ion                                                              228

From the Perspective of the
Accounting Profession

    Util i1in){ \'\ h.n h New in   Accounti n~   I . •on:od P Sp.1cek             2!J5
                                                 Scnim Partner
                                                  \rthur ,\adersen & Co.
         Di~cu,,ion                                                               248

From the Perspective of tire
Management Expert

    TlH: U\C, .ind Limitatiom of Expen            john J. Coron                  257
                                                 C:h;1i1 ma11 of the Board
                                                 l·n Con,11ltanl\, Inc.
        Oi,cussion                                                               27·1

   The U~cs nnd Limi tations of Ex pen'          .\J.111 L. Dean                 267
                                                 l kp11L\ ,\~,i,cant Director
                                                 for 0 1gani1ation and
                                                 \Ltnagcmcnt Sv,tcm~. Office
                                                 of ~J.ma~emem and Budget
        D"c u\\ion                                                               274


   The Brooking' Institution and the             \\',ii lCI {;, I leJtl          279
   BudgtL ind .\ccounting \ cl of 1921           Du ct 1or uf ..\dminl'tration
                                                 The H1uoking' lnstin11ion




                                                                                   ix
                                                George P. Schultz
                                                Director, Office of
                                                Management and Budget




     George Shultz. was sworn ;,, as the Secretary of Labor in President Nixon's
Cabinet on January 22, 1969. A year a11d a half later, on ]tme IO, 1970, Presi-
dent Nixon selected Mr. Shultz to berome the fit.ft Director of the newl)'
created Qfficc of Management and B udget.
     Mr. Shultz has .seroed in man)• advisory copncities for governments a11d
labor and management organizations in the United States and abroad. He has
had experience a.i an arb1tmtor and mediator and ha..\ authored or edited many
boo/cs and articles in his professional field.
    He received a B.A . degree (cum laude) in rcorwmics from Princeton Unt-
vasity in 19-12 and a Ph.D. degree in industrial t:eonomics from the .\Ias1a.
chusetts Institute of TcchnolO(;>' rn 1949.
    From 194S-5i Mr. Shult: taught economics at M.J T. He was Professor of
Industrial R elations, University of Chicago Graduate School of Business, from
1957-68. a11d Dean of the Gradttate School of Busme.ss, University of Chicago,
from 1962-68.
West Auditorium, State Department
June 11. 1971




Views on Improving Management for
More Effective Government


Over the years, the General Accounting Office and the Bun:nu of the
Budget (now the Office of Management and Budget), both crt'nted by the
Budget and Accountiug Act of 1921 , have worked closely toget/m·, in
many ways, to improve financial management in the Federal Government.
A long with the Treasury Depnrtment, the two ngencies wcrl' dircrted by
law in 1950 to conduct the continuous activity now /mown as the joint
Financial Management lm.prot1(~m.erit Program. Mr. Shultz, Director of
the Office of Management and Budget, reviews some of the traditions
of his office that contribute to better management in the Government.
He observes that if the Office of Mariagement a.n d Budget and the General
Acro1mting Office are to do their jobs, it will be to a considerable
extent beca1.1,se they have people who are able and motivated to get
into the day-to-day work of making the Government work better.



   I consider i t a great honor and privi-      Some Traditions
lege to appear here on the occasion of
the 50th anniversary of this landmark              First, let me mention some t hings that
legislation. A possible theme here today        seem co me to be in the Budget Bureau
would be "50 years of tradition." A             tradition, but which are, a t the same
number of fine traditions and a lot of          time, fresh and ever-new and useful
good old chings are part of the 50 years        when looking at our responsibilities
of operacing under the Budget a11d Ac-          from the management standpoint.
counting Act of 1921. We have all of this         The first, of course, is the budget as
to draw on, but there is still room for         a process. l don't mean the b udget total,
the new and renewed. P erhaps last year's       but our use of the processes involved in
plan . from the Office of Management            the budgeL cycle as strong tools for man-
and Budget (OMB) stand point, is em-            agement and for implementing things
phasizi n g th at. \!\Te have new tasks and     that the President wants implemented
new ideas and we want, as the President         in the various departments and agencies.
has said, to help make Government               In short, we shall continue to use the
 work better.                                   budget process as a tool for understand-
  Consequently, my visit with you here          ing the cotal Federal enterprise and for
will be by way of emphasizing some of           thinking about priorities.
the management aspects of our new or-              We need to improve the budget proc-
ganization and some of che problems it          ess so thac we keep dear the relation-
faces.                                          sh ip of the parts and the whole. We have
 LO concentrate 011 individual part!t--h()w      (.ray O~J B" and the GAO come in. We
the} are working, what we thinl- or              1,hare .in oblig<uion for attention to de-
tht·n1. whethe1 they should be large1 01         t,ii I and fol lowu p. for trying to make
-.111alle1-bm at the same time it' im-           thing~ work. This is the second tradi-
possible to be consrructi\'e unless we can       tio n-an old role but fre hand ever-new
see how these pans fit into the overall          and 11sel u I.
picture. It\ hard to juggle things bad..
                                                     The third element of tradition that
and forth, l>tll that' an essential ingi e-
                                                 St'etm impo1 Lant to recogniLe and accept
client. So, of <1111n.c. is a constant dfo1 t
                                                 is the rnlc ol the whippinrr boy. The
10 relate the whole to 0' erall economic
                                                 13udg«:f Bureau has always been that
pol icy.
                                                :incl I can see tlrnt the OMB is that, too.
     The M:co11d Budget Bure:i u tradition
                                                      Wl1en I first came into this job I re-
-and this is a 'cry import<lnt old tradi-
                                                 member tht1l a proposal came along for
 tion-is the net:d to give attention to de-
                                                 n new program. \ '\le looked i L over and
 t:til and to foll<m11p. One of the natural      agreed on the program but we didn't
attribute~ ol a political capital is es. en-
                                                 think the agency was being ambitious
tia 11) that-politics. The emphasis is on
                                                 enou~h to do Lhe job right.            a result
the thing-; that ha\e Lhe most political
                                                 of our dfort~I'm not putting this for-
'i-.ibilitv. that maJ...e the most news. For
                                                 11•.ircl a ... a 1vpical case, believe me-the
e'\ample. a tremendous amount of work
                                                a~enn c'\.panded its concept o( the pro-
tan be done, '' ith lms of compromising         gr:Jm and it' estimate of resource. re·
:md arguing. before a program is fin.t
                                                q11irecl . The nexL thing we knew, che
p1udllled and announted. £\er) boclv
                                                :u~enn head was do\1 n in Con2"rcss and
.,nit of takes a deep breath and says,
                                                wht•n somebody criticized the program
"\Veil tha t's O\er."
                                                101 nnt being big· enough, lo and behold,
    lt is not over. The detailed worJ... is     ht· said. " 'W ell. it wou ld have been a lot
just beginning. 11 new legis lation is in-      bigp;cr ii I'd had my way, hut the Ol\ rB
\Olved. the CnngTe s must act. Hearing-s        wouldn't let me do it.' ' To be whipping
will take place, then Aoor debate and           ho) in Lhi~ c::ise was clearly more painful
confc1·e11ce-all requiring unremitting          th:tn when we have had to be "no" man
auenrion Lo det:iil. Finally a bill is          and ;ue trititiLed for "negativism" ancl
pnssed and come., to the 'White House           a1 ro~alll disregard of the will of Con-
lor c;igning. Fverybody shakes hands            ).,'TCS\,

\~ith everyhodv el\e and oflen get.; a            \Ve 1 <:< o~niLe that that i one of our
ne\\ pen. fhe1 e are deep sigh of re lid        rnle.. . It is :tn important role and some-
and the feeling. "\\'ell that"s done.'' ll'c;   hod} ha' Lo be willing to play it. In a
over and all ul the flashbulbs have gone        pnlitu al capital not 'ery many are will·
off. There's no more mileage tO he              ing. That ·~ one ol our burdens and we
gained.                                         mustn't ·hirk it; we must stand up rn ir.
   Oft <Hilse. wc all know that when all           When my appoinunent to 01\fB was
or the flash b u lb~ have p;one off a second    annou nced , Bob t\ fayo, my predecessor,
kind of work starts. btH a different kind       took me through his office and pointed
of worJ.... Jr 's the kind of work that calls   out che pictures of past Directors of the
for detailed fnllo\\'up-the essentially         l~llT<.'au on the wall. He said. "These
nonpolitical (in the partisan           ense)   pie u11 es LO\'er the last 22 vears of the
rhores in \'Oh ed in making the program         B11clget Bureau. You can count 11p the
work. 1 think that's where the "Good            pictu1 e "-there were I I-and he -;aid

2
"Thcte' a mes .1ge Lhe1e." I thinl-. it            Ll1111~' thJt we do. I suppose           Lite 1e<tl
ha., LO do '"1Lli thi, nn' nt.tn wk If yu11        lllt.,,.i~c j,th.1L when vou are in the "·1~c
pla it right-ii you're \\ illin~ Lo he u11-        111 l0111111l;1t111g- IH'W policies and pro·
popu l.1 r-i t \ nut guod I01 longe\ i L' .        ~TJlll\ thett ou~ht tlJ be a tt:n Ilic bur
                                                   den of proof Oil 'll.11 ting anythin~ lle\\
                                                   hC(;lll~e 011((' ii 's \ t.11Led. it'll ne\et SlOJ1.
Terminal Facilities Needed for                     I hJ\ t' It <11 nt·cl t h.11 we nut unull on
Government Activities                              h{·lp liom the (,i\() in this tegard. You
                                                   .ue \\ dling to mal-.e uiLical and con
   The lcn1rth thing I \hall mention i-.
                                                   'tn1t LI\ e um1111e111' .1bouL progTam., that
more a pn-.istenL pt obi em than a tradi-
                                                   h;l\c 011tli,ecl th en purpo:;e.
tional atti\ ity ol the Bui t:au. This is a
more ovcrw hel111ing need in .ove111-
menl to ha\e te1111i11al I.ii ilitie' on acti\'-   Expanded Role of OMB
i tie't or programs. l t ~eems Lo be prac:u-
cal h impossihlc.: 10 <iLOp 'wnething once             :\ow lei me cum to a differenc kind of
C~o\t•rnmcnl Starts it.     '\n m:ttler hO\\       J  'uhjl'Cl tint h." to do with manage-
bad it is, ir 1u t keeps going. The only           lllt'llt .111d budget. \\'e ha\e a new thar-
que-.uon h \d1ether it 'ihnuld be bigger.          Lc:r. \\'e h;ne a new label. The word
hut ne,·er "hethc1 ur not it should jm.t            m.rn;igemc:m" h.1, heen added to the
he eliminated. I think thi' is a problem           word "buclgc1:· 1'111 going to talk about
that ha been around for a long while               wh.tt tlt:ic means '' ithin our 0\\0 nrga-
and it cenainly need'i ou1 cnminuing               ni1.ition an<l wh.tt it nta . mean ror peo-
attention.                                         ple   \\ e   are \\orking- with.

   J Wtl'i am:ited the other day \\'h('n I                fanagement ha~ a set of 01~ni1ed
pirkecl up the papc.·1s. T had gradualh             milt'.'! <in<l 1c~pom1Liliues and things that
become q11ite a Ian of ;i product called            il \\'a ll l:!i Lo do. Some ol these are new
C01 fam. I h:t\'e a pai1 o l gntr .. hoe~ tha1     and '11111e a1e traciitiona l, in 1he same
l'H· ht·en Wt'arin~ fm quite a "hi le tha1         ~emc: th;H 'mue l>11cl~elary process lunc -
seem to be 'erv good. l pie ked up the             tion' are ll'aditinnal. r think , lw\\ever.
newspape1 and t'n<·nunlcrcd a -.ion                th.IL t:\en the t1adi1ional one are heing
nbn11l how lhe DuPont Compan} ha'                  \tren~thenecl in ''!..11 ifit ant wan. \ \ 'e
'topped Lhe 111a1111la< u11 e ol Corfa111.         fi11cl we .11 e nm< crning ourseh e., mut h
The\ 'e giH·n 11p bee-am<' iL i,n·1 profil·        m111 t th;111 we 11\l'd to in the Budget
able. \ L fi1\1 I \\a' aswuncleci and cfi,ap-      n111e.1u day' abo11 1 things like exetllll\t:
pointed hcc:iuse 1 ~:iid, " \\'h ere am I g-o-     dt'\ dopn1c111 . pc:1'101111el syi,1ems, labm
ing to get anothc1 pair of 'hoe · lil.e            1el.111nn' 1t1.lllilgc111ent ~tn 1nures , m.1n-
Lhi'i?" Then I lm~·an lO rt:flctt. ··wel I.        a~t:11wnc inlunnat ion ')'tems. and othe1
isn' t that wondctf11I? ~rnnebod) ha~ ter-         Lh1111.\' ol thi' 1..incl. JI we reallv think
minal lanl1Lie!I on a program chat ap·             tl1.tt maktn~ tlw (.men11nent work bec-
parcntlv people .1n:n ' t \\ illing- to pa\        lt't ., impmt.1111, then we know th:it a
en uugh to c;uscain."                              tl1icl way lO do thi~ i., through a ru11-
                                                   ti 11 uing improvement in the q11a li cy,
   I'm su1e that if we in the Fcdernl              u :1111in~. and nwriviltion of the people
CO\ernmcnt had been i11 the business o l           who are worki11g lor the GO\ernmem
makinrr Corfam, nmliing roulcl ~top m .            and thi: prm ision of beuer managemenL
Thi., is ;i real prnhlem. I don' t knO\\           tool, with ''hie It to do that \\'Ork. The'ie
h ow to do it, hut ~om chow or ocher \\ c          lta\c to he identified .i~ key elemems in
h;:ne 10 hgure out ho\\ to ~top marginal           oi11 man.1gt•mt'nl wm k.
   Second, we're putting a ITT"eat deal of    and C\aluation work of the GAO. lt is
emphasis and have an organized el or          not fomlally located on the managemenc
re pon~ibilitk~ in t.he area of program       'ide of O\fB, but is kind of a swing ele-
coordination. eemingly, most problem          ment n<rn' as ociated with the budget
and initiali\CS involve many depa1 l·         'iidc of our office. We think that applica-
ments and agencies. The question i .          uon o[ microeconomic Lhinking to Lhe
" How does lhe Government coordinate          hudgec process is constructh e and im-
all these thin~?" We"ve been trying to        portant in crying to get a ense of pro-
play a more effccthe role in doing thi .      gram workability.
   The Pre.ident'. reorganization pro-
posals for realigning units of Govern-        Organizational Te ns io n
ment imo four domestic depanments
with imemalh rnnsistent missions will            The addition of institutional manage-
help u:. "ith this coordination problem.      ment responsibilities ha created our
IL will mean that much more can be            own !lpecial kind of internal organiza-
done within each department. Each Sec-        tional tension. I say that as one "ho
retary \\·ill have within his pan of con-     belie\es that if there is no tension, there
trol a greater number, and perhaps all.       i no action. I don t identify tension as
of the relevant program and resour ces        something bad. I'm not saying we need
that need to be coordinated. In that          too much of it. but on the other hand
~n e the 0 MB and other Execmhe
                                              the fatt that the inrroducrion of the
Office units will have to do less of it and   managemelll function has brought a
we welcome that. J think that's one of        ten ion to the organization i both ap-
the good rea'ion why reorganization is        parent and good.
called for.                                      Our new management re pon ibility
                                              does not really embrace a separaLc set of
    The reorgani1ation legislation and rc-
                                              functions. Jn fact, as soon as we st.art
organi1.alion plans of the President do
                                              working on almost any undertaking. the
not relie\·e the o'r B from going for·
                                              first thing we find out is t.hat t11e budget
ward in other wa ·s. '\Ve are moving for-
                                              side or our organization and the manage-
ward in the area o f management infor-
                                              ment side ha\e to be closely linked and
mation system and . uniscical policy.
                                              mu pied. The program cli\ isions have Lhe
'\\'e shall continue. of course. the tradi-
                                              necessary knowledge of the programs of
tional legislative reference work which
                                              the departments and the agencies and
has been a revelation to me. From Lhe
                                              how they work. The management di\.i-
department standpoint, I knew that thio;
                                               ions pro' ide the crosscut on how one
was done in the Budget Bureau and
                                              can be related co or differentiated from
more or lc"-5 how. bu c to ee the legi la-
                                              another. Together they make an effec-
the reference operation a a manage-
                                              tive and comprehensive process through
ment tool in the policy formulation proc-
                                              which we can make contact wilh che
ess is another matter. I ha"·e to take my     whole governmental enterprise and try
hat off Lo the way ir operates today and      to get something accompli hed.
to all of those who have had a key pan
in developing it and making the orga-            'W hat all of these things mean is that
nization as good as it is.                    people in our program divisions either
                                              ha\e to reallocate their time. or they
  We ha\e charted a new course for our        have co have some additional people to
own evaluation work, some of which i          take on ~ome of these casl..s. ln eithe1
nor too differem from the investigation       e\'ent, we gee tension. If it weren't hap-

4
pening, 1 would sa that m11 "\(" -;ide of        that hal) now been put before the Con-
the house wa not really pu-;hing hard. lt        ~n,,      Lhe 11nplemcmacion-the dr.w.ing
is happening and it\ good on the whole.          up o[ the bilb, the backup \\Ork, ,md the
                                                 detail-. ol getting thi'i broad Pre idential
                                                 decmon out-fell J'i a special project
Need for Better Program Management               to the OMB. This mok a cremendous
                                                 amount of effort jtm as the budget proc-
  lnneasini.;ly. I thin"- the combined
                                                 e'' .ind all of t.he hork imohed in that
managemt.'nt and budgec anal}:.is ap-
                                                 \\ ,J'i coming to an end.
proarh is going to be more and more
necessary. The gigantic buildup of the              Of rou1,c, we welcome this :;ort ol
budget is ob\ iuu!lly outrunning the will-       thmg. because it gives us an opponunity
ingn ess o f people w cough up the money.        to p11t m;inageria l thinking as well as
"Fiscal Overkill" is not an acceptable           cost thinking imo the policy process.
answer to today's problems.                      Ht>re we find ourselves helping fill out
                                                 P1 csidentia I ini tiati\ e. he! ping depan-
   Better management of programs has
                                                 mcnu; and agencie develop a system (or
to be the answer to the peopte·s demands
                                                 resulL~. ti") ing to figure out ways to et
for more sen ice fTom the Go\'emment.
                                                 goal . de,·eloping organizational anange-
This fact alone mt>ans that the change in
                                                 ments tha1 will implement the goals,
our organt1.acion give us new opportuni-
                                                  etting interim targets, and finding ways
ties. It pushes us to look at the budget
                                                 of checking on whether we·re getting to
process in what vou might call nondolla1
                                                 tho e carget or not. The. e are standard
prioritie as well as dollar priorities. 1t
                                                 m.magemem tools, and we're trying to
forces attention to the impact of the
                                                 bring them more into operation in Gov-
functional ~kill that the management
                                                 ernment prow-ams.
side of the house brings to the problems.
I suppnst•. in a different ense. in a subtle
way, i1 lengthen the auention pttn that          Institution Building
the organi1ation ran give co some desig-
                                                     A -;econd attribute of our work co
nated issues hy forcing them into the
                                                 which we've been gi\ ing a strong pui.h
process in a mote pervasin: and ronstanl
                                                 in the last year is what yo u mi~ht call
way.
                                                 imtiwtion lrnildmg on a wide variety of
   Bv wa of empha is. let me reiterate           fl onL~. Fm C'\ample, there is the whole
three all! iuutei. of the work we are d o-       bminc<;<; o r bettt:r information ~ystem
ing in our " \1 " and ··s·· 1oles.               ahout Lht." hudget and what" happening
                                                 LO ir. throug h netter acces.s to data u inR
                                                 the be t nf modern information technol-
Involvement in Special Projects                  og-,. We .11e doing the ame thing wich
                                                 rcspett to legislation and what's happen-
   FirsL of all. \H~ eem to be getting in
                                                 111g l() it.
vo(ved in a rail (y massi\ e Wa) in al( SOfL<1
of special projec ls. Many of these involve          Jn 1he a1ea ol institution buildi ng. we
fol lowing up on P1esidential initiative 01      ;ire a lso nrnc h ronlerned with lines o f
on the passage of a piece of legislation,        a11thority and responsibility- not onl
or trying to get a newly passed piece o l        within Lhe Washington level of the Fed-
legislation started in a wa\ thal· going         e1 al GoH'rnmem. hut especial ly out in
to be workable. For example, "hen the            the field. H o w are the line of responsi-
Pre,idelll derided that he wanted to go          bility and authoncy to be set up and hO\\
forward with the broad reorganization            ran \\e c larif) chem? How can ''e apply

                                                                                           5
the printiple of u ying Lo !ind somebody.         we c.in . I think that's what most people
someplace, to whom we can say. "All               do '"hen the} cope on an ad hoc basis,
right. you'1e in ( harge. and you're re-          but it 'eems to me I\ e can do a lot better.
spumible. II it cloc~n't work, you're ac-
                                                    l had a rntleaeue at the Uni\'ersity of
countable. If iL doe work, vou get the
                                                  Chka~o who wrote a 'ery interesting
'lap on Lhe back''?
                                                  article-I think t he title was "Top \lan-
    \\le mmr try co get greater clarit-. into    agement Doe!'ln' t \ Jake Policy Deci-
that whole pinure. I his i m oh~ a lot of        sions." The general thesis was chat the
di Ille ult work. Some people who                stereotype of the big businessman, sit·
!'lhouldn ' t h;ne it walll authority and re-    ting hchind his desk with a cigar, crack
sponsibilitv: othet!'I who hould, sh irk it      ing off a big policy decision every o ther
a net prefer a m 11ch more ambiguous si l ·      d.iy is al.I wrong. The way in which
11ation so that if somet hing doesn'L go         policy t ('a lly ge ts made, the way in which
1 ight, one reallv ran never know who is         an 01gani1..ation change direnions is
re11pon ible. Theu:'s a lot of struggle          teally through a host of operating deci·
ab1Htl this. hut at any rate. it is all along     ions t ltat get made day by day. Any one
the line of what I think we might call           deci wn in it.,elf doesn't seem co ha\C
imtitmion building in a greater 'ar1etv          much ma~nitude. but over a period of
of '"avs-all directed toward the ohjec-          6 ot 8 month' they add up to a sense of
U\e or making- Gmetnmem work better.             direc11on a tone. a push in the OTgani
                                                 1ation. The cffecti\ e top mana"er has hi
"Coping"                                         eye cm the e npe1 acing decisions and i
                                                 ll\illR to implement them in a way that
    Finallv, I wo11lcl idemify one of my         mm·es in the direction of the strategic
favorite managerial subjects-"coping."           objec tivc he is s1..·<.·kin g.
I don't really know yet whel hcr l'm 011             It seems to mt' that the notion of try-
to something important here or whcthe t
                                                  ing to rnpe not simply ad hoc (although
I just so1t o ( like Lite idea. l think ii you    there ha., to be a lot of ad hoc efforts in
will re,iew vour own work day. you will
                                                 .my prnhlem·sohing process), but
agree with me that mu spend a dispro-            rather. in ll'rm' of a long-Lenn strategy
portionate amount of \our time coping            that \C1t1'1c ll)in~ to implemem, is very
with what '>eem~ to be an endless 'tream         import•tnt. I think that coping and or-
of problem and mini-crises of all SOrL').        !;.}ni1ing nuneh es for it i extremeh im-
You ha\e 10 do something abom them:
                                                 port:mt. Our program coordination di·
you (Ope and dee ide to do this. tha t. 0 1
                                                 'ision i-; getting e'tremely good ac takin~
the: other thing in order IO rearrange the
                                                 prohlem' that arise. g-rappling with their
sittta11on and ~ohe the problem. \\'ell. I
                                                 \arious dimemion . trying to relate them
think that thi i~ on<: of the most impor-
                                                 to ongoing policy mfltters. and gett ing
tant manageria l tasks that we have. \Ve
                                                 the crisis hand le::d in a manner that he Ip:,
mmt think aho ut it carefully and orga·
                                                 to support the Pn:sident in terms of his
nizc o urselves for it.
                                                 genera I strategy.
   The great temptatio n is to solve to-
clav\ problems today on their own terms          OMB-A Renewed Organization
and Ice ic go at that. l suppo e that's
mrn.tly what we dn. Problems ari e which            Th:it is mv O\'erall me sage. As vou can
interrupt a train ot thou~hl or action.          o;ee. 1 find my~clf in the po ilion of a
\\'c resent chem .ind try to brush them          pe1<,011 who ha inherited the obligations
off or ,impl} pacifv the siwaiion as best        and opportunities e tablished 50 years

6
.1go hy the B11dg-et and \<rnunung :\<.t. a           111e11 11111011 of tht' /noJm.<ed rfrp11rtme11tal
per~on who ha., inhc1il<:d fine lladlliom             rt'O I   f!,fJ II I .:.fl I fo n ?
-n<>L the lea. t of which i th<.· tr.ldition
of allrallin~ fi1.,1-<la~'i peopll' 1mo our               \11 . \/111/t:                   I Jg-Tee rnmplecelv with
encerp1-i'ie. If we in 0 \1 B an: tn do nu1           \\hilt ( hehC'\C '' the implication of the
job-.--. nd If , ·1111 in th<" C, .\ 0 are lo d o     cpte,tion-chal tht· p111lifera1ion of catc
vour job-it will lie w a con,iclerable                gorit.tl prng-ram' reduce their nee dfet ·
                                                       tiH·ne'~ bee au'<.' of OH:tlaps and L<>nflicb.
extent became.· ''e \e mana~ed to ~et
into these organ11auom people who have                The\ rcpre,t>ttl .1 <li\lnbution decided al
the ability ,me! 1ht• 1110tivadon co get               the 11a11onal leH•I th:tl doe'in't neces-
into the day·to·day work ol making Cm-                .,i'lrilv fit each loc·11lity. Localicie differ as
crnmenL work b<' Llt•r.                               Lo 1hei1 panic 111:11 nc:eds.
                                                         There have hecn now f01 some period
   I am gr:n cf11l lor wh.11 I have inher·
                                                      of tilll(: prng-111m~ or gram consol id:t tion.
ited a nd of< oune abo Im the c h:mre to
                                                      \\'c lia' e hecn ''01 king o n them very
take pan. at lea<,t in th<. ca1 Iv 'it.age<. of
                                                      h.ird .111d h:l\ e made 'ome progress. A J.
the '>Cconci 10 year., of the implementa-
                                                      tho11~h Lhev ha,·en't answered all the
tion of thi' att \\llh a rt>ne,,ed-1 wo n 't
                                                      prnhlem•,, the.' h;n·e impro\'ed maccen.
say ne,,--organ11ation. The Offlce of
                                                      Jn term~ of .1dmin1stratiYe machinerv.
 \fanag-emem and Bud~ct j, a renewed
                                                      their ha\e het:n effort<, lo e-;cabli.,h com-
onr.mization th.it will h11ild on its tradi-
                                                      mon houndat ics for the domestic depart-
tion' in meetm~ its new responsibilitie<.
                                                      ments :md. to the e"\.tent we ran. ha\e
and possihiliucs for achicH·mcnL.
                                                      the ~ame cin. he the headquaners for
   \\'e recog-nizc the 'ue~.'e' :ind strains          1claterl dcp:Hcmcntal function. This
that this e ffort IJ1 ing within the orga-            meam that .111ybnclv waminl{ co wo1 k
nintion ancl to 0 11r 1e la tionship with             wi1h thr Fcde1;il Gme1 11 ntelll can go w
others ou ts ide. vVe flC're pl 1hat tension as       a sin~lc < ity (Jlld 11<;>e <tl l th e relevant
a n index of sonic t'ff('ct ivcn<:ss. Jf Lhere        pt·oplc: 111 voh t•cl.
weren' t Lensioth, we wn11 ld not he doing
                                                          Yo11 111cnlio11cd the broader 1e01 oani-
our joh. whi("h j., to scne a~ an arm and             1ation pt nposals of the President. These
an a 1d Lo Lite P1 c'>1clen1. whoever he may          ..ho11 Id he: \el\ lit' Ipf 11 I beca w.e thn
he. If we c :in .. ,.,ht Llw Pre'\1dent in tl1e
                                                      ~Ollfl n •k1ted programs '' ithin the same
poliqmakin!? protcss .tncl in making the              depat tme11t and ,g l\C each ecretan the
pro~ratth llt.tt lhc PTl''lci( nl ha' put ror-
                                                      m.1na~e11al .i11thot tl'. and re.pomihilit'
watd and Lile p111~1.mh ll1at the Congresc;           to lonk c 1 icit .tlh .H the relationsl11p.,
ha .. enac Led \\' OJ k.1, t•ffertiH·lv a!> pos i-    IJc;tween ptn~rnm'i ; i , he admini ten
ble for the \mcrican people. we shall                  them.
h:l\e fulfillccl Lhc tllt~t plau:d in m.
                                                          Finallv, 1 should \treSll the re\'enue
                                                      .. hating p1npmal made by Lhe Pre~i·
                  Discussion                          de nt. T lil' ~ p<:r i a l 1evcnue sharing pro·
                                                       pma l!> in the areas of t·d1wation and man·
   Tlie "d111i11i.1tmtion n11d roordi11atio11          power .ind transportation a nd urban
of the mflll/' fllft',C!,Oriwl gra11t /nOJ!,l'allll   clen~lopmt1H                    and      rural   development
is one of t lic m oJI tro11 h/el()mt' mr11iage-       and     jt1\tice Jre explicidy for the
mt•111 /1roblt'1111 111 tht• ft•dt•rnl G1J11n11-      ptirp<M' of J>ll ltit1~ a large number nf
me11t.  ls ii 111tr1ulnl that tU'/1011 lo ron·        c.ttego11c;1 I programs more or le s into
.solidnte thc ~r. /noJ!.rams wW he tal<e11.           one hm. l 11cie1 th me pt oposals, ( ongTess
posJil>/y in ro111.111cticm with the imple·           .,el pt 1011 tit'..., Ior the area and ecs an

                                                                                                                 7
amount of money that can be spent, but             arie . The1e's been a good deal accom-
the people in the State or local area are          pli hed, but I Lhink that after a while you
gh en discretion as co the disrribution ol         run into an organizational blockage. We
that monev among what might be called              think th<it it's time to take a deep breath
the implicit constituent categorical pro-          and to a . " \\.'e've gone as Car as we can
grams. Thus, chc can fit the use of the            go making marginal adjustments to the
mone} to the needs of their own localit            existing structure. The time has c<>mc to
and. therefore. make much more effec-              loo!... at che whole tructure and rauonal-
tive tt' e of che money.                           b:e tt better."

   Tht! P1e.\idt!nt'.s dt!pa1·tmenlal rco1·ga-        \11 . . taats: , peaking as one who has
nizatio11 /Jrngram cont em plates strength-        made many efTorts and faj)ed LO get re-
ening the staff function in the office             giona l boundaries for some of the re-
of each departmental Secretary nnd                 giona 1 cemers, 1 think that this may well
delegating more authority and decision-            cum out to be one of the greatest things
making to the field offices. Couldn't this         that hac; been done in many years to im-
be done u11dt•1 the j1re.sent departmeulal         prove coordination and to make po~siblc
structure?                                         the delegation .
   ,\fr. .\/111 ll z: 1 th ink Lhe answer is ves     It ha.\ l1een said that some of the exiJt-
and more i'> being done, but there are             ;,,~ df'partment.~.such as Health, Educa-
definite limits under the prbent ar-               11011.  and Welfare. are too big to be
rangement. Fur example. the Secretary              managed effectit el)'. Would not co11sol1-
                                                                     1


of Labor in trving to administer Lhe               dati"g ut1en existing departments and
\ ork Incentive P1ogram doesn't have all           \{"'(Ina/ independent agencies into /our
the related action.. within his span of            depa1tmr11t.s, as proposed in the Presi-
control-neilhe1 does the Secretary of              rlt'nt's reorganization jJlan, compound
Health. Education. and Welfare (HEW)               thij problem?
- nei Lher does the Director of the Office
                                                      Mr. Shultz: I've heard that question
o l E.C'onomic- Oppo1 cunity-so they can't
                                                   before, having testified on the Hill. Fir r
\cry well coordinace in the field unless
                                                   of all, a' to <;izc-the Department of Hu-
c;omehow they can ~et the program
                                                   man Resource. would be slightly bigger
p1e('es together in a ingle Framework.
                                                   lhan 111:.\\' IS now. Two of the Depart-
The same is true with rafts of other pro-
                                                   ment would not be large by present
~ams.
                                                   \l<lndard--those are Community De\el-
   There are also limits built into the            oprnent and ~atural Resources. The De-
categorical program which limit the de-            partment of Economic Affairs would be
gree to which each ecretarv can manage.            the largest one in terms of number of
in an inLegrated way. the various pro-             people. 1 think it is important to recog-
grams that fal l under his discretion. I           ni1e lhat one reason why it would have a
think the reorgani7.ation proposal helps           large number of people is that it would
all of the!.e matters, but that doesn't            include two big administrations-the
mean that you can't do anything right              Coasl Guard and the Federal Aviation
now. We've been Lrying to do something             Administration which together would
in the Labor Depanment. Amie Weber                 account for more than half. I believe. o f
did reor~nize the \lanpower Admini -               the total employment.
tration. He did decenttali1e to a ~eater
                                                      1 think that maybe when you look at
degree.
                                                   it that way you ee how we are going to
  \\'e have c tablhhed rnmmon bound-               approach this question of manageability.
for tha t matter , it is well to remember      tion and thus give t he Secretary a chance
that a very large proportion of HE\V-          to work with people who have the au-
perhaps 40 percent or somethin g on that       thoritv a nd, we would expect, the com-
order-is accounted for by the odal Se-         petence and quality which \\'ill a id him
curity Admi nistration whid1 is an iden-       greatl y.
tifiable and, I believe. extremely well
                                                  I think it's certainly a clear and proper
managed enterprise.
                                               q uestion to raise about the si1e of the
   Now, ha' ing said that, I wou ld add        new departments. I also think when you
that I know of no evidence that si1e hy        look a t it in terms of the breakdown of
itself necessarily produces poor manage-       the departments and in terms of lhe ef-
ment. Io fact, 1 think you <an look            forts made to strengthen the managerial
around Government, business, and reli-         c:ipaci ty of the departments there will be
gious organi1arions. and find example:.        better management of programs.
of very large organizations that are gen-
erally t ho ught of :is extremely effeeti\e       The P1·esideu(s message on the depart-
or, to put it even more stronglv. as t he      mentfll reorganization       program stated
most effective in terms of ell1ciency          llwt tht' Regional Council.1 would be
in their particular fie ld.                    slrengt hened to achieve f u.rt her coordi-
                                               11alion al the lower levels of Govern-
   There are positive keys to the manage-      ment. Can you tell us in what way the
ment of the new departments. First. ad-        Regional Councils will be strengthened?
ministrations within the departments
                                                 Mr. Shultz: Yes, I think you'll find
will conta in similar fun ctions O\ er which
                                               more detai l on tha t in the back up mt1.-
the person charged with responsibility
                                               terial. Ha,·e you seen this gray booklet
has greatly expanded control as com-
                                               that we put o ut? There·s a lot of backup
pared with the present. Al l related func-
                                               materia l in there that tleshes o ut t he
tions are there-he can manage it. He
                                               nature of the fl.ow of work to the field as
doesn't have to spend a large proportion
                                               contemplated in the reorganization plan.
of his time coordinating with half a
dozen other Cabinet officers which is very           We ha,•e left room for some discretion
debilitating in a m:inagerial sense. Even      for the Secretary of the new department
with all our efforts at coordination and       to develop fi eld operation in a way Lhat
cooperation and Lhe best wi ll in the          seems to be workable. I think that the
world , it is hard to manage tl1 rough a       reason for expecting a better ability to
coordina ted mechanism. I think Lhat this      ,.,,· ork in the field is related to the t hings
is one thing that we will achieve th:iL        that we've already talked :-ibout here. If
will help management and he lp with the        you ivoup like things together within
problem of size.                               the same depa rtment and under th e same
                                               Secretary and yo u d elegate to the field
    econd. there are the substantial efforts
                                                through one ser of policies and coordina-
that are being made in thinking through
                                               ting mech anisms. authority will flow to
the m anageria l structure of each of these
                                               the fi e ld in a clearer fashion.
depa .-tments--incl uding the strength that
is accorded to the staff and policymakin~        A great deal of thought and attention
function in the Secretary's office. A tre-     has been given to this area, but I think
mendous effort has been made to put in         that fundamentally a cleaner stn1cture at
place clear tructures where we can put         the to p and a desire to put greater au-
someone in the position of managing the        thority in the field gi\'e promise of a
programs that fall within an administra-       more effecti \'e kind of field organization.

                                                                                             9
 I for oue believe that it"~ essential, Lhat     which is c:learly covered by policy and
 you just can't manage things from Wash-         the regional people decide ic shou ld be
 ington. h's i111possible: it's just too big.    handled one way and the mayor or
 You have to de,·elop more strength out         mmebody thinks that's all wrong and
 where che programs are if they are going       comes ro \Vashington-wel l, thac's the
 to wot I-.. It ~eemli to me that if 1 iny      point where what people do in \Vashing-
 little ouLfiLS like American Telephone          LOn will decide whether decentralization
 and TelegrJph and General l\lowrs have         means anything or not. U the Washing-
 to decentralize. goodness knows what a         ton people just overrule the regional
 really big· o utfit like Lhe Federal Govern-   man who was operat ing properly and in
 ment !ms to do. Of course. t hat goes baC'k    good faith, then decentralization is over
 to your problem of size.                       w ith. You've got to stand behind that
                                                person in 1be field and if w hat has come
     \Ve ltave to develop a managerial ca-      up i 'i a problem that rca lly suggests that
t:>acity in the field and we have LO put        the policy is wrong. then change the
responsibility Lhere. \Ve have to put trust     policy.
and some discretion there and learn a
s tronge1 pattern of decentralization. A           1 hope you will be at leaM somewhat
slrong pattern of decentraliLalion doesn'L      reassured when you look through this
mean that e' erYthing gees decided in the       book let 10 see that it's been thought
field. It means. however. chat you have         about quite a lot. l think it's going to
to have a clear-cue policy formulation          '"or!-. a lot better.
pt ocess :ll the 1r>p. The field person who         f'm very grateful for thi opportunity
i!I supposed to be implementing policy          to pav respects. on my own beha If. on
has to know what th e policy is; other-         hehilll' of the O:\rB as an organizaLion,
wise he's lost. 1 think that having tlte        and nn bchaH of the Presidem. to the
kind of depat tments we are talking about       Budg-et and Accounting Act-to what ic
will help th:n po licy process.                 h ~1s accompl ished a nd to the ront.lnuing
                                                an:omplishments that you all expeCL that
   \Ve will have to work hard on learn-         we will be able to generate by the kind
ing :1 Stronger paetern of decentra]j7;irion    of dfort~ th:lt people like the ones gath-
as part of the implementation of these          ered in th is room hJve put forward over
reorgan izacion programs. \Vhen 'iOme-          1uanv. many 'ears. l salure you and I
hod y comes m with a progTam propoo;al          thank you for your consideration.




10
     A Nonpartisan and Reliable Source
               of Assistance


   Thl' General \ccounting Offict' ), 1101 onh an inclj,.
pcm.1hle :i~ency of the Congress bnt in m' judgment is
.al,n one ol Lhc finC\t in GO\e1nmc111. Jf we <lid noL have
the G \0 we would ll<l\l to immcdiatc:h n<>ate one It
hc..•lp' Congre.' fulfill the high duty of monitoring tl1e ad-
mini,tration ol :ippropriatioru to operate 1he (.overnment
 ind thm helps Congtc~' in its con tinuing rc\ponsibilit)
lor ,ceing that e.\.ecutive clepartmcnr' .1ml a~encies keep
f.1i1h with the law~ and undenakc LO 'c' urc a dollar in
':iluc for each dollar expcnued.
   The General Accounting Office lt;1' been hcadrd bv men
of  out~1;inding .1bilit) and dc\'otion ro tht.· puhlic intercr.t.
1-rom Elmer Swats. 1he pre~cnl Comp1ro llt.:r Ccner:il. on
b.rck t in ough my ex perien«e in the Gong1 cs~. Coin ptrollcr\
C.cncr:d have been men ol hrrea L dcvotiot1 to duty. dcdi-
r atccl to 1calousl) maintai ning one or the kt•\ aim' o[ the
C.n11g-ie'' of 50 'ean ago. ''hich wa' to c..·quip it,cl£ with
.111 independent £acilit\ Lo -.crve ·" .1 nonpani,an and rt
 li.tblc source of ;1ssi~lancc in camin~ 0111 it' cum1itutional
rc:,1iomibllic' foi tht u..e ol the public monc\\.


                                Con~1 C\\lll.in C:c..·or~c      H . \fa hon
                                 Chai! m:rn. I lut1\t' \pprnpriation-;
                                   Cum mil l<'C
                                 C<>t11!• "'·"t1t111/ lluni<l
                                 Junr Ill. IQ7J




                                                                              11
                                                   Russell E. Train
                                                   C hairman, Council on
                                                   Environmental Quality




      R11ucll Tram, a native of Washington, D.C., /ins .ferued it1 all three branches
of the Federal Government: exerntive, legislolive, and judicial. H e beg(ln his
ra1·ecr ns an attomey for the j oint Co11grt•ss1011al Committee on I nternrli R eve·
nue Taxation m 1947 and become Clerk and then Minority A dvisor lo the
l/owe Wa)'S nnd /\leanJ Committee, 1953-56. From 1956 to 1957 he headed the
Trrasury Department's tax legislatme staff. Jn 1957, President Eisenhower ap-
pointrd him to the Tax Court of the l'111trd Statf'.f a11d reappointed l11m to a
ful/ 12-")'t'flT term in 1959.
     Mr. Train i.t an active conscrvat1011ist. He foundrd a11d became {int Presi-
dent of the African Wildlife Leadrnhip Foundation, and in 1965, he left the
Tax Court to become President of The Consrn•atirm Fou11dation, a nonprofit
rrscarch. eduration, and information orga111wt1on roncrrned with a broad range
of e11v1ronmc11tal matters.
     Mr. Train 's deep commitment to ronservntion and environmental prob-
Lcrns /rel to his choice by President j oh11sor1 for a mrmbership on the National
Water Comm1.mon in 1968, and his select1on that yenr by President-elect Nixon
to chair a special task force to ad11ise the incoming administration on environ-
mental problrms. He was nominated to be Undt•r ecretary of Interior, in earl)'
1969, by Prf'sidf'nt Nixon and was appointed Chairman of the Council on En-
vironrnental Quality on Febrnary 9, 1970.




12
West Auditorium State Deportment
June 11. 1971




Improving the Management of
Environmental Programs


Among l}I(• tnll JOT Fr•dcml fJmgrnm .1 I hnt I h1· G:10 1md1·rtnltr.1 lo
asse)S are lho.1r· r·011rr•rn1·d with improving the qualily u/ fJ11r 1·uv1rnnmcr1/.
fl.fr. T rain, spenlm1g u1 n Con·rnmrnt rxcrnti1·c d1ratl1• cortffrnt•cl with
polic)' ancl coordwntum of Ft'deral t•m1fro11mrr1tal p1ugwm.1, d11c11s.1cs
the governmrntal mgm11u1tw1111/ problt'ms thnt t':'Ct)/ i11 prop.wm.1 //tat
involve more than one 11w•11r-,. lie pmnll out that while unit't'nall)•
applicable prwciple.\ of gm•ernmental orga111:111um do nol exHI, u•t· have
bun lcorga11izing thr fcdrrnl Government for almost '200 )'t'nY:> and
thw have. 11 TltJJf borly of t".xpn1rnce lo draw upon. U11fort11natcl)', WI"
do not have an i111t1tu1imwl mrchn111.17n for systemat1cally a11alv:ing
and learning from r/u.1 exprrter1cr. He stn(r.5 that some of the mmt
recent intrrr1ting 1nmn-nt1on.1 111 govrrnm<"ntal Ol'{!.nnt:.a/1011 hnr1e lu•rn
made   111   /hr ar1·a of Frrlt•ral 1•1m1rrmmental prnta/1011 /Jmgrnms.




   Jn Lhe 50 years of iLs existence the               whirh contribute to program success-
General Accounting Office has been on e               good orga nization , adequa te legal a11-
of the great fOt(e~ for more erlicient                thoritv. public su ppon , ad<.>quate n:-
and e ffenhc gO\et nment. '\ eH:r ha'i                ...ources of money and qualified person-
tha t been more true than u11der the dis-             nel. 1 would likt· to focus lOday primar·
tinguished leade1 hip of the pre ent                  1 h on the q ue ... tion of organit.ation be·
Comptroller Genera I.                                 rause 1t is wnh tt:'>peCL to organi1.aLional
                                                      mauer'> thal -.ome of the mo!>t imer<·\ting
   I '" ish to dist"'' with \<>11 the man·
agemenr of em. 1ronmenta1 pro~am'i. Al                inno\aliom ha\e ht-en made in lhe en·
                                                      'ironment..11 area.
though there are factor<; which are
unique to envi 1o nmenta l policy. I hope
that much of ,,hat I will ha\'e to -;ay is             Need To Learn From Experience
equally applicable to mher policy areas.
                                                         It is \'Cry clo11btful whethet there ;ire
\ Ve are engag·ect in sume interesting
                                                      any gr:ind J..\Cnera l principle~ of organi·
organizalional expc1 imems with respec t
to environmental policymaking, and Lh c
                                                      1ation which are of much help in orga-
                                                      nizing the Federal Government. A pro·
experience derived from these ex pe1 i-
                                                      re~sor o f public aclmin i'\tra tion at m y
ments should tel l us something aboul
how to organize othc 1 area'>.                        alma mater, Princeton, used to ask his
                                                      'wcients: \ re there any genera l prin-
  Good managemen t in the broadt::-.t                 ciples of 01gani1ation? If ~o. what are
sense is dependent u pnn a II of the facco1'          the' ; If nol, wh' do people hire man·

                                                                                                13
agement lOnsult.ttnts?" \1 o!>t of the Lu-           It eems to me that it would be very
dents ended up hy Lrving to explain the            wonhwhile for the Office of Manage-
hiring of rnanagcmem consultant.                  ment and Budget, particularly gi,en its
                                                  new emphasi on managemem, to begin
   Allhuugh there mav noL be uni\ersalh           to colleu and anal}Ze data, perhaps in
applicable principl~ of administration.           the form of <a e studie , on the cypes o(
there i-; a va'>t hody of experience to           organ1nt1onal questions outlined above.
d1 aw from. \\!e h,I\ e been reorganizin~         '\o magical amwer:. would emerge from
the Federal Go\t:t nment for almost 200           'uch an effort. but hopefully we would
years. There ha\ e been countless task            begin to learn something from the vast
forces. rnmmis~1ons, and study groups             collective experience the Government
de voted to asking !tow the Governmem             has had with the situations underl ying
can best be org:rnizcd. And yet each ol           these quest ions. H the effon were a con-
these grou ps ha~ started out with on ly          tinuing one. it would pro\'ide the basis
the expe1 icncc which it.'> individual            for the in,titutional memory which i
member~ h;l\C been able to accumulate.
                                                  the beginning of in titlltional wisdom.
   The ame que,tiom are asked when-                 L\.CnlS in the environmental area O\er
e,·er Federal or~nizacion is conc;idered.         the past vcar pto\ ide a good example of
Can an agency be "too large." and what            some of the ongoing experiments which
doe'> too large mean? hould agencie               we a1e undenaking in an effort to dis-
with conflictin~ mi· ions be placed in            CO\Cr optimal fonns uf Gmemment
the ame department? t•nder what cir-              mgani;;1tion.
cumstance'> do two agencies cooperate or
C"Omntunic:w: "11h each ocher? I low are
                                                  Creation of the
dispute between bureaus or agencies in
the e"'ecut ivc branch setLled? l s ir real ly    Council on Environmental Quality
true that no Cabi ne t rlcpanmcm can in-
                                                     The Counc il on Environmental Qual-
fluence any other Cabinet department?
                                                  iLy (CFQ) was created by statute in
Are interngcncy committees ever suc-
                                                  early 1970 primarily bec·ause of the need
cessful. and if so, at what tasks and undc1
                                                  co prO\ ide top-level policy ad\'ice and
what rirc 11111\tance'>?
                                                  coordination in the environmental area.
    De pite the lrt"q11enn with \\hich            It al o l>Cned the purpo e of gh·ing ,·isi-
such questions arc ai.ked and their ob-           hilit, and prominence lo the environ-
' iom. rele\.111cc, \\'e ha'e no in<>titucional   mental issue. In an age of ma~ media
mechant m for dr.l\dn~ upon our experi            and m.h,i,·c numbers of problem , visi-
ence to pro\1de the answers. One of the           hillt\ has become an important organi-
characteristic-.. of \-ital and growing in        1..ational \alue.
di' iciuals is that they learn from experi           The charter gi,·en to the Council was
ence. The same is true of institutions.           e\.tranrdinarily broad. It was made re-
and ~ound policymaking requires mech-             spomihle for, t1mong oth er things:
anisms for imtiwtiona l memory a nd
feedhark. O ur file rnbinets are full o f           • Receh ing from all Federal agencies
instillltiona l 111e111ories. but o ur experi-        re pons on each major anion which
ence wi Lh difTerrnt org-anizational fonns            :;ignificantly affects environmental
has not been a n alyLed or evaluated, nor             qual iry and reviewing those reports;
has it been made a\ailable to those                 • Coordinating all Federal agencies
charged ,,ith making futme policv deci-               with respect to their actiom which
 ion.,.                                               affect the environment:

14
  • Re\ iC\\ in~ exi'>ling {'11\ irnnml'ntal        CEO Policy Function
    monitnrang ')\!em'>:
  • Collecting. .11rnly1ing. and evaluat-              Thl· Co11111d i' the only ma101 pan of
    ing 1nf11n11ati1111 on en\ irnnmental           the I· '\C'< llllH Oflu e of the Pre~iclent Ol'·
    qualiw·                                         \Oled l''\CIU\IH"h co a p:irticular rnb·
                                                    ,tami\c polil' area. There are "t'\eral
  •   Promntin~ J...ncm kclgc· of thl' cffeu-.
                                                    potent i,JI cl i ..an va1tt.1ge' to plac tne, 'uc '1
      of ac.uon' .and tee hnolo~ nn the             an ot~:111i1ati1111 in the Executi\C~ Office.
    environllll'lll     and    enc miraging
    mean:-. LO pre.: vent or reduce ad\'C•rse          le i-; oh\IOU\ that the process or (IC<ll·
    effects on th<.· 1.·nvirnnmcnt:                 ing agcncic!I wi thin the Executive Ofl1cc
  • Prepat ing a11 a11n11al report:                 respomible fnr par titular program areas
                                                    rn11lcl be .,elf defeating if pursued too
  • Analy1ing rnnclition.., and tr('nds 111         frn. 11 is h:1rd 10 envi:.ion an Executive
    the quali t\ of the en' ironmem:                OflH:t' cmH11111ing Councils tor l t ban
  • Dornm<:nting :md defininA          t   hanges   Problem-. Fm·rg'\ . Transponation. Con-
      in the nau11.t1 en\'ironment:                 sunwt Prot<•nion, Rural De\elopment.
  • Concl11uine, imesti~tiom relating               and '>O lot th doing- amthing but creat-
    to t.•cnlogical 'i)Stem-. and l'miron-          ing lotal c haO'.. Jn the ca e of CEQ.
    mcntal qualit):                                 tl1('r<' <loe., <:''\isl -.pee ial ralionale-the
                                                    envi1onment c 11ts aero the entire fabrfr
  •   ~laking n·commend:11iom to the
                                                    of the Feclt·ra I [.m ernmen t.
      Pre icknt on national polat ies w
      impro"e em 1ronmcmal quality and                  \ more comple>.. problem is the 1·ela-
      maJ...ing \\IC h '>tudie:-. as the Pre'\i-    tion,hip of the 'taff Executive Office
      dent may n·q11es1:                            agency to clw opera ting line ap;enq, in
  • Cond11rti 11g public h{'arings or con-          the !':tsc ol C.f.Q the re latio n ship co
      ferences:                                     the b1vi1 mrnit:nrnl P rcJtec tinn Agency
                                                    ( EP.\ ). Although officiall y t.he Cou nc il
  • Rt•commcnding to the President ancl
                                                    "sets policy" while EPA "enforce~" 1he
      Fedc..·ral .1p,ent ics priorities among
                                                    poliC\. this tli,tmction is not overlv hel p·
    em ironmc·ntal enhancement pru
                                                    flt! in pc.11 tic e .\ mone familiar " ·ith
    gram'>· and
                                                    pollucion cutHrol J...nows that manv ol
  • .\ d\ising and 3'> i'iling the President        che critic.al polio cleli,ion :11e enfone-
      :ind tlH· agc11c It''> in achie\ in~ inter-   menc de< j,irn1... The decision to <.ancel
      national    cooperauon      for dealing       DD I . lot ex.1mple. was an enforc.ement
      with environmental problem'>.                 dee i~ion. hut .ll the 'lame rnne it imohed
   To do .111 d11' we \\ere ~\en in the             a numhc:r ol 111aj01 polin dcchiom.
first vear a ~taff l)f ahouL a do1en prCI               The lw:icl of .1 major operating Iine
fc.:ssionals. Gi\en the disparirv between           a~1.:nc v. p.irc ir11 lnrly when he r<>port~
our legi,lall\ e m.mdate and Lhe n''>ottrce'        di 1 C:< th en Llw P1 es idem (as does the
we had to r;'lrry n11t this n1:rnclate, it wa<;
                                                    .\ dm1nis1rator ol llw F.P.-\ ) . is not likely
clearly nece!lsary ro establish pt ioritics.        to te~l co111 e 11t wich le tting some o ther
We p laced hig hest priority 0 11 two gen·          bodv nwk<' pnlic y decisions for him. He
eral runctions-prmiding policy ad,·ire              "i II W•tnt a \'Ci ice in the decisions. and
to the Prc'>idcnt, pat ticul.11 Iv in the form      the public ,Jllcl the Co11gtes will hold
or repm t<; and legislative propn~:t ls. ancl       him J<.''f><>milile for the policv ''hether
c·oordinatm~ tht: anivi11e'i of Federal             or not ht' h.1d ,1 h.md in dt'ciding it.
:igenciell. pa rtt t ul,u h "ia the em iron-
mental impart '>lJtement ptoces<,.                    (.l\ell   tht: far from neat <li\ision of

                                                                                                     15
labor, one might expccl considerable           CEQ is informal. We are involved in a
confiin bccween the ta.ff and line agen-        eemingh endless round of meetings. tel-
cies. Howe\er. in practice this has not        ephone calls, and exchange of memo-
been the ca e. The good relations which        randa, on an incredibly broad range of
ha\e prevailed between CEQ and EPA             problem • wit11 the primary purpose of
are due partiall to good personal rela-        a unn({ that the admini tracion speaks
tionships from the top of each agency on       with a consi cent voice.
down. But the\ are based also on an
acute ·cnse of Lhe mlerdependen<.e of the         The Council is also at the nexus of a
two agenties. Each is necessary for the        formal mechanism for coordination-the
survival e>f the other. A mistake by either    envitonmental impact statement process.
agency reflecu; on the competence of the         ection 102(2)(C) of the National En-
o ther. This provides a major incentive        viron mental Policy Act requires that a ny
for good working relations.                    Federal agency undertaking an action
                                               which wi II have a significant impact on
    The experience of Lhe past year bas        the environment must file a report with
 pro\ ided much e' idence on the milirv of     the Council. The report must describe
a ub'>Lanti\'e policv council within the       the proposed action. the environmental
Executh e Office. It i doubtful. for ex-       effens expttted Crom the action, and any
ample, th.it thi, year's very exten i\e, en-   alccrnati\"C to the action which were
' ironmemal legi. lacive program could         <on 1dered. The repon are circulated
ha\e been de,elo pcd b., an operating          for comment to other rele\"ant Federal
line agency. ~o matter how well orga-          a~enci~. to concerned      tate and local
ni1ed. policy proposal in a large bu-          agcnc-i~. and to the public. The com-
re:rncracv ~et diluted as the} work their      ment received become part of the final
way through the hierarchy. Also, the           impact Latemem. We are now receiving
gap between the policymakers at the top        more t han 200 such sta tements a month.
and t he subject-matter expert~ at the
bottom often make; it difficull to fu e            The em ironmencal impact statement
imaginative ideas with the constraints of      prcx·c:,s is a fascinating experiment in
admini trauve and ubstantive realities.        coordination. Its primary purpose was
The Counc ii' ~mall size and it, 1eadv         concc•' ed to be changing lhe way in
acress to experts both within and outside      which agencies made decision by estab-
the GO\ernmcnt enabled it to a\·oid these      li hrn~ a fonual method whereby the en-
difficultie'> and to put together what in      ' ironmental implications of :in action
all due mode.. t · I comider the boldest       would become pan of the factors con-
and most ima~rnative set of measure              ide1 ed ac the time a final decision was
e\er proposed in the en\'ironmental field.     made. This purpose is being fulfilled by
                                               the 102 process. However, it is being ful-
                                               filled through means which were not
CEO Coordinating Function
                                               fully appreciated at the time the act was
  A major part or CEQ's work involves          pas ed.
coordinating the activities of the Federal        The circu lalion of the 102 statements
bureaucracy. Environment in the broad          to other Fcdera I agencies has become a
 ense cuts across the missions of every
                                               signifkant method for coordinating fed-
Federal a~ency. ;md thus c.he potential
                                               eral action and for giving focus to i ues
for agem i~ to \\ ork al cros -purp<>!>eS is
                                               which had only been ,·aguel) perceived.
ven• gTCat.
                                               \fany Federal actions have side effects
     ~Juch   of the coordinatio n done by      \\hi< h contradict or make more difficult

16
the missions of the environmental agen-       the creation of the Environmental Pro-
cies. Before the initiation oE the environ-   tection Agency. The creation of this
mental impact statement process, there        independent agency, consolidating the
was no way to identify such actions a11d,     major antipollution programs, is the cul-
even if an environmental agency were          mination of several organizational
aware of such an action. it had no way        changes designed to pro\'ide an improved
by which it could intervene in the            framework for cleating with the pollu-
decisionmaking process. This has now          tion problem.
changed. and not only can issues be iden-
tified and joined but the existence of a          Until 1965 the air and water pollution
written statement prov ides a rational        and solid waste programs, and part of
basis for delineating and settling- issues.    the pesticide and radiation programs,
                                              were organizationally grouped together
   The other aspect of the process which      as part of the Bureau of State Services in
has become clear with experience is the       the Public Health Service. As might be
key role which can be played by non-          expected, the emphasis was given to the
governmental groups. Much o f the suc-        health problems created by environmen-
cess of the I02 process to date has been      tal pollution. This was fine for programs
due to the actions of private citizens who    such as air pollution and radiation, but
have taken steps, some of them involv-        the oldest an<l largest program-water
ing judicial action, to force compliance      pollution control-had become increas-
with the environmental impart require-        ingly Jess related to the goals of the Pub-
ments and to improve the quality of the       lic Health Service. Typhoid and other
impact statements. We have neated a           waterborne epidemics had largely been
new and constructive role for the citizen.    controlled. and the major benefits from
which h as given the citizen a sense of       controlling water pollution were recrea-
greater control over the decisions which      tional and aesthetic. The major support-
affect his life and which has improved        ers of the water program came to be-
the quality of the decisions made by the      lieve, probably correctly, that the
Government.                                   program was being neglected because of
                                              i ts lack of relevance to public health.
   The section I02 statements are not an
end in themselves. \'\fe are not interested     The Water Quality Act of 1965 re-
in simply adding to an already mountain-      moved the waler pollution program from
ous Federal papcrload. The enviromncn-        the Public H ealth Service and <..TCaLed a
tal impact statement is an anion-forcing      new Federal \i\Tater Pollution Control
mechanism. and it is the reality of           Administralion within the Department
the underlying process--one in which          of Health. Education. and Welfare
thorough consideration of environmental       (HEW). This arrangement never be-
factors is an integral part of decision-      came a reality. because in February of
making at every level of government-          1966 President .Johnson submitted to
that is our overriding concern.               Congress a reorganization plan transfer-
                                              ring the Water Pollution Control Ad-
                                              ministration to the Department of the
Creation of the                               Interior. The plan took effect in ~fay.
Environmental Protection Agency
                                                 The primary rationale for the transfer
  Of the recent managerial experiments        to Interior was that it would promote
in the environmental field, the one that      coordination between the water pollu-
perhaps has received the most attention is    tion control functions and the other

                                                                                      17
''ater rc:.ource programs. nH~t of "hid1         rnntrol. and epidemiological analy i .
were located in fnterior. Thi illmtrate<;         fhe B11reau searched in vain for a con-
one of the I undamemal problem3 in               '>tlluenry which would Lie Lhese pro-
deciding among organiLational alcema-            gi atm together. The Bureau was sue-
Lives. There has been much 1alk ::ihout          <eeded bv the Con um er Protection and
the need for a .. sy tem approach .. in          f .,, ironmental Health en·ice (CPEH )
reurgani1ation mauers. But all organ1m           which did not include the pre\entive
ciona l choit c., ine\ i ta bl) im oh e a sv -   health pro!pdms but incorporated the
Lem Jpp1oalh, in the sense that puuing           Food and Drug '\dmini ·trntion (FDA).
pro~atrn. togelher in a depa1 tmenl or           !lo\\ ever. the pressures on FDA p1 oved
agency a11M1mcs tha t they are more              to be ' CT) great and rhey were not the
closely relatt·d to each other Lhan to pro·      same pressures which p layed on the en·
grams not included in the agency, and            vi 1011111enta l programs. FDA was thus
the definition ol a system is a gro u p ol       testored to its independenc stallls, a nd
things more dosely related to each other         C:PFH w.i' comened into the Environ-
than to thing" not included in the YStem.        memal I Jealth en.ice.
     The n·al problem in or~ni1.ational
                                                   The rcrnnsolidation of all the major
 matter is not the use of a i.y<;tem~ ap-        pull11tion control programs under the
 proach but rather which system i~ the
                                                  Fmironmental Protection Agenq had
correct one lor analysis. In term of the
                                                  it' ~cnesi~ in the Pre ident's Add ory
.. \\'ater resource!) systems ... there was no
                                                  C.ounc ii on Executive Or1r.mi1.auon,
question that the ''ater pollution control        headed b) Roy Ash. The Council con-
 program belonged in the Department of           cluded fairly quickly that the guiding
 the Ime1ior. llcm•e,er. in tenns of the
                                                 orJ..r.rn1unional principle should be to
.. health w11em" it 5hould ha'e stayed in        J..11·m1p togethe1 the pollution conaol
 1IE\V. and in terms of the "pollution            prnMrrams. I Jowever, this did not com-
control sy<;tc.:m" il didn't fit neatly into
                                                  plc•rcly solve the problem of the most
either agc11c·v. The choice o f t he re levanc    1elc\ant system. becau~e the Co11ntil ~till
    stem seems to be a matter of the polit-       h.1d to de6de \\here in the executi\e
ital prim itie.\ and personal perceptions         bran< h to locate the pollution control
of Lhe de< is10nmakers at the: time the          p1 og1 allts. They cou Id be assigned to
c·hoice i, made.
                                                 HF\\' because of their important con-
   The difi1c11lties of making suth a            e ctn \\ i th hea Ith and hec:a u e many of
choice <ire ill11!ttra1ed by the fate of the     the prnt,rrams were already there: they
air polluuon and other em 1ronnwni..,J           tou Id he ,1,signed to Incerior. because of
programs "hich 1 emained in H E\V. Fol-          the c lo~e relatiomhip between natural re·
lowing the transfer of water pollution           'iOtn <e' and pollution control and becau~e
control to lnteiior, there followed a suc-       the la1gest single component, the wacet
cession uf reonrcmizations wichin HE\\',         pollmion control program, was alread'
each im oh ing a somewhat different con -        there: Ll1ey could be assigned to the De-
ception of the relevant system in which          pa1 tmcnt ol Housing and Urban Devel-
to g-ro11p thcse programs.                       opment, because many of the pollution
   The firsr step was the creation of the        problt·ms are primaril) urban problems:
Bureau of Disea e Prevemion and En-              they rnuld be placed in a reoriented
dronmental Control. This placed the cn-          ~aticmal .\eronautics and pace Admin-
dronrncntal progi.1ms with the pre\en-           istt.lllon ( 'A A). giving new ' itality
ti\'e heallh programs. 11uch a!> cancer          and .1 '>trong sense of mission to both
detection. accident prevention. ~rooking         \; \ \ and pollution control.
   In the encl. Ll1t• Co11ndl wa' impre~-.e<l            ThcH· '' c1 C' man' !{OC>d argumen~ for
hy Lhe e'lctll Ln whid1 the pnll11ticm                comhi11i11g the· em ironment.al and the
tonuol p1o~ra111' 1mp111~ed on a lan~e                pru111oti1111a I prograrm. \~enC} dc:r1:.1om.
number of l''1Sllll~ a~e11< 1e. The pin               1111gltt IH.' moie balanced and judiuo11s.
gram-. wc1e impnrtanL Im health, for                  Di.,a~1et·111cm' \\Oulcl not haH· to he
natmal re,11111"1<''>, 1111 111han de,cl11p-          <.-seal.Heel to Lhe \Vhitc I luuse hut rnuld
mem. and Im 'C' et al other area .... The             he J(.'\01\(.'d \\llhm the a!-{enty. rhe en
Council dectckd th.11 1hc- only way i11               'irnnme1a.1I p1ogran1' tould exerci'>e a
''hith the~c \a111111 ... elements cnuld he           chnk on p111rn11tion;il p1ogi::i111s al an
adequately wn tclt•1 eel in making poll11·            eat h -it.I~('.
lion tontrol ck< i-;ion-. was to p•H the
                                                          I hew   .in~umems     were crntweighed by
programs in .1 s<·1xirale, indepencle11t
                                                      Lht ad\'Oi l llilg<:' or separation. The ab·
agenC'y wh ich wo11 ld not bias such de< i-
                                                      sern e ol .111v con flict of interest could
 iom in fa,01 of the 111i,)ion of one ol
                                                      impa1 L a M'll'>C: ol mission nnd esprit co
lhe pree'\.isLin~ clepanmem-;.
                                                      an agern \ which would not be pos'\ihle
  The C:ounc ii Lhm retomrncndcd tu                   otht·1 \\'t,e. Cunnic:t., would not be
the \\'hire I lome the nealion of an En-              hluned b\ quic:t negotiaLions within the
vironmental Protet LHlll '\genq wl10-.e               a~enc.~ hut rnuld be .. harply defined and
Administratot would report directly lo                brought to public auemion. The 1isk
Lhe President. 1 hi 1 etommendation wa-.              of the cm irnnmemal programs being
arcepted by the Pn·..,idcnt. sent 10 the              die< ked by the promotional pror,rram
C:ongie a\ Re01~ani1aLion Plan '.\!um·                \\fill Id ht l\'Olclt.>d.
ber j of 1!170. an<l on Detembe1 .I.
£PA came tnlO e,i.,terne.                                Thu' l P.\ came into being as a single-
                                                      pu1 pml' <1gen< \. withouc significanc ma-
                                                      jor intt·rn;tl rnnflicts concerning its mis-
Rationale for EPA                                     sim1. Th is i ~ one ol' the experimental
    One or the mnjo1 q11estions which che             fe:it ure' o l EPA, because al though othe1
.\ sh C:ounc.:il had lau·d was what is col·           such a~C!nc 1es e'ist. EPA is unirp1e in the
loquialh known "' the "fo' in the                     clc:.,•H'C 111 \\It ic. h i L'• mis~ion arTect~ that
thitken toop" problem. hould pro-                     of other I t·dc1al agencie' and the pti\ate
gram~ dealin~ \\ ith similar subjens but              sec tm .
with oppo in~ con,tiwenc ie!'I and mi.,.
                                                           l he n.11111e ol EP.\ and ib mission will
siom be lm.11ecl 111 tht' ~ame a~enq? The             1eq111tc c lo,<.· coordination \\ ith ocher
q11e.,tinn ,,ao; pmed most acute Iv \\hen
                                                      Fede r,tl agt·n< '"' in the pc:rfonnanc e of
lcx.atron nl the pollution control p10-
                                                      iL' f111Ht1om. fhe Council on Emiron-
gram' in thl' lkpartmem of the Interio r
                                                      mental Qu.dit\ has and will tununue w
\\asron ide1ed . IntC'1i01 h;1cla number of
                                                      pla\i an e"c.'nli:il role in mch roordina-
''promotional" p1ogi .11m \dHch dealt
                                                      rion, .ind i11 rc:,ol\.inq the ronflins which
"ili1 the 'lillll<' pi ohlt'lll'> a!> tile polluuon
                                                      will inc\ltahly arbc. But thet e is much
program!>, hut lro111 " \'cry cliffcrcm pct·
                                                      rnn111 lrn innovation and experimellla·
spective. The Bui <.':Ill of l\1ine' and the
                                                      tio11 i11 w.tvs Lo promote coot dination.
Ofl1ce ol Oi I and <:as encou raged the
                                                      E" lrnngc ol pen.onnel. joim budget
use of fm+. which wc1e essential LO the
                                                      pl.urning-. lllll'rlorking infonnauon ws
cronomv hue whil h we1e ;ilso major
                                                      terns. a11cl 111a11v other lethnique~ should
sources of ai1 polluuon. The Bui e.1u ol
                                                      be tried out. and their sune-;s or failure
Reclamacion promoled irrigation proj-
                                                      ('\ al11.1l<.'CJ.
ectJ. ''hie h oftm hacl the incidemal
effen u( in< rt•a,ing wale• pollution.                   One otlle1 'nal a1ea ol managerial ex-

                                                                                                       19
perimentation is the internal organiza-        have taken place over the past year or
tion of EPA. The primary rationale for         rwo in environmental management. I
EPA 's creation was the need to recog-         have touched on only some of these.
nize and deal with the interrelationships      State governments are undertaking simi-
among the different forms of environ-          lar pioneering ventures, but I have not
mental pollution. Control of water pol-        described these. I also have not described
lution may be achieved at the expense of       the content of our environmental legisla-
creating more air pollution. Many pollut-      tive program which involves a number
ants are noc limited to air or water but       of new concepts with major implications
cut across the boundary lines of the           for better management. The Department
existing programs. There is a need to          of Natural Resources, proposed by the
deal with all sources of particular poll ut-   President last February, also promises to
ants and to be able to trace their total       markedly improve the administration of
ecological effecLS.                            environmental programs.

   1f these requirements are to be met, it        The Council on Environmental Qual-
is clear that EPA must achieve a high          ity and the Environmental Protection
degree of internal unity. And yet the          Agency are significant experiments in
constituent bureaus operate as semi-inde-      Federal management, and, as I stated
ha"e a long history of independent exist-      earlier, 1 hope that those concerned with
ence. The model of the "holding com-           better management and organization wiJI
pany" department, within which the             record our successes and failures so that
constituent parts of which it is composed,     all can learn from our experience. I am
is the typical one at the Federal level.       convinced that they will record far more
There are fe,..• examples of truly unified     successe than failures. and tha t CEQ
agencies above t he bureau level.              and EPA will provide the organizational
                                               framework for achieving the improve-
   The EPA reorganization plan set the         ment in the Nation's environ mental
stage for overcoming this problem. A ll        quality which is so badly needed.
program authority was formally vested
in the Administrator, and he was given
complete power Lo reorganize internally.                      Discussion
On April 28 of this year. Bill Ruckels-
haus took advantage of this opportunity.          Do you feel that, over the past 5
He announced a new internal organiza-          yca1·s. we have made progress in clean-
tion of EPA. largely along functional          ing up our environment, have merely
lines. Five As ·istant Administrators-         held our ow11, or have lost ground?
covering research and monitoring, stand-
                                                  Mr. Train: I said we were responsible
ards and enforcement, planning and
                                               for developing and documenting status
management. media programs, and cate-
                                               and trends but I didn't say that we had
gorical programs-have been given line
                                               been rea lly able to do it. I remember last
responsibility. Tbis represents a rather
bold venture in achieving internal agency      year when we were doing up our annual
integration of disparate units.                report and trying to wrap it up and
                                               develop a crystal-clear concept o( the
                                               sta tus of the environment, I suggested-
Conclusion                                     although we did not use it-"Things are
                                               geuing worse Jess rapidly now." Maybe
  As I hope I have made clear. there are       we'd better use it, because actually there
a number of exciting innovations which         is truth in the statement.

20
   There ate o manv different a-.pect.'> of       are around and prubablv a hell of a lot
en\'ironmental problems. Some are get-            longer.
ting wor~e. ome are getting beuer. Ex-
                                                     H ow mutb is all or Lhis goi ng to cost•
actly how you wei~h all the e is a
                                                  I can't really am\\ er that one satisfacto-
problem. We don·t rcall) ha'e any y -
                                                  rily at the m o ment. \\'e are devoting a
tem for it as of yet. 011r indicator~ are
                                                  whole chapter in ou1 annual report Lo
very weak.. 0 111 ba..,e line dat.n and ou t
                                                  the economic' of environmental prob-
monitoring s ·stems are very weak.
                                                  lems with very hea\'y em phasis on cost
   Now, l o sa ii fe \\ th ing:. Lhat are
                 1                                estima tes.
hopefu l. The le\el of , 11Jphur oxid e in
                                                    On the water quality side. we ha"e
the atmosphere uf most ol o u r ci Lies b
                                                  estimates, u pon which the most recent
definitely going down. This is a ery
                                                  legislative proposals were based, of $12
major air pollutant. At the same Lime
                                                  billion. 1ep1 eseminga LOtal need for ·ec-
having said tha t , I've got to point o ut
                                                  ondary treatment of municipal wa ·te
that Lhe cotal volume of sulphu r oxide in
                                                  with a 50 percent federal share of $6
the atmmphere of the United ta les is
                                                  billion in Lhe next :'l years. I can't Lalk
going up. Maybe we :ire 'ihilting the             abouc I 0 years from now but that's what
p10blem from the city to the country.             we arc talking about over the next 3.
But we are l'Teuing on top of this particu-
                                                  That is jusl the municipal waste field.
lar problem. Likewi e, le"el" of carbon
monoxide in the urban em.ironment are                Industrial rnst. arc approachin g some-
going up. \Ve have more automobiles               thing around I billion a year. I saw
buc thi too in a period of a few ears             some figure\ the Olhe1 day indicating
will revet c;e. The level of tot.a I emission s   both public and private air and water
from automobi le:i is going down and ha           progi am~ ;n the present time are running
been for a couple o f yea rs. At some             a lmost $10 billion annually and are ex-
point, possibly, Lhis graph will stan             pened l<> rcalh $23 billion or $24 billion
going back up again as the population of          in 197!i. o we are talking about ve ry
a utomobiles increases.                           substan tial levels which are rapidly in-
                                                  crea~ing.
  There a t e other kinds of indicaLOn
which give rise co some optimi~m. In the             Tlnu11gho11l 01n hitlory we have built
Federal .overnment. tate and local                fnclo11e\ zc11h l11tle or no concern /01
governments, and in pri\'ate enterprise           the pol/111io11 tltt') cause. There art' 1111-
gener a ll y. we are developin~ a much            do11htedl) rnn11v old factories that ran-
more effecti\'e insLiLutional ba e for en-        not be modi{it•d economically to meet
vironmental managemenc. I t doon·t                current 01 propo., ed air and wate1 quality
make the sky any clearer ove1 nig ht but          slandard.1; yf'I to clolf' them would rncll11
in the long run it provides a n essemia I         lo.!>5 of jolH a11d taxes. What do you
underpinning for progress. I Lhink the            think is the an.1we1 lo this dilemma?
level or public interest, concern. and
acti\'ity is going up more all o f the time.         M 1. Trai11 : I don' t think you can
This, too. I think is a very importa nt           ~i m p lify
                                                           eithe1 the problems w the olu-
thing, both here and abroad. I think that         lions hy !-lay ing 1hat the real problem is
things are getting better but we can't            econ omic growth or the real problem i-;
jump up a nd down al>ouc them yet.                Lechnolosn . lf you look at a countf} like
There is no room for complacency. \Ve             I ndia m the city of Calcutta where the
have a long job that is goin~ to be \\'ith        level or economic a fflu ence is low and
us for ma n y years.--as long a<; yo u and I      technology is e<Jually low, you see thaL

                                                                                             21
the pollution problems are pretty hor-            :.enic.es rather than simply the quanlita-
1 endous.                                         ti\e .t">pec~ al. much as we h;ne in the
                                                  past.
   l think that we can certainly trace
man} pollmion problems to economic                     \\ e arc ~oi11g to need some quantity
acth ity and l<> the effects of technology.       too. 'Ve have a growing populacion .
At the same time, 1 don't :.ay tha t in           E\cn if we \\Cnt to t,,.o c h ildren on the
tedrnolugv lie-, the olution to the prob·         a' e1 age per family right no\\ , the pop-
lem. 1 he .,olution is much more com pie:\.       11 l,Jtion \\Olild still climb b) 100 million.

than that, as there a1e social. political,          o I think we need econom ic g1owth.
and cc onom ic factors a nd all of thc!>e            1 think we al o n eed cechn ology. We
h;ive to he in \'Ol\'ed.                          :.imply o ugh t to be sure that economic
    J Iowcver, I do think that technology         ac livit y a nd technological activicy are
is exteedingly important in the solution          directed to mee ting real human needs.
of e nvironme m al prob lems. Certain pol-        Fcon01ni1 auivity and technology ough t
IULion problems, like automobi le em i'i-         to he dedicated co improYing the quality
~io ns or rcmo,·al of sulphur oxide from          nf om life-and not simply to busincs~
the ait, are technological problems.              for the sake o l business or to technology
There are alternate technological ap-             for the al..e oft(.'< hnolog).
proachc!> to the:.e problem!>. In the c;ise
                                                     H'lwt letie/ oj funding b)' Lhe Federal
of the automobile, the de,elopmem ol
                                                  C.0t1er11111e11t do you feel is neceuary
more efficient mass 1rans1c-in part. a
                                                  ot•r1 thr nt'\f 10 years to make rea.son-
tee hnological prnblem-i one solution.
                                                  n/Jle p10p,1e.s.1 i11 cleaning up 0111 env11011-
In the ca'e of '>ulphur oxide emission.
                                                  111t:11I'
l;irgely a n e lectric gen erating problem ,
the cle\'elopmem o f new al te rnate sources         Mr. Train : I d on ·c think Lhe public
of energy-nuclear reac tors or solar              wams to an-c pt a reduced standard o f
e nergy-is a po!.sible :.olution. These are       li ving. One dot:s hear a great many state-
tcfhnnlogical problems as far as ern-             ment:., pnrtintlarly by those whose
nom ic' ~nm th is c n11cerned .                   sLand;i rd o l Ii\ ing is high , that they
                                                  wouldn' t rc,tllv worry about it. P olls do
    I don t sa} that economic- growth i-,         indicate tha t a l:irge percent of the public-
again the culp1 it. I think we need ern-          at least sa\ that thev are willing 10 g 1'e
numic growth in o ur country to do a IOL          up ~ome things if this would be impor-
of thin~ like providint; job'>: rebuildm~         t:im to em ironmental protection. I think
our c:iti~: and prm·iding ma~s cran:.it.          that in most cases what thev are talking
better de Ihen of health sen kes. and a           abouc i't a ~hilt rat her than a reduced
\\'ide rnn)?;e of other thing-s. There are a      standard uf li,ing.
'> Ub~ t ~ntiaf number Of people in the COU il·
u y who would noc be \'cry happy with                \\'hat d o 011 mean by standard of lh -
1ero economic growth. I d on'c chink              111~?  At the present time, we estimate
er011orni < ~ow th need be equated '' ith         that the "it1lphur oxide in the atmosphere.
pollution. I Lh i11k that more and more           fm which there is n o accounting in term
we need to understand the em ironmental           o l ou1 not mal hooks of bu:.ines , is cost-
impan uf our econom ic actidties and              i11g the .\merican people abou t S billion
tcd111olngical auh ities and plan Lo a\oid        a }Car in medical bills. emphysema,
.1d, crsc result~. I '>uspen that more and        bronchial problems, lung cancer, dete-
m01e of our economit acth it) is going            rior:tt ing plant and equipment. a nd dam-
rn emphasiLe thl· flllalit · of good and          age to uops. Thee are the big cace-
.,.,
AOric,. Fi~ltt hillion clolla1s a \Ca1 . That\                 trampmtation ol the [uels to our g<:n·
 probabh in the (,;'\ P 'onH:'' here. Ir ' C!                  crattn~    pl.1111.,: 1111 c,.1mple. trip minin~
u1u ltJ g-et th:H out. it wnu ld he a \Cf}                     in the <.1'1' ol !lial or transportation of
'iubstanti.il net profit to rhc .\menc:111                     oil r101ll '\orth 1\fric.a or the .\la..kan
people. I thin k that in .1 't'IN~ it would                    ptpc:lim. r1ie,e :ue .tll parts or the <.tde
be an 111( re.1,c m dw 'tancl.11 d or Ii\ in~.                 cflcc L'> that clcc inc .d cn<'rgy prod union
                                                               rau,c•..
     ll't' 11rr. told       thnl Jim .\'flt1011's 1ir.ecJ,
(<11 t'llf'rf!'\'   lilt'   do11/J/i11g rt11'1-y JO )'t'nrs.        Likew j,c, 11 rn·lcar em·rin. a' we pi C'.'I·
Fo~1il     /m:/j     t1H' rw1011~      !hr· /11~ge~I ro11-     elllh know it. ill\ohe-. considcrahlt
l11lmt01 \ lo Jmll 11 I im1, t11ul 11w WV /Jt"O /JI r          the1 m.tl pollution. \ir pollmion is not 1
rnr co11u•rnt•d a/1011/ tht' jJo.uihle t'flt'<I~               '11h!>ta11tial problem. but radiation .111cl
of 1111det11 powtn nn n111                1•m1iron111 r·111.   di pusal nl radioac. tivc wastes are. This
flow "'" 11 11• lllt't't 0111 lt11gt' '1eniJ /01                i-; the 111.lJnr alte1 nattve at thi Lime and
e11e1 gy mu/ :,till Jn otr1 I our 1•11t•11011·                 the Pre..icknt in hi~ erlC'rgy message d1-
men ti                                                         rcned ht11t'>el£ to thi!>dilemma.

   /\fr. Train : He is tl kin~ 101 me to                          \\'e have tried to approach this prob-
direct tn) .Htc:ntion to the Ian~ that                         lem 111 .,c,eral wavs. ""e have before
the prncluccion of c.-lcc lrlc IL)' i:. related                Congre,., .111 dee trim! power plant .. ating
to our tandard of Ii' in~ and our c(o-                         bill Lo deal with the \Hing of elect1 ital
nomic a<ti\ ity and the product inn of                         pol\'er plant' and tran mission line • w
clc<Liicit-. imolves 'inme acl\'er..e c:n'\-i                  1nakt• t hl' whole pr0< e s more acrepta·
ronment imp 1ct. Thal " the: 11nder,taLe·                      blc p11hlit h anci co do a more cffeCLi\e
mem of the }Car. It H.'plt''t'lll!> a lot uf                   joh. Rl'":;11c h i, betrll{ done in sulphur
acher.,e en\'itonmemal impan. fo,sil fuc.-1                    o'idc: 1cmrnal .111d in developing llC\\'
generation nf electric itv ill\ nhe'i Lhe1 mal                 emrg-\ '""HC'). II ''e tecogni1e ch:n we
poll ut ion ol watet .incl :ti t pollutio11,                   111uM 111akt: a suhstnnci:tl effort LO dc\elop
typicnlly sulph ur oxide. mosl impo1-                          thl'l11. we· will. in time. find c lean energy
r.mcl . It .d ..o invohe, p10d11cuon and                       sou ffl''·




                                                                                                              23

 4    '·
                                                James E. Webb
                                                Former Administrator
                                                National Aeronautics and
                                                 pace Administration




     James £. Webb's term as Administrator of the National Aeronautics and
Space Administration spanned the first eight yt'ars of our Nation's drive to
achieve the goal set by President Ke11nedy to land a man on the moon by 1970.
His years at NASA are part of a career ro11ering fottr decades dttring which
Mr. Webb has been one of the most active mt'n in the United Stales, and his
distinguishrd career continues.
     Mr. TVebb served as Director of the Bureau nf t/le Budget, 19-1H9, and as
Under Secrt'ta1j' of State, 1949-52. He has won JO public award.s, received 28
honorary degrees, and is a member of JS organi:ntion.r. He was a reserve officer
in the U . . Mariru: Corps from 1932 to 1966 when he retired as a lieutenant
colonel. He was commanding officer of the /st Marine Air Warning Group on
active duty from 194-1-45.
     A 11atwe of Granville County, North Caro/ma, toda)' Mr. 'Webb is an
attomey at law in Washmgton, D.C. Jn add1t1on to serving as a dirutor of
several private firms, lie is a tT?Lftee or offU"er of nine ma7or public Sl!rv1ce
organizat1ons, inrl1tding the Committee for £ronomic Development and !he
Smithsonian lnst it ution.




24
GAO Auditorium
September 17. 1971




                                        .
Leadership Evaluation 1n
Large-Scale Efforts


When he wos Vircctor of the Bureau of the Budgt•t, James E. Wrbh was
cosigner with Comptroller General [..ind.say C. Warrt:11 and ScCJ"<'tm-y
of the Treasury ]oh11 IV. Snyder of the original charter of the Joint
Financwl Man11geme11t lmp10vement Program in 1919. He has long
had o strong intrrr.fl in the worli of the GAO.
The management challenge of almost inconceivable complexity
that M1. W eb b faced as Adrnrni.11rator of NA A in thr 1960'.~-to make
a manned landing 011 the moon-required the harnessing of the highest
talents in our Nation m the fields of scienre, engmeermg, production,
business managNnent , public administration, and congre.1.nonnl relations.
Drawing on this a11d other experiences, he obsertHJs that executive
leadership in got1ernme11tal large-scale efforts needs m1tch more re 1earch
to identify and maintain thf' qualities needed for rncress. Tl11s nwrnrch
should be carnrd out by scholars from numerous disriplin1'.1 who ca11
observe and describe what rnccessful executives do to proriucr    .111rrc~s
and what cause:, them to fail.




   Than!.. you tor this opportunity to par-       and the President have recognized that
ticipate in GAO's 50th anniversary. In            the GAO and the Bureau of the Budget
the life of an organi1,ation, 50 years is a       could help them make decisions based
long time. Many do not l>urvive that              on organi1ed facts as opposed to orga-
long. It has been my privilege during             nized prejudice.
more than half of CAO's 50 years to
either panic i pate in or fol low closely de-        World \Var II ~eems a long time ago.
velopments under the 192 l Budget and             but some of us are old enough to remem-
Accounting Act which set up the GAO               be1 rhe organizational problems of the
and the Bureau or the Rudget. Perhaps             prewar buildup and o( mobilization. Pat-
some might lhink of these 25 years as a           te1 ns of governmental action changed
half-lite in the decay ol these institu-          radically. M11ny have commented on
tions. I prefer lo think of it as a period of     President Roosevelt's leadership in this
growing strength and usefulness. Each             period, but most have not associated t his
has evolved on a different time scale and         with the transfer of the Bureau o( the
in response to different pressures and            Budget to che Executive Office of the
opportunities. But the common heritage            Prc,1dem in 1939. When the War began
of the 1921 act has helped maintain               2 years later. the Bureau and Harold
many common goals. Both the Congress                mith, it~ able Director, had already

                                                                                         25
learned to u'e iu. bcue of power, resting      to participate, that he told us with ome
on its loralion in the Executive Office        heat. " \\' hat you are asking me to do i!> lo
and its mutually supporting acthities. to      rem g.1ni1c the General Accounting or.
strengthen the institulion of the Presi-       Ike .md nobod~ ought to be asked to do
dency. This Prcsidemial sncngth was            that."
able to ~hape in many ways the lorm.
  uh tance. and administrati'e structures
needed for the war effort. It helped to        Need for Changing Organizational
pre:.e1 ve coherence on the homelrom.          Patterns
 \ lso, during- the mobilization period and
the wa1. the Ceneral Acrnu11ting Of!JCe            \\ ith the necessicy for answers Lo com-
recognized the urgency of the limes and        m1111isL pressure~. and Lhe initiation of
adapted its work Lo the essential needs        Lhe Greek-Turkey Aid Program and t.he
not only of Liu: Conbrress, but of the exec-   l\far~ltall Plan, many of the postwa1
utive branch as well. IL thus pla •ed an       planning a. sumptions g-a\'e way to cold
impo1 tam 10le in the suc-ce ful war           \\'ar real iues. But for the CAO and the
effon.                                         Bureau of the Bud~et, these only added
                                               em phasi to the need for g°' ernmental
    .\s tn the postwar years. o ur memories    p:ittern' of leadet 'hip and organization
are mt1th lrcshet. l n the 1946-47 period      that u>ttlcl produce ·urcessful results.
the Federal GO\·ernment was re-                Buth organiz.ations changed with the
 trucrn1 ed lur a return to what was           d1.rng-ing pattern , and today we ha\C a
hoped '' otald be man · •ears of world         long .1ccumulation of shared experience.
peace. 1 he \\arume ur~nizational and           I he introduction of new organizational
management le ons were studied and             ronn·pts and structures to meet chang-
efforts were made to apply them to the         ing go,ernmental needs does not seem so
new pea< etime problems. A close and           formidable a in those days, although
dfcctive worki ng- relationship between        there is nothing easy about it. Jn fact, 10-
the General i\rcounting Ofl1ce and the         da} the rnrnplexities of large-scale org;:i-
Bureau of the Budget continued and             n11ed c!forLs require more skill and
was broadened w include the Treasurv           judgment and tronger leadership than
Depanmcm. In 1947 as Director of the           e' et before.
Budget it was 111 privilege LO work \\ ith
Comptroller \.eneral Lindsay \ \'arrcn           Through the 25 vears of these ch:ing-
and Tre:is11n cc:.retarv John Snydet to        in~ a·qui1ements. the C .\O has shown
establi<ih the GAO-Treasury-Bureau of          th.a it       truh concerned as any unit
                                                         ts :l'>

the Budget Joint ..\ccounting lmprove-         or gm ernmem       with measure to meet
mem Prow-am. which has no'' matured            the need-. of depa1 tmemal. agenC\·. and
into the Joint Financial Impro.. emem          pro~attl leacier fo r thoroughly proft·s·
Program.                                       ~tonal and multidi-;ciplinary approaches
                                               to effeccive and accountable govern-
   There is an important message for us        ment. Frnm both our successes and our
today. I belie\e, in th is evolution, over     lailutel), we have found that government
the years. from emphasis on "Accounting        cannot move forward without the kind of
lmprovemem .. to emphasis on "Financial        ~lrengtlt thm can sohe the organizational
\lanagement Jmpro,·ement." f\f1. taats         and administrati\e problems which have
helped develop thi project as a mem-           so often in the past limited effectiveness.
be1 of the Bureau of the Budget staff.         In our constitutional government of di-
and I belie\e he will remember, when           \idccl power-. it is 'ery difficult to create
we urged Comptroller General \Varren           and nuincain such strength, but ic can be

26
done. To meet Lhe neeclc; n! Lhei1 time.            ro1 c. Fa i Imes are more conspi( uous. The
l ind'"' \\.·arrcn. F1 an!. \\'eiuel. am!           management 1cquiremcnts go bevond
man\ othe1 s put t!1ei1 .. houlders to 1he          the        r•
                                                           0\ en rapabiliucs of our present
wheel. and £lrnC'1 St.aat). Bob Kelle1.             lunn' ancl methods.
and manv ol You he1 t are doing the
                                                        In or~.1011auon and adminbtration. a'>
same to<i,;, Tltc obJ<:c tl\e "a' and -.nil
                                                    in othe1 ;11 t.•as. tncl:n ' leaders must lca1 n
i' a mme effe1L1\C .tnd 1e pons1ble qm
                                                    to 11\c wtth uncenaint\ and e\aluaco1
ernment, <apalile 1>1 <loin~ its part in a
                                                    11111'>t lea111 to .1ssess how well thq mt.·ct
world 1ot n h)' 'u 1It-, yet Iu 11 nl opponu-
                                                    lhis rt'q11i1 emenl. llaney herrnan, of
n i tiel!. and aL the same 1 ime .id justing <H
                                                    1he :'\c.''' Yori.. Poi t .\11tho1 icy. in \\hat ht.•
home w Ile.'\\ c011< epl' ol technolog'\-
                                                    1 alb " \ Prag:mmic Approach to Organi-
ba-;ed e< onom k development, to ne"
                                                    1a1io11," <;ltlle!I it this way: "The problem
conet.:pt' o l '<ll i,tl and politic-al relation-
                                                    we nnw l.i< e in organin1tion may well
ships.
                                                    h~l\c rh:'111ged in narnre lrom one of ad-
   In the I 940's Federa l leaders sough t          justing 01p;a n i1a tions to meel presen1
ima~natl\C     w,l\., to enlist colleag-11cs        concliw111,, LhaL i'>. maintaining equilih-
throui;hout the n:nion "ho 'hared these             rium. Ill one of ad ju ling organization LO
obje<tiH':S. \\e 'iOll~l11 «>0perati\e 1ela         meet fuu11 e unl-ncm n condilions: that is,
tionship, \dth ~t.1Lc· .ind local gO\em-            maintaining cle,i1ed di,equilibrium." 1
mcnt of11tials. \\Lth indw.trial manage-                In today\ lare;e-scale gO\·emmencal ef-
menr leader" . •rnd with both re earch              fort'> \\t' .1 H' jtm he~inning to learn what
and themetical !l('hola1' in uni,eri.iues.          this meam. \\'e are cold. and belie,·c.
Then.· \\Cre m.1m 'uppm ter' of thi' el             that ' the n.1tu1e of 5C'it.·mific and techni-
foll among the mc:mlier<; and ~t;tffs or            cnl I.nm\ lcrl~t· j., different from that ol
conwessional comm lltee'i. \\'e need                social '' u:n ce l..nowlc:de;e" :? and yet we
more of this todav. In tlte~e matters 1here         han· not lea1 11ed prnrtind ways LO inr01-
is no s11h11tituu: l:cn al lc:asl a minim 11 111    porn l (' 1hC' hC\ l of a n y o l t he three in o u r
of coopcracion hetwc<'n the leg-isl;i Lu1 <:        pron_.,,,., fm dee id i ng- priorities and gcL-
:md exec11ti\e, between our three le,el'            ti 11e; 1 hi ng~ done. Former erretary of
of ~O\i.:tnmelll. and between industn               I Im1,in~ and l lrban DeYelopment.
and ~u' c1 nmcnl.                                    Robc.·1 L '\'eaver empha<.ized this in hi'>
                                                    recenr nnni,c1,arv letture here at G .\ O
Living with Uncertainty                             and g ;iH <;omc of Lhe reason .:i I \dll
                                                    rckr to the\e 1n .1 moment.
   .u  we finish the (11 st and begm the               fr \\Ollld he ca \ LO curn away frnm
'\e<ond   ·,o \eat'> ol the (,AO . in tnam          the'<: p1 nble1m and to 'pend our tim~
''ays 1he gie.1tc,1 di.lllcrn;e j, ,till the        tnda\ 1(:'111101-.cing abnut the per.,onalt-
one we ha\C laced all along-how Lo                  tic,, 'IH t l''>Sc\, and fai lu1ell nf the fir.t t;Q
at hie' e out lon~-scnu~h1 (!,oal of mo1e cl-       }e"r' u11der the B11dgtc and .\ ccou11tiniz
fenive g-overnmern. The difference is
that we must now        '>Cd.   this goal under           1 11.ot " ' '     -.111·1111;o11, It A II Drp1•11d.1- A P rflJ:"lllfir
condi 1ions where ~< it.•m e and technology         1l/•firt111rh 111 CJ11t11111:11t11m                fl'111v.:rs11' of Alab.1ma
add so much st) rapidly to our power ,              rn·"·        l'llil1)
but req uire us LO set up such large cn-                    \\ . I        11.t~'Jlt'l I\ , l·.1l11r11/1111t r u h110/ogu1J m De
                                                    11 rab/1•       'im 111/ f'o ltr'}     111111   J:d11 r11tmp. Sorin/ Sor111111.1
dea\Or s as the :'\atio11n l \eronautics and        111       J ,.,/11w ltif! 1r11 / C11p11b1/1t1r1. \lonowaph             11
 pace \clmini,traLion (l\tA .\ ) ro !i~al-.e         1 \1111·111.111     \1.1tlt'lll\ o f rolill ~J I a n<l (iocial Sl IClllC,
use of these new power'>. Today c1u1en               llliO).
e'penation are hi~her c.han e\ er he-                       .,,.t p        I:!.
Act. I remember very well the day Har-              centralcd on '"the areas of program selec-
old Smith told me that the Bureau of the            tion and evaluation." He called these
Budget .. had sunived because its name              " the new dynamics of effective admini .
concealed its function.'' I remember my             tration. " His emphasis was on planning
reaction to General Lord's• procedure,              and followup.
which was that when his ecretary
                                                       l\ly approach will be from a different
would come in and say, "General. Mr.
                                                    direction and my emphasis will be more
 o-and-so is out here lo see you," he
                                                    on the dynamics of organizational lead-
would answer, "Find out what he wants
                                                    ership and the use of feedback for more
and tell him he can't have it." 1 remem-
                                                    effecthe leadership in the broad sense,
ber that when President Truman told
                                                    in Congress as well as in the executive
me he wanted to balance the budget an d
                                                    !>ranch. My theme is that once the plans
pay back $5 billion on the debt, and I
                                                    are made we need the kind of job done
carried this back to the Bureau staff, it
                                                    in administration that will enable both
took a rew days to get a clear reaction.
                                                    cit izens and Congress to get a feedback
Finally, Lee Manin who was then head
                                                    against the assumptions which underlie
of the Estimates Division came into my
                                                    program concent and to see for a given
office, clo ed the door, and said, .. Now.
                                                    program or project what was done, by
young man, 1 listened carefully when                whom, and with what re ult. This re-
you said the Pre idem wants to balance
                                                    quires strong leadership. It also provides
the budget. You should not say that un-
                                                    a way through which leadership can be
less you reall) mean it, because if you
                                                    constantly improved and the public dia-
do, I can show you how Lo do it!" My
                                                    logue and debate can bring aboul sup·
response was that I would go back and
                                                    port for that wb ich accomplish es the
ask President Truman again if he really
                                                    desired results and force changes in
meant it. He did, and Lee Martin deli\··
                                                    what does not. J believe we need to do
ered on his statement.
                                                    more "'looking at the record" of what re-
                                                    sults were achieved and by what means
Dynamics of Organizational Leadership               rather than to spend time listening LO
                                                    more promises though t up by speech-
   But J must resist the temptation to              wriLers seeJ..ing a headline for their prin-
look backward. \Vhat I would like to do             cipals. \\' e need to know more about
is co peak of the present and the futme.            why o many important undertakings
                                                    seem unable to proceed except in peril-
   Today l belie' e the General Account·
                                                    ou., proximity to the rocks of disaster.
ing Office finds itself serving a Congress
                                                    \\'e need to know a great deal more
that i deeplv perplexed and quite un-
                                                    abouc what males for succe fut leadcr-
happy about the way policy and pro-
                                                    o;hip in large-scale endeavors.
gram dtcision are made, both in the
executive branch and in the Congress it-              '\\' hen an important undertaking docs
self. Some are even unhappy with the                escape Lhe perils and delivers success,
j udiciary. Individual Mem bers, as we ll           we need lo learn why. In most such
as the comm ittees and staff, are not sati -        cases, J believe we will find that al-
fied that our Government is doing an                though it was judged inadequate for the
adequate job.                                       tnsk a t hand, the best of available org;i-
                                                    nizational theory and doctrine was put
    I o his lecture, Professor Weaver con-
                                                    to use by the leadership group. that
    • Editor's Nott: Bngadaer General Herbert M.    within the operational framework the
Lord was Oarcctor. Bureau of the Budget. 1922-29.   best of proven self-policing and feed-

2
back procedures were clllployed. and         difficult to use than ocher machines; tha t
that careful thought was g iven to the       bold objecti ves require conservative en-
best known ways to generate coopera-         gineering; that in rocketry if anything
tion between the legislative and execu-      can go wrong, it will; Lhat even the best
live branches. In most successful            o[ p lans cannot incorporate all contin-
endeavors, I believe we will find that       gencies: and that when an unplanned-for
imelligenc use of at least a minimum of      event occurs the immediate need is t0
social science and public administration     find out what happened, to appl)' the
know-how made a vast difference, both        best available know ledge and technology
in the operational and nonoperational        to fix it, and to thoroughly test the fix.
areas. But my point is that we wi ll have
                                                Under this philosoph)' we turned
to find out, because we do not know
                                             away from both the " find the cu lprit"
today.
                                             and the procurement-oriented concepts
                                             that when trouble shows up one should
Success of the Apollo Program                look first for a person to blame or to the
                                             contract to determine who is a t fault and
   Perhaps you will permit me to use         who shou ld pay the price for not being
Apollo as an example of a success. I         able to foresee or prevent the trouble-
know of n o events more clearly fixed as     some happening. \Ve based our incen-
successes in the minds of millions of peo-   tives for creative and innovative
ple than Apollos 11, 12, 14, and 15. I       perfom1ance on the assumption that sci-
know of no better illustration of the        entific methods cou ld be used to help
value of first-class systems engineering     solve the developmental problems of
and management-or of the va lue o r          high-performance vehicles a nd that we
linking the best of the machine and the      must be prepared to rapidly identify and
best of man. Even in the failure of          solve many complex. problems that could
Apollo 13. but with the successful return    not be foreseen. Our assumption was that
of the crew, we find an example that a       to build this capability to work with the
complex system, properly designed and        known and to meet the unknown would
staffed, can survive when otherwise it       prove the most efficient and least cost! y
would fail.                                  way to proceed.
  We all know Apollo 15 landed safely
                                                We learned what we could from mili-
even though one of its three parachutes
                                             tary developments and experience of the
failed, and that NASA as an organization
                                             National Advisory Committee for Aero-
survived the perils which [aced it in the
                                             nau tics (NACA). We knew that before
period fol lowing the Apollo 204 Bash fire
                                             NASA was formed NACA had devel-
that took the lives of Grissom, White,
                                             oped a pattern for encouraging and
and Chafee.
                                             guiding research and development
   Let me immediately make the point         which involved industry and universities
that is in my mind. It is that Apollo        as well as Government, in guiding lhe
succeeded and NASA survived because          total national research and development
it followed a clear management philoso·      effort in aeronautics and utilizing the
phy and steadily tested its assumption       results. Under ' ACA, the policy was to
as well as its hardware. The basic as-       support promising efforts to expand sci-
sumption was chat rocket-powered             entific knowledge in areas of aeronautics
transportation for men canno t avoid         where practical applications could be
high risks and public visibility; that       foreseen. Engineers as well as scientists
rockets are much more dangerous and          were a part of this process a nd new de-

                                                                                     29
i.igm were encouraged. At a point of           nrT hum a point on t.he surfa<e of the
acu11nulated ptogie-.s. a summarv of the       eanh that wa~ tra,•eling 1,000 miles an
state-of-the-art emerged and lormed a          lio111 a' the earth rotated, to go into 01 biL
ba i'> lor new .1 ppwa< hes. Both com pc>-     .tt 18,000 miles an hour. to speed up at
nent and '>)''terns de\ elopmem we1 e          the proper time to 2:J.OOO miles an hour.
supported In the 1950' . thi approach           to tr;nel to a bod} in pace 240,000 mile
th.It had pro\'en so effercive in aeronau-     d1'tant ''hich was itself rraveling 2.000
tics was expanded Lo include rcxke11y.          mile., per hour relative to the earth, to go
Thus for the .\polio effort ;\!,.\ A wa        into orbit around this borly. to drop
able.: to dr:iw on a well-worked-out ba.,ic    clown to its surface. and then to repeat
pane1 n of intelligent uppo1 t for re-         111urh of the pruress to get hack home.
search and deve lopment in l>oth aero-         While that was the immediate and 1noH
nautic.'> and rod.etry. Without this, and      v1,ihle job of work. the real objective
the clmel} related developments of our         was to create, as a national asset, hun-
military services. NA i\ could not ha\C        dred'\ or thousands of speciafots in all
clone its job 'o rapidly.                      '' iemificand technical disciplines trained
                                               to clo what was required to '''>ail on the
   \polio t0ok almost a full 10 \earc;. To     new oc can of 'pace." The real obje<:tiH~
get 1mo posuion to build and fh l11e,t.·       wa'i w incre."c the competenre of the
large 'pace W'>terns. and to carry om the      '\,1twn co a level adequate to meet any
mhe1 pan~ of the :'\ \ .\ prognm. a cap-       <hallen~e and to take ad\•antag-t• of op-
ital expansion of~'\ . A's plam had to be      p111 t1111ities in the air or in space.
put in place amounting- to S'l billion-
nne and one hair time!> the amount spent           1\t the stan of .\polio, Presiclem Ken·
on the entire \f:tnhauan Distrkt prnj·         m·d . \"ice President Johnson . and many
en. Tile progt am \\'as first presented to     ol nut l\>ation 's ~enior leaders felt this
the C:ongre~s :ts costing between $20 hi I-    i1111 cased cmnpetcnre was the only way
lion and $10 billion to be spent over 7        to ;H:-.111 e that our voice and our Lcchno-
Lo H years.                                    log-ical preeminence would be heeded
                                               \\hen the lar~c decisions affetting the
  Thi~     was :lt a time when ~A \ criuc      f11t111c nf the worlci were made. There
\vc:1c: t laimm~ 1t would cost SIOO billion.   wa It u le dou ht in thoo;e ye:ir" :rn1ong
 \fte1 2 or :s }~'·'''or work and a ca1eful    thmc mmc knowledgeable that we
'tudy ul what we had learned. Con~es~          needed both the image and the reality
,,a., infonnecl thac the total cost would
                                               of hein~ able to contest for ;1 le:tdiniz
be ~O hill1nn. and that for each year of
                                               po<i1tiun in . pace e>.ploration and to uti-
delav there would he an increa-.e of , I
                                               lize our grm' m~ potential LO the fulle...t
billion. The p1owam was dela\ed 1
                                               e\.tC:nt pcmible lor peaceful purpo~e'\ for
vear<; and the cost ended up ~ :! billion.
                                               the benefit ol all mankind. It is in this
This shows. 1 think. the great value of
                                               hrtmclc1 lOIHCxt that we need Lo evaluate
earlv planning and the great value nt
                                               ~ \ ' A·s management philo ophy and
building up .1 tapability to revise the
plan a. experience shows the need. lL          pct formance, and to ponder how differ·
also shows cite great value or adequate        e1H the ,,·orld wou lei look upon our
investment., in facilities for imulati11g      N.11io11's powC'r tnday if Apollo had
the <<>ndicinm to he encountered in a          railed. h is in this same broad context
                                               that r believe oversight org-anit.ation~
nc'' em ironrneni like space. and 101
testin~.
                                               like the G.\O mu ·t learn to e\aluate Lhc
                                               leader,hip requirements for succes in
  The \polio 1equiremem wa          to c.1ke   ~11< h large-s ale efforlS. There is alo;o the


jO
prohllm ol lum fic,t Ln c1111111wn1cate                 :i pl11\. B11t how m11th ot a plu ? .\nd
<>ttc h <:u1I11,u 1011 ro Con~ e''·                     lum 11111d1 nl \\lt,11 worked 101 .:\ \ · \
                                                        ca11 \Oil tt'.l,nnably expect otht•r' to
    (11 111,1f...i11~ the'e potnll> tt '' not m'        in(C>1potale 111 the11 p1ugram!>? It l'i Ctr·
purpmc to t·111pha,i1c t ltc 'uu t•,,c, ol              tai11 h L111<· tk11 C. i\O, on a number ul
 \ pol lo a-. 1111t pi ojcc t. Ratlll'r I di) it 10     n« ,"inn•., could h.1-.e tal..en a more hard·
come w Liu' cpte,uon- In C.\o, c:\ol\ -                 nml·d and n 11ic.tl 'tew of what it lnund
ing p.ttte1 n nl c\#il11;1t111g and reponin~            in ih auclm and 111\e,tigations ot p.1nit-
on the effeu 1' cne-.s ul m.1nage111ent. and            1d. 11 .:\,\S \ p101ec t~ . That you g-;l\'e m :i
in a\\c..,,mg a panu 11br ma11.1oc:111en1· ,            ch.111«' to ll'iC 11111 1es11urce and 0111
wny or \\Ol king, \\ h.11 ran he lea1 ned               ingt>1111i1y 10 \\uri... 011t ol our diflk11lcic,
fiom ,\ polio? ,\11cl c:\Ctt 1no1e i111por·             cont 1 i bULcd m uc It lo our succ~s. Are
tanlly. wl1al can ht lea111c:d rro111 the               the1c: pren·clt'nt' hete Lhal will help in
hroackr '\!,\, :\ C\.peric:rne? It is clear             1 he f11L11rc?
that N:\ · \ h.1d to fit \ polio intn a11 e\en
larger prngrn111 that ill( lucled a ~ean h fo1
life on \l ,ns and \'enu,, an extcmi'e pro-             Need for Multidisciplinary Approach
gram of 'tud1cs of the ,ol.11 '''tem and
the u111' er'>e hevond. ;tnd .1 'ea rclt for               \, ym1 in c; \() expand your capabil-
hetter mea11' LO ut1li1c tlw earth\ at-                 it\ to e\',duate ho\\ well management .,
mosphere. " \ \ h.1cl tu hreai... new                   perfn1 mm~          m       1.11 q-e endeavor,    likt
ground in tht.' ll'>C ol mate1 ials. in acl11e\-        '\ \ \, I c.111 .. ,,urc you that if you dig
ing reliJhiliry in both la1~c and ~mall                 deep enou~h vou \d 11 find that the
int.let. and in ad\anc.ed .1eronautic'i.                dee i'1onmal..e1s. at e\ery major winin~
chrnugh planes th:tt cmd<l hm er mer one                poi Ill. IC~< eiH•d tn nfliCLing advice. ( fllll
spot , .111d 0 1hers th a l cult Id II\' 11101 e than   Siii(' \011 will ;il,o find tha t one clement
4.000 miles per ho11r. \\'e had to le~1rn               of many c111cia l decisions is a deep inner
LO u!>e Lht· private senor l'nr over 90 per-            searr lt i11µ; :i nd asst·ss111c 1n by t he seniot
cent ol 0111 work hut 10 build up an                    rc~po11i.ihle ofhcia 1., a'i to \\'hether ilwy
rn-house rapahilitv ..1rnng enough to ef.               h.t\l' tlw 'llcngth and ability to supph
fccti' ch m.uta!4e all 1 c,0111l ,., employed.          the lc-adc1,hip H·quired to gee the joh
                                                        dom· I '11~g,l''t .11"' that \OU will more
   CJn "'Ille Imun.·         ma11a~t·1    he tolcl      ancl 111111 t.' haH· to look imo "!tether a
\\ nhu11l J111l11i;11il" \\ lwtht•t it \\'a' \\ i'c     pri111t·   c1111cC'111 of   llw leader'>hip   ~011p I'
fut' \ ~A to ll'l conu .1u' th.11 W'•ttld in·           10  incmprnatt the hc'l of admini .. trati\C
\Ohc :!0,000 primr .tncl ,111>1 onttanor .              tlwm \ .incl doctrine in their prog,-am
O\er 'l70,000 entplovee'l in ,\ merican                 p l:im :rnd 1o c011 pie the,e " 'i th lht 'll 1-
industry. and another 10.000 in •\meri-                 e11uf1< . e11~111ec1 intt. and other e..-.enClal
ran uni' ersi1 ic'l? r\t th e time tl1i~ dee i-         elcn1t·n1s. l '11clc1 the pre!>sures generaled
'>inn \\'.ts mark .,ome ni1 irs \\ere ~aving            bv a large .111d com pie:-. program that i'>
 loudly that this would ah-.rn h all the                :i pH'll\'   tall rndei.
sciencists and engineers in Lhe rnuntry
and 'trip hare eve1 y other program.                        Vvr hc;i1 11111rh today ol the multi-
 How< .in one judge whethe1 otir dee i~ion              cli,1 ipl111a1.,. apprnarh Lu proble1m.
to employ ~3 .000 in-ho11se pc:1,onnel was              ~l.mv co111pt."1enne' are needed to 1ead1
 the ri~ht one? I would .1s,ume chat a'                 , ;il1cl j11clg111l'11h on the elements nee<.')·
 long a'> our decisions prod uted the 1 e-              'an 111 'uut''' in l.1r~e-'>CJle effort<.. 11< -
'>11 lc~ intended. and die! not do the d :11n·          ce" will nol follow decisions ba ed only
age fmeca.~l hv our uitin. \\C \\0tild get              on~< 1c:ntific .rnd engineerin~ knowledge.
It is an intere ting fact that in NA A·s         Very early in NASA it became clear that
mo l tumultuous years the fourth rank-           we could never succeed unless we faced
ing offi er in Lhe hierarchy was a sociol-       up to both the nonoperational and t:he
ogist-Mr. George L . Simpson. now                operational problems of what would cer·
Chancello1 of the Uni\'ersity Sy tern (or        tainly become a very large endeavor.
the cate of eorgia. NASA was deeply
                                                   Based o n these and other studies.
concerned with che use o[ social dence
                                                 NA .\ leadership determined to use the
knowledge and Dr. Simpson made im-
                                                 be.t theory and doctrine we cou Id find
portant contributions Lo our leadersh ip
                                                 and co consider the environment outside
group.
                                                 NA A as an important element in form-
    To il lustrate the way OUI senior execu-     ing our managemem judgments.
 tives. Dr. Hugh Dryden, Dr. R obert
                                                    Now that I have expressed my con-
Seamans, and I. sought a basis for our
                                                 cern over the inadequacy of administra-
decisions in theory and doctrine and
                                                 tive theorv and doctrine LO guide man-
sought to learn from what had gone
                                                 agers of large scientific and technical
before. we made tudies of the problems
                                                 efforts, let me immediately say that
faced by the developer of our transcon-
                                                 there are available to managers, who will
tinenL1 l railroads in the 19th century.
                                                 examine the literature, important areas
\\'e noted chac the railroad bui Ider
                                                 where well-pro"en theory and doctrine
faced, ju. t as we did in NASA, an inade-
                                                 tan be of great help.
quacy in e cablished · management doc-
trine and practice applicable to the siLe            As far back as the l 930's Mary Parker
of their undertaking. We found that in           FollctL ummarized the leader's relation
the railro.1d-building period it was the         to the fundamental principles of organi-
successful efforts to meet the "problems         z:uion, using such words as "evoking,
inherem i n the operat ion of a large rail-      interaeting. in tegrating. and emerging."' n
way, lather than theory or previous              She saw the dut ies of the leader of an
experience" that determined the nat ure          organi1ation as to "draw out from each
and content of those elements relied on          his lullt:st possibilities:· co "understand
for sun:e ~.• There was also a warning           or get others who understand, the sci-
in the fau that afcer l 65 " forces within       c:mific methods which have lately been
the American economy threw the rail-             applied. • • • " he saw the leader in his
roads into cue-throat competition, that          organi1ational context as ··more respon-
this cau~ed emphasis on the non-                   ible lhan anyone else for that integrated
operational problems," and that in this          uniLy \\hich is the aim of organization."
situation. ··the operational manager             She :.t..1 Lcd chat in undeTtakings of vast
were thrust a ide and control gravitated          i1e and complexity ''success • • • de-
to financier'i." This railroad experience        pend o n their parts being o skillfully
clearly showed that administrative struc-        related one to another that che best
ture lacking an adequate basis in theory         leader is not the greate t hwaler or the
and docu ine, and which did not take             mo t persuasive orator or even the best
into acco unt the Fu ll range of operational     t rader, Lhe great leader is he who is able
requirements would prove inad equate.            to integrate the experience of al l and u e
It seemed to us that the railroads never         it for a common purpose."
had a chance to ·how what they cou Id              It was my good fortune in the l 930's to
do a an optimized operational )'Stem.            tudy Follett' teachings and seek to
  • The Railroad nnd tlu: Space Pmg-rQm, Bruce    n \fJ~ Pukcr foUeu. Dynamic AdminulrQtion
!11:ulam , c:d. (Mll Pr~'. 1965).                ( Pitm~n.
                                                         1941) .

32
apply them in a large and East growing          back in the I 930"s, laid down good doc-
business enterprise. I tried to do the          trine on incentives. 6 He described their
same in J\iASA in the 1960"s.                   ro le in organizations as " to secure and
                                                maintain the contributions • • • that are
   One effort amon g many was t h e crea-
                                                required •••·· and stated "Lhat the
tion of an executive secretariat skilled in
                                                determination of the precise combin a-
communications wh ich formed a k ind of
                                                tion of incentives and of persuasion that
monitoring and contro l overlay on the
                                                would be both effective and reasonable
information and procedures n e tworks of
both the line and sta ff organ ization . This
                                                is a matter o f grea t del icacy ••• ·· which,
                                                as he said, .. can on I y evolve in a specific
grou p reported directly to me as Admin-
                                                situation." In the I 960's N ASA followed
istrator and constantly followed, through
                                                Barnard 's theory o f developing its incen-
the flow of correspondence, documents.
                                                tives through evolution and learned to
con ferences and personal contacts with
                                                apply them effectively in many different
key participan ts, the dynamics of the
                                                siruations.
evolving total NASA effort, including
both the informal and the prescribed               Does anyone in the General A ccount-
ways of working. This group was                 ing Office today have a judgment as to
charged wi th developing both knowl-            what would have happened if NASA
ed ge and judgment on the organiza-             h ad not followed an evol utionary path in
tional and decisionmaking approaches of         developing its pattern of incen tives? Can
the men opera ting the system and the           GAO find a way to ask the managers of
procedures which they used. They were           the I 970"s, n ot what incentives they are
specialists in th e flow of decision-rela ted   using, but what systems they have for
information. They were charged wi th            evolving better incentives? In your
assis ting . guiding, and teaching those        search. it will be well to keep in mind
w ho would take ad vantage of their help.       Barnard's admonition that this is a "'ma t-
from senior officials down to key person-       ter of great delicacy."
nel at all levels. Their effort was to en-
courage everyon e to work within the
                                                Organizational Stability and Control
"system" but also to know when ad hoc
or informal substitutes were being used.           In seeking to develop among senior
It was their responsibility to know where       executi ves desirable habits of organiza-
authority resided at a given time on a          tional thought and desirable pa tterns of
g iven matt er and what information was         leadersh ip actio n ,      I   have    frequently
Rowi n g in the system , up and down, cor -     Eo un cl analogies usefu I. One o f those
rect and incorrert. The secretariat was,        used in NASA. because it came from the
in one o f its aspects a "communications        field. oE aeronautics, was the concept of
n etwork overlay"' and as such was in-          the Wright brothers that a successful Ay-
tended to make aYailable reliable infor-        ing m achine must be designed as an
ma tion and feedback at all levels as to        unstable ve hicle with a system of con-
what was happening so tha l everyone            trols powerful enough to overcome this
willing to take advantage of this reality-      instabil ity and also powerful en o ugh to
maximizing· tool could d o a better job of      mee t all condition s of turbulence in the
relating decisions to current reality.          air: and further tha t the controls must be
                                                so designed as to be natura l for the pilot
Incentives                                      to use. The Wright brothers realized that
  Chester Barnard, in his book on 1.he            o Chester Barnard. The Function.{ of the Execu·
functions of the executi ve, also written       live (Harvard University Press, l!l!IR).


                                                                                              33
in Lhe turb u lent and unpredictable at-          ing sen ior NA A experts as saying that
mosphere a too ·table Aying mac hine             the Russian and American space systems
would not respond quickly to tbe pilot\         \'.ere incompatible. Allhough he and J
controls and that the delay in following         were sure none of them knew this would
the pilot 's commands would cau e it lo          bother the President and that il repre-
crash. They also realized that the com-          sented their best judgment, we both
plexities of control in the new three            understood it would make my job of con-
dimensional flight pattern, when man             trolling their reactions more difficult
was separated from his traditional earth         when he made his speech. N everthelcs .
reference. could hardly be accom-                I wall able to assure him that NA. A
p lished, C\'Cn by the most skillful pilot,      He:idquan ers had sufficient control to
if he hacl to use a separate lever or            prevent his being undercut. I told him
wh ee l to control eac:li ax is of mot ion.      that he on ly had to let me kn ow, with a
Therefore they developed an unstab le            little lcadrime, t hat he meant to go for-
mathine with a fas t response to pi lm          ward and I would take the necessary
commands and a coordinated system of             ·tcps. A few days later when l was in
conuols which permitted the p ilot to fly       .St. Louis, he sent me a message that be
it by doin~ the thing chat was natural          planned to make his speech the next
for him as his senses provided him with         dav. In that speech he went much fur-
data inpucs.                                    ther than r expected and proposed a
                                                joint l ' -l.1 R lunar landing, somethin~
    In explaming to :\A A personnel the         no ne n! u believed possible at the time,
objectives of our dynamic and evol\'ing         hut he wa not undercut in !\A A. There
organizat ional and administrati\'e pat-        was a 'cry considerable reaction in the
te1 rn.. it wa:. not hard to convince most of   Congress. and concern that he was
o u r execlllives tha r we were required to
                                                chang-ing his policy away from :.eeking
Ay o u r administra tive machin e in a tur-
                                                p1ecmin ence in space, but no NASA
biilent en\'ironment. and that a certa in       official added his voice.
level of organizational instability was
essent ial if NA A was n ot to lose con-           When President J ohnson, soon a fter
trol. The next seep was to show them             President Kennedy's death. was en-
Lhnt \\e l<>uld <.lc,c:lop information sp·      deaV<11 ing to get a tax bill through Con-
terns, pattern:. of authority, and proce-       grc:.i., lit: called me over co his on1ce to
dural controls that were effecti\e.             c;ay that a certain Senator was demand-
re!>prm ive, an<l flexible, and which fitted    in!{ assurame that for the next year
in \\ ith what an executive could anci          N.\SA e'<pendiwres would be held hc-
should do naturally.                            low :; billion. This was the price for his
                                                mpport of the President's tax bill. This
   .As an example of the importance ol          wo11 Id hold hack our fast-building effort.
lhis, a nd the discipline which it gener-       but again I was able to assure the Presi-
ates, let me <ice an example. President         dent 1hal if he decided to do this we had
Kennedy called me to the 'Vhite House           sufficient control to accomplish it al-
i11 ScpLember o f 1963 a nd told me he          tho ug h if the hold down went beyond
was thin king of ma king a speech a t the       the I year it would serious ly affect t he
llnited Nations which would urge lur-           program.
the1 coopera t ion with the R ussians in
spare, and that he was somewhat con-
                                                Need for More Research on Leadership
cerned that he wou Id be undercut by
adverse reanion from :\.\ SA. He told             As we think about what the experi-
me he had seen nc\\'spaper articles quot-       ence of the pa t 25 years can mean for

34
future managc1~. let rne c lo'>e In staung            rlunrln11r /1•twl.s of ma11ageme11t b oth i11
my lOnvinion         th.IL ''l' nct:d rnu ch m o re   tht• / Jt pmtmrnt of n efemc and in in-
re~earc h on what C'\C< llli\e leadersh ip in         dtllfl) /JltLS "   prolifenzf/011 of funr/1011 -
Gove1nment neech to do to nourish and                 nll'i ~P''' lfJ/iud staff group.1 who.if' f1111c-
effec ll\CI\ attend to the l'are a nd feed-           t i 0111 tend t o l1e vieu•ed as end.1 m
ing of the organ11<1iiomil c·mities witho ut          th1•u11efot:J TJ11J h1u /,-d lo d1l11thl[!
whkh '''t.' cannot de,e lop and maintai n             mtlllflJ{emerit a11tlt o 11t)' a11d obseta111g 1t'-
all the qualitit.·-. neetlccl ror succe~ in           1/w11si/J i/it1t'~. f)flr/1r11lmly   111 rnch   areas
large-scale e fl o 1ts.      l,rn y rnm pctencics        ro11 trnr t admi111strntio11. H ow ca11 Wt'
                                                      fl.\
are vita l. \ \'e kn o" that some leaders             t>liminate un11ece.1sor)• layers of ma11f1~c­
can uri ng al l of them wgether for grea t            m1•111 and /n oviclt• t•//ect1ve coordi11at1011
accomplh hm ents, h ut we know li ttle ol             n11d <011trol?
how they do it. I l ow a lead er p laced in
charge of a large. rnmplex effon can re-                   M 1. ir,•/1 /1: I Ll1 ink tha t any gi-ou p of
la te h h oper ationnl w his nono perational          sen i01 kMJers in an effort such as a large
pr o blem s and tn the forces a t work in             :tcq u is i Lio n project must have a t horo ugh
the enn1onmerH nt·e(h a great deal nl                 ktmwlcd~e o1 the re ·ources it req ui1 c.

study. I belie\'e that 1n (,O\ernment lO·             for \llffC'i'I and not Jo<;e control of the
da '' c have no i;i eatc1 need than to                power Lo d 1rect Lhose re')()urces. Il muse
in\'Ohe '< holar hom many disciplines in              nm IJernme Lbc pri:.oner of the 'e1
this re,earch, schol:J1, who can ob enc               forces 'dlll h the) must re ly on to get
and ;1<·c11rately descri be wh a t '>t1ccessf11I      wm k clone. It has seemed to me-lrom
'ienior gmemmental executi\'es do to                  't11clving- tht· procurement systems that
produce succe.,'i and wha t causes them               ,,t.·rc dcq:lnpcd back as far as 1926
 to fai l. \ Ve pm ticu la1ly need r inse coop-       when the aeronautical industry wa'I r e-
eration between the' c 1 esearchers and               q mred LO go to ciesign com pe ti tion . and
o ut best governm en rn l executi ves so Lliat        then la1e1 th ro ug h the I 930's wh en profit
th e research r es ul ts can be tran slated            li m ita tio n s wet e being put o n prow re-
in to new a nrl bett ('T teaching in o u 1            1nc.·n1 lrnl "hen a n exception from such
graduate: schools. .\ nd th en we need to              limitauom was made to en com age rc-
~elet t and support chc kind of exccucive             ,e.1rrh 111 "ientdic equipment for fire
- the kind of leade1ship groups that can              ronc ro l. communications, na\'iga tio n , and
                                                       tar~et decection-that it is very impor-
 brim~ chi new 1.. n owledge into use in
real-lilc ,i llla t inn ... \ ncl. 10 acid to all      tan t to 1cwgni1c t ha t in very lar~e er-
 thi,. we need the kinrl of audi ts ;111rl             lo1t,, m h as 101 \\' 01 Id \\'ar 11 and in
evaluaciom h\ (, \ 0 that \dll enable                  '\ \S \ , Lhe pron1remenc relatiomhiP'
Con gre'i~ to feel confident chat it i u'>ing         mu~t be 'o .1rran~c:cJ that ,,hen ou han:

it oversight fun< tion to improve pro-                a major or unexpened problem. Lhc
gram perform;mce in the exetUti\e                     "°'    k habit to follow j, D r. von Brn u n's
 branch .ts wel l as to improve its own per-           p1a1ti<t'. JI he had a 111.1 jor fail ure on a
formance in t he a1ah01 i1ation an d ap-               tesl a n d a worke1 ste pped u p a nd a id,
 propnacion process. 'Thi!>, tn me, is one            " \\' c m hc1. I know why that rocket
o f the major cha llcngei. to the GAO in its           ra iled, J gooled: 01 J oe m ith goofed," he
second 50 years.                                       wo11lc1 11 ' Lrri tici7c rhe person at fa u lt b ut
                                                       WOll Id ha nd h im a bott le o f champagne.
                                                       When n rocket fo ils it generally explode
                  Discussion
                                                      and bu1 m . a n d iL is ver hard to get the
  £11ol11t io11 of the dt•/rme ncqui~1rw11             informauo n needed to fix the nex t Rig-ht.
proresJ has Jnod11r.ed n.ce.s.sive and 1e·             \ 'on B1:.iun knt:w he couldn·t do any-

                                                                                                        35
thing about the one that had just failed,       three senior officers came to know a great
but he could u e this kind of information.      deal about the resources that were avail-
                                                able 1n American industry where about
   In NASA we departed from che previ-          95 percent of our dol1ars were going.
ous practice of having the procurement          • nd the point is that through the ource
organization do the procurement and
                                                E' aluation Board process and the fre-
forced the three senior officers--Dr. Dry-      quent program reviews which we1e con-
den. Dr. ·eaman ·. and myself-to make           ducted on the same carefully structured
the decisions on every contract that wa         basi , everybody in NASA was constantly
over $5 million. We formally appointed          reminded that the agency's three senior
Source Evaluation Boards chat were re-          officers were following the agency's prog-
quired to develop their own plan for            ress on its projects almost on a day-to-
evaluating every (acct of all proposals-        day basis. From this they bad confidence
che bu ines management, the engineer-           thac, if something went wrong or needed
ing, the S<:ience, and such que tions as
                                                to be done differently than it had been
the reliability and capability of the con-
                                                planned, they could get a receptive hear-
tractor co deliver on his contract. This
                                                ing before people at the cop who were
included his ability co meet the uncer-
                                                clearly kno,dedgeable. Also, through the
tainties that would be faced in the
                                                Soun.e E'aluation Board and program
de\'elopmcnt. Thc!>e ource Evaluation
                                                re,icw processes. we were able to clarify
Boards were required to repon in num-
                                                and O\.ercome deficiencies in the under-
bers rather than in adjectives. Instead of
                                                 tanding of our headquarters and field
taking tho·e report home and reading
                                                cente1 leaders as to • ASA policies and
them by the bedside lamp. NASA" three
                                                the proper procedures to be followed.
senior officials sat side by side in a formal
hearing. heard the evidence presented                o I would say that in large acquisi-
by the Board, and asked many questions.         tions yo11 must have a clear idea of how
We had siuing with 11s people like Paul         not tn lo e control. how to effect a con-
Dembling from the Legal Office, the             tin 11ous but not too detailed control. and
procurement expercs, the small business         how to inspire confidence up and down
set-aside ex.pens, and all Headquarters         the organization Lhac knowledgeable peo-
~taff Lhat were concerned. The staff ex-        ple are always available to make de-
perts asked many questions so as to             cision· when needed. It seems co me thal
evaluate the thoroughness of the work           in re earch and development particu-
and co test the assumptions and judg-           lai ly, Lhere is a need to do all po sible to
ment.-. of the Source EvCJluation Board         ha\e the project leaders feel strong sup-
members.                                        port. This is related to your question of
  The three of us then went co another          nol letting a gap develop between Lhe
room, di cussed Lhe basic elements that         lower and senior levels. In these large
would determine success or failure, and         developmental projeccs I think it is very
made our decision. In essence, we were          important to get away from the idea that
required lo have a direct confrontation         computers, or PERT or critica 1-paLh anal-
wilh the problems at the beginn ing of          ysis, or companion costs can show you
the work effort and this gave us a much         exactly how to do the development job.
better basis to make Lhe project man-           We used all of these, bm also found chac
agement decisions and follow what hap-          many of the leadership and social science
pened as work went forward under those          features are not susceptible to this kind
comracts. But even more important,              of treatment. Understanding the total
through this process, day after day, we         problem of leadership and developing

36
valid judgments as to how far the leader-      verse . whereas what is really needed is a
ship can go in pressing the organization       stronger seme of cooperation in allain-
co do what is requfred are not revealed        ing what is really fl romrnon goal. Do you
in computer analyses. It has seemed to         believe that there is a need to develop a
me that in many case~. you find too late       bell er working re lat ionship between Gov-
that a computer analysis that looks good       ernmrnt and industry~ And, if so . what
is not developed from a basic fi le of re-     do you thinll could be done abo1tl it?
liable data, b1 1L it is ba ·ed on informa-
tion drawn off rrom aggregates some-              Mr. Webb: I believe that you have to
where up the line and ometimes from            have bolh cooperation and conflict. rn
data prepared for another purpose.             the selection of one contractor out of say
                                               four or five who are making proposals, it
   Another problem arises when the con-        is very imponant to have something of
tracts are so detailed that when you en-       the adversary relationship as a compo-
counter techni ca l troubles you have to       nent of rhe governmental process. In the
go to the contract LO decide what to do        negotiation of the contract, I think it is
instead of identifying and putting into        very import.ant to have some kind of a
use the kind or lechnology it takes to fix     reserve or fall-back position. You will
the situation. Of course it is important       note that in NASA we announced who
to have a relationship with R. & D. con-       had been selecced for negotiation of a
tractors under which you can determine         contract, always with the imp! ication
at the proper time the full cost of a fix      that, if we cannot negotiate a satisfactory
and the extent of the contractor's lia-        contract, there are other contractors we
bility. The in-house capability to deter-      could turn to.
mine lhe practicability of a contractor's
proposed technical effort to solve a prob-        I think thal this is basic to o ur coun-
lem and Lo judge its probable cost is          try's way o r doing business. Our courts
extremely important. There are three           are based on an adversary process. Busi-
questions in most such cases: Can we rely      ness undersrands th is and it is constantly
on the contractor to accomplish what he        looking at its competitors. as well as the
proposes? Do we have to put in our own         Government, and there is a son of a three-
technical judgment ingredient to make          way adversary relationship. But it seems
sure that lhe fix will work? Do we bring       to me. even in that framework, there
in another contractor to supplement            must be cooperation, and within the
these elements?                                early phases of a major development
                                               project. It is \ery important for the Gov-
   Project managers have to make those
                                               ernmen t to Lell all comracrors those
decisions-make them almost in real
                                               things that are important to success. It
time-and to do so they must have con-
                                               is very important also to have intelligent
fidence that, up the line, the kind of judg-
ment and ass umption basis that they are       thought by both governmental and con-
using will be underst0od at the top. So I      tractor personnel as to how each is go-
say that in research and development. if       ing LCJ proceed lo get the job done. ln
you expect the unknown and plan ways           th is kind or an arrangement there is no
to fix the problems that you will certainly    substitute , that I've found, for confidence
encounter, you are a lot beuer off.            of the industry leaders in the people in
                                               the ~overnmenta l set-up. that they are
  Some writers believe that the present        going to face up to all the situations, all
procurement atmosphere between Gov-            the. problems. and do a fair, honest, and
ernment and indu.stry is strongly ad-          honorable job.

                                                                                        37
   We had a policy in NASA to keep an            a "liars' contest." Do you believe this is
open door to the senior officers of com-         a problem? if so, do you have any rngges-
panies. 01 Go' ernors, Senators. or Con-         tions /01 a solution?
gressmen, or c hambers of commerce,
                                                    Mr. Webb : Well. I think that pan of
who wanted to come in and say, "Th is
                                                 this is maintaining adequate competence
contract is extremely important and
                                                 within the Government to form a judg-
make all the difference in the world to
                                                 ment o n how the Government is going to
011r tate." Jn anS\\er I would say very
                                                 get the mo t for its money and how it is
frankly, " \Ve are glad to hear what you
                                                 going to get the job done that it is start-
have LO say: we will listen to it: we will
                                                  ing out to do. Let me point out thin in the
keep it in mind . But the decision is go·
                                                 lunar orbiter award we chose the highest
ing to be made in the fo llowing way, and
                                                 bid, not t h e lowest bid, and tha t every
I, as a person . am only one o f t hose in-
                                                 one of the five flights to the moon in rhis
volved in this pr ocess." I would tel I
                                                 projen was successful and the entire
t hem , "You can see that it's a self.
                                                 moon was mapped in just five flights.
polic ing proces~. so if something~ome
                                                 The basic reason Lhat we chose Lhe high-
force- is brought to bear to distort the
                                                 est bid was that there was incorporated
proce s or to bring in inequities or fn.
                                                 into the sy!'ltem a means of proteCLing
voriti ·m, this is vel) likely to come out
                                                 film from solar radiation in the e\ent of
through the self-policing features and
                                                 a sola1 Aare. IL happened that on the
find its w:w into the newspapers. "
                                                 first Right there was a solar flare that
   '\ow when these kinds of procedures           wou Id ha' e destroyed I.he film if we had
are used. it makes it easy for industry          d1osen any other system. As might be
leaders. presidents of companies--fortu-         e'pened, \\' C were challenged in the
natcly for NA A T had known most of              Congress. and the low bidders were ' 'ery
them in the aerospace industry for ma n y        upsel and fe lt that the Government had
years--to come in and spend an hour              clone a wrong thing. But in NASA we
with a sen ior Government official and           said "We did the right rh ing because it
during the first :!O minutes wear his com-       was 1he best way to ensure s11cress for t he
p(lny hat and say what he thinks is in his       project."
company's interest. 1 believe char's help-
                                                     ;\low l think you rnust have a way to
ful. and it's al~o all right and helpful in
                                                 dt·\elop a basii. for good judgment and
the econd 30 minutes for him to ay he
                                                 then ·ou must ha\e the courage LO apply
is puning on hi-, public-interest hat and
                                                 that judgment. lt seems to me that there
talk about the problems of the industrv,
                                                 ;ire tim es, and certainlv we have clone
how :\'.\ \ look· to him. a nd whal in-
                                                 1his in :\',\ .\. when you reject a low bid
terdepartmental relationship · are c~ws­
                                                 for good and sufficie nt reasons. I chink
ing prohlem . I'm willing to listen to
                                                 vou must take account of any fartor, in-
what industry leaders th ink would make
                                                 t luding a clear effort to buy-in, that is
for better relationships in the public in-
                                                 not ren I i~ti r in terms of getting the work
terest. l\ faybe that will at least give you
                                                 done. There was no sub!>titute in our
my view. I'ni s u 1 e 1here are ochers who
                                                 progrnm for the clear understanding by
have different opinions about this.
                                                 everyone that the rocket which was being
    Mall )' j1eo/1le believe that one of the     huilt was going to be launched, that they
causes of cost p;wi.vllt .1tarts at the source   were going to be there when it either
.1l'lectio11 process. that is, that the tend-    Sllffcedcd or failed. and that rheir costs
ency lo award development co11t racls            as well as their technical work were go-
 largely 011 tlzf' basis of price has rrentni    ing to he closely followed. So all of their

3
dee i,1on' \\Cte look in~ toward that mo·            <c:ntt  i I11~t''• ',1< 1111111 < hambers. ~un sim-
mem ol truth ''hen the roe ke::r would                11 lato1, .•u1d utlat:1 1e l fat iii ties 'o both
SU<:ecccl and fl Ill \\t1Uld f,1il. \\·e all          we and ou1 1 01111.1< lOI"\ could 11 e 3ffll·
were dear that \d1ile \ou «10 hrinq batk             rate lllt'.l'111eme11b rather than concep
an airplane that h:is .a fe\\ t1oulJlt':i and        t11al :n~u111c.·11t.' i11 1t'~uh ing i.,!>ues. \\'c
imprO\c it. .incl 'end it nff a!{.tin. a nxket       .1dckcl J l>illio11 wonh of capital plant
ha' to wml., on its first flight or the 1d1nk        lO LIH' .,. I bi I I ton t\ <Jrth that :\AC. \ had
thing 1s Inst.                                       .1he.1dv p111 in. So here was a S4 billion
                                                     capital pl.1111 111a11nerl In ~3.000 rnmpt·-
  Ruog11i:it1g lht• 11et'f/ fm 1·m·o 11mging         tenc c ''ii \Cl' u l' people working wtlh
the adt'<Jtflf) /11nct1011 i11 /110.~rnm ma11-       a not he1 .IHO .000 111 i11d ustry. ~ O l a II of
(lgemer1l, what .tll'p.1 do yo11 see flj es-         Lile :l:l,000 111 home· people were imolved
ser1trnl for lo/1 111t111age111ent lo em/1loy to     in tethlll«tl e\,duatiom: there we1c ad
pro/t•c/ it~f'/f ugai111/ "/Jroc/1111f'ma11-         111ini,t1ator,, 111a11.1gers. and lawye1 s, but
shiP"?                                               basic.ti I) '' c t1 t(;'d to ha' e in our 'a1 iom
                                                     unit, all the .,kill' and disciplint·s chat
   Mr. T1' eu/J.· .\ Aain I think that judg--
                                                     wcndd pe1111i1 m to apply intellie;enc e to
ment mmc be based on cardul, intelli-
                                                     \\ hateu•1 prohltm aro e. whether it wa)
gent applic.ttwn nf thought .111d .tnahsts.
A a unit of ma'' 01 t'nergY. the total of            t·:-.:pt·cted m 11nc pectt·cl. And I belie'e
                                                     th:it thi' i, 1ht.· nnlv w:n: ro proc<.-'ed in
human imell1gcncc j, infin11e,imal in
                                                     t he.,e 'er · l.!l'l!C cncle:l\ ors.
the \a:o.tnCS'i or the uni\et,e. But it vou
look at human intelli~encc 111 te1 ms of                 0111· o/ thr 1hi11~J which yo" hat•e men·
it elfc< t on e' eryth 111~ wt du. you wi II         tio11t'd i.\ the' T'lllur. of lhr NA 'iA laliora-
find that 1t h the mmt rrernendou~ and               toril'.~ I<> }'Ollr /1tt1f.;.,rat11. D o you hat1e n11\
p0\1e1ful lone we h.ne. 1t \<.'Cll1\ to me           ~e111• "" I '10111!,hl (lj lo whet litn 1ir111 la1
that. in the .1pplicat1nn ol human intelli-          Jno/Jln111 of of /in f/gf'11ries . .111ch a.1 t ht•
gence lo l l1 e p1olilem 'iLa1ed. iL is possilil<·   netJ1111111e111 of n efe11.1t> and AEC:, tltat
co:malyn: wha1 you need fo1 'ltfle~:-..              ltavt· ltll~t· U. & !J. /nogrrmH, co11/d llfl'C'l'
                                                     hf'1'11 dealt ;1 11/h l1t>f11•r if the ti~n" 1e.1
   In 'J '\S \ w<· 'pent abou1 5 pen em 1>1
                                                     Juul 111111la1 l'I ''if 1ti/J/1cd laboratoriej!
o ur lunch tor an how.e capabiltt\. \\ e
startc:cl nut '' llh man} people in ind met\              Mi. H't'/1 /1 : I .1m ron\.inced that m01e
knowin~ more ahout how 10 111,1!.,e bq               i n-how•t' lom petenrc would ha\ e heen of
rocke1..' fl) and the \Jrtom tt•rhnologie.-.         :.,rre.11 'aluc. \\'hen "orth ..\me1 irnn
related to them than ''e did \\ e deter              'ra1 tcd to t l't.·n~rnee1 the Apo! lo '>pace·
mined that ,,.e were going Lo change that            t raft allt.t 1hc .!O l fit<:. we we1e able LU
balance to '' he1 t' ' ' c 111 ~ .\ . \, the Cm      'encl 01. I· lie1 h.11 cl Recs. second r;tn keel
emment people. J..ne'' mme on t'\t~l\                offiual at I lunt,\ille, to render expel!
subject \ital LO 0111 SllHCSS th.111 did the         .1lh it c a11d .1"i".11tl e :it the North Ame1-
people on the uu t:iicle. Tlte1dure, \\he11          ic J11 pla111 .md :11 the ' '11ne time tu 'end
a ro11tranor ramc· 1<> us \\ith a pttJposal.         <hLro11a11t Frank Bur111an ou t to sene a-.
suc:h a~ 1he l11n,1r 01bite1 propo~at. we            Lite < li.1i1111.111 of the 'pacecraft reengi-
subjened 11 to lhe rno:-.t carC'lul ex,unina-        nt·ering rnmmntet.'. We didn't jll.'lt say co
tion and "crnttny If a cnntranot ran into            North \nwiican . ''It'' up to yo n w p10·
a prnlJlcm he rould nm snhc. we worked               dun a rt'< nginee1 ed c ap-.ule." It was out
with him on the specifics ol Lhe problem             re~pum ilH l ll y .is we 11 a-. tha L of th c con-
and sonH•urnes would take his equip-                 u :inor. \\'e had the capabiltt} to get
ment imu 0111 own laboratu11e' fui an.ti             right 111111 the joh with the company ancl
ysi" 111d tt:sts. \\'c built the needed              make 'u1c.: 0111 combined kncrn-ho''

                                                                                                        J!I

  ' . ,,ll.
would produce an acceptable re ulL             then went Lo industry with O\<er 200
Frank Borman knew he would have co            million worth of procurement. But the
fly in the next 'pacecrafL ~ a r~ult of       inclmu1al comractor was con untl) mon-
the fire, we had learned that, in the         itored by F\ SA and by the MIT people
whole indu trial structure of the country,    who had done the original design. The
very little \\:   known about the true        sy tern was so critical to the uccc of
value of how thin~ bum under special          Apollo that all agreed thi was necosary.
condition... \\'c had to do a massi\:e job    One of the contractors ran into labor
of testing in a hurry. We had co join our     troubles and had to lay off some of the
in-hou~e capability with that of our con-     younger worker who had the greatest
tractors to amass the new data and apply      know-how. As a re ult. \\e began co get
it to the new designs.                        unreliable gyros. We had to spend about
                                              . 3 million to pick up 1..hc c unreliable
   For 1hh kind of Lhing, you cannot
                                              gyro from the industrial contractor and
simply let a contract and assume you "'-ill
                                              to t<!!lt them at the MIT labor.norics to
get what you need. I think that man           be sut c th~c we used in Apollo wou Id
project managers ha\'e tended to rely too
                                              work p1operly.
much on computer anal)':>is, logical anal-
y is, and model-building becau c they            This J..ind of relation hip. a kind of
did not ha\c the in-house capability to       O\er-thc-shouldcr supervision, is \Cry
take a piece of equipment into a labora-      complex. and I don't know that I could
tory and t~t it to find out "hether it        d~nibe it in C\en detail. But it seems
works under unu ual conditions. how re-       to me chat you imply cannot develop
liable it i , and this kind o( thing. The     \Crv large and complex } lems ,..nthout
face that the project manager and the         the kind or in-house competence we
contractor lme\\ that NA A had this           [ound o effective. It is doubly important
kind of capahility was a \cry trong force     now th,tt complex acquisitions require
for better perfomlance on 1he pan ol          more than half the money for electron-
our industria l partners.                     ics. The electronic components of the e
   May J gi\'e you one illustration? We        yscems arc very difficult to integrate
used the tn!>trumentation laboratory al       with the mechanical components.
 MIT for the Apollo guidance sy Lem. We
                                                  The grou.'ing complexity of weapons iJ
did thi bt'Gluse ''e needed gyro that
                                              umltir1g in projections of higher and
would be adequate and thoroughly reli-
                                              highe1 co.sis. •\fo)' we have )'Our vit:U'.S as
able for doing our job, but we did not
                                              to wht!lh~r trulv alternative sourc~ can
wane co pa) for re carch for some other
                                              l1e maintained ·fimply to have competi-
purpo We knew we did not have the
                                              tio11 and whether this might not be more
capabilic to monitor an indu trial con-
tractor in thi field in the ~nc way we        costly to our uonomy than clo.se manage-
                                              ment of an arsenal industry and the use
could in area like propulsion. Both Sea-
mans and I had worked closely with Dr.
                                              of a uo11 profit orga11izalion1
 tark Draper. lhc Director of the labora-        Mt. IJ'ebb : In the NA A program,
tory in Wolld War II and later. We were       once a contractor was selected there was
sure he was the best leader we could get      no alte1 native source unless it became
for this very complex project. The result     clear that a process or a component
was that for about 66 million. Dr.            could not be delivered in time. Then
Draper and his colleagues at MIT give         alternachc projects were developed and
us Lheic kinds of gyros and the designs       new contracts let. In most cases, the co-
needed to produce them in quantity. "'c       opcrath·e efforts of our contractors and

10
our in-house people provided success so        nonprofit _Jet Propulsion Laboratory
that no alternative contractors were re-       UPL). which had been established by
quired.                                        the Army and is run by Cal Tech. As
                                               NASA·s lunar and planetary phases ex-
   I certainly think that there are some
                                               panded, i~ wa~ extremely difficult to get
jo.bs that the nonprofits can help you
                                               JPL to thmk m terms that it constituted
with . .But look at NASA's experience. We
                                               the o~I~ lunar and planetary exploration
chose. no~ to create a single nonprofit
                                               capah1hty on which the Government
organization . \Vhen we asked Bell Tele-
                                               cou ld rely. It was in one sense the Gov-
phone officials to create a computer capa-
                                               ernment's in-house capability. In another
bility for Apollo and a softwear capa-
                                               sense .. j P1;- people had the feeling that,
bility. which became BellCom, they
                                               as university people, they ought to do the
6.rst p:oposed it as a nonprofit organiza-
                                               research work on the projects and handle
uon hke Sandia. Our answer was, " No.
                                               them the way they thought best, that the
we want to hold the Bell top manage-
                                               state-of-the-a rt wou l.d th us be best ad-
ment responsible and we want you to
                                               vanced, that science would advance, and
put your best people on it. Vve wane to
                                               so forth. Yet there were scien tists and
make it easy for you to transle1 the
                                               engineers in other places who needed to
needed people in or out. lf they have
                                               be incorporated into the govern.mental
stock options we want them to keep
                                               ~attern for lunar and planetary explora-
Lhem, so this will not become a criteria
                                               tion.
for judging a transfer." We made it clear
~hat we preferred an ordinary profitmak-            So we. had the experience of having
mg enmy of the Bell System, and the            on~     quJte large nonprofit operation
officials after considerable discussion fi.    which was very successful in its projects--
nally agreed.                                  R anger, Surveyor, Mariner, and so forth
                                               -bur which, in between and in the proc-
   In another area of Apollo, we went to
                                               ~s.o;, could not adopt the kind of operat-
a natio~wide integrated checkout sys·
                                                ing pattern that the leaders of NASA
tern. which cost about $1 billion. Each
                                               thought was essential for the total pro-
engine and major component was mea ·-
                                               gram operations of the U.S. Government.
ured by the same type of test equipment
                                               I belie\•e there is no great virtue in be-
at all locations. and computer data banks
                                               ing.a nonprofit organization. I am a great
were used to store the resu Ics of th is ac-
                                               b~hever that. if everyon e is doing one
cur~te, reliable, and uniform system for
                                               th.mg, you migh t want to try something
testing. whether t he tests were conducted
                                               different, and that is what we did in
in California. Florida, or some other
                                               ~ASA in this case. We simply said that
place in between. To get this done, Gen-
                                               we were not going to rely on these non-
eral E.lectric took a contract and set it up
                                               profit organizations to the extent of be-
~s an integral part of its organization , on
                                               com ing . their prisoner. They might be
1tS normal profitmaking basis.
                                               more difficult co fit into our system o f
  On the other hand, we did absorb the         working than industrial contractors.




                                                                                        41
                                                      Robert C. Weaver
                                                      Profrssor of Economics
                                                      Cily lJniversicy of New Yor k




      Dr. Wf'f/tlt'r, n nativr of lfla1hi11gtrm. I>.C .. lra.1 d1st111gui~licd himself at
nil lrvrls 111 ~mwnm1ent. Jn J95-l - 'i5, he wr1.\ /)r>f111t11 Cm11111iuioncr of Housing
for Nt•w Yorll Stnff• mul from 1955-59, State Rr•nt Admini1trntor. From 19fi0-61,
he scrvrd f,l.'i Vier Chairman, /\'rw }'ork C11y llow111p, 1md Rrclcwlopment Board.
From 1961 Mi. lu· Ul(l.1 Adrn1t111trr1to1, U.S. Hou~mg fmd flomr Finance AgctlC)',
ancl in J9r.6, Prnitl1•nt ]0/111.1011 apporntrtl /11m !),•n1•lt1T')• of the new/)' created
Department of l-Jo11.1111g and U1bfln Dn•f'lo/mlf•11t, n pm1t1<1n lu: filled until
/Q6S. hl J9r.Q am/ !970 hr wa.1 Prr11drnt of B11rnrl1 Collf'gt', Cit)' L'nivrrsit)'
of .\ ew }'ork.
     Dr. J:.i't'nt•t•r i1 thr author of m11m•1·011' book1, mo11ogrnpliJ, pamphlets, and
Jchola1l)· t1rlirlr~ m11crrning ho11sing prnblrm.1, pmblt'111.1 of Nrgmes in the
Uniled 'tatr1, racr. relatiom, rwd urban problem.1
     Among hi.1 /mbl1c lCmtrt' flCtm1t1e5 ht ha.1 .11•rved n.1 Chairman of thr
Nalio11a/ Bomd of Dm•rtor.1 , .VAACP. n11d Chrwmnn a11d late1· President of
the \'ational Cumm1/let· A~ainst D11rnmmatinn 1n Tlou.1ing. He is a fellow of
thr American Acad1•my of Arts and Scirnrrs: <:hairrntw, Task Force on the
Demonatic Dt·11elopm<'11/ of New Towns: l\fembt•r nf th" Vi.1iting Committee
of the fowl Center for Urban A fl a in, M .I .T. and flc1mard L' niversit)': and
Member of the National Acndrmy of Public Admm1,1trnt1cm.
    Dr. Wf•t1v1•r i~ a grad11atf' of Han.mrd Collt•gc (cum !Jude) 1929 and holds
M .A. and Ph.D. clrgr1·f•.1 f1·om Han 1"rd. Hr has rt•r1•n•rd l L.D., Litt.D., D.H.L.,
D.S.S., and JJ.P.A. honorary clrgr<'t'.1 from 30 rollt•g1•.1 and 11111versi11es.




42
West Auditorium, State Department
June 11, 1971




Management of Urban Programs


Speahmg 11s 11 /"11111·1 Cnvcn1111enl exr·n1litw with 111/J1tr111twl y,•.1pmw-
bililit1s for imprm1111p, lm11si11g anrl olhn a.1pr•r-t.1 of urban lifr•. DL
IVf'fmer pn•.1t·11t1 """" imporfnnl basic prinriple\ fm rnff1•11f11//y
plnn11i11g ond mr11111f!,lllf 11rb"n prog1nms. /Ir n11ph11.111.1·J tlwl 11rl.Jfln
program rna1111gr·r.1, 11nd e11n/1wlors ns well. 1hn11/d hmlf• n .1i11gl<• mwr-
nclmg p111 po.11• -1,, /Jr<Jt111fr th1• be.i t po.1S1bll' drln•1·1..,, nf 11•11 icr.1 to
                                                                            1


socit:t)'· Com/an/ 111tt•1cl11111gr of ideas and i nformallfm 1.1 rrq1mt•d and
manoger.11 e1111/1mt011, and lrg.11/otors must bam11e 111ort' co11ren1t•d with
Ille 11at111e of tilt" mba11 ~ tructure and i/J problems.




                                                               pie to e\'al11au~ meaningfully the effon
                                                               and for administrators to relate their and
   Lee Rainwater rt'c:ently published a                        otl1<:r11' appraisab of their activities. Thus
study of black family lite in a Federal                        we mw.t turn our attention to basic re-
slum. In che p1clace of the book that                          sea1ch, tools lor program development,
evolved he observed: " the research 011                        and modt's of evalt1ation. In eacl1 of Lhe~e
which • • • [ic] h based began as a                            the1c is a significant role for governmen-
study of problc1n~ in a public housing                         ta I and nong-o' ernmemal institutions.
projecL, PrniLt-lgoe in St. Louis, and
ended as a study of Lhe dynamics of socio-                         In chis paper l shall sav less lhan the
economic meq11ality."' 1 In a somewhat                         tille 'u~ge~l.'. about manal{ement /u•1 sc.
similar \ein, 111y appru;1ch lO the man-                       Tim i, deliberate. It is not meant, hO\\·
agement ot urban programs e'-panded lC1                        C\.CT. lo imph: rhal adminiscrative skill
inrl11de :rn:ilvsis nf the nacure of urban                     and m :m ,1gement e"\.penise are no longer
problems and program de' elopment.                             req u111:cl. h a m.1tter o[ fact, as govcrn-
                                                               me1n l>c:u1mcs more and 1nore in\olvc:d
   The first req 111sne oi good manage-                        lTI domesti1 'otial and et:onomit:-as well
ment is an cITetti\'e program. That, in                        a' l'cologiutl-ac tivities, a higher order
turn, rails Im an understanding of the                         ol petlonnanc:e i-; needed. U11t this is olrl
problem or prohlems involved and ma                            hat Im ·m1 who have long been in the
ch.incry for choosing l'rom alternatives                       bu-;i11css nf stressing the quality of man-
th:.it which is mosc efltcient and effective.                  age111e11L and reviewing its results. You
With this understanding and conscious                          know th,u it is nor enoug-h to formulate
choice, it is possible lor competent pe<>·                     ne\\ prng1 ams and fund them. Uni es~
                                                               they are operated \\;ith skill. the results
  1 Lei.' Rain watl'I , Bf'yo11d r./ul/ f1 tl'n//~ lCh1cago,   art.· \\t1stel111. inefficient. and sometimes
\l<lml· Publi1h1ng Cumpam , !!170). I'· \11                    dbam 011~.

                                                                                                          43
Program Selection and Evaluation              one area often produces unexpected and
                                              frequently unanticipated consequences
   To do more than refer to these obvious     in other aspects 0£ the urban complex.
conclusions would, in my opinion, re-
peat what your experience has made               Before we can achieve real advances in
commonplace. Rather, I will concentrate       management of programs addressed to
upon the new dynamics of effective man-       urban problems, we need to widen our
agement. They are in the areas of pro-        horizon from concern with a cluster of
gram selection and evaluation. Unless         finite activities to consideration of a sys-
and until all elements in government          tem. This can best be illustrated in the
join together in selecting programs with      context of specific examples.
greater understanding of social institu-         One of the problems is confusion as to
tions, the environment that surrounds us,     the goals and objectives of existing or
human behavior, and potential effective-      proposed programs. This matter can be
ness, the best administrative skills will     approached from two points of view: the
be misdirected.                               basic objectives of a complex activity,
                                              such as urban renewal, or the goals of a
   I approach the subject matter of this
                                              whole complex of activities, such as Fed-
lecture from the perspective of one who
                                              eral assistance in urban affairs and hous-
has long been concerned wit.h urban af-
                                              ing. In either instance, it is clear that
fairs and housing and who has, on occa-
                                              evaluation of performance must be de-
sions, differed with specific findings of
                                              veloped in the perspective of the effort's
the General Accounting Office. (A no-
                                              announced objectives. If there is ambi-
table example was the GAO report on the
                                              guity in the tated or implied goals and
design of a public hou ing project in the
                                              objectives, a given performance record
Bay Area of California.) This, however,
                                              may simultaneously be criticized or de-
is not the occasion for discussing such
                                              fended by several competent evaluation
differences or rehashing piques of the
                                              agencies or individuals. Each can and
past. Time, fortunately, mellows one,
                                              does cite impressive evidence in support
and its passing puts into proper perspec-
                                              of its or his position.
tive what once seemed to be all-impor-
tant conuoversies. You may therefore re-         There remains, however, the larger
lax in the expectation that I shall today     issue of whether or not the program be-
attempt to display an unprecedented de-       ing evaluated is either capable of achiev-
gree of objecthity. l cannot, however,        ing a given objective or the most efficient
resist marveling that a program operator      and effective instrument for doing so. As
-albeit an ex-administrator-has been          I hall elaborate later, failure to recog-
invited to lecture to the General Ac-         nize this basic factor leads co confusion
counting Office.                              between evaluation of results and evalua-
                                              tion of goals.

Importance of Clearly Defined Goals             Something more should be said about
                                              goals and objectives at this point. "Real-
   Management o( urban programs in-           ization as soon as possible of the goal of
volves not alone the evaluation of specific   a decent home and a suitable living en-
activities in terms of what is assumed to     vironment for every American family''
be their mission but also a constant effort   was enunciated as national policy in
to define more clearly Lhe goals involved.    1949. It was a statement of a long-term
It implies a recognition that urban pro-      result, the desirability of which was ob-
grams are interrelated, so that action m      vious and the time of realization un-

44
stated. Thus there was no real proposal                 Goals and objectives are no less cru-
to evaluate; rather, there was dictum of             cial in audits and reviews aimed at pro-
an achievement in the indefinite future.             moting efficiency and economy, while as-
By 1968 Congress reaffirmed the earlier              suring that legislative intent is followed.
goal and declared that "it can be sub-
                                                        In the process of program operation,
stantially achieved within the next dec-
                                                     frequently the stated objectives are ques-
ade by the construction and rehabil ita-
                                                     tioned and modified. Not always, how-
tion of twenty-six million housing units,
                                                     ever, is this specifically articulated. Or
six million of these for low and moderate
                                                     the operating agency, recognizing the in-
income families."
                                                     adequacies or ambiguities of a program,
   Jn contrast to the broad goal of 1949,            may attempt to shift or modify its em-
the 1968 action set forth a specific ob-             phasis or direction. Sometimes, of course,
jective to be achieved in a specified time.          this gives rise to new or amended legisla-
The act to which the above statement                 tion or the development of new legisla-
was a declaration of purpose included                tive history to justify changes in opera-
two new Federal Housing Administra-                  tion. But highly desirable changes may
tion (FHA)-insured subsidized rental                 be initiated by administrative actions
and sales housing programs and reorgani-             alone-actions, incidentally, which may
zation of the Federal National Mortage               have congressional support. Usually,
Association. The 1968 national housing               complicated programs undergo many
goal provoked much controversy. Some                 significant changes, and those who evalu-
asserted that it was unrealistic in light            ate the activity do not always recognize
of the capacity of the building industry             the reasons or authority for such modi-
and the availability of required physical            fications.
and financial resources. Others criticized
                                                        When evaluations are undertaken by
it as too modest, declaring that it could
                                                     a governmental agency, such as the Gen-
and should be achieved in 5 rather than
                                                     eral. Accounting Office, there is a con-
10 years. Both positions were generally
undocumented, relying upon conven-
                                                     housing units. The administration forecasts Lhat 4
tional wisdom or invoking wishful think-             million mobile homes will be built during the goal
mg.                                                  c.kcade. Since mosr mobile homes are chought to be
                                                     principal residences, their inclusion broadens and
  At this point the Kaiser Committee on              improves the definition of housing units, but it also
Urban H ousing-a Presidential task                   implie• a reduction of 4 million unio in the goal
force--<:arried out an independent and               a;;   origina lly defined." Charles L. Schultze with
comprehensive analysis of national hous-             Edward K. Hamilton and Allen Schick, Setli11g
ing goals. Its conclusions were similar w            National Priorities: The 19i1 Budget (Washington,
                                                     The Brooking.• Institution, 19i0). p. 96.
those produced by earlier comprehensive                  Oiscussi<m of national housing goals continues as
analyses of the Department of Housing                new data ~n<.I ~iiuations develop. See, for example,
and Urban Development (HUD). These                     h(•rman Maisel, Mont:)' and Housing. a paper de·
developments demonstrate that a specific             li\'<.'rcd before the Prn<lucers' Council Conference,
goal with delineated objectives can be.              '"'a~hingron . D.C .. May 6. 1971: C. L. Schultze,
                                                     et al, op. rit., pp. 282-288; and H enry B. Schechter
and frequently is, evaluated both inside
                                                     and Manon IC Schiefer, Ho11si11g Net:ds and Na·
and outside of government soon after it              tio11n.l Con.ls, papers submitted to Subcommiuce on
has been enunciated.2                                Housing Panels on Housing Produclion. Housing
                                                     Demand, and Development of Suitable Living En-
   2 Coals can be altered by changing definition~.   vi ronmcnr, Committee on Banking and Currency,
" ln Lhc Second Annual Report on National Hous-      House o[ Representatives. 92d Cong.. lsc sess.
ing Goals, President Nixon revised the goal by        (Washington. U.S. Government Printing Office,
including mobile homes within the dcfiniLion of      1971). pp. 1- 139.


                                                                                                       45
cinuing need to make sure that findings       management of programs, it is desirable
reflect program objectives. Obviously, if     to d ifferentiate between these two types
the administrator sought co achieve goals     o( evaluation.
and objectives differing from those ac-
cepted by GAO, the record of achieve-                                   II
ment may be poor. lf, on the other hand,
GAO accepts a mission which deviates          The Problem of Conflicting Goals
from the stated or evolving objective of
the program, this poor rating may, in            The frequent lack of agreement on
reality, reflect good performance. There      objectives between the operators and the
is more food for conflict in defining goals   evaluators is reaJly a reflection of some-
than determining what results occurred.       thing more pervasive-the absence of
                                              clear program objectives and the inevi-
                                              tability of their modification over time.
Evaluating Objectives                         And there is impressive evidence that ur·
                                              ban affairs and housing programs have
    Th~ question remains as lo the degree     been peculiarly plagued by indefinite
to which GAO should attempt to evalu-         and often conflicting objectives. Obvi-
ate the established objectives of pro-        ously, t his seriously complicates applica-
grams. As an arm of the legislative           tion of PPBS to urban activities.
branch of Government. its first responsi-
bility is to look at performance in the          Urban renewal, for example, was con-
 light of the pertinent legislation. But      ceived in controversy and it was nurtured
even here, more is involved than readin<T     in controversy.. In the process, two ex-
                                         0
the law and its legislative history. Com-     treme schools of thought have grown up.
prehension of problem areas and appre-        On the one hand, there are those who
ciation of changes in administrative em-      can see no good in the program and
phasis are needed. "Where this broader        would do away with it. The champions
point of view is accepted, the GAO be-        of urban renewal, both inside and out-
comes more effective in carrying out its      side of government, have often been
traditional function of recommending          equally dogmatic in its defense, de-
legislative changes either to modify or       nouncing all critics as biased and all
clarify program objectives and content.       criticisms as unfair.a
And certainly it should make appropri-        . One of many sets o f conflicting goals
ate recommendations for desirable fur-        rn urban renewal comes to mind. As the
ther evaluation where such is beyond its      program operated in scores of localities,
audit capacity bul revealed in its review.    its main objective was to attract middle-
                                              class and affluent whites residing in the
   Where private evaluation is involved.
                                              suburbs back to central cities, thereby
it has been my experience that fre-
                                              strengthening the tax base of the city.
quently the researcher establishes his
                                              But it was also a federally assisted pro-
own set of program objectives or fails
                                              gTam for slum clearance, and the legisla-
to inform himself on the legislative his-
                                              tion clearly delineated this as a major
tory and the basis for current adminis-
                                              program goal. This implied a responsi-
tration actions. Thus there is often con-
                                              bility for providing and upgrading the
fusion between evaluation of objectives
and evaluation of performance. Granted        supply of housing for the poor and the
                                              disadvantaged. Clearance of slums meant
that resuks may be less than maximum
or even inimical to solvino-
                           0 a problem •        ~ Rt, hcn C. Weaver, Dilemmri.1 of Urbt1n America
from Lhe point oE view of upgrading           (Cambridge. Harvard llnivcrsiLy Press, l!)fl!j), p. 40.

46
displacemt'nt of lilrgl' numbers of no n-        c·mhtraitw. of an apprO\ ed plan, wou ld
" hitc, reducing the ;rn1ount o f 'helter        he de fnt to block grants. It w;:is assumed
available Lo a g-roup already under,up-          f11nht·r, ll1'1t the coordination ol efforts
plied, and P<ta,ioning funher upward             thrnugh detailed planning ''ould be
pre:..,11re upon n •nt,, e'>pecially for Lhe     rn<M effective at the local level rather
dC;advamaged. 13m it did more. ">inn:.           1han in \\'a hington . .\nd this seems log·
during the earlier operational phase 111         irnl. prmiding a potential for de,elop-
urban rene"·al dH.'re "'"'a tight housin~         ment nf p-e:Her Aexihility in <ategorical
marke t, the nt:cd for relocation resource,      aid-. .lncl pro\ 1cling funds for related ac-
and resultin~ upward pressures on sales           ti \'tcie-. tn field' not co"ered by e'<.l<icing
pri(es ancl remal created incentives for         ~mm 111 -aid programs.
whites to sell or rent their central city
                                                    If, as one academ ic eval uator of M odel
houses and move to th e sub urbs. Or, had
                                                 C ities has suggesLed. local officials have
the cen tral city become 3!i attranive to
                                                 opposed th(' approach, asserting that de-
whites ac; wa<; ac;c;1t1ned, more wou ld ha\ c
                                                 L.1iled sh01 t· and long-term plane; are su-
come back and fewer would h:He left,.
                                                 pc1 nuons. thi-; i not nece sarily a defect
thereb) lc~-.cning clw amount of housrng
                                                 of the rnncept of ~fodel Cities. Rather i t
available to nom' hices and ,]owing- tht:
                                                 ma) be a c1 iticism of the planning proc-
fi I teri ng pr()( e '·
                                                 es emploved in certain. but not all, lo-
   l 1rban tenet, al t"ould ne\'er ha\e been.    calicic,, reflening. perhap . the purchas-
simulcaneou-.ly. the economic ";n ior of         ing of .1pplicacjon preparation r:nhcr
the central cil\. an in,crumenr for clear-       than a true elTon or capacity co develop
ing all the ,J11m'i, the mean., of aurauing      a program r<.>'>ponsi\'e lO loc:iJ oeeru.
hordes of uppc.r middle-inrnme familie'i
back into the t cntral dties. and a tool for        The Model C:itie program is signif-
rehousing former slum dwellers in de-            ic-.ant. ton, hecau e it reflects the prob-
cent, safe. and 'an itary housing, whik          lems inlterem in experi mental and dem-
gen erating a volu m e or construction in-       onstration efforts. The original concept
volving pri valc: in vestments fo11r w six       cmt'rgecl h·o111 a Presidentia l task force.
times as p-eat ''' the public expendiwrc.        It was intended co demonstrate how ron-
It could. and did, in iLs various a pecLi;,      'ol id.i ti on of existing grant-in-aid pro-
do -,ome of all nl 1hi,. Blll the expect.1·      gram.,, dt' facto block grant.ll, and local
Lion that the total package would be             planning could be combined t0 produce
realized th1011~lt urban renewal was un-         h11m.t11 and phy ical rc.:habilitalion in
realistit h om the 'tatt.4 Fe'' cva I u;nim"     bligh1e<l urhan area!.. Initially considera-
of the prog1am rern~nize th i..,.                tion wa<; givt•n 10 selecting a single city
                                                 a-; the clemonscration area. Then. be-
Model Cities                                     c:-r1N.· of the heterogeneous nature of the
                                                 < oun1ry. more th;in one location was pro-
   ~l ode! Cilil'~ wa' an effort co encour-
                                                 p<> eel 'o .is to encompass variou') eccions
age devclopmt:nt of specific goals and           of tlw Nawm and cities of different
minimize rnnR1ning nbjcnives. In addi-           ~ill'S. Ikcau~e of the magnitude of the
tion, by encouragin g the util ization o f       problems a n d the recogn ized necessity to
m an y existing progTams in a well -con·         embrace relatively lar ge sections or the
ceived package, it was hoped that the-;e         localilies involved, the amount of au Lhor-
could complement rather than rancel out          izaLion proposed wa large. Only a lim-
each other. Jt tht• same time t.hat upple-       ited number of cities were comemplaced,
mencar grants, operating within the              and the actl\·i1y wa 01 iginally called Lhe
  •Ibid .. p i5.                                 Dt·nton,u .ttion Ciue program.

                                                                                              47
    Semantics and politics occasion ed a                     cannot delay action in vital and crucial
 change in the name and a radical modi-                     areas until our knowledge about their
 fication in the scope of program. In the                    nature is comprehensive or definitive,
 hearings before the Banking and Cur-                       experimentation is a must. le is a part of
 rency ubcomminee of the H ouse of                           the trial and error process that yields
 Repre emat.ives, a member observed that                    knowledge and comprehension, provid-
 (in 1966) we had enough demonstra-                          ing a basis for program design. planning,
 tions in our cities without proposing a                    and evaluation. Of course such action
 program so idemified. Demonstration                        should be carefully formulated to assure
 Cities became Model Cities. Earlier it                     its yielding results. Congress and the
 had become obvious that the Congress                       GAO need to have a full understandi ng
 was not going lo authorize or fund a                       of what is involved and be prepared to
 program involving large expenditures                       avoid recrimination when some of the
 unless more than six to 10 localities                      experiments fail. And any experimental
 could hope to participate. Thus, ulti-                     effort must have funds for its evaluation
 mately some 150 locali ties were in-                       as an integral part of the program. as
 cluded. What was conceived and pro·                        was provided in the Model Cities legis-
 posed as a demonstration became a full-                    lation.
 Redged operational program.
                                                               From the Model Cities experience, it
   Even from che vantage point of hind-                     become clear that an experiment must
sight, I doubt if it could have been                        be of limited size if it is to maintain its
otherwise. Two factors were overriding.                     integrity as an experiment. Otherwise
First. there was a national desire to do                    there is the probability that political
something about the erupting ghettos.ft                     pressures will direct it into an opera-
  econd, regardless of the extent of par-                   tional effort or defeat it.
ticipation, any action in the field re-
quired large expenditures. These two
                                                            The Systems Approach
considerations meant that participation
had to be expanded or no action would                          This brings me to another poinL Be-
be taken on the proposal.                                   cause local governments are o harassed
  Model Cities never had a chance as an                      by finandaJ troubles, they tend to assume
experimental program.11 Yet because we                      that all urhan problems are basically fi-
                                                            nancial. While, of course, greater finan-
   a ..The problt"m, [0£ rban America] arc so scri·         cial resources are an absolute require-
ous that vnall ·11<:ale expcrimentarion is insuflicienr.    ment. money alone will not solve our
Massive undcrt:ik1ngs are necc:IS3n-. The politicians
                                                            urban ills. Equally important are greater
must be prepared for f.:Jilures and they, in turn ,
must prepare 1hc public. Thu~ far no new genera-
                                                            knowledge and more qualified people to
tion of mcrropolirnn leaden bas appeared willing            do what needs to be done. Three B's are
to take the kinds of polirical risks implied,.. Alan        involved: brains, bodies, and bucks. Our
K . Campbell and J cs.~le Burkhead ... Public Po licy       primary need is for better understanding
for Urban America.... in Harv!!')' S. Perloff :ind
                                                            of the urban complex and more sophis--
Lowdon Wingo. Jr.. cd>.• h11u:.r in Urban Economics
 (Baltimore, The J o hns Hopkins Press.. 1968), p.
                                                            licated techniques for dealing with it.
&14.                                                        All involved in the process-the execu-
   o For a brief di:.cu~~ion nf recent developments in      tive and legislative branches of Govern-
t11c program , ~'e Sc..hult1c, et. al., op. cit., pp. 94-   ment, and the evaluators, public and
96, and Jud110n Lchmal\ James,. Evaluation Report
                                  0
                                                            private-share this need.
on the Model C1t1es Program, papers submitted co
Subcomm1t1ce o n llousmg Panels. op. cit.. pp. 83~            During the last decade, in the field of
  56.                                                       urban affairs and housing there bas been

48
less emphasis upon :tdministratinn and                        sound ob jecti ve!o. Al I of the major pro·
effenive management and more upon                             po ·a b e'ipoused by re!>ponsible ad,·ocate
analy is of hO\\ modern society really                        '' ould !>11cceed in distributing funds to
operates. J\£uc-h has beeu i..iid about the                   . tale and local governments. !\lost, in
potemial of the ystems approach to ur-                        ,·a rying degrees. would lessen reliance
ban problems. uc.h an approach, ideal!\.                      upon tCJ..TTessivc taxes. On the other
would reve:tl the impact of a propo ed ac-                    ha11d, )Ome of the proposals will do litde
tion upon other elements in Lhe svstem.                       tn srimulate <:itctle and local tax efforts or
This would make mana~eable the will                           m.1ke their revenue more reflective of
and resources to change 1he urban envi-                       e<nnomi<. growth. Nor will others con-
ronment. o fat , we ha\'e nm been able to                     tribute c;ign ificamly to raising the income
perfect such an approach, reflecting, in                      levels of the poor or dealin g w ith the
pare, t he clcpartm e ntaliall ion of know l-                 ptoblem o f tax revenues resulting from
edge in our univenities and the complexi-                     rc-.idenrial mobility and institutional re-
ties of tran ·ferring the technology of                       straints. Only a few are responsi\e to the
weapons and aerospace to human and                            nt:ed fot na tional support of social serv-
urban problems. For as '"e ha' e been re-                     iu:" \\hid1 are national in scope and tm-
minded. the 'Y~tems approach "enjoyed                         p;ict.
its initial success in a field in which the
                                                                 Clearly. until there i..; ome decision
goal was pre~clected and clearly defined,
                                                              a.~to what the principal objectives of the
unlike the manilold goals to today's
heterogeneous city." 7                                        program are, no meaningful determina-
                                                              tion can he made of the best tool or tools
   Yet there seems Lo be great promise                        for achie' mg the desired results. And the
and immediate application in ucilizing                        only way there can be significant evalua-
systems analy i , 11ot to '>Cl goals. but Lo                  tion i<i to look at re ults in light of stated
select the best program mix from a :.et                       goals and an analysis of the soundness of
of programs so a.s Lo get t he most service                   1hese goals.
delivery from the resources available. To
date this approach seem~ to be more ef-                           More i~ in volved in urban affairs and
fective in solving ~pecific and less com-                      housing. There are two difficulties. The
plicated problems than broader and in-                        first is 1elnted to goals and policy. It
terrelated issues. h should be ucilized                       imolve' failure to differentiate clearly
wherever possible, as "e continue our                         hetwecn general and special revenue
 earch to disco\"er techniques ,.. hich will                  ~h.u ing. not recogni1ing that pecial reve-
avoid Lhe <ontinuing development of a                         nue sharing and categorical gram pro-
bundle of c.onfiicting finite o lution of                     gr.11ns provide different solution to dif-
specific, but related. problems.                              ferent typ<: of problems. After half a
                                                              century of urbanization, this Nation af-
                           rn                                 firmed a national concern for urba n
                                                              development. The proposal for special
Revenue Sharjng Objectives                                    revenue sharing in th is field would say
                                                              llML this is nu longer a n ational concern
  The current conlrovcr·y over revenue                         but solely one for random local decision.
sharing illustrates the imporcance o f                        The ~econd-not unrelated-is a matter
                                                              of ma11agement. Are our 5tates and
   : Walter \ . 'Kht>ib<'I, "Cnmmcnuin of Rdt•
                                                              cities, acting indi' idually and without
\·ancc of Science' aml ·1 ccl111olog-, lo l rban Affair\, '
Coveming Urban 'ionl'I)" \!ru.• Smmt1fic 'I/•·                ..ome n:itional guidelines, capable of ex-
proaclrt'1 IPh1IJtll"lph1;i The .\mcncan \cadcm,·              trat ting the maximum benefits in an
of Political anrl 'io<-1;1( tlc.'DCl'. 1%i). p. 72.           effort '' hich has national and regional

                                                                                                        49
 implications? The record of urban de\ el-       Jar rnnOirting goal~ and objectives devel-
 opment to date ~uggests a negative an-          oped. Today we have come to realize
 'wer.                                           th.it lum dweller are not a homogene-
                                                 ous group, nor are the poor-save in
   This is what the controversy is all
                                                 their pO\·cny. In recent years the rnm-
abouc. Forwnacely, in this instance, di'-
                                                 position o l the consumers of public hous-
rn'>sion of goals and objectives is waxing
                                                 ing <hanged radically. Thus a program
eloquentl) bdore the effort is defined in
                                                 that was initially successful became Jes
law.
                                                 viable with the passage of time.
                                                      A major com plication is that the na-
Problems Are Complex                               ture 0£ urban problems and the rharac-
                                                  tt·ristics o f the people involved change
    Jn hn11'iing ;ind urban affairs, any ~ig-­   over time. Since most of the basic defi-
 nificant anion inrnlve a complicated            ciencies require long-term solutions and
process and affet.ts a complex organism.         arc slow to move from planning to execu-
 Both the administrator and Lhe evaluator         tion. ohi>olescence ~eems to be built in.
need w 11nderstancl these complexitie            The onlv wav to minimize it i con tantly
and the rnmplic.ned proces es that ,1re          to 1 e\ ie'' a\sumptions, institutional struc-
 et into n10t1on by the programs. And, of         tun·~. and human componenu,. Currently
course. bcuer law.. would be passed, had         we tend to initiate actiYitie in urban
the congre:i ional committees access to          deH·lopmenc and housing based upon
more realiscit and sophisticated analy cs        rt.'a,onable assumpltons, some of which
of the u1 ban proce s. M ut.h of the frus-        p1 me to be wrong. Anothe1 approach
tration and many of the failures reflect a       would be emphasis upon basic mean -end
lack of 11ch information. Indeed, we             and C"dll'il'·efTect relations. In a period o{
have frequently depended upon trial and          soc ial 11pheaval we cannot be purists. But
<:1Tc>r since our analy e and models are         we ran , and we should, accelerate our
often crude and imperfect. Bm only re-           an ivity of the latter type so as co reduce
cently and inrnnsistcntly have we added          the waste and frustration incident to ex-
the crucial ingredient of evaJuacion. For        cessive trial and error. First the issue has
if we are tu learn by trial and error, there     to he defined. more needs to be known
mu:.t be a y tem;Hi< analy.,is of program        alJOlll the problem~ im·ol\'ed, and priori-
dfec ci veness.                                  tie~ ha\ e to be set. Then there needs to
                                                 l>e Jnaly,is of the impact of sugge ted
   Billions of dollars haYe been spent for
                                                 ac c1on upon the specific problem to which
compensatory education for poor chil-
                                                 it 1s addrc ~ed. as well as upon other ele-
dren, and yet there 1s little agreemem as
                                                 ments in the urban environment. And
LO how elTecLive the effort is or how best
                                                 alwa)'S \\here people are involved, a cer-
to de ign the acth it}. In urban develop-
                                                 tain degree of flexibility mu.'>t be antiti-
ment and housing similar problems
                                                 p.ned and accepted.
exist. A<, uggested above, urban renewal
has, from its inception, been harassed by           ln recent years departments and agen-
a series of rnn flicting, and at times, in-      dc!i have significantly stepped up their
con istent goal and objectives. Doubtful         in-house eval ua Lion. A pan of th is re flects
as umpcions have been made about the             a budgetary situaLion. As the Great o-
economic \trunurc of the city, partic-u-         ciety programs found unprecedented
larly the housing market, and the naLUre         translation into legislation, many de-
and fun<.rions of slums. In programs for         pai 1mems and agencies began to feel a
the hou ing of lo\\ income families imi-         real money crunch when they faced tht:

50
Budget Bure;w .tnd             \ppropriation'                          pt.>r-.untH:l who an· <oncerned with      p10-
Comrni nee~ •>I the Cong1 ess rn an effon                                      pl.urning and re:;earch.
                                                                       J.,>T.11n
to fund them. Capicali1111~ upon Lhi' it
                                                                            The clcp.11 tmerw. and agenue~ aho
uation, the people at Budget killed l\'<O
                                                                       <. n and should periodicaJly pause .rnd
bird with 01w 'hot Thev aH·d mane
                                                                       t..1!.;.e "llXk. I his mav invohe looking
hy quc-.tinn111g ex1.,ting program:., and
                                                                        h.IC k upon what ha been done. or look·
they imi-.ted, with the full suppori of
                                                                        ing .1he;icl 111 \\hat ra n he done. le may be
the Pre.,1dem. that oh')olete programl> be
                                                                        lormal .md group oricmed, or it m.iy be
trimmt·d if 111011ey \\a!> to be forthtoming
                                                                       an in<li' id11.tl e flort. I recall two in-
for rnme urA<.'lll anivities.'
                                                                       c,wnte'> of .1 formal typl'. The firM occur·
                                                                       1 cd ,1fter the Kennedy administration

What Needs To Be Done                                                   h.1d ht'en ill office for LS month!>. A
                                                                       '!1 1al l gro1 1p of college professors, busi·
    A'i on(• rcvi<:w~ Lhe n11TenL situ;nion,                            ne,smen, .rnd gm ernmen t offic:ia Is were
i t appear~ 1hil l a better job i~ done on                             '"'emblcd hy the I l oming and Home
evaluation of nngnin~ anivicies and the                                 Fi11a1He \genty (HHFA) in Washington
preparation of propmals to deal with                                   10 ci t" uc,s die effectiveness of existing
  petifit problems than in b•"ic anahsi'                                prngraml> Jnd to develop new strategies.
of urban and how.ing pi obi em'. It seern'i                            Paper, ''ert.· prepared and circulated
to me. thcrdnre. th.it 'it.'\eral things need                           pt io1 Lo our convocation and there was
to be done. Finl, the Feder.ii Gm em·                                  health) exchange of ideas and critical
ment '>lwuld pro\'ide more funds for                                   <.'\~1 I ua lions.
basic re,e.ul. h, and nongovernmental or·
                                                                           \\ hen the Department of H ousing and
ganizatiom ' hmild be encouraged to
                                                                       l l1b.111 Dev<•lopment was organized, in
widen the ,rnpe of thl'ir re\e:irc-h, con·
                                                                       t nopcration with the Office of          ienc e
c:en1rating more upo n comprehensivt•
                                                                       and Tet hnology, we called a second
ana lyses: for [ agree with Adam Yarmo·
linsky when he said 1ha t th e greatest
                                                                       ma jor ronfcren ce. Th is one was in June
                                                                       I <Hi6. lnc:atcd away from Washington at
source of imponam .rnd succc sful idea'
                                                                       \\'noels H ok. ~fa'IS. h funuion was to
is probably ,til l in the academic com
                                                                       bring togeth er scientists and urbanists
munhy. 11 Pntentht'Lically. I have found
                                                                       with the aim of invoh ing the former in
many uf mv <11rrent 11ni\er icy tulleague~
                                                                       tll ban affair\. From it there emerged a
more ueativc and produc ti,·e in the
                                                                       mun· meanin~ful dialogue between tht.>\t'
 field of idea-. than t:\.tl11ation. econd,
                                                                       h'1oups. ~ ignificantly, and by desiA'fl. mrm
both admini,tr.ttiH· .ind e\·aluati\e agen·
                                                                       of the: participants were scienu t .
cie' should 1...eep abn:ast of re.,ean-h and
i11< rca~ingly 1 evie\\ bnrh ongoing and                                     \dmini ...uator.. need to be lOnccrncd
 propm.ed prng1a1m. from the point 11f                                 "iLh con< t>pb. goals. and objective., .1.,
vie\\ uf their impan upon the brnade1                                  \\ell ;i., opcr.ttions. Hiring idea and TC·
em 1ronment. i hi rd, IL 1s most importalll                            'l'::lr< It pcr..onnd. while imperative, i'i
 that 1he "idea pcopk" lrom academia                                   11nt enough l\f y own atti wdes toward thC"
 flow illlO a nd Ollt of governrucnL. for                               role nf idea~ and anJly·es in publil ad·
 th ey c:ffeni vel y su pplemem the ca rc·cr                            ministrauon were set forth :.ome 6 years
                                                                        ago wlwn I indicated the desir<lbility o f
  • K<·1111i1 c.uuJon. '"T lw Rudgl'l Director," 111                   :rn admini ..cr:nor's putting away-for a
fhomu~ ~ .   C1n11i11 ,111d -..111Cu1cl D C:n·c11bcrg. c1"··
                                                                        rime-the operations of an agency and
rite Pir11de1:1111/ ''"'""" ,,.,,,.,,, ' l'W 'orl... H~r·
                                                                       \Llb'>ttllltin~ the proce.,s of problem fur·
per ancl Rim. I'lll!l) . p. 6'.i.
  u J\d;1111    \.irmohll,kl ,      "lcfras    11110    Proh'l'am,,"    mulation .llld ttnalysis. On that occa ion
Cronin and C.rn·nht·1 1t.        t•1h,   op   rt/.,   p. 94.           1 aicl:

                                                                                                                   51
   Pub)jc admini u-.ition is popularly con-            There is no reason, however, why
ceived of as action-oriented. And, too often,       there can not and should not be greater
it is jusl that and no more. Action without         professional contact and exchange ~f
program, progr:am olving without problem            ideas among groups of evaluators. This
analysis, da)-by-<by decisions without a phi-       occurs in the legislative process when
losophy arc a cravcst} of public administra-        pro{e ionally competent employees of
tion. They are inexcusable and dangerous
                                                    committee staffs, Presidential commis-
in lhe modem world where public policy is
so vilal to the well-being of all citizens.111
                                                     ions, and departments and agencies
                                                    maintain continuing contaccs wilh each
                        IV                          other. Indeed, there is frequent tempo-
                                                    rary assignment of knowledgeable per on-
   While evaluation at the e.xecutive               nel from the depanmenc or agency to
level has significantly improved in recent          the committees and commissions, and the
years, the ituation at the legislative level        staffs of the latter provide a rich ource
i mixed. Too often special committees               of talent for the departments and agen-
of the Congress concentrate upon un-                cie.
covering deficiencies or malfeasance. The              One con equence of such contaets is
Gl\O, too, emphasizes, as its mandate re-           the df'.elopment of a body of data and
quires, specific performance and sus-               information responsive to the needs of
pected irregularities. Both of these
                                                     evcral groups and uniform in content.
circumstances militate against adminis-
                                                    This has been recognized by the Con-
trators' championing experimental pro-
                                                    gTe ~. The Legislative Reorganization
grams or utilizing more sophisticated
tools of evaluation.                                Act of 1970, for example, directs the
                                                      ecretary of the Treasury and the Direc-
                                                    tor of the Office of Management and
Need for Better Coordination of                     Budget, in cooperation with the Comp-
Evaluation                                          LTol ler General, to establish standard
                                                    program and activiLy classifications. A
   There is need for better coordination            subsequent step would be the develop-
of evaluation in the Federal Govern-                ment 0£ an integrated data system. To-
ment. ot only have programs prolifer-               gether these actions would. among other
ated but evaluation has done so too,                things, facilitate measurement of agency
creating an obvious danger that evalua-             overlap) and identify more clearly the
tion may become an end in iLSelf rather             total resources allocated to different ob-
than a mean!> for upgrading manage-
                                                    jeCLives.
ment. In this regard, I suggest that
evaluation be concenrrated upon new                    In addition, the evaluators, either di-
programs and those activities which have            rectly or through professional associates,
become institutionalized, thereby devel-            are brought closer to the operators co the
oping longevicy through seniority. Unless           benefit of each. Bue more important is
some priorities are developed to maintain           the early give-and-take between qualified
a proper balance and greater coordina-              people with different background , bi-
tion occurs among the governmencal                  ases, and points of view. This usually
evaluators, there is the possibility that           results in better designed patterns of re-
official evaJ uation may result in a neglect        search, legi~lation, or evaluation and the
of the operational aspects of manage-               early resolution of differences relative to
ment.
                                                    the nature of the problem under study
 10   Weaver, Diltmma.s of Urban A mtnca. p. Vin.   or review.

52
   While lhe CAO will remain a pan of          Values and Limitations of
Lhc lcgi laLi\e lminch ol Co"emmenc            Quantitative Approaches
concerned wit.h cxpo!.urc: of mallunt·
tioning. it, wo benefit<; from gi eater             In the liter<nun.· and discussion of
involvement with rc~carchers, adminis-         111 uan dc\'clopmcm and ho~ing and ot
trawr-., and mher e\aluatur One mean\          puulidy a-.si ted programs in general,
of acC"omplishinp; th1 · would be LO have      inc rc.1sing reference is made co rnH-l>en-
represencati\e from GAO ob en e and            dit analyst . program planning budget
analyze the early and subsetiuem phases        :.}'stc:1m and the I ike. as a basi for pro-
of program development. The more that          gram det:-i-.ions and e\'aluation of result\.
is known ahout t.he origin and the evolu-        \II agencies concerned with manage·
lion of an anivicy the better its operation     ment. administrators, and Congress it·
can be appraised.                              self w ill, T believe, increasingly look tO
                                                these techniques.
  GAO's tni'ision is traditionally ro eval-
uate the effectiveness ol Federal pro·            As public goals and services become :m
grams in achieving the objectives in-          e\•cn greater pare of our consumption.
tended by the Congress and to facilitate       there is a rnncurrenc growing tendency
efficiency .ind economy in the administra·     to minimize the differences between the
tion of chc,e programs. It can al o be         operatiom and mechanics of the pri,•ate
helpful ro the administrators by infor-        and public ectors of our society       ·a
mally calling to their attention tenden-       doubt, in large measure. this reflects a
cies or siwarion · which uggest trouble        desire co achieve more rational deci ions
spots. Evalualion !>hould be more than         in the laner. .\s   onon E. Long ob-
surveillance and moni toring. ln its crea·     -;ervcd:
tive expre,,1on the prime ob jecthe is to         Comumcr,hip bcc·ome~ the S) nonym for
facilitate as qu ickly and effectively as      < iti1t•mhip .ind a ll problems arc ~olved by
possible the delivery of services. EvaI ua-    the working, of the political analogue of
tion organi7.ations ·hould nor hesitate LO     tlw m:11 kn. Thi\ reduction of politics to
speak with administrative agencies sincl'      economics hJ' an esrnpi~t .mraction. But it
the real ohjecti"e of their effort is not LO   won't work E\'cn lhe democracy of the
occasion c m.ure but to encourage posi-        buck requires political actiou to in.,urc the
tive results    uch rontau would also          frct•dom of the m.irkec from 11oneconom ic
weaken the all-too-frequenr feeling on         tl1'tiimin.11ion 11
the pan of depanment'I and agencies            Tn a word.       to a~sume      a free and totally
that (,AO 1s engaged ex< I u ively in ad·      <ompetiuvc housing market in a sirua-
versary proceedings.                           tion typified by racial residential segre-
                                               gauon is to assure such noneronoma
                     v                         disnimin.1tion.
                                                 1 here i no magic- in the newer,
  Early in chi' paper. I stres ed Lhe im-      la1~ely quancicative approaches. I ndeed,
portance o f greater under~tanding ol          the fact that they are quantitative gives
urban and housing programs, sound              them an image of being scientific and
goals and program objectives. and dif-         exact. Not only is th is an exaggcration-
ferentiation between evaluation of goah        since ''\e are ~Lill learning how to utili1e
and performance. Also I emphasi1ed the
                                                  11 ' ortnn •  Lung " l.oc:il C..overnment 01.nd Re
need for research, inside and out~ide of       newal Polactc~... in Jame; T Wilwn, ed., C.'rh1w
government. as the basis for more              llrnrunl Tlrr Rrrord and tltr Colllron•n) Qm·
soundly c:once1ved goals and program-..        hricJgt', Tht• \I J.T . Prc''· 1966)   p. 4'3.

                                                                                                53
them effectivelv-but also it ignore~             of political deci ion. there still is a vital
manv signifir:mt realities. ~ot the least        role in the process for more exact tools
of these is Lhe fact that political, as well     of analy~is and evaluation. 'Without them,
as anal)tical, rons1derations are in\'ohed       we are forced to compromise from po i-
in the choice and perpetuation or public         tions of uncertain validity and effecti\le·
programll. The possibility of uncritit.:al       ne'\s.   ince compromise we muse, it
acceptance of new techniques is not justi·       would         ue
                                                             most useful i.f we knew more
ficcuion for their rejection: rather. it re·     of the pos~ible choices and the relative
quires sophhtitatec.I understanding and          co c-benefits of each. William Gorham,
intelligent application of them.                 Presidem of the Urban Institute, says:
                                                 " urely it is better that policy be chosen
    Kermit (.ordon, an economi'>t and
                                                 in the light ol' whatever relevant infor·
former D irector of the Bur eau of t he
                                                 rnation rnn be obtained, however incom-
Budget, has ob,ent'd:
    • • • ln lhc bcsl or all po ·sible worlds,   plete it may have to be." 1''
the federal ~ovemment would launch or                  Tho..,e agencies of Government which
cominue a program uni) when the rc,ourccs        arc concerned with the public purse are
emplo\c<l )ieldcd ~realer aggre~ace l>enc-       '' idenin~ their perspecti\ e. And the
rit~ 1n the public ~cctor than the\ would
                                                 General <\ctouming Office is no excep-
h.nc \iekled in the pri\ate sector. It would
                                                 tion. )'ou are involved in svstems analy-
rc"·icw the alternative means o( pur.,uin~
                                                 ,j... .•md vout activities in thi field indi-
each program goal. and it would cltoo'e tht
me<1n' which .1nompJi,h the goal at least        l~Hc that vour major client, the Congre '·
co~t. lt would 'eule on a scale for each         is t:oncet ned with the proc~. \ho, the
program melt that benefit\ 'iclclcd b) the       ,·e1 y nawre of this approach on your
marginnl cloII,u· were equal in all applira-     pan invol\es greater contacts wi1.h Fed-
tion\. 1~                                        eral agcnc y officials.1:1
    The lormer Budget Director recog-               This t lca1 ly indicates that the agencfi.
nizes, of roursc, that such a ·randard is        mis, ion has (!'( panded beyond that or a
wo high to be fully realized. He has in-         watchdog mtem on exposing what it be-
dicated e\eral c:omplications: fi1st. the        lie, cs to he improper. wa tcful, and in-
'er) nawre of Gm en1ment's role in               erfecwal. It raises the hori10n of the
redistribution ol re~ources and '>Ccond,         office hnond thac of audit) and suggest.5
the absence of a market test of benc-            that much more Lhan analy is of details is
fiL~.13 Yet the1e j, a significant ran~e ol      requi1 ed. To me it representS a jusLifica-
applicability fot evaluation standard~           tion for greater coordination between
which approa<.h tho e de'>Cribed abo\c.          G.\O and other branches of the Go\-
E\'en where benefit, and costs cannoL be         ernment t·ngaged in the application of
quantified. alternati"e strateo-ies can be       '"~tern' analvs~ to che management of
analyLed with the goa I of some approxi-         program,. u<.h contacts would upgrade
madon to a cost-benefit evaluation, and ,        the quality ol the process nt the same
of course. we can always utilize more            time that ic brings operators and evalua-
and better information about the direct          tors into c loser contact. It also involve
and indirect consequences of programs.           em phasi.' 11 pon goals and evaluation of
   Recognizing that there are lobbies,
                                                  H \\ ilh.1m C:or ham. "\ Soci;il Report and Sona I
clients, and spc< ial interests and that         Pohl' ;\d\l<.rr<. ' Cronin and Greenhtrg. e<I•. op.
compromise' are the name of I.he g-ame           nt.. I'· 70.
                                                   1 ~ /'170 Armual Report of tlie Comptrollr r Cn1
 12 Go1 don. op. rit .. p . 116.                 eral (W;uh1ngton. U.S. Co,ernm~nt Priniing Office,
 13 /bid                                         1971 ).   p. 8.
results within the comexc o l these goals,   se or was iL to the t)pe of consolidation
as well as an appredalion lor the inevita-   that would Aow from specia I revenue
bility of changing objecLives.               sharing? Clearly I think anyone who has
                                             had any exposure to these problems must
   As the domestic governmental activi-
                                             be in fa\"or of consolidation. The whole
ties become more extensive and rompl i-
                                             comext of my remarks wJs the fact that
cated, the requirements of manag-ement
                                             these prog-rams often conflict with each
assume new dimensions. Program evalua-
                                             o ther. They <ertainly don't always com-
tion not only calls for more ~ophisticated
                                             plement each other. I think one ·step in
approaches but also needs to be e"er con-
                                             the direction of consolidation. and one
scious of its potential tor interferino
needlessly with operations. Tho~e wh~
                                             whic h has really nor been sufficiently
                                             evaluated from that point of view. is the
engage in evaluation are required to walk
                                             Model Cities p1ogram. 1t attempted con-
a naJTow path which avoids too great
                                             solidation at the level where it has to be
reliance upon mechanical measurement
                                             and where it wou ld be under special
on the one hand and receptiveness t.o im-
                                             revenue sharing-not in Washington. but
proved evaluation lechniques on the
                                             at the local level-because Model Cities
othe1.
                                             required a local program which could
    Both the evaluators and the program      put these prognms as well as other activ-
managers hould ha\'e a single overriding     ities together and put them all in one
purpose-to provide the best possible de-     package under the supplemental grant.
li very of services to ~ociety. This in-
                                                I am opposed to special reYenue shar-
volves constant interchange of ideas and
                                             ing because I think that in urban affairs
information, and it places upon both. as
                                             and housing. there shou Id be national
well as the legislative brand1 of Govern-
                                             policies. These are nationa l concerns.
mem, the need to become more con-
                                             Over the l<lst clecade we have worked
cerned with the nature of the urban
                                             wicli the Congi-ess, first in HHFA and
structure and the problems which arise
                                             the~ in l H TD, in order to encourage
therein. Clearly, as you face your !>0th
                                             regwnal approaches to regional prob-
anniversary. vou must reevalwne your
                                             lems: for example. giving either Jn extra
mission and operation· in light of these
                                             amount nf grant if an area-wide ap-
developments. That. 1 believe. is why we
                                             pro:ich were ta~en or requiring that it be
are assembled here today.
                                             taken as a condition lor the grant. ~ow
                                             to gi\'e this up, to give up this national
                Discussion                   approach or this regional approa(.h w
                                             regional problems anrl turn this back to
   Whal are your views 011 the President's   localities to go ahead and operate wi thin
/)roposal for revenue sharing? Do yo11       the proliferated local g·overnment situa-
fe~l   that the revenue sharing technique     tion that now exists is. l think, a step
w1ll be more effective i11 achieving pro-    back. I don't think it will work and I
gram objectives /01 the .1orial progmms?     think it is undesirable. I am, as you can
                                             see. somewhat opposed.
   Dr. Weaver: The question assumes
that I was against revenue sharing, par-        tr'hat role should the Deparlmer1l of
ticularly special revenue sharing. \Vasn't   Ho11sir1p, rwd Ur/Jan Development per·
the special revenue sharing really a tech-   form i11 the e:i1ablishmer1t of national and
nique for consolidating programs which       local housing codes . portiwlarly with re-
are now proliferating and O\'erlapping?      ~pect lo rehabilitntion of older houusl
Was my opposition to consolidation j1e·1     11/hal lias HUD do11e in this area, and

                                                                                      55
has HUD satisfactorily performed its           think that the biggest impact on building
role?                                         codes is probably going to come indi-
                                              rectly because I think that the first and
  Dr. Weaver: This is a complicated issue
                                              largest impact of Operation Break-
because too much Federal intervention
                                              through is going to be the changing of
in an area which has traditionally been
                                              certain institutional impediments to new
local, but which is constitutionally State,
                                              types of construction and new types of
gets you into difficulty. The role of the
                                              approaches to houses. I would say that
Federal Government is going to have to
                                              we are moving and having been moving
be that of seduction-a very delightful
                                              in this area and the present administra-
role even in administration. This means
                                              tion is also working on it.
that it offers goodies and it encourages
people co do things and gives a quid pro         A few of the States are assuming
quo if results are forthcoming. That is a     greater responsibility; New York State,
peculiar definition of seduction, but I'll    for example, has a model building code
have to research that.                        as have three or four other States. As we
   The problem, of course, is that the        look more and more towards industrial-
matter of building codes is legally-and       ized houses, the Operation Breakthrough
I'm not a la"vyer, therefore I speak with     type of thing, as we look more and more
impunity on this-a matter which falls         toward rehabilitation of necessity, we
under the purview of the State. This au-      have to come to grips with these prob-
thority has been delegated to the local       lems. They are very difficult problems
government and the local governments          because, first of all, our form of govern-
have proliferated. In one building area       ment has the power residing in the States
you might have five different building        and the States are not assuming too much
codes, which is a great impediment to a       concern about urban affairs, and sec-
large-scale production. In the central        ondly, because of the proliferation of
cities you get a different problem. There     governments.
you find a building code which was not          The most significant development is
designed for the rehabilitation of housing    the creation of the Urban Development
that you want to last maybe I 0 or 15         Corporation in New York State. This
years more but for brand new units. The       corporation is authorized to modify
result is the codes become an impediment      housing codes as well as zoning. It hasn't
to rehabilitation.                            done it yet but you'd be surprised at
  Now what has been done? Of course,          how much more amenable people have
there has been exhortation but that's sort    been to change when they know some-
of moving with deliberate speed. More         one has the authority to make them
recently, as programs for rehabilitation      change. Sometimes you don't necessarily
have been proposed with the Model             have to assert the bare hand of authority,
Cities program and others, there has been     but you can get people to do things vol-
pressure placed directly upon localities      untarily if you have a little bit more
for changes in their building codes. I        behind you.




56
       GAO's Environmental Challenge


   Many of the real problem are multiple faceted. Many
of the programs and points of attack overlap and, in some
cases, are at variance with or counter-productive to other
program~ and· proposed cures. The whole ~tructure show~
sigm of becoming so unwield} a~ to inhibit the olution
of the urgent problems involved. Strong. prompt action to
correct this tendency seems indicated lest 11 collap~e of it!.
own weight. Also, the point of dimini~hing return may be
near an the-e efforts ~ well a in thei1 si1e and cost to the
Fc<lcral Government. This is the emironmcnt in which
the Comptroller General and the General Accounting Office
now operate in their efforts to strain mhm:inagement and
financial extravagance from this tide.
   I he Compr..roller General and the General Accounting
Office 'lerve the Congress by ~e~trLhing continually for means
uf achieving greater cffcCLi\•encss in the execution of author-
i1cd programli and increased economv and elllcienc~ in the
management of program execution.


                               Congre'>sman Frank T . Bow
                               Con~""•onol    Rtrord
                               June 10 1971




                                                                  57
                                                  David E. Bell
                                                  Executive Vice President
                                                  The Ford Foundation




     After David Bell g-raduated from Pomona College in Clan:monl, Cali-
fornia, in 19)9, he went on to Harvard whe-re he rerf'ived his Master's Dt•grec
in economics in 19'11. He remained for a yearns n teaching fellow. Mr. Bell also
hold.! honorary Dortor of Laws degrees from Pomona College, the University of
f'ermont, and Harvard Universit)'·
      Since 1942 Mr. Bell ha,\ spent almost half of htJ working life in the Federal
.1crv1re. Ilu first pomwn wm that of a staff member rn the Bureau of thr Budget
Thi.f 1ob u•as interrupted b)' -I }'Cars ns a comm1ss1oned ofliur m the Marine
Corps. H~ returnrd to the Bureau m 1915 and remained until his appointment
ns a .sprcial assistant on the White Hou.~e Staff in 1917. Here he rose to the
poJition of AdmrniJtrativc Assis/an/ to the Pre.r1drnt i11 1951, and continued i11
that post until the end of the Truman adm1ni.~tration.
     David Bell received the Rorkefeller Public erv1ce Award in 195J and
returned to Harvard University as a Rockefeller Public Service Fellow to teach.
During 1954-57 he served aJ adviser on gent'ral economics to the planning
board of the Government of Pakistan and as pro1ert firld supervisor of the
Harvard Advisory Group in Pakistan.
    111 1957 J\Jr. Bell rejoined the Ha1'Varcl Department of Economics to lecture
and to teach, and in 1959 he wrote a book entitfod Allocaling Developmen1
Resources: Some ObservaLions Based on Pakblan Experience.
     In 1961 President Kennedy appomted Mr. Bell Director of the Bureau of
the Budget. He servrci in that polit1011 until 1962, wlten he was appomted
Administrator of the AgertC)' for lritrmatwnal Development. In 1966 he became
Vice President of the l11ternatio11a/ DitJis1on of thr Ford Foundation, and since
1969 Ju: lta.s been Executive T'ice President of that orgamuzt1on.

5
GAO Auditorium
December 13. 1971




Assessment of Efforts To Assist
Underdeveloped Areas


There has been UJ11.iidnab/,. 1•111phasi$ in the C:ottJ!,rt'.1.1 and 1•l.1r•w/1('1e rm
the need to e.1tnbli.1lt f)(•/lt•r rritnin Jar oss1•s.1 ing (;mw1111n1·111 /nogrorn .1
for wl11rlt q111111t1tt1tnu• rft1tfl nrf' innrlcq11ntr nr, in wmr ra.1t•.1, 1•n lirrf)•
fn.rhing. G 1JO 1.1 rnfled upon to analyze and f'\:preu j11dgm1·1111 n1 to thr
effectiveneu of mrmv of tltt•.1t• prngrams. one i1 morr r/1ffir11lt than thr
area which Dar•ui Bell rl1.1nn11·1 in tJn1 luturt'. 1h h1• pmnts out,
roaluatmg Go11ein111e11/ pmgrnm.1 i.i com pli('(lt1•d 1·11011gh beca111e tire
evaluation function l/1f'lf 1.1 a 1elativel)• new art and 1.l .\till 110/ under-
stood as well 111 oth1•1 d1'111n1t.1 of govemment11l manngenlt'nt. Thi'
difficulty 1s inrrrmrd 111 t11•mg to r•vaf11ate devrlopme11t /nogmms 1t1
foreign countric:.i with m11/tiplr, 1nterrelatrd ob1ert1vr.1 of nn eronom1r.
sorial. milita11'. and 1•t1t't1 polit1ra/ nature.



   I am very honored LO have been asked                  ness lO sec L11c vn lue o[ new approache.~
to join in Lhii. 50th Anniversary Lecture                and an understanding of the rich, stuh-
Series here aL the GAO, and I am                         bo1 n va1 iety of h u man values. I con·
especially delip,hted to be here at the in-              g-ratulatc a ll of you in Lhe G 0 on you1
vitation of my long-time friend and c:ol-                good fnrr 11ne in having flmer Staats as
league. Elmer taacs. I think. the United                 \Our leader.
Stales is extremely fortunaLe to have
Elmer in this p1"t. :'\o one could have                      I <1111 al.,o ~lad co join in discussing the
had n bettet bac !..ground for becoming                  1-{rneral rhcme of Lhis 50th An11i\'ersarv
Comptrolle1 General: strong profes-                      Let L111 e ·er ic.\ . " Improving .\lanauement
sional training, long and intimate ac -                  for .\T01 c Fffec ti\(;' Cmernmet1L" \\'e
quaintante with the e \.ecuti\·e branch.                 are in a pl·riod. a~ we are all well aware,
including high-rank.iug office which gave                in which lhc ability o( the l l.S. Govern-
him direct acquaimance with severa l                     ment, or any government, to get thing-.
Presidents tinder bOLh Republican and                    do11e is u nder great question. P eople in

Democratic administrauons. and exten -                   this rouncry and in many c.:ountries
sive personal acquai nt ance with Members                :irrmncl llie world are increasingly skepti-
of bOLh Houses ol Congress. In addiLion,                 cal Lltal :rn y government-Federal . State,
if I can s:iy so wiL11om embnrrassing my                 lnral , provincial, whatever the terms
old friend, 1 think. he is Lhe righL man for             may lie in th e rouncry in question--can
this job because of his constructi \ e and               ac l effectively for lhe common ~ood.
large- pirited charaner, based on unim-                  People a • LhaL governmen ts have been
peachable integrity but including a readi-               working on slums for years and the

                                                                                                      59
slums are worse cban ever; governments         oing. The Inter-American cooperative
have been attacking drugs, but more of         program in 1941 was controversial. Point
our kids are in drug trouble every day;        Four was controversial in 1949. AID was
pollution increases; hunger does not di-       controversial when it was started in 1961
minish; and so on. Most of us who work,        and, of course, it remains controversial to
or ha'Ve worked, in govemmem consider          this day, with the currenL AID bill in its
that these charges are greatly overdone        customary cliff-hanging, last-minute sta-
and are prepared to defend government          tus. not clear whether it is to go forward
as an institution. Nevertheless, I think all   for 1 more year and, if so, at what leveJ
of us would agree thaL there are very seri-    of finan ing. So the program is impor-
ous shortcomings in what governments           tant and it has been conrroversial.
have been able to do until now and, con-
sequently, it is most appropriate for the         The question to be addressed here,
GAO in Lhis series to put the spotlight on     however, is how can we assess, how can
the effectiveness of government and its        we evaluate, the results? Have these pro·
services.                                      grams had any impact? What have we
                                               learned about how to be effective in
   ls the Govemmenc getting anything           assisting the developing countries? I will
done? If not, why noL; and how can its         make a few remarks first about how one
effectiveness be improved? The particu-        should assess or evaluate these foreign
lar aspect of chat general topic thal I        assistance programs and, second, offer a
have been asked to discuss "Assessment         few personal assessments-simply by
o( Efforts to Assist Underdeveloped            way of indicating tbat I think we can
Countries.. is a pertinent aspect of this      draw some conclusions, although one of
overall I.heme. As you know, through a         the themes that I will stress is that it is
series of aces and agencies beginning with     extraordinarily difficult to evaluate Lhese
the Inter-American cooperative program         particular programs.
starting in 1941. the Congress has au-
thorized a long series of programs sup-           The problem of assessing development
porting the improvement of conditions          assi tance is complicated, first of all, be-
in less developed countries. This type o(      cause evaluation or assessment is itself a
activity has never been a major program        relatively new art in government and is
of the U.S. Government. Year by year           still not understood nearly as well as
the funds spent for these purposes have        other elements of management, such as
been, on the whole, less than those spent      forward planning and budgeting, which
for agricultural price supports, or for        by now have a rich literature based on
veterans benefits, to cite a couple of         many' arieties of experience. We ue still
random comparisons.                            learning things but if anyone wants to
                                               understand program planning and budg-
   But tbe Government's programs of            eting-how to get it done effectively,
assistance for developing countries have       how to organize for it-there is a lot of
always been important, touching as they        information available.
do the lives of hundreds of millions of
people around the world, necessarily af-         If you want to ask about evaluation,
fecting U.S. foreign policy, and involv-       however, which is organized hindsight,
ing our country in an acrivist role in         then you do not find as rich a literature
many parts of the world. This role of          or as much experience. I doubt even that
working with people in less developed          there is agreement on definitions as yet.
countries is a new one in our history. It      Per anally, I have used some definitions
has been controversial from the begin-         that were provided by General George

60
Lincoln, (Abe I.lncoln), some yeai:s ago        to build an airport. The project was
when he was at \Vest Poim, before he            carried out. The execution was impec-
joined Lhis administratio11 as Director of      cable. The runway is solid. Costs came
the Office of Emergency Preparedness.           within reasonable range of estimates.
Ac that time, he spent a sabbatical year
with us in the Agency for lnternaLional            The only trouble was that nobody
Development. We invited him to explore          wanted to use this airport. It was de-
this subject of eva I uat ion, which was rel-   signed by somebody who t hought that
atively new in AlD then, and he pro-            when the jet age came there was going
vided a set of definitiom and concepts          to be need for an airport at about this
which I have found more usefu l than            place in central Asia and, if an airport
anything else lhat 1 have nm across on          were built at Kandahar, all the interna-
the subject.                                    tional airlines would stop there and this
                                                would have an important positive effect
   Lincoln defined evaluation as Lhe proc-      on the development of Afghanistan.
ess of looking back at programs and             None of this happened. When I was in
projecl'I which have been undertaken.           AID some years later. the weekly count
analyzing the resuhs, and learning from         of aircraft landings at Kandahar was
your own experience. s Lincoln saw it.          something like 16. most of which were
evaluation fits into a three-part concept       crop dusters and local people.
of management: planning. execution,
and evaluation. He drew it neatly in tri-          The evaluation in terms of the objec-
angular form , the implication being that       tives of that project was excelleni:, but
the three pans mutually support each            the project itself was a mistake. Tt should
other. The results of evaluation feed back      not have been undertaken. The objective
into better planning and better execution       was tn error.
in the future.
                                                   A second case, which in a sense illus-
                                                trates the opposite outcome, was the
Two Questions To Be Asked                       famous Cambodian road that sank into a
                                                swamp. A road was designed and built
   The parcicular point, however, that          under AID financing between Phnom
sticks in my mind as most illuminating          Penh and the southwest coast of Cam-
was Lhat two key questions need to be           bodia. When the road bad been built,
asked when you are eva 1uating anything.        most of it stood up bul an important
One is: How did the pe1 Cormance com-           section gradually sank inlo a swamp over
pare with the o bjectives: did you actually     which it had been laid. This was a very
accomplish what you set out to accom-           poor performance. The objective was to
plish? The second question is: By hind-         build a road and when ic was finished a
sight, looking back, were the objectives        crucial section of the road \\'as not usa-
right; would you do it again? This is not       ble. On the other hand, the objective of
the same question and it i~ important           building th<lt road turned out to ha\'e
Lo ask both.                                    been correcr. The road-once the s·w amp
   Let me give a couple of illustratio ns       part had been rebuilt at great additional
that show this. They are both AID proj-         cost-turned out to have all the eco-
ects. The first is che Kandahar airport.        nomic and social benefits that had been
Kandahar is a city in southern Afghani-         anticipated, and it is a major and impor-
stan and, in the middle 1950's, with AID        tant highway in Cambodia today. So, if
financing. a fine international airport         one simply asked !tow the perfom1ance
was built at Kandahar. The project was          compared with the objectives, the an-

                                                                                        61
swcr would be: Terrible. Bul, were the         indicated, I think this is an inadequate
objectives righL? Yes, indeed.                 concept.
   1 might add, incidentally, that lhis case      One 01her introductory remark. I am
al ·o taught me omething important             very conscious of my own limitations in
which I have tried on several occasions        discussing this subject. I am 5 years out
to explain to the Members of Congress          of date on what is going on in the Gov-
who were upset about what happened to          ernment, ~md I have not followed the
this road. The road was designed by a          professional literature on the subject, so
reputable American firm of highway             what I offer here today is 'ery much a
engineer ..\ nd it was built, under the        layman's \•iew.
supervision of that engineering firm. by a
reputable American highway construc-
tion company. If AID or anybody else           Evaluating Assistance to
were to build that road over again, they       Developing Countries
would do it, I suspect, exactly that way.
The lesson. therefore. is not that AID            Now, ir we address the question of
did a terrible job. The lesson is that every   how we should evaluate assi tance to
now and then the besl lechniques fail,         developing countries, we run into some
and the American engineer~. in this case,      exasperating complexities. Start with a
did a bad job. They did not recognize lhat     single objective. Suppose our purpose is
this particular swamp was a special kind,      to help a country achieve self-sustaining
and they needed more research and ex-          economic growth as measured by gross
perimentation, or maybe some special           nalional product. Set aside for the mo-
kinds of advisory ervices that they did        ment other objectives often involved in
not call on. and hence the road disap-         foreign assistance, such as larger mililary
pea1ed into the swamp. But the process         forces, establishment of U.S. bases, or
was all right. We did not have to change       other purposes: concentrate for the mo-
any of our engineering or management           ment only on the single objective of eco-
processes; we simply carried them out          nomic growth. Then look at a single
                                               project, say a power plant in Korea.
with even more care thereafter.
                                               First of all. evaluation requires an exami·
   I emphasize, however. the two ques-         nation of the project as such. 'Vas its
tions of Abe Lincoln. How did the per·         construction !.Ound? \Vere the raw ma-
formance com pare with the objectives.         terials plans appropriate? Does the plant
and, looking back with the benefit of          work? Does it produce pawer at an ac-
hindsight, were the objectives sound? I        ceptahlc cost? And so on. These are
stress this because l read the other day a     standard and necessary questions. but
recent srntement by the Committee for          they are only the beginning.
Economic Development called, '"Im-               Secondly, in a developing country
proving Federal Program Performance,"          such as Korea one must analyze the set·
published in September 1971. This pub-         ting for the project. Normally, if the
lication seemed rn me LO contain many          development assistance project is de-
good ideas. But on this question of pro-       signed right, there is much more to it
gram evaluation, lo my surprise, the           than ·imply a construction job. There
CED emphasized only Lincoln's first            will have been important additional con-
question--e\·aluation against objectives       ditions. such as training the necessary
-and not the second question. evaluat-         Korean staff. It may be a relatively sim-
ing the objectives. For the reasons I have     ple training process, or quite a complex

62
one-:i . Im im1anc<'. in 1r.1inin~ man-                is really in the fire ht·c a ll'iC, if the pu r po~c
ager. !or a   p<>\\Ct '~stem .                         of the llnirtd 'tatt~ in its de\elopmem
                                                       a"i\t.1111 t' i' noc ,imply to establi'h :t
   In acldilinn. 1here    ma~ well ha\e heen
                                                       .,crie nl 'iable pn>jc< 1 around the
conduioth       ill\ohin~    1he m.1nagt·rial
                                                       \\ orld, h11 t. i 11 fin. lo assist the C\'Ol 11-
c;tructu1 e of the f><I\\ e1 w'tem. There
                                                       tion of sclf-,mt·1inmg t•conumic gl!l\\th
wa a <"3'<' \\ lll'n I w.1s with AID in
                                                       in dc,eloping countries. then an) indi
\\hith \\C uwd .t potential lo;m for a
                                                       'idua I prnjct t must be looked al not 'im-
power plam ." .1 maj111 bar r.1ining tool in
                                                       p!} b iL,cll Inn :i-, part of an m era II
tr)ing co J?.Cl .1 1cca.. ting ol the powt>t·
                                                       effort.
management piocc~~ in a dcvelopinJ?;
country. Jn working on 1hc negotiations                    I h,1\ c hct'n vc1 y pleased LO see that in
lor a power pl.mt. m1e c:ou ld also aim at             the rcvic.·w, yolll International Division
important cha n~e., in the nae ~tructu1 e              make,, )'CHI a1c a'king thi' kind of broad
or othe1 ;isptcls of the power system.                 quemo11. I rnng1.1culate you and applaud
                                                       ymn co111 age and the a ppropriateness ol
   The evaluation ol' a projec1 for a
                                                       your logic 1 note, howc,er, that ha,·ing
power pl.int 1hcrelore in\nhe"' :i ~ond
                                                       a keel the q ue..tion. the Dh ision fre·
deal mmc than 'imply the plant nsell.
                                                       quenth quote" :m an'\\Cr from lhe Clle
'\1iac were the a '>t>< iat<•d t han~e that
                                                       Department 111 .\ID, or imply say that
were upp<> t•d w takt• place-m1ining.
                                                       it lS too 'non to tell. or that the e\·idence
rate 'itrw turc'i. me1.tll ma11agement W'·
                                                       1' 'iCant\ , all of which is certainly true.
terns, 01 what not-and dici they. in fact,
                                                       This j, a nw'l difficult ~ind of question
occur::.
                                                       to ;inah1e her.tu'c one is required to
   As a third clement ol <111 e,·alu:ition,            examine.· .1 countn 'economic policv and
still thinkin~ of a dc,elopmg toumr~                   ,1,k wht'the1 it    1' app1opriate and effer
and o nl y ec.onomir ob1ec 11vcs, o n e mu~t           ti' e. wllt:'lhC'1 it ts all that the <·ountry
analyze Llw cffet t of the .1dd i tiona 1 power        can clo, and wlwthcr it ha~ been matched
produced. The projc:n should n<H ha\c                  hy the: bcs1 kinds ol a!isistt1nce fro m o ut-
been 11ncle1 taken unless the gains from               side
inve<,un~ in power and the impart of
                                                          The cl101c ult · of the task can be illu.'-
that pnwe1 on economic .1c:tivitv would
                                                       tratcd h\ notin~ that it i~ a' if the(;,\(),
be hi~hc1 than the P'Henual gains from
                                                       or a1n c\:tluation orga11i1ation, were to
an} alte1 n.11he me ol the capital. B}
                                                       he :1'kcd t11 1 t'\ IC\\ the current economic
definition, a de\clopin~ ((Hmtry i.-. ex -
                                                       polic \ 111 the l'.        C cl\cmmem. Ha'e
tremeh ,fimt of capital. C1pit.tl mmt he
                                                       the.· Counc il o l L<onomic .\d'i'et ~. Lhe
applied. \\ lu.•llwr it i thcii nwn or capital
                                                       Sen <. ta1} of the T1ea .. uq. and others
                                                             0


from ouL.. ide, to the maximum ad,antage
                                                       been 1 ighL in ad' j,in~ du· Pre,idem rm
and an c\·aluation pm< t''" 1a·cc.,sarily a.,i.....,
                                                       Ph.1sC'> l and I I and on the preced1n~
wheLl1e1, looking hark. that in foe t was
                                                       pol1< ic.·' in re< cm vear.,? I do nm mean
done.
                                                       tha1 tlwse q11est1on' .1Tc heyond the S<"ope
  And, finalh, as ii th.IL were not                    of the human mind. I ,imply emphasi1e
enough. one 1mm .1sk whethe r this prnj-               Lheir brcad1h and complexity. But, com-
ect was pa1 t of a progiam of invcsl-                  plex 01 n ot, that is what is at issue, be-
mencs .md othc1 ac LI\ ilies undertaken b\             ra11 e the p111 pose of the United 1ates in
the Kotean Gu\'e111mcm and other Ko-                   its cle,clopment ;issi\tance effort has
rean imtitutions \\ hidt would mo\'e Ko-               been to connihute to the e,·olution of
rea mo'r tapidly tnw:trd ~elf-sustaining               self ,u,tainin~ ec. onomie in the de' elop-
economic gro\\'th. At that point. the Cat               ing rnuntric . The que tions follow in-

                                                                                                        63
evit.ably Crom the nature of the program       achieve self-sustaining economic growth.
objective. Whether the aid takes the form      In £-act, a variety of other objectives are
of a grant. a project loan, or a program       normallv involved.
loall-\\'hate\er form it takes-the eval-
                                                  First of all, economic objectives are
uator must reach conclusions as to the
                                               not usually one-dimensional. We are usu-
effecti,ene s of the development plan of
the country in que tion and the effec-
                                               ally interested in the distribution of in-
                                               come as well as its size, and we are
tivene s of the outside a~istance to that
                                               usually interested in employment as well
plan.
                                               as income. These various objectives, as
   To say this. of course, establisheii a      economist have struggled over the years
high and difficult standard. It will not be    to understand, to some extent are com-
feasible in every instance to come neatly      patible with each other and to some ex-
to a conclusion. But I think any econo-        tent are incompatible. And they set up
mist who has been concerned with de-           trade-offs which have to be understood
veloping councries over the last 15 or 20      and which complicate the proces· of
year would feel that it is not a hopeless      measurement.
task. When I was in AID, we did apply
chis standard of self-sustaining economic         These are not light matters. For exam-
growth, and we did decide that sufficient      ple, the assei.sment of the Alliance for
growth was being achieved in a number          Prow-es'.'. over the last decade has nor-
of countries o that further external as-       mally rested on the judgment that the
 i tance was not needed. And on the            economic change in Latin America over
baSIS of preci ·cly thal judgment, foreign     that period, while valuable in terms of
a ·i cance of a concessional nature was        total economic growth, did not improve
brought to an end in the cases of Mexko.       the di:Mibution of income, and further-
Taiwan, Iran, and other developing             more, as an additional complexity, did
cou ntries. This w-as 5, 6, and 7 years ago.   not have much value in improving the
I assume there ha' e been other cases          quality and responsiveness of govern-
since then. So lhat the art or science of      mem in Latin America. Let me empha-
the economist does permit some practical       ~ize that most people have judged the
judgments co be reached in these cases.        .\llianle for Progress harshly. not be-
At che ame time. 1 would again empha-          cause it did not help to bring about more
size the delicacy and complexity of the        rapid rates of economic growth in Latin
anal~is that is necessary, and hope that
                                               America-by and large it did-but be-
as the GAO \enwres further on these
                                               cause the benefits of tho e larger rate~ of
slippery slopes, you will have at its dis-
                                               growth \\ere not widely shared among
posal the advice of some of the cop qual-
                                               the Latin American populations. It was
ity de,elopment economists like Ed
                                               the distribution of income rather than
 Ma~on a t Harvard, Hollis Chenery at the
World Bank. Arnold Harburger at                the race of growth of income which did
Chicago, or Dick Cooper at Yale.               not move in the direction which the Alli-
                                               ance had set out to achieve.

Programs With Multiple Objectives                 I do not mean that the standard of
                                               evaluation is unfair . The standard is en-
   Let me remind vou that I have been          tirely fair. The Alliance did set out to
talking only about a one-objective stand-      achieve a broadening of the income dis-
ard, on the assumption that all the            tribution in Latin America. I am simply
United tates was tqing to do was to help       poincing out that two objectives were in-

64
volved: one generally was a(hieved, one          Political Objectives
generally was not achie,ed. •\ny evalua-
tion must take an ouru of both.                    I have not talked about what are per-
                                                 hap the most vexing !..ind of objectives,
   Beyond economic objecti\e . Ameri-            namely, the objecuves of our develop-
can assistance programs ha\'e typically          ment a'-!>l'>tance program in political
had other objenhe . Frequently tho~e             tenns o,et the years our aid co deH!lop-
objectives have been military; that i co         ing countries undoubtedl) has been
say. the l!nllcd . tale h~ had an inter-         aimed in part at upponing or establish-
est in rrengthening the military forces of       ing certain kind!i of government. It is
a given coumry. One of the reasons that          a very complex ~ubjeCl, perhaps the least
the evaluatio11 proce~s becomes compl i-         well analyzed o f any i n the aid 6eld.
cated is that you can assis t the develop-       \Vic.h respect Lo economics and economic
ment of larger military force in a               change you can go tO quite widely
country by providing military assistance.        recognized authorities. such as some of
(military equ1pmem and training}. or             chose J mentioned a few minutes ago.
you can add to the economic capacity of          But if you are talking about the political
the governmem in quesuon, in which               side and governmental changes in devel-
event the\' can put more of tlreir own           oping countries. there i a murkier basis
resources into their milit~•r:· budget.          for analysi . le. clc:ar academic doctrine,
                                                 and much more argument as to who is
   .\Io c of us ha\'e felt over the years that   an authority and who h not an authoritv.
the first tep toward \\i~dom, both in
planning and in evaluaung military a -              Originally, 20 years ago. the U .. Gov-
sisLa.nce programs, i to c;cpa1ate the ob-       emm<:nt-the legi lative and executive
jectives clearl) in the analytical process,      branches JOindy-in its aid programs
so that everything is a~ identifiable as         placed great tmphasis on establishing
possible al l the way a long the line.           and mnintaining anticommunist govern-
Nevertheless, as indicated above. there          ments. That simple idea is, of course,
are limm rn chc po!i)ibilLL} of separation       long outdated. B)' 1960, when the Alli-
because of the fungibtl1ty oE the re-            ance for Progress was under considera-
  ourcc involved Whether you put mili-           tion, that aid program was explicitly not
tary aSltistance into ii country, permitting     aimed imply to .,uppon anticommunist
it to shift rc.,oune tO\,·anl the economic       gO\ernmems. It wa aimed in tead to
side, or whether )OU put cc:onot01t. re-         enco11r.1ge more democratic go' ern-
                                                 ments. :md was intended to help alhteve
  ources into a country. permitting il to
                                                 a broadening of the b<be of paninpation
put more resoun~ into the milit.ar),
                                                 and more pluralt~m tn Laun American
chere is an rne.c:apablc rdauomhip. You
                                                 political ~')"stem ... It ww, inferentially.
cannot '>Cp:tr.tlc them wholly Con e-
                                                 aimed ill reduc:mg the number of mili-
quently, there mu ...1 be in the L1• • Cov-
                                                 tary guvernment'i in L.,tin .\merica.
ernment some ~on of rommon approach
to these matt(•rs. There must be some               Look.in~ back at the Alliance today, I
sort of joim negoti~uing proress with the        think muse of us would (eel that the ex-
aid-receivmg govcrnmem in question .             perience of the last I 0 years demon-
 And anyone who h cval uating the assist-        strates that the program objectivec; were
ance effort has co think about the e             set too high for the means at hand. I
 interrelation hips. and cannot simply           think that economic assistance clearly
 look at one aspect or the other without         could not have achieved the kind of
 reference Lo their interconnection.             ch:m~e' 111 Latin American governments


                                                                                          65
-no mancr how desirable-which were              very complex and important. element of
 ought. The exLernal le\erage of aid was        the whole evaluation problem.
simply not a feasible means Lo those
ends.                                           Technical Assistance
   Howe-.:er. this is simply a negative
                                                    fin ;il Iv, let me call your attention co
comment. lt is a -.tep forward that we
                                                 Lhe complications inrroduced by techni-
are no longer simply imerested in anll·
                                                <:al av.iswnce and training as distin-
communism. We found in one ca<ie, a
                                                guished from capital assi tance. So far. 1
major case, that economic as.sistame has
                                                have been talking mainly about capital
severe limlls in improving the degree o(
                                                assistance. Technical assistance can be
p luralism and Lolcrance in foreign poliL-
                                                'ecn a I inked to capital assistance-as
iral sy.. cems. Where does this leave us
                                                 part of the process o( developing self-
t0day? I am noL su re. l am rather in-
                                                susLainrng economies. een this way, it
<lin ed to feel t.hat Lhe principal le son of
                                                does not introduce any new questions for
the pasL b that. by and large. the people
                                                anal)''>I~ other than those I have already
in dc\elopmg counrries are going to pick
                                                mentioned. When capital assistance h.
their own governments and 1here is not
                                                cut off, as in the case of Taiwan or Iran,
much that anvbody outside can do about
                                                became 1t is no longer needed, technical
it \Ve should be inu~re ted in marginal
                                                a'>'il tance i!. al o cul off.
gains for tolerance, pluralism, participa-
tion. and other dt:mcxratic 'alues hut we          On the other hand, technic:al assi t-
 hould nm expect too much.      "·e   .,hnuld   ance can be seen more broad!) as tech-
expect more effect in the long run on the       n iral cooperation. as part or an incer-
polit1cal evolulion and the govemmc:ntal        nacional proce:;s of scientific. cultural.
changes of mher countries through the           ,rnd edutational imerchange designed to
proces ci. of intellectual , educationa l,      en large the world's understanding of
and cul tura l inLerchange t han thro ugh       how lO dea l wi th major problems, and a
Lhc: prcx:es~ of government-Lo-government        proce'is from which Lhe lnited tates
bargaining.                                     has mu< h to gain a well as mud1 to give.
                                                    I citt.· two ~imple illustrations. Mosl of
     By and L'lrge. the people "ho are
                                                you knc>\\ that great changes have been
working moM strongl v for the kind~ of
                                                made in 1he outlook for food produccion
v,1lues in L ·uin \meriG1n societicll that
                                                in developing countries through the de-
t\C applaud-values of freedom and juc;-
                                                \'elopment of dwarf wheats which origi-
ticc and more equitable opportunitv-
                                                nated in ~f exico, under a program
are those \\ho ha\;e had access co the          originally started by the Rockefeller
same kind' of education and social in-          Foundation, and more recently joined by
sight that we have had. They see that           the Ford Foundation. Thee ''heats
we have many problems. \\'e ee that             have yielded two or three times as much
Lhcy have many problems. Neither we             .1~ moM nf the wheaLS available in devel-
nor they tire in a very good position LO        oping counrrie . They are <t very impor-
advi!\e on hot\ LO change the others' gov-      Lant '>Cicmific advance. The poim I wam
ernment. So I chink that LO evaluate eco-       LO make now is thaL these wheals arc
nomic assi<;Lancc activi ties in terms o(       also being introduced inco Lhe United
their impact on foreign govemmcncs                tates in many places with considerable
ma} well be asking more of our stale of         gain. Thi'.) is a feedback from sc:ientific
knowledge and more of the instrument            \\Ork done elsewhere for purpo e          not
at hand than i legitimate. Bue it is a          ha' ing to do with Lhe progress of the

66
United. talc'>. H owe\C~r. ~i nle U.S. scien-      grm' th in the deve loping countri es over
    ha' e bet n on the 11Hellet.lllal circuit,
ll'it                                              tht- last cle"tde haH' been more than I)
we are able to benefi l from the results.          percc.:nt per year, which i impr~she h
                                                   any '>tandards. By now, furthermore.
    \n othcr il lustra tion is an important
                                                   <JUite a few countries are well along to-
re earch project exploring the relation-
                                                   ward ...elf ..,u taining gro wth. l '.'i. aid ha!.
ship bel\\een nmriuon and earh child
                                                   been ended in a number of countries
hood. being carried out in Cali, Colom-
                                                   and, no doubt, is en route to e nd ing it;
bia. The re ul1.1. ol that project can be ol
                                                   others.
great benefit 111 dealing with the prob-
lem ol t he serious effeCL ol malnutri-              Sernndly. however, growth in devel-
ti on on yo1111g children lrom disadv;rn           o ping co 11 n1rics has b een very uneven.
tagcd fami lies in thi., <011 nt rv as well ai.    "iome countries ha \ C done ver y well,
el ewherc: in the world.          .                w hi le othen have dune relatively poorly.
   1 ci te this possible way of lookin g a t       Al o , the benefits of grow th have been
technical assistance bemuse 1 think then·          very un even wi thin countr ies, so that
is more futm e in d1e techn ica I coopera-         Lhere has hcen liuk if any improvement
tion field than we h.we yet understood             in 1he Ji._c., of many hundreds of milliom
I n all probab1hcy. just as the French and         of people Thi dm·., not invalidate the
the Briti'h ha\'e tried to do through fnr-         firsc cond 11~ion but it indicates hO\\
mal gowrnment programs. we also                    muc:h \\ork remain.. to be done. Further-
shou ld C'> tablish systcmati< and concinu-        more. there has not heen much discerni-
ous technka 1 cooperation bet'' een our            ble effe<r of economic growth i n encour-
scientists .ind educators and those in             aging more pluralistic and tolerant
                                                   ~ocietie'i--maybe a li ttle, but not very
other countnes becau-;e it will be bene-
ficial LO us as \veil as tu them. It is a part     much .
of the in ternn tionaliLation of the world            Thirdly. the va lidity of lhe lJ . . assist·
whilh is going on apace and from whi ch            ance e ffons has been demonstrated in
we have a great dea l to gain .                    pan by th t.• great increase in aid pro-
                                                   ~.1m of others. fwcntv five years ago
                                                   when we began hardly an) body else was
Some Personal Assessments
                                                   doing anything si1-,rnificanc. Over the
   Lee me close \\ ith one or two rather           ye.in. country a lter country has estah-
sweeping per onal a~es.,mt·n~ of L' "i             li hcd .1n aid program and while Lherc i~
assi tance to developmg coumries O\Ct              muth talk in che l'nited caces and wme
the last '.HI years. The ...e arc most cas11:t I   other counme · of weariness with the aid
and broad, and , ... htlc· I would be willing      effort. in nth er countries. such a .• \\eden
Lo defend thcni m the que.tion period , l
                                                   and Canada, supporc for a si. tance acllv-
C"ertainly do not argue that they an~              ities is ~re.1dily ri ·ing and the share of
based on <.icntifi.« analr•is : moreover,          their resource going to foreign aid is
they slide mer a n 11 mbc1 nf the t0ugh            steadily increasing.
question s wh ic.h I have idcnti fi ed earlier       Lastly. Lh e kn owledge of how to pro·
in these remarks.                                  vide assistance usefull y, and how to
   First o f all I Lhink that while there          a(hie\C progress in developing countric ,
have been many difficulues. many mis-              has r;ipidl) increased. There was a great
takes, and much waste, the overall im-             deal of naivete in the early years. We
pact of U.S. aid progra ms has been                thought we could transfer know-how.
powerfully pomi\'C:. The overall ra tes of         Well. b) and large, know-how that will

                                                                                                 67
distribuuon objective we \\'Cr(' working        therefcm: l,1rgel y a matter of guesswork
for in th<H case.                               and almo:.t no one knows \.'ery much
                                                about at
  But that 1'\ nm the 'ame thing as say-
ing that one c;an yet give a fullv 'iatisfac-      The drcum rnmes differ greatly
wry analytica l response co chc question        around the world. Bue in the b1gge t
you rai-;e. In my \:icw , this is a problem     n>ulllric-;, and the most important coun-
we must nrntinue to'' reslle \\1th.             trie~. 1t is my impn: ~ion that income dis-
                                                tribution i' nut a hidden question, there
   Mr. Bell, you comm~11ted about the           are quite a few data, and it is possible lO
unevenntl.I of the raft's of economic           make sensible jud~ments.
growth l1elwn:11 developing 11ations.
One n1a1or Jmrpou of U .• . developmer1-          Jn view of fhe serious debl-.'>eruicmg
tal assistauce is to he/ p improve the          probln11s tltat many of the less-devf'l-
slandard of filling of the citiu11ry in re-     oped co1111tries have, should nol more
c1pienl countries. Houi can the United          a.s.si.'llance /J~ i11 tile form of grants, not
 'tales better asse.ss the t'xteul ro which     loans!
the benefits of such e{forts in a particular
country may be flowing to .small aflluenl         Mr. Bell· That is an important que -
group~ m.slead of helping the large body        lion, in my opinion, and one that might
of ordinary citi:ens!                           form a good question for some of the
                                                GAO cvalu:nions. You will recall the dif-
  Air. Bell: The tatistical and measure·        ficult and controversial history of loan
ment techniques are available, I think,         terms in Congre'iS. lo the early 1950' ,
for almo!>L .my ..cuing in the ''otld. The      most of the aid in the Marshall Plan -v.as
statistical organizations are not always        provided in Lhe form of grants. Looking
there as yet, and the imerest in the ques·      back, that W:t!. un n ecessarily generous.
tion is sometimes n m even present. If          The redpient coun tries could have as-
you nre aski ng the question abo ut a           sumed debt burdens which they could
country Ii kc India, which basical Iy has       have paid ofT !~Iler.
a democratically oriented government.
which has a large and active crew of              We did nm think o at the time. It
eronomist.s and ociologists '>cattered          was an honest decision, but that experi-
lhrough the rnumry. lhere i enormous            ence. in pat t, explains why so many
concemrauon on preci ely this question.         people ha\e felt thac it is legitimate to
There are official go' emmem bodies             ask ev<.·n e"'tremely poor developing
making e,,timatcs or income di~tribution        countncs to a. ume some debt burden
and how it is thanging O\-Cr lime. There        for most of the re ourc:es that arc tram-
arc academic and other research com-            lerred.
 mentaton who :ire -;a} ing the go\'ern-            Partly for th.n reason. and partly be-
 ment is right or the government is
                                                cause influential members of Congre s,
 wrong. In short, there exists a Ii vel y,
                                                Ii le . emllor El lender, ha,'e believed con-
 vigorous discussion pron:.-.s sue h as we
                                                sistent ly that we should be charging
 have in our own country.
                                                commercial interest rates on most of our
   Other countries are in a differenr set-      loans, the loan terms have grown pro-
ting. Take a case like Paraguay which is        gressively ha.rder over the years. Most of
extremely limited in lhe number of per-         us in the aid field when I was in the
sons who have been trained to make lhe          Government, and most of tho e I know
necessary measurements and estimates.           who have been in AID since, have be-
The income distribution in Paraguay is          lieved that the e decisions by the Con-

                                                                                            69
work in India or Brazil does nol exi t in        ment at the start about priorities, income
the United tates. The know-how we                objectives, or economic objectives. For
have i responsive to U . . problems, and         example, is it better to have large mag-
new and ~ pecially tailored know-how             nitudes of income or is it better to get
must be developed to deal with the               more equitable distribution of existing
problems of India or Brazil. It is not a         mcomel
tran fer proc~. but an adaptation and
innovation process that is needed. My               Mr. Bell: I see significant improve-
earlier illustration of the dwarf wheat is      ment in the recognition that Lhere are
a classic illustration of how we ha\e           potential conflicts among thee objec·
learned this lesson.                             tives. I think. that 15 years ago most
                                                economists probably would have as-
    Finally, it is quite clear that in the        umed that the most rapid pos ible rate
 early years nobody was paying enough           uf grol\th in GNP would automatically
 attention to the problem of population         result in the most rapid possible gains in
 growth. And let me simply do e on this         the di tributioo of income. That view is
 point by noting that if the GAO had            not held coday. The rwo problems are
 been in the business of evaluating assist-     recognized as somewhat different, and
 ance efforts in the early and middle           anyone eeking co arrive at an agreement
 1950's, one of the conclusions that it         on the objectives of development pro-
ought to have come t~though I do                gram or of development aid would have
not know lhat che GAO or any other              to consider both.
 evaluator would have been brilliant
enough and courageou enough co reach               Now, ha\;ng said that., I cannot cite a
 this conclusion-would have been that           good example of a development pro-
the U .. aid programs were grossly in-          gram in a developing coumry which, in
adequate because they were not paying           my view, analyzes the problem pr ecisely
attention to population growth . The ap-        and esLabl ishes a clear and definite rela-
propriate recommendation would have             tionship between these two objectives.
been that the United States shou ld             We are at the stage, as far as I can see,
change its policies and, if it was going to     of appreciating that we do not auLOmaL-
be -.cdou about the improvement of Jife         1cally get a good income distribution if
in the developing countries, il should un-      we get a large rate of growth, but we arc
dertake to ipport research on contra-           not very dear as to bow to tran late that
ceptive developments and to support the         recognition into specific program objec·
expansion of family planning programs.          tive~. That does not mean that we can-
These ideas are commonplace today, but          not reach conclusions chat are of value.
in the early and middle l 950's they            Often we can.
would have been rather difficult for any-
one Lo put forward. So I suppose one of            I recaJI, for an illustration, in the year
the conclusions we should come to is that       when I was in AID, one of the things we
we live and learn.                              were doing in Latin America was work-
                                                ing co support the developmem of hous-
                                                ing fina nce agencies. We were steadily
                Discussion                      trying to make housing finance available
                                                to lower income groups than had been
  Mr. Bell, apropos the postperformanu          the tradition in Latin America. That \"35
evaluation of program.s, some of my aca-        a traighlfonvard effon to move the ben-
demic friends tell me that one of the big       efit of hou ing--of new and better hous-
difficulties is that there is a lack of agru-   ing--down the income scale. IL was a

68
gre h;ne limiLed unwisely the flexibil-         year'\, the \Vorld Bank's instruments
ity or decisio11making in this fit!ld , and     have been heller than those:: available to
in some case:. have brought :ibout che          AID.
rt.'\ull you -.peak of, namely, that we
h;ive forced 'ome developing counrries.           Thert• appears to bt" legislation in this
in the intere. t ur geuing re ouru.: at all.    Congress u.i/1ich seems to separate eco-
LO undertake a hurden of deht repay-            11omir. as.si.stanC"I'! nnd military sccunty
ment and intere~l payments whid1 is be-         a.u utance. In your remarks you .said that
yond their capacity. Consequently. we           they are wextricably mixed. Do you
now face problems of constant rcsched-          think that this legislation will ~make it
ulings or ome form of moratorium or             more coJLly to manage assistance pro-
repudiation, and this is an awkward             J...rram.s!
situation.
                                                    Mr. Bell: I hope I used a phrase like
   This docs not mean, however, that the        "inexLricably relaLed" rather Lh :rn "inex-
re ulcs o f aid loans have been bad in          Lricably mixed." I agree wiLh Lhe ton·
eH~ry case. There are a substantial num-        grc!.siona l tendency to disLinguish them
h<'r of developing countries whose eco-         more clearly. \Ve have indeed for some
nomic prmpec~ are good. lndone,ia is            years had two parallel provisions of law,
one:.. Indonesia has rich natural reM>urces     \\ ith the admini tralion of military a ist-
\\hich can be translated relatively easily,     ance bt:ing handled essenti:illy by the
although not immediately. imo foreign           Pentagon, and the administration of ern-
exchange earningoi. Therefore. hhile the        nomic assistance being handkd main!}
debt burden nf Indonesia is high. in the        h'r \ID. :'\evenheless. I think the point
long run they tan probably handle it.           I made earlier still holds. The two forms
Hm that is not ttue of India or of a num-       of aid are inextrirably related in the rase
ber of ocher countries. So the difficulLy       of ;my country to which we are provid-
has been that the Congress has provided         ing both.
a son of single Procrustean bed which
fined some 1 ascs and not other'!. If it            Consequently. whatever Lhc legisla-
were possible to give .\ID or other lend-       Live pauern, I would hope it wou ld pro-
ers more flex1bilitv, the results could he      ridc for '\Orne kind or required joint look
much more sen ible.                             within the executi\·e branch-joint deci·
                                                sionma king and mutual undemanding
   You will recall that the \Vorld B.mk         as bet\\een the executive branch agen-
OH'r chc yearc; ~tJrting with Gene Blad...      uc wn<..erned-so that the United
ha~ developed rwo pauems of lending-            \)tale . in negotiating \vith a given for-
one on commercial rates and the other           t: 1gn mun try. is seeking objecm e:. in the
on soft rates-that is, the so-ca lied "o;oft-   military assistance field which are con-
w indow" of the International De,elop-          'i:-.tcnt with those in the economic a~sist­
mcm As oci:nion. The amount of money            ance field, t1nd vice versa. For c-...imple.
going Lhro11gh Lhe IDA has steadily             ic wou ld clea rly be a mistake if the ob-
risen. and the World Bank has u.,ed              jc:rtive of the people running miliwry
these:: two authorities to work ouc differ-     asl!tstance were to encourage country X
ing combinations of hard- and soft-term         to increase its military budget anci at
loans appropriately related to che repay-       the same Lime the people in the eco·
ment capacity ol the individual coumry.         nomic aid business-because they felt it
They have recognized the need for flexi-        would contribute LO more economic
bility, and they ha\e had the instruments       growth-were trying to get country X to
a\'ailable to achieve flexibility. In recent    reduce it military budget. The U ..

70
Government cannot ac;I,. hmh thingc; at                be va luable. It i<; a waste of time to try
the ame time. There needs to be co<irdi-               to bu ild an overall development plan.
nation within our Co"ernment in the
planning and negotialing '>tages. But                     \\Te thought then, and I think today,
that is noL an enonnous burden or com-                 that is not a corren understanding of the
plication, and it i entirely possible, in              situation. On the wntrary. in a situation
my judgment. to run tht· two programs                  where needs are :.o overwhelming and
more distinctly than they have been run                re!>ources are so :icarce, it i · more impor-
in the pa t :ind, 'o far <L~ t he congres-             tant than in a "c::althier country to try co
sional process i~ con ccrnt'd, to put them             figure out what i~ the \\ i:.~t application
in two bills rather t han one is prub::tbly            of limited resourLtS, having examin ed
an encouragement to gTeater clarity                    the emire spenru m o f alternatives avail-
rather than the o pposite.                             able. L do no t think this poin t is at issue
                                                       a mong most of the people who have
    I n his April message lo !he Congress              looked seriously a t development prob-
proposing inrrea::.ed rdianre 011 interna-             lems over the years.
liona.l financial i11stit11tio11s. the Prni-
dent said that the less developed coun-                   Thi:re are many appropriate argu-
tries should set tht>ir oum priorities and             ments over whether the planners under-
develop their own programs. He also said               stand the problems they are working
that U.S. bilatPral rlevelopment assist-               wilh, a nd whether their answers are re-
ance would operate within a framework                  liable. P lanners are fall ible. There are
set by the fi11ancial i11stitutions and that           many aspects o[ the be ha\ ior of econo-
the United State::. wo11ld loo/\ to these              mies-whid1, aller all, are social entities.
institutions to provide f'Valuations of                not machine~-that are not well under-
overall development prosfJecls. I have a               stood. P lanners make mistakes: planners
t.wo-part q 11estion. Do we have a llflsis             miss die point, and :-.o on.
for 1·elying on the co urrtri<·s and the insti-
                                                          But ther e is nevertheless the n ecessity,
lutions lo develop effutive co1Lnlry pro-              when resource!> arc i;carce. lo decide not
grams and goals! On the other side of                  LO put the 111011cy simply on the problem
lhe coin, in view of the owny areas of                 that happens to be o m side your door
obvious need, how import an/ is it for a               that morning, bu t to pm ic on the one
country to have an overall ritJT1elopmr111             that, on analysis, is the most important
plan as a /;asing poi111 fur individual                in terms of th<: maximum leverage co get
a:.sista11ce prugrcw1:i-c <J11ld11 'l a:i:iista nc e   the w hole: c::co11urny moving forward . In
!limply be t1pplied lo tho:.e area.s of most           other words, where the1 e .ire many
obvious need?                                          needs, it is an illusion co say: "I know
                                                       what to du." The opposite ill the case.
   Mr. Bell: Let me answt>r the last quel>-
tio n first, panly because it is easier. I                 Now, your first question is a more
have been involved hy chance in devel-                 complicated one. I do not wish w com-
opme nt problems for quiLe a while now.                ment on the Presiden L's message, be-
I first served as a memher of a develop-               cause I read it a long time ago ancl I do
ment advisory team in 1!J5·1. One o f the              no t want to pretend that I have a n inti-
first queslions we ran into was: 'What is              111a te recollection of il. J understand
all this talk abo uc developmem plan-                  yo ur question to be: "Can the t Tnited
ning? This country is l>O poor, we know                ~tales properly rt:ly on analyses made by
what it needs. Any dollar that we can                  aid-receivin g countries and international
apply to such extreme requirements \\'ill              finan( ing agencies to develop effective

                                                                                                 71
 country programs and goals?" My an-          about. My own view of the matter is that
 swer, with a rea~nablc degree of cau-        we hould pay very erious attention to
 tion, i : "Ye ."                             lhe sense of priorities that a country has
                                              about itS own affairs. It comes back to
    The World Bank, for example, has          the very fir t question asked here. If you
 contributed for a number of years co the     have a choice co make between a more
 establishment of consortia and con~ulta­     rapid rate of GNP growth and a better
 tive groups of donor counrries. The Bank     di cribution of the results, the only way
 has provided secretariat services to these   that choice can be made is through a
 groups. including ending missions to         value judgment. There is no technical
 individual. developing countries. They       answer. If there is a trade-off, then it is
 find out what tl1c faces are and present     a matter of values. Which do you v2lue
 them to the donor group, so there will       Lhe higher?
 be a common basis of under Landing
 among the countries in the group. The           In a case like that, surely we hould
 various counuie · which are involved in      re pen the values that are stated by tlle
 consultative group have found lhe            local people. That is different from ay-
 Bank's reviews and analyses quite            ing we hould rely on their analy is of
 reliable.                                    the problem. We would ·w ant an analy-
                                               is from an international financial agency
    Once in awhile there is a difference of   or another independent source, to be
";cw. \Vhen I was in \ID, e\'ery now          sure there is in fact a conflict between
and then we found a situation thac we
                                              economic growth and distribution. But
 aw a little differently than the Bank did.
                                              once "e get to the poim of value choice,
One needs to maintain an independent
                                              I think, by and large, we should simply
attitude of mind toward the Bank or any
                                              respect what the country wants to do.
other financinl agency. We used co argue
more frequently with lhe IMF in tho e           In view of your experiences, what is
days chan we did wilh the World Bank;         your feeling of the situation in India and
mainly. because we thought the IMF            Pakistan, and particularly with regard to
sometimes was ob!iessed with stabiliza-       the cutting of aid?
tion and did not give sufficient weight to
the neces ities for development in local         Mr. Bell: The questioner is evidently
 ituauon . particular!> in Latin America.     aware that the country in ,,·hich I served
But if one checks the internal con ist-        15 year ago was Pakistan. My wife and
ency and the logic of the reports of the      I. and our children. lived there for nearly
international financ.ial agencie ·, and if    4 yean--from early 1954 to laLe 1957.
one maintain        ome son of periodic       \Ve gained and have retained many
independent check, I feel that the inter-     frienili lhere and a la ting regard for the
national financial agencies, by and large,    people o( thal country; thus, we are
can provide efficient, economical, and        badly tom by the events of this pa t
effective advisory services to the United     year.
  tates and LO other donor agencies.
                                                 Let me say a word or two about the
    o far as the aid-receiving countries      current situation as 1 see it, and Lhen go
are concerned, I think you quoted the         back to what I think are more generally
Pre idem as sa7ing we hould rely more         interesting que cions: chat is, do the
on whal they say their own needs are.         e"'entS in Pakistan suggest that the eco-
I think that is true, but I do not think it   nomic a i tance the United tates has
i lhe same point we have been talking         provided lhere over the years was mis-
..,_.,
guided; wa'> it w::t tcd ; or might other    stanis, hoch Wet and East, that with the
condu!tions be drawn?                        result of the election held l<i!>t Decem·
                                             ber, the Pakistan Government had only
    o far as the current silllation i con-   cwo choices. One was co let the
cerned, r mmt av lhat l perceive it          East Pakistan political \\eight-more
r.ither differencly than the presem ad-      than half the countr) '!. population li\'e
mini tration does. I thought that the        there-take effect m the national legisla-
election in East P.tki tan last DeLember     t urc. wh1ch meant turning the tountry
wa an extremely 11ignificnm event. You       over to the leadership of East Pakistanis.
will remember that the '\wami League         Thii; the Pakii.tan Government was 1111·
got all but two seats among those that       \\illing to do. Alternatively, it could
were contested in that election and. as n    have let £ao;t Pakistan become virtually
result, would have had an absolute           autonomous and, if they wi hed, a ne\~
majority in the national assembly-if the     Cree country. Those were the only
national assembly had been allowed to        choke· that would have prevented the
meeL The National Govemment, which           kind of m1gedy chat we have been wil·
was controlled b) Wesc Pakistanis, did       ne ing. I he West Pakistan Government
not wi:ih an East Pakistan party to have     wa "illing to do neither of those thing!>
control of the national legislature. They    and the re ult is what we see no".
twisted and turned for some months and
finally decided to outlaw that East Paki·       Now, back co the broader question of
                                             whether the outcome means that we
stan party, jail its leader, and impose
martial law on East Pakistan.                have been mistaken all these years in
                                             try111g to help develop economic strength
   That decision wa taken in mid.            in Pakistan. 1 would say no.
  larch. lt was ruthlessly carried out by       Let me sh1fL the venue for a moment.
th e Pakistan army in East Pakistan and        used LO respond to questions like this
th is, as we saw it, was a very tragic       when I was in AID with what still seem!.
evem. It led inexorably to what has hap·     co me lo be the exactly appropriate com·
pened over the month in between: (I )        menu. During the period of the l\farshall
the development of a guerrilla-type war-     Pliin, the country in Europe which got
fare. with the Bengalis trying to attack     the mo-;t aid wa France. I have forgot·
and drive out the West Pakistan army:        ten the exaLt amount, but it was $7 bil·
(2) the Aood of refugees in India, some-     lion or 'omethmg like that-virtually all
where on the orda of 10 million refugees     of n 111 the form of granLS. That aJd did
fleeing for what they obviously felt was     just what it was supposed t0 do; namely.
lheir very Live~. many, many thousands       to re rnre a 'iable French econom) a!. .1
having been killed in Ease Pakistan: (:i)    :,uppon for an independent French
the gradual in<Tca e in the support by       nation.
India for the rebels, for the guerrillas
and, eventually, the actual movement of         Fifteen years later, General DeGaulle
Indian troops into East Pakistan in sup-     was in charge of the Frenc-h government.
 port of Bangla Dcsh; (4) the response of    Ile was in the habit of kicking the
We~t Pakistan attacking across the West      llniced . rates in the shins every other
Pakistan-I ndia line, and (5) the present    d.1y. and tutting aero s our policies in
state of nearly full-scale war.              important ways. He drove the NATO
                                             Headquarters out of Paris and created
  1t seems to many of us who have lived      all sort:; of awkwardne . Did that mean
in Paki tan and who kno" many Paid-          that our aid to France had been wrong?

                                                                                     73
1t did not seem o to me The purpo~e           that we ought to put enormous U .. re-
of our aid co France was to restore a         sources into the AID program. We never
strong and independent France. 'Ve had        have and we won't in the future.
to take our chances thereafter, and we
                                                 Personally, I think. that the U.S.' con-
still do.
                                              tribution to foreign assistance of only
   This i' a world of independent nation .    one-third or one percent of its G P is
It is a VCT) difficult world co run, but it   rather niggardly, and that the United
is also our kind of world. We applaud          laces could well afford to increase its
and admire pluralism imide our country        contribution. I recently realized, with a
and out ide. We think that the world ran      start. that our GNP is supposed to go up
be managed cooperatively. It remain~ to       by $4-0 billion in the present yea1. Of
be seen whether this article of faith is      that amount, we are not proposing to p ut
going to be surc<:ssful in the long light     one percent into foreign assistance. Well,
of history or nm : but, that is what \\ c     why not? ,\ small share of that increase
think.                                        as a conll ibution would result in very
                                               ubstamial improvements around the
   Cone pondingly. in the case of Pald-       world and, to me, it would seem to be
stan. the basi for our as istance to          well warranted.
 Pakistan over these years has been w try
to encourage the establishment of an             I do not argue the particular merits of
economically progressi\'e and srronger        a particular figure that is now before the
nation. uppo~e it turns om to be two          Congre \. I do suggest chat the underly-
 nations? IL does not make all that much      ing rationale for economic and technical
difference. They are both big. One has a      a sisrnnce co devt:loping countries is not
 population of 75 million and the other a     seriously challenged by the current trag-
population of 55 million-indeed, there-       edy in Pakistan. Our purposes will be set
fore, two of the biggest nations in the       back. The purpose of most Pakistanis
world. They will constitute cwo of the        will be set back. It is a political failure
entities which we will be trying to work      within Pakistan-a political failure o[
with to try to solve important intema-        enormous dimensions and with enor-
rional problems. The ba-;j, for our effort    mous hum;in costs as a result.
has been recogni1ing that one of the             Ho,,e,er, we are noc in charge of the
problems that i most damaging to the          world and there are going lO be a lot of
world, namely. the problem of world           political failures in many places. h does
poverty, can be attacked effectively and      not seem lo me that they invaJidate the
relati\'ely cheaply, and the world has a      sLcady, scm.ible effon to contribute to
better chance of dealing with other prob-     more consLruc:tive events where we have
lems if that one i on the way to solution     it within our power to do so, and whet e
than if it is nm on the way to olution.       the costs are reasonable in terms of our
 fhose arguments, it seem:. to me, are        own resources. I think that is the essen-
valid and impressive. They do not mean        tial logic of Lhe matter.
                A Record of Service


   • • • the General Accounting Office. which i~ completing
its 50th \Car of operations this month, ha, compiled a fine
record of sen·ice during lhe past half centun: ~Ct\' ice to t.he
Go11gre''" -;enice to the cause of a continualh: improving
Federal administrative S)Stem, and ervice to 1he \merican
people. I welcome the opportunity to join with my col-
leagues toda) in commencling t.he G \0 on its 50th anni-
n:r,,1q and on the record of accompli. hmcnt which it haq
compiled charing that period.
  The Committee on Foreign Rclatiom ha~ calkocl on the
CAO on many occasions with requests for a\~i,tance in
the Cicld of foreign operaiions, and the resulting work is
indicative of both the quali ty and diversity or tlac service
whirlt CAO can provide.


                                 enator   J. \'\'   Fulbright
                                Chairman. •n;11e Foreign Relation<>
                                 Committee
                                Conwl'wona/ Ru,,rtl
                                Junl' 8, 1971




                                                                      75
                                                   Chet Holifield
                                                   Chairman, Committee on
                                                   Governmen t Operations,
                                                   House of Representatives




    Congressman Holifid<l is serving in his 15th term in the U.S. House of
Representatives and ha:i moved 11p to tht eighth .1rn1ority g;roup in rank. He
was elected Chairman of the Howe Government Operations Comm illec and its
Subcommittee on legislation and Military Operatiom.
     /\fr. H olifield relinquished. therefore, his po.fit1on a.s Vice Chairman of the
J oint Committu 011 Atomic Enr·rg:y, becomirig rl.f Rrmking House Member. lie
also was rea ppomtr.d by the prakn of the !Jome lo 5erve as Vice Chairman
of the Commimon on Government Procurement.
     Jfr. Holifield has been a leadtr in p1·omoting legislation in lht' fidd of
atomic wn-gy both for a strong defense and for its peaceful application in re·
search. He ha!i served a.i a member of the Joint Comm1ttu on Atomtc Entrf:j
since 19·16. He ha!i 1eroed as Cor1gi·e.uio11al Advism to the U.S. Delegation at
most of the international ron/erenus on tire pe(].('efrll USt:J of atomic enerf!;Y.
   Mr. Ilol1field authorrd the legislation estnbl1.1/11ng the General Services
Admrni.tlrat1on. Durmg the 89th Congrt'ss, ht• managed thr. b1ll creating the
Dcpartmt'nt of Housing and U1·ban Development.
    Tn 1966 Congl'f',1sman Holifield at1thored a bill w hirh created the Depa.rt-
ment of Tramportflti<m, th1ts becoming the only Representative in our history
to manage legislation creat ing two Cabinet-level departments.




76
GAO Auditorium
June 11 1971




The General Accounting Office
and the Congress


Once each yea1-, th<' Comptroller Gent'ral presidl:s al spt>rilll reremonies
to bestow honor award..! 011 CAO employeeJ who hat1e diltmgufahed
themselves thro11glt exct'pt1onal pcrformancc of tht>tr duttrf The 197 I
ceremontrs corncrded with the obsernance of CAO'l 50th anmvcnaT)'·
Represc11tnt1vc Hol1field'.1 address to lhe honor awarder~. thr1r guests,
and nil GAO officials a11d employees was relatrd lo both ouaiions. Hf'
observes that 111 1h 1earrh for the imperfutwri.1 m Govrrnmrnt in order to
make 11 morr etficirnt and efjectwe, GAO work rs a l11ghly 1atisf•1mg
form of p1tblic t•ndravm . That work u rm portant for the assurance it
gives the countn· that the Congre.H hllJ created and works with an
inst1tut1on thal k.ups an rye 011 the executivt• branch and u•orri1•.1 about
the taxpayer's dollar.



   I was p leased ro receive the invitation        Considering that Mr. Staats served so
from Comptroller General Sraats to par-         many years in the executive branch and
ticipate in the Fifth Annual Honor              the presidential orbit, I find it interest-
Awards Ceremony of the General Ac-              ing that he has committed himself so
counting Office The House Committee             firmlv to shaping the GAO as a service
on •O\ernment Operations, of which I            agency to the C:ongre~s. And, more than
am Cha1nnan. has a verv close relation-         his predece sors, he bas refashioned the
 hip ''1th vour Office.                         GAO as an in.,ticution to keep ic abreru.t
   Before examining thi:. relationship in
                                                of the times. ro expand its horizon , to
                                                dhersifv us c;k.11ls.
some detail, 1 would like Lo express my
high regard for Comptroller General                Jn paying this tribute to Comptrolle1
Staat.r, and my appreciation for his many       General taats, I do not want to detract
contnbutions to the public service.             from the imp01 taut work of his predeco-
                                                son. Earlier Comptrollers General, in-
   I knew him hnt in the Bureau of Lhe
                                                cluding ]. R. McCarl and Lindsay C.
Budget, and then I was greatly pleased
                                                Warren, were congressionally oriented.
when President Johnson appoimed him
                                                Preceding his appointment, McCarl was
in 1966 to the high offire of Comptroller
                                                a private secretary to Senator George
General. I have always regarded Mt.
                                                Xorrh of Nebraska, and Lindsay Warren
Staats as a dedicated public servant, al>
                                                wa:i a \fember of Congress from :'-Jorth
a man of keen intellect, broad experi-
                                                Carolina for many years.
ence, and deep underrnmding of the
complex processes of Go\ernment.                   \\'hen I came to the Congress in 1943,

                                                                                        77
\\'arren was in hi5 third year as Comp-      farflung responsibilities. Depression and
troller General. He guided the CAO           war and 'iocial turmoil have expanded
through the critical period of World War     greatly the responsibilities of the Federal
II, helped to establish the joint accoum-    Government and have made its opera-
mg improvement program. deYeloped            tions infinitely more complex. The GAO
the concept of the comprehensi,·e audit,     as Gmernment auditor for the Congr~
extended the practice of auditing at the     has had to deal with these complexities.
 ite of operations. and did much to make
the GAO an increasingly effecti\'e force        Comparing the Comptroller General's
to serve the Congress.                       first annual report of 16 pages (fiscal year
                                             I 922) with his latest annual report of
   Jn 1954, Joseph Campbell succeeded        150 pages (fiscal year 1970), one sees the
Mi. Warren a~ Comptroller General and        vast change in functions and perspec·
served for JO years. During his tenure       tives of your Office. When the GAO was
the GAO became increasingly involved         created. the Federal budget was SS bil-
in defense contract audits and played an     lion. compared to $200 billion today.
important 10le in the enactment of such
landmark legislation as the TrULh m              Fifty vears ago, the Office ga"e dry
"egotiations Act.                            . tatistin on how many different cypes of
                                             accounts it received. checked, and M:ttled
  Each Comptroller General has an       s-   in \arious Co\'emmem departments. To-
'ii~tant Comptroller General who    is his   da} the c..;AO still settles accounts, but it
good right arm. Frank H. Weitzel c;en·ed
                                             is concerned more with the adequacy of
in that position, t ulminaring a long and
                                             agency mcounting procedures than with
distingui hed career with the GAO over
a period of 45 years. almost for the         checJ..ing individual transactions.
length of its existence. Robert F. Keller.       Although the d ictionary definition o(
the present Assistant Comptroller Gen-       audit refers to the examination and
eral. also has sened with distinct.ion in    vc:rificacion o[ financial accounts, modern
the GAO for many years. Both Weit1el         usage has broadened the term to encom-
and Keller have made outstanding con-        pass the evaluation o( management or
cribuLions Lo the cvolucionarv develop·
                                             administration. The stereotype of the
mem of the office.
                                             auditor with the green eyeshade gives
  There are many other career men and        way co that of the professional analy t
women in the G.\0-1 cannot begin to          ,,·ith compurer support. The accounting
name them all-who desen•e our thanks         and auditing staff is being broadened to
and appreciation for selfless and dedi-      include engineers, economists, mathema-
cated work in the public interest. They      ticians, e\'en an expert in cybernetics!
have helped to build the GAO a an
                                                Today lhe GAO, by planned audit
instiLUtion. They have built their careers
                                             and by congressional request, tracks a
around this institution. The GAO is as
                                             multitude of Government operations.
good as its people, and judging by the
                                             GAO regional offices are manned
reputation it has, I would say that the
                                             lhrougho ut the country and around the
people are very good.
                                             world, wherever American Government
  The half-century of GAO's existence        holds sway. The work of the GAO today
spans the period of America's emergence      is more sophisticated, more diversified,
as a world powe1 and an urban society,       more attuned to cong:re sional needs and
with a big governmental apparatus and        interests.

78
Role of House Committee on                   exec11ti\e lnanch. There was a commit-
Government Operations                        tee. for example:. on Expenditures in the
                                             State De pat t111ent, another on Expendi-
   Under the Rules of the House and the      wres in the War Department, and so on.
Legishnive Reorganization Act of 1946.
it is the duty of the Comrniuee on Gov-         A few n:port.s come down to us of
ernment Operations to oversee the worl..      ignificam investigations by these com-
of the General Accounting Office. Our        mittees, but the historical judgment
committee has legislative jurisdiction       seems to be that the expenditure com-
over budget and accounting matters           m i uees of lorme1 times were not very
(other than appropriations). For exam-       effective, urten politically motivated. and
ple, the Government Corporation Con-         more o ften in a state of suspended ani-
tro l Act o f' 1945 and the Budget and       mation.
Accounting Procedures of 1950, both of
                                                ln 1927. ll tommittees o n expendi-
which govern important segments of
                                             tt1res in the House were merged into a
GAO operations, were handled by pred-
                                             single committee on Expenditures in the
ecessors of our commillee in the House
                                             Executive Departments. In 1952, the
of Representatives.
                                             name was changed to the Comm ittee on
  The Committee on (.;overnmem Op-           Government Operations. This name
erations regularly receives the reports of   change signified that the Committee
the Comptroller General for review and       wanted to go beyond the narrower his-
followup acuon if necessary, and we          torical identification with fiscal matters.
draw upon GAO personnel for assistance
in specific studies and investigations.         Just as the GAO may be said to have
Government anna ls conta in records of       developed fro n1 a voucher audit agency
many investigations Lhrough the years        to a management audit agency, so the
conducted jointly by o ur comm ittee and     CommitLee on Government Operatio ns
the GAO. We have worked together in          h:is taken a broadened view of its role
a constructive way for more effective        and become, in a ense. the congressional
Covernmenl.                                  nuditor of executive management.

  These relations are by no means ex-           Our committee also has important leg-
clusive. The GAO works dosely with the       islative responsibilities in con nection
Committees on Approrriations. Armed          with Government reorganization, pro-
Services, and others as the need and ot -    cu rement and property managemem.
casion arise. The Comptrol ler General       adminisuati\t: c:xpenses, freedom of in-
details personnel to the committees on       fornlacion, and Olher maucrs which have
request. ln fiscal year 1970, I am told.     a Government-wide or multiagency im-
some 115 GAO employees were assigned         part. However. the Committee on Gov-
to congressional com mittees. A lso the      ernment Operations is the across-the-
GAO is prepnred LO respond to appropri-      board investigating Committee of the
ale requestS of individual Members as        Congress and. I herefore, our investigative
resources permit.                            mandate-at least in the House or R ep-
                                             rese ntatives-is broader than that of
  Our committee's re lationship with the     other committees.
GAO has historical ioots. The Commit-
tee on Government Operations is the            We are c harged by the Legislative Re-
modern-day successor to various commit-      organization Act and the Rules o( the
tees throughout our Nation's history         House with examining the efficiency and
which dealc with expenditures in the         economy of the Federal Government ac

                                                                                     79
all levels. for this purpose we have :>omc   wide and touches everything thaL Gov-
specific tools, such as:                     ernment does.
     -A continuing subpena power;               The GAO declares itself on many mat-
     - A special statute giving access to    ters in Government beyond the legality
       Government records;                   of expenditures. 1t reviews agency per-
                                             formance and makes numerous recom-
     -The privilege of sitting when the      mendations for improvement. For the
       House is in session: and              most part, these are sound and well-con-
     -A sizeable investigative staff.        sidered, and the GAO bas a high score in
                                             agency responsiveness.
   Presently the Committee is divided
inLo seven subcommiuees, which among            However, honest men differ frequently
them cover all the departments and           about the best way to manage affairs, and
agencies of the Federal Government and       no single agency, including the GAO, bas
certain functional areas of interest: such   a monopoly on managerial wisdom. The
as intergovernmental relations, freedom      Congress itself does not a lways agree
of information, and foreign operations.      with GAO recommendations and re-
The Committee employs approximately          serves the right, through its committee
60 staff persons in total, including pro-    syscem and membership. to take issue
fessional, administrative, and secretarial   with the GAO and express its differ-
employees.                                   ences.
   The Committee on Government Op·              Who watches the Congress, you may
eracions, as 1 said, receives and studies    ask. The press and public watch che
the reports of the Comptroller General       Congress, which also has its in ternal
and works closely with the GAO in            checks and balances. Above all, the vot-
many ways. We have the responsibility        ers watch their Senators and Representa-
of supervising GAO operations as part of     tives. It is the voter s who hire and fire the
our legislative oversight function. Fre-     Members of Congress.
quently, we praise the GAO for work
well done. but from time to time we
criticize the G 0 in the interest of get-    Some Issues Involving Congress
ting work done even better.                  and the GAO
  No institution is perfect, not even the       The pecial relationship between the
GAO, and not even the Congress. If the       GAO and che Congress creates sensitive
GAO, as commonly said, is the watchdog       issues with respect to the Congress itself
of the Treasury, there are those who         and the executive branch. I will devote
want to know who watches the watchers.       the remainder of my remarks to a brief
                                             but candid discussion of some of these
   The Congress and particularly the
                                             issues. My comments are not conclusive
Committees on Government Operations
                                             because the answers in a few instances
watch the GAO. We are the source of its
                                             are not easy to perceive and are still to
basic authority. We are concerned about
                                             be considered in pending legislation .
the quality of its performance. The Con-
                                             Hopefu lly these comm ems will help you
gress has delegated to the GAO enor·
                                             to identify some of the issues which m ust
mous power and responsibility. The
                                             be thought through.
Comptroller General passes upon the
legality of Government expenditure ,           I. Since the Congress does not a lways
and, therefore, his writ runs far and        speak with one voice, the GAO has to

80
sene man~ m.a~te1'1. The1c 1s Jlway:. the          The(, \0 i'I right to be re5ponsi\e, but
danger of being hurt 111 the uo~fires of        it c.1nnot hope w he e'pen in all things.
poliural confli< l. The G .\0 pr,1cti('e has    What the Congtes-. neeili. from the GAO.
been Lo stid. to the fact .10d stay neutral     in cite fin.ii analysi . are auditors and in-
is politic . De pite cxcasional c:irping and    ' e!ltiga tor., who .u e \\ell trained and per-
critio~m. wlmh e\'ery public: a~eney i~         cepth e and can dig up the fatt.s. The
~po:.ed Lo. and Ccmhrre~smen are u ed           Cong1 c~ t .rnnrn hope to develop a ''hole
LO, the GAO h.1 built a n.•putation for         arra)· ol ccrhniral experLS to match those
objc:rthity. This 1eputation should be          in the cxecutiYe branch.
jealously guarded.
                                                     5. Tht (, \() holds iLSelf out as the
   2. The Congre~~ in its quest [or infor-      agent or the Congress, but it must be
mation has unbou nded appeLites. There          111 indfu l of. and perhitps resist.ant lO, de-
is no end LO what can be invesLigated           velopments which would tend to reverse
and never ennuKh staff to do everything         in many parcintlar~ the agent-principal
which is reque~ted. There are defi-             1elacionsl11p. Ihere are demands for leg-
nite limits to ( •.\O expan ibilitv as an       islation which would make the Comptrol-
agcncv and, thc1 efore. a need for care         ler General responsible for policing lob-
and ~lectl\ icv in honoring and c"ecuting       bies, political campaign contributions,
congTes ional requests.                         financial holdin~ of Members (the
                                                Comptroller General alread, is custodian
   3. The work or Congies is hased upon         for Senatorr,' financial declarations) and
a highly refined da\I ion of labor in the       other mauers affecting congressional con-
committee "'cem. The CAO must give              duce.
priority accemion to the committees ,,;th
important legislative and investigati\·e            ince the Congress itself is not well
tasks. On the 01 her hand, much of the          comtittued fot administrative opera-
drive for expanded GAO authority and            tions, the tendency to look to the GAO
resources comes from less-senior Mem            for such assi'it:'lnc e is understandable and.
bcrs of Congtcs'i who believe the <0m·          in any given <a.lie, possibly merited. If
mittee system is nm de"eloping enough           this tendency •~ encouraged. however,
infom1ation for Lhe Congres as a whole          and too many t'cmgressional policing and
   The C \0 must keep in perspectiYe            custodial functions are thrust upon the
these di\ ergent trend-. and the :.u!Jletie-.   Comptroller \.eneral. the GAO may
of lcgislati\ e maneuvering for po..ition       change into a quite different kind of
and influence.                                  a~enc)'--one which begins to acquire
                                                po\\ er O\ er the ( ongress itself.
   4. There .ire tho e in Congress \\ho
                                                  fi. The1 e are differences. not only
''ill try to put upon CAO. not onl)' more
                                                within che C:nns.,rre itself . b11t between
than it can do, but more than it should
do. The i~ue ma) be e\aluadon of .1
                                                the leg1 lame and executi\e branches
                                                about 111.tny ,1~pect of public policies and
complex weapon sy:.tcnt. or defense
                                                Governmen 1 optTations. As the agency
straLegy for t he ncx1 dcc-adc. or some
                                                which passes upon che legality of Govern-
other demanding task of a high policy
nature. The GAO i!I brought in because          ment expenditures. the Comptroller
it ioi ready at hand and anxious lo serYe.      General finds him elf occasionall}' at log-
                                                ~erheads \vith the Attorney General as to
The Comptroller General cakes the \ ' iC\\
that the GAO should respond in the full-        what ts legal and proper. Such conflicts
                                                are difficult LO resohe.
eSL extent po ible to all rca onable re·
quests.                                           The Congre " ha legislati,·e options
 LO cla1 iCy policy and prescribe proper             A frequent congressional complaint is
 cour5es of agency conduct. Nevenheles:.,          that C .\O reports are not timely enough.
 the Congre~ is not thaL flexible in le~is­        I know that many efforts are being made
 lati\'e re!lponse because consensus may be        LO overcome this time lag and to make
 difficult co actain, or the matter is left in     the reporting process more responsi\ e to
 limbo through inattennon or deliberace            the needs of the Congress.
 choice.
                                                       There are no book formulas to rcsohe
   The proposition has been put forth             such issue.~. and I raise chem to provoke
that the Comptroller General should                thou~ht and discussion in a time o[
have statutory authority to bring such            change. The Congress is changing, and so
connict il>!lues to the COllrtS for resolution.    i · the GAO. We enter che decade of the
I belie\e chat if the Comptroller General          l 970's and grope Lor answers to na t ional
is to acqui1 e such authority. it should be       problems of staggering dimensions and
excrci ·able in specific instances only with      great urgency. I take an optimistic view.
the full knowledge and consent of che             however. believing that this Nation has
Congress.                                         the resiliency, the imagination, the re·
                                                  sourte , and the basic inner strength to
   7. The Comptroller General believes            soh e these problems while keeping a
chat his ofhte hould have subpena                 steady course.
power, a privilege possessed by certain
commiuees and accorded by tature to
designaced agencies of the Govemmem.              Importance of GAO's Work
Since this power practicably cannot be
                                                      lt would be Cun to speculate how GAO
e:xerci ed against departments and agen-
                                                  would look on its lOOth anniversary. This
cies in the executive branch, it is sought
                                                   T wi ll not do now, but to those ol you
mainly in connection with access to rec-
                                                  who make your careers at the General
ords of Gove1 nment contractors.
                                                  Arcnuming Office, and to those who a re
   Does the Comptroller General need              recei,ing awards today, let me wish you
the su hpena power for effective work in          well and say chat you are engaged in a
contract :wdits? Some committee chair-            highly satisfying Corm of public en-
men believe that when a difficult situa-          deavor. You search for the imperfections
tion arise~. committees can exercise their        in Go\ernment in order co make Gov-
own ubpt'na po\\'er in support of the             emmem more efficient and effective. You
GAO. Perhaps the acces -to-records -.tat-         help to shore up the foundations of Gov-
uce need <larification.                           e1 nmcnt, co strengthen its bearing walls,
                                                  to repair its cracks and crevices, to
    . Finally, I should mention without            rnooth i~ rough edges. to make il habit-
necessarily e~hausting the list of sensi-         able and enduring.
tive issues, the age-old problem of the              Yum work is important above all for
auditor's lag. Audit reports look back-           the assurance it gives to the dtizens of
ward in time to past performance. They            this democracy that the Congress has
take a long time co prepare because au-           created and works w irh a n institution
diting is an arduous task, and the audit          that keeps an eye on the executive
agency u nderstanda b Iy wan ts to be co1-        branch and worries about the taxpayer's
recc in its facts.                                do llar.
                    GAO Annual Awards Ceremonies, June 11 , 1971


From lt'fl. IN> Herbnt. Dircctm, GAO           Office of Penrm11r.I Mrwt1~1·mrnt: R obert F. K eller.
Dcpuf'\· Cnmptrnllrr General: Grorge           P. Shull:. f)m ·rtor, O{ftre of '1011agemr11t and
811dgt•I. Clirt H11 /1firld, Reprrst'n/a/1ve   from Caltfmwn: Elmt•r H. Stant~. Comptml/er r.nr-
cral: and Pro/l'unr Robert C. 11i'l'nver.       City l'm111·nrty of N1·w l'mh.




                                                                                                    3
                                                 Elmer B. Staats
                                                 Comptroller General
                                                 of the United States




     E/mt>r B. Staats became Comptroller Genera l of the United States March 8,
1966, after 26 years of seroice in the Federal Government. B efore his appoint-
ment as Comptroller General, he served as Deputy Direr/or of the Bureau of the
Budget under Presidents Johnson, Kennedy, Eisenhower, and Tntman.
    Mr. Staats joined the Budget Bureau in 1939 serving in various capacities
prior lo his appointment by P1·esident Tmman tts Deputy Director in 1950.
     In 1953, Mr. Staats left Government .w~rvicc to accept a position as Research
Direr/or for Ma-rshall Field & Company in Chicago. A year later he was ap-
pointed by President Eisenhower as Executive O[fict?'r of the newly established
Operations Coordinating Board of the National Suurtt)' Council. He held this
post until he rejoined the Budget Bureau as Deputy Director in September 1958,
and continued in this position until he became Comptroller General.
     Mr. Staats was national p1·esidenl of the American Society for Public Ad-
ministration, 1961-62. He is a member of several boards and committees, in-
cluding the Board of Directors of the American Academy of Political and Social
Science and the Board of Trustees of Public Administration Service.
     A native of Kansas and a gradttate of McPherson College, Mr. Staats re-
ceived an M.A. deg·ree from the University of Kansas and a Ph. D . degree from
the University of Minnesota. He was a. fellow of the Brookings Institution from
1938-39, is a member of Phi Beta Kappa, an honorary member of Alpha Kappa
Psi, and received the Rockefeller Public Service Award in 1961. He also re-
ceived an honorary degree of Doctor of Public Service from The George Wash-
ington University in 1971. He i.r rurrently serving on the Board of Trustees of
The American University in Washington, D .C., and McPherson College in
Kansas.

84
ASPA Conference
April 21, 1971




New Problems of Accountability for
Federal Programs

The increasing in110/vement of external gro1tps in carrying out Govern-
ment progrnms and operations raises new questions of accountability
for results. As concern for accountability increases, we must seek new
ways to evaluate the management and effectiveness of Government
programs. On behalf of the Congress, the GAO auditor's responsibility
embraces evaluations of fiscal, managerial, and program accountability.
H owever, the primary responsibility for an adequate accountability
system lies in the executive branch and the performing agencies. (This
address, except for minor changes, was delivered before the annual con-
ference of the American Society for Public Administration in Denver,
Colo.)




   If I were to ask you as public adminis-    authority to commit our armed forces to
trators and political scientists what prin-   combat, criticism of the President for
cipally comes to mind when one refers to      impounding funds appropriated by the
accountability, I suspect that most of you    Congress, charges of a credibility gap in
would reply in terms which would relate       information made available to Congress,
accountability as it bears upon our con-      and so on. Concurrencly. we hear more
stitutional separation of powers-princi-      and more frequently that Congress has
pa lly between the executive and the leg-     lost its "coordinate" position with the
islative branches.                            executive branch, that Government has
                                              become too large and too complex for
  Article II of the Constitution provides     adequate legislative oversigh t, and that
that the Presidem "shall take care that       the President-thanks to television-
the laws be faithfully executed • • •."       overshadows any similar figure or group
Tt further provides that " he shall from      of figures in the legislative branch, and
time to time give to the Congress infor-      thus has an overpowering natural advan-
mation on the state of the Union." ln         tage in molding public opinion.
other words. h e is accountable to the
Congress for carrying out legislation en-        An equally challenging and tempting
                                              aspect of accountability is whether the
acted by it.
                                              Congress has weakened its capability to
   This aspect of accountability is cer-      exercise adequate legislative oversight
tainly a timely one. The temptation is        because of its outmoded procedures and
great to develop it at length. We hear        because of its preoccu pation with de-
much these days about "executive privi-       tails and hence insufficient attention to
lege," questions as to the President's        major program issues. This is a familiar

                                                                                    85
story to all of us. Perhaps some of you             Some have described this mixture of
have made Lhese charges yourself.                governmental and nongovernmental ar-
                                                 rangements as the "contract state."
   But. I shall resist Lhese temptations.        Others ha,·e desc.Tibed it as a blurring of
Instead, I would like to develop a differ-       the lines between the public and private
ent but increasingly significant aspect of       sectors. Sti 11 others see it as a dangerous
accountability. It is not unrelated to ac-       and unhealthy situation in which the
countability of the Congress to the elec-        Government is in danger of losing--or
torate, nor to the subject of separation         has lost-its ability to act in tbe public
of powers. Indeed, it is impossible to           interest. The phrases-"military indus-
separate them. I am referring to tbe             trial complex," "educational industrial
problem of accountability as it relates to       complex,'' and "medical industrial com-
the increasing use of organizations out-         plex"-are used to describe what some
side the Federal establishment in carry-         consider to be an unholy alliance be-
ing out governmental programs.                   tween Go\'ernment and industry under
   The idea of carrying out governmental         which the taxpayer and the general
programs through nongovernmental or-             public come out as losers. Still others
ganizations is not a new one in our his-         fear that accountability will bring with
tory. It is as old as the Erie Canal. land       it governmema I comrols and the seeds of
grants to the railroads, and the Morrill         destruction of our pluralistic society.
Act to supportJand-grant colleges.                 For others, the issue-whether the
                                                 growing trend is or is not desirable-is
   \Vhat is new is the sharply increased
                                                 an academic one. They consider it inevi-
dimension in recent years of the use of
                                                 table and that the future will see an even
instrumentalities not dirett ly adminis-
                                                 more extensive use of such organizations.
tered by Federal employees-the private
corporation, the quasi-governmental or-             As these people view it. the issue,
ganization, nonprofit groups. interna-           therefore, is how the Government can
tional organizations. and State and local        hold these organizations accountable
governments. The forms of sponsorship            without losing the essentials of ingenu-
are many, ranging from Federal charters          ity. creativeness. and initiative which we
to subsidies, from contracts to grants.          have associated throughout our history
But, they all have a common denomina-            with independent groups in our society.
tor in that they are not administered di-        This is the view which I hold.
rectly by Federal employees: they share
                                                    This latter thesis has been ably voiced
accountability to their own management
                                                 in a cu1Tent project sponsored by the
and to the Federal Government.                   Carnegie Corporation under the heading
   It is a fundamental tenet of demo-            of "Accountability and Independence."
cratic society that individuals, organiza-       Through joint United cates-British con-
tions. or groups entrusted with public           ferences, through a series of papers com-
funds and responsibilities must be held          missioned for a conference at Ditchley
                                                 Park in Britain, and through additional
accountable for carrying out their activi-
                                                 papers commissioned for an upcoming
ties faithfully, efficiently, and effectively.
                                                 meeting in Williamsburg this fall, the
This need for accountability applies n ot
                                                 importance of preserving both account-
only to organizations Sllpported wholly
                                                 abil ity and independence has been un-
with public (unds but to those financed
                                                 derscored and highlighted.
only in part with public funds or those
established by governmental charter.               In this 50th anniversary }'ear of the

86
Bud<>'et and Accounting An, it is particu-    greater portion of U.S. foreign assistance
larly timely co locus our attention on this   funds to international organizations.
apparent dilemma. While the subject is        Certain characteristics ol these organiza-
not exclusively one of Federal concern,       tions, particularly the fact of their being
the extent of delegation or contracting       international, create perplexing prob-
with external groups has gone funhe1 in       lems in devising adequate techniques to
the Feder:il Government than in State         obtain accountability. \Ve must start by
and local governments. Jt is also an area     recognizing that membership in interna-
of interest to me as head of the U.S. Gen-    tional organizations presumes a willing-
eral Accounting Office-a major concern        ness on the part of member nations co
of which is to assist the Congress in its     re ly heavi ly upon the management of
legislative oversight responsibilities.       these org·aniz.ations, an agreement which
                                              severely limits action thal can be taken
   A listing and ltighlighting of the prin-
                                              unilaterally.
cipal forms of delegation wi ll help em-
phasize the importance and ramifications         For example. developmental assistance
of the subject.                               carried out through the specialized agen-
                                              cies o( the United Nations involves the
Federal Support of                            international sovereignty, so to speak, of
                                              these agencies. But this o ereigmy must
International Programs
                                              somehow be reconciled with the need to
  Since \\'orld War Il, the United States     obtain sufficient financia I. management,
has been a major contri hutor to various      and program data to assure the contribut-
internationa l organizations. especially      ing nations that the programs of these
the United Nations and its specialized        agencies are being carried out effectively.
agencies, and the internationa l financ ial   This information is needed, of course,
insti tu tions.                               for the United States to determine the
                                              type and level of support it should pro-
  Let me cite a few statistics:               vide these agencies. The General Ac-
  -U.S. subscriptions · in the Interna-       counting Office ltas reviewed many of
    cional Monetary Fund stand at $6.7        these programs and in many instances
    billion.                                  concluded that not enough in formation
                                              is a' ·ailable to the United States to make
  - U.S. subscriptions to che World Bank
                                              a valid assessment of their operations or
    now total $6.3 billion.
                                              resu lcs.
   -Over the last decade, U.S. contribu-
    tions to other international lendinp;        \Vhat is needed to overcome these in-
    institutions, such a~ tlte Imer·Amer-     adequacies? \\-e considered the possibil-
    ican Development Rank, the Inter-         ity of audits by the United States and
    nacional Development As~ociation.         other member nations but discarded the
    and the Asian Development Bank ,          idea '1S unwise and impractical. We con-
    totaled more than $4 billion.             e! uded that the better course for pro-
                                              viding accountability lies in pushing for
  -During the same period direct con-         better financial controls, program evalua-
    tributions to the United Nations          tion, and budgetary systems within these
    and its specialized ag·encies, and        organizations. We recommended, and the
    other international organizations         Departmem of tate is recommending,
    totaled more than S3.2 billion.
                                              that the United States support the estab-
  In recent years there has been a pro-       lishment of a single United Nations re-
nounced tendency toward transferring a        view body to make independent evalua-

                                                                                      87
tions of United Nations developmental             Human resource programs--educa-
activities.                                    tion, manpower, health, and income
                                               maintenance-account for more than
   Following the recent announcement
                                               half of all Federal grant funds. The De-
 by the President that the t.:nited tales
                                               partment of Health, Education, and Wel-
would seek increasingly co channel its
                                               fare alone made FederaJ aid expenditures
development assistance through multilat-
                                               in the form of grams totaling over $12
eral organizations. the Department of
                                               billion in 1970, $14.7 billion in 1971 and
  tate reorganized its Bureau of Interna-
                                               expects to pend $18.5 billion in 1972.
tional Organization Affairs to strengthen
the Bureau's ability to monitor and eval-      This compares to totaJ grant expendi-
                                               tures made for the entire Government as
uate the prognms and activities of the
                                               Federal aid to State and local govern-
Un ited Nations and its speciaJized agen-
                                               ments during 1970 of nearly $24 billion,
cies. This reorganization followed
                                               and $29.8 billion d uring 1971. It is ex-
closely a plan we recommended to the
Department and to the House Foreign            pected that total Federal aid expendi-
                                               tures will increase to over $39 billion
Affairs Commictee. This reorganization
                                               during 1972.
will provide greater assurance to the
Congress that channeling more aid                 For the future. the Federal budget for
through multilateral bodies will still af-     1972 states that "'this year promises to be
ford reasonable oversight of expenditures      a turning point in the history o( our
channeled through these organizations.         federal system." It notes that the Presi-
   With respect to the international lend-     dem"s proposals for financial assistance to
ing institutions, GAO has similarly been       State and local governments, includes a
concerned Lhat there be a rop level man-       program for general sharing of Federal
agement review body in each interna-           revenues for fiscaJ year 1972, estimated
tional institution reporting to its govern-    at about $5 billion during the first year.
ing board, as contrasted with the limited         l n the debate on grants-in-aid and
lower level audit activities reporting to
                                               revenue sharing the basic question fo-
the operating officials of the banks. T h is
                                               cuses on the primary purpose of such as-
goal has already been accomplished at          sistance. Is the primary purpose lo sup-
the Inter-American Development Bank.
                                               port programs for specific nalional needs,
                                               financed in substantial part "'"'-ith national
Financial Assistance to State and              revenues and accounted for to the na-
Local Governments                              tional Government? Or is their prime
                                               purpose equalization of the tax burden
   The national debate now taking place        under a system of federally collected,
on grants-in-aid and revenue sharing is of     locally administered revenues?
special interest to those interested in the
subject of accountability. Grant-in-aid            The President in his February 4 mes-
programs hnve increased in the past 20         sage to the Congress on general revenue
years from $2.3 billion in 1950 to $29.8       sharing, took note of the issue of ac-
bill ion in 1971. Gran ts-in-aid have in-      countability. He pointed out that many
creased over this period on an aver age of     people believe chat the best way to hold
12 percent a year. By comparison State         Government accountable to the people
and local revenues have increased about        ''is to be certain that the taxing authority
9 percent a year. Approximately one-           and the spending authority coincide."
fiftb of all rate and local funds are now      He disagrees. His con cl us ion is that ac-
derived from Federal grants.                   countability reaJly depends in the end

8
"on how easily a given official can be held      \ Vhithever way the issue curns. our
responsible for his spending decisions        attention has been focused sharply on the
• • • not where the money comes from,         c:apauili ty of State a nd local governments
but whether the official who ~pends it        to audit programs and to evaluate their
can be made lo answer lo those who are        effectiveness.
affected by the choices he maJ..es." In
brief, the President concludes that the          The CAO is currently taking the
-;pending rath~r than the taxing is crucial   leadership in an effort LO develop au-
in the accountabi lity issue.                 diting standards which will more clearly
                                              define the nature and quality of auditing
  The dilemma is posed by the face thac       of these programs needed to provide
the President recommended against al -        man.tger · and policymakers, including
lowing the application ol the civil righ ts   legislators, with information a nd inde·
and equal employment laws Lo be deter-        pendent evaluations o n what is done and
mined by Stale a nd local governments.        what is arrnmpl ished wi th Lhe funds ex·
These would rnminue to be suujen to           pended. We also expect to develop a
Federal audit and Federal control.            model state audit law. If revenue sharing,
   " Special revenue sharing," essentially,   as proposed by the President, is adopted,
is a program to comolidate categorical        the application of such standards may
grants. The Presidem·s proposal, how-         well become the major- perhaps the
ever, contemplates vastly increased local     only-arcoumability tool remaining for
discretion to allow local determinations      the Federal Government.
on program prioricie. within broad cate-
gories to replace judgments of Federal
                                              Federal Contract Research Centers
agencies and to provide for minimum ac-
countability to the Federal Government           Closely al lied with the issues associated
as to how these funds are expended.           with grants-in-aid and revenue sharing is
  1 doubt if there is any issue in our        Federal Governme nt assistance to scien-
generation wh ich has posed the issue of      Lific research . During the last 20 years,
accountability more sharply.                  the Federal Government's assumption of
                                              expanded responsibili ty for scientific re-
   Will the Congress, which muse raise        search ha led to increased reliance on
the revenues, be willing to i.eule for the    contracling with private nonprofit orga-
discretion and delegation to State and        ni7.miom. One of Lhe first of these wa<;
local government which the President'         the RAND Corporation, started in 1946
proposals contemplate? Can we find al·        as an Ai my Air Corps project ac Douglas
temative ways of achieving acrnuntabil-       Airnaft Company. Two years later, il
ity short ol the detailed and burdensome      was organized as a priva le nonprofit cor-
requirements which we have today in so        poration, a model since followed in the
many of our gram-in-aid programs? Will        establishment of o ther similar research
the special imerest.s-<onc.erned with. for    organizations.
example, child care, aid to the mentally
retarded, or water pollution rnntrol-be           By the early 1960's, the number of
satisfied to allow the need for these pro-    similar nonprofit corporations created by
grams to be determined by the . tate and      the defen e agencies had expanded
local governments? \Viii cmes who             E-,rreacly. The increased need for strategic
ado pt "neighborhood-level" governmen-        analysis led to the formation in 1956 of
tal units be able to hold such units fis-     the lnslitute of Defense Analyses, used
cally accountable?                            by the Joint Chiefs of taff. Ocher we ll

                                                                                        89
known nonprofit corporations sponsored         tection Institute to provide a similar role
by the defense agencies include:               for the Environmental           Protection
                                               Agency.
     - .A nalytic ervices, Inc. (Air Force),
        1958                                     By 1967. the Office of Science and
     -Logistics Management lnstilllte          Technology and the Federal Council for
       (DOD). 1961                              cience and Technology had identified
                                               68 Federal contract research centers,
     -Research     Analysis    Corporation     with varying degrees of autonomy and
       (Army), 1961                            having highly differing purposes, includ-
     -Center for    1
                     aval Analysis (Navy).     ing Ii ponsored by the Department of
       1962                                    Defense. Funding of these centers in-
                                               creased from .$1.1 billion in 1962 to over
   During this period, the Air Force's
                                               $1.5 b illion in 1970.
need for systems engineering and techni-
cal management resulted in the creation           Much has been written and said as to
of the MITRE Corporation in 1958 to            the merits of the e centers sometimes re-
serve in de\'eloping electronic and com-       ferred to as "captive'' organizations. The
mand control systems. The Aero pace            word "captive," at least in the early day,
Corporation was formed in 1960 to pro-         was appropriate since most were not per-
vide technical direction in missile and        mitted at that time to undertake work or
space programs. The ystem Develop-             receive funds from any organization
ment Corporation was spun-off from             other than the sponsoring agency. The
RA. D in I 956 to provide operationally        policy has since changed for most of
oriented training and other technical          them.
support for control information and
                                                 Supporters of these Lenters argued in
processing systems. Finally, the Johns
                                               behalf of their establishment that they
Hopkins University Applied Physics
                                               could be organized more quickly than a
Laboratory, established in I 942, has
                                               new unit in rhe governmental establish-
been used by the Navy for technical ad-
                                               ment: they frequently could borrow per-
vice on missile and space programs; the
                                               sonnel and resources a lready available at
Laboratory is a Government-financed
                                               a univer ity location: and, most impor-
laboratory, operated as a division of the
                                               tantly it was argued, they would not be
University. Nondefense agencies such
                                               subject to the painsi.aking accountability
as AEC, NASA, and the National cience
                                               and administrative requirements qf the
Foundation also sponsor nonprofit re-
                                               bureaucracy with respect to salaries,
search corporations.
                                               budgets, reporting, etc.-matters of
   One of the most recent nonprofit re-        long·<.Landing concern to governmental
 earch corporations is the Urban Insti-        in-house establishments.
tute, established in 1968 to study urban
                                                 But this very independence has also
problems.
                                               been the source of problems. How truly
   In 1970 the National Area Develop-          independent can an organization be, it is
ment Institute was established by Spin-        asked, if its Iife depends upon a year·to·
dletop Research, a nonprofit corporation       year budget allowance from an agency
in Lexington, Ky .. with assistance from       or even a subordinate unit within an
Ford Foundation, to serve a similar pur-       agency. Why should an organization
pose with regard to small towns and            fully or chiefly supported with Federal
rural areas. Recently announced are            funds be permitted special privileges or
plans t0 create an Environmental Pro-          advantages not given to those in the Fed-

90
eral establishment? One sludem of Lhe          vitality of research t:ffons; to develop
subjen summed up the dile m ma of the          and su pport research efforts to inc.Tease
Federal contract r esearch centers in 1he:.e   our understa nding of the problems of
ironic terms: the principal i:.sue with        society and th eir solu tion; and to ad-
the m c urrenrly, h e said, is how to pre-     vance the Nation's economic gro\\'Lh and
serve the strengths which caused these         welfare.
centers to be established in the first
place; tha t is, how to preserve profes-          This r esearch a lso provides for the
sional ism and independence when chl'ir        training of science and engineering grad-
future is tied up so closely wilh the fund-    uate students through employment on
ing of a panicular spon oring organiza-        the research projerts and helps de, elop
tion.                                          needed capabi lities in academic inst itu-
                                               tions to undertake research on important
   With increasing scrutiny a nd restric-      national, regional, and local problems.
tions, especially from the House Appro-
priations Committee. these centers have           It is nm possible in the limits of this
been pushing for diversification of sup·       paper to o utline the full significance :ind
pore and at least one has been cue loose       implications of the Federal Govern-
from Government sponsorsh ip and func-         m ent's relationship to colleges and uni-
tions in the private sector.                   ,·ersi ties as it provides funds to carry out
                                               speci fic projects a nd programs or to en-
   And the end o f the story may not           courage re earch and training in areas of
have been told. The que:.tion is asked-        national interest. Essentially, the basic .
if we have the ingenuity to create a spc·      questions, however. are the same as with
dal purpose Langley R esearc.h Center or       o th er organizations: What does society
a National Institute of H eal th , wby can-    get from its investment? H ow can as-
not we likewise cstabl ish the necessary       surance!> be provided that the objectives
flexibility a nd autonomy within Govern-       sought with such funds are being
ment? Can the sponsored research cen-          achieved? How can assessments be made
t~·r, in sh ort, have it both ways-free-
                                               in a way w hich will not interfere wit h
dom from market-place wmpetition on            academic: freedom or stifle initiative? Is
the one hand and relative freedom from         there a choice, in other words, between
accountability to Government on the            the roads which lead co ever-increasing
other?                                         Government control of o ur universities
                                               and fa lling back to the level of support
Research and Development in                    which can be provided them th rough en-
Colleges and Universities                      dowments and private philanthropy
                                                which have been relatively rr~e from
    Another significant n1easurc of Federal    such rnnlro l?
suppon of science is the gTowth of grant
and con tract funds to universities. The
National c:ience Foundation p lays a           Government-Owned,
major role in such support. , tatistics        Contractor-Operated Plants
compiled by th is agency :.how l hat obl i-
gations for research a nd development            I n obtaining the goods needed by the
conducted by colleges and universities         Government to Glrry out its programs,
more than doubled from S 00 million in         the q uestion of whether co make or
1962 to $1.7 billion in 1970. T he 1972        whether to buy is the first question that
budget contemplates nearly $2 billion.         must be answered. ·when it decides to
 res goal is very broad: to insme the          make. the Government often invests in

                                                                                        91
 plan ts and equipment and then contTacts     the management effectiveness of chese
 with the private sector Lo operate the       contractors.
 plants.
                                                 Yardsticks used by the AEC include
    The Deparcment of Defense and the         ( 1) developing tandards for direct labor
 Acomic Energy Commission both make           and direct material, where applicable,
extensive use of private contractors to       (2) developing financial and personnel
operate Government-owned industrial           plans on the basis of expected workload,
 plan ts. l n fact, most of the work in       (3) comparing actual performance with
achieving AEC goals is performed in           planned performance, and (4) conduct-
Governmen t-owned facilities under con-       ing formal appraisals of individual plant
 tracts with industrial and educational or   operational segments. One of the most
other non-profit organizations. By the        promising objective means of measuring
end of fiscal yeaT 1970, these AEC con-       management effectiveness that can be
tractors had approximately 106,000 em-        used at COCO plants and which should
ployees engaged in operations and 9,000      rereive more attention is the industrial
in construction work. In comparison          management review or "should-co t"
AEC itself had 7,548 full-time em-           :inalysis.
ployees. Contracts with 350 prime indus-
trial contractors in I 9i0 amounted to       Negotiated Procurement
  1.6 billion. In the same period, the
Department of the Anny bad 2 active             The Federal Government is the pri-
GOCO industrial plane whose operac-          vate sector's biggest cusLOmer. ince
ing expenses exceeded 1.1 billion.            1949, when the Federal Property and
                                             Administrative ervices Ace cencralized
   It can be seen that this technique is,    dvilian procurement, the dollar value of
essentially, that of procuring the man-      all U.S. purchases of supplies and equip-
agement talents of the private sector.       ment has increased from $9 bil lion to $55
The Government exerts varying degrees        bi t lion. This represents nearly one-
of control over the activities of contrac-   founh of the Federal Government's total
tors that operate COCO plants. These         budget. Nearly 90 percent of these pur-
controls are intended to achieve a variety   chases is in the form of negotiated rather
of objenives. They are not necessarily       tbnn formally advertised bid procure-
directed to increasing plant efficiency.     ment. About one-half is negotiated with
For example, needed equipment mod-           a single supplier, known as sole-source
ernization or replacement that can be        procurement.
justified b; the economics involved may
                                                Where the Government can buy com-
be rejected by the Government agency         pctiti vel y in the market place, the nor-
because of other demands for funds hav-      mal market mechanisms can generally be
ing higher priority.                         relied upon to assure that the goods are
  The traditional incentive to efficiency    procured at fair and reasonable prices.
-increased profit-is a lso absent since      BuL negotiated procurement--especially
most G OCO contracts are cost-reim-          negotiated sole-source procurement-re-
bursement contracts where the contrac-       quires other controls to insure reason-
cor's profit or fee is fixed at the outset   able prices to the Govemmenr.
and the concractor is not rewarded for           ome have even raised the question as
reducing costs. The Government must          to whether the major defense contrac-
therefore find the yardsticks to measure     tor . whose entire business depends upon

92
Government consumption and whose               the purpose of stimulating private busi-
sales to the Government are predomi-           ness firms to hire and train the disad-
nately negotiated, are losing their status     vantaged. The goal of the JOBS Pro-
as private corporations.                       gram is the employment of 614,000
                                               hard-core unemployed in l 25 cities by
   A great deal of interest has been
                                               June 30, 1971. The National Associa-
stimulated in improving Government
                                               tion of Businessmen seeks to attain this
procurement procedures. For example,
                                               objecrive by creating awareness, involve-
~he Department oC Defense is increasing
                                               ment, and commitment in the business
lts use of "fly-before-you-buy'' procure-
                                               community to stimulate them to provide
ment. <?AO has recommended greater
                                               jobs and training for such persons and
emphasis on "should-cost" analysis to
                                               advise the Secretary of Labor on how
find ways in which the Government and
                                               the Government can help meet this
the contractors can reduce the rost of
                                               objective.
weapon systems by applying improved
~anag~ent and engineering techniques              GAO recently reviewed the operation
in carrymg out the contracts.                  of the JOBS Program and concluded
                                               that, _in. spite of growing pains and many
  The far-ranging studies of the Pro-
                                               remammg problems, it has been effective
curement Commission. established hy the
                                               in focusing the attention of businessmen
Congress in 1969, are expected to pro-
                                               on the employment problems of disad-
duce many significant recommendations          vantaged persons and in eliciting broad
for improving Government procedures
                                               res.pon cs and commitments by many
for acquiring goods and services ;it fair
                                               pnvate employers to hire, train, and re·
prices.                                        tain the disadvantaged. By the end of
                                               June I 970. more than 15,000 companies
Government Utilization of Private              had hired persons under the .JOBS Pro-
Enterprise for Social Purposes                 gram and almost one-half million jobs
                                               had been pledged to be placed.
  A relatively new and different tech-
nique for attaining Federal objectives         Medicare Program
other than through grants and subsidies
                                                   The Medicare program was established
co private instilutions is the chartering of
sep~rate and independent organi1.ations
                                               i':   1966 t~ provide persons over age 65
                                               '"':1th ,hosp1~al and physician care. Physi-
which may or may not receive initial or
                                                cians services and other medical and
continuing f uncling by the Federal Gov-
                                                health care is provided through a volun-
ernment. Many are intended to be sci f-
                                                tary Supplementary Medical Insurance
su pponing. Here are two illustrations of
                                                Program. This program is administered
this technique.
                                                by private · carriers through contracts
                                                with the Secretary of HEW. The car-
Job Opportunities In the Business Sector--
                                                riers' functions include:
JOBS Program
                                                     -Determining the rates and amounts
  The JOBS Program, initiated in 19G8,                 of ~ayments on a reasonable charge
represents a joint effort by the Govern-               basis;
ment and the private sector to find mean-
ingful employment for disadvantaged                  -Determining the medical necessicy
persons. The National Association of                   of the payments; and
Businessmen was established as a private.            -Receiving, disbursing, and account-
independent, nonprofit corporation for                 ing for Medicar e fund~.

                                                                                        93
  By the end of 1970, 19.2 million per-         Corporation for Public Broadcasting
sons were enrolled in this program and
49 carriers had made benefit payments of          Jn 1967 Congress established the Cor-
about $1.5 billion.                             poration for Public Broadcasting to pro-
                                               vide financial assistance for noncommer-
    I think we can look forward to even        cial educational television and radio
further use of the private sector for a        broadcasting. This nonprofi t corporation
 range of social-purpose programs. Jn his      seeks to strengthen and improve educa-
Heal th Message to the Congress earlier        tional radio and television by providing
 this year, the President called for the       an independent source of funds. It also
establishment of health maintenance or-        operates and interconnects its own sta-
ganizations-known as HMO's-to up-              tions. Although independent of the Gov-
grade the delivery of health services to       ernment in its operations, it thus far
U.S. citizens. The HMO's are intended          depends upon appropriations by the
to bring together a comprehensive range        Congress to finance its oper ations. Hav-
of medical services in a single organiza-      ing no independent source of income, it
tion so that a patien t is assu red of con-    remains subject to influence by the
venient access to all of them. These med-      President and the Congress through the
ical services are provided for a fixed         appropriation process beyond that con-
contract fee which is paid in advance by       templated when established.
al I subscribers. T h ere is thus a strong
b uilt-in in centive for greater efficiency.
                                               Communications Satellite Corporation
   An advantage of using privaLe organi-
zations for social-purpose programs is            At the dawn of the space age in the
the ability to develop highly flexible rel-    early 1960's, the Communications Satel-
ationships with the persons being served.      lite Corporation (COM SAT) was incor-
But to the extent that delivery of services    porated as a profit-making corporation
is decentralized, accountability problems      with the goal of establishing, in coopera-
becom e more acute. A "built-in" ac-           tion with other countries, a commercial
countability discipline-such as the            communications satellite system as part
profit incentive of the proposed HMO's         of an improved global communications
- thus becomes increasingly important.         network. Financially, this corporation is
                                               completely independent of the Govern-
                                               ment since it fi nances its operations
Specially Chartered                            through issuance o{ capital stock to the
Quasi-Public Organizations                     public.
   In addition to the utilization of private      Dual responsibility to its stockholders
enterprise for social-purpose programs, a      and the Government can cause a di-
number of quasi-public organizations           chotomy in its operations--for example,
have been established to carry out func-       the State Department can direct
tions which traditionally have been            COMSAT to provide commun ications
wholly committed to the private sector.        for areas of the world that are unprofit-
These quasi-public organizations were          able and therefore not in the interest of
created to fill the gap between what the       its shareholders. COMSAT also must de-
private sector had been ab le to deliver       pend upon NASA for launching of its
and what the Government felt was re-           satellites, and i ts operations are regulated
q uired in the public interest. Here are       by the Federal Comm un ications Com-
three examples.                                m ission.

94
National Railroad Passenger Corporation        ing agency. From their initiation in l 917,
(AMTRAK)                                       their role has grown to the extent that
   A more recent quasi-public corpora-         their operations play important roles in
tion-the National Railroad Passenger           the allocat ion of monetary and fiscal re-
Corporation-was created by the Con-            sources. The five presently in exi~tence
gress in 1970 to provide intercity rail.       are:
road passenger service. This action was
in response LO the threat that railroad          -Federal National Mortgage Associa-
passenger service might disappear. By              tion,
l 970, there were only 500 passenger             -Federal Home Loan Banks.
trains in service in the United States
compared to 20,000 in 1929. AMTRAK               -Federal Intermediate Credit Banks,
is chartered as a private, profit-making         -Federal Land Banks, and
organization financed principally by
common and preferred stock: is author·           -Bank for Cooperatives.
ized to operate intercity trains and make         Each was, at one time, either wholly
contracts with railroads or other comr.a·      or partly Government-owned. Now
nies for use of facil ities and equipment;     they are entirely privately owned and ar e
and can rely on railroads to provide           not included in the budget of the Federal
manpower.                                      Government. They were established by
   Although the accountability problems        the Congress to meet national objectives
associated with the qu~i-public corpora-       in the area of agriculture and housing
tions are similar to t hose relating to pri-   and, although now privately owned, are
vate enterprise organizations estab1 ished     stil I under Government supervision.
for social purpose programs--tbat is,
                                                 The Federal National Mortgage Asso-
preserving independence and the advan-
                                               ciation is the largest in scope of the fed-
tage of mark.et mechanisms-an addi-
                                               erally spon sored financing agencies,
tional factor to consider is that they
                                               being involved mainly in the purchase
compete with other private sector cor·
                                               and sale of FHA insured and VA guar-
porations. Thus there is inevitably a dan-
                                               anteed mortgages. In 1970, the outstand-
ger that Federal support of th is type of
                                               ing debt of these agencies LOtaled $35.8
quasi-public corporation, if not carefully
                                               billion. Over fiscal years 1970 and 1971,
controlled, may tend Lo undermine the
                                               the estimated net increase in outstan ding
effect of private sector competition
                                               debt of these agencies amounted to more
which may be the very reason for being
                                               than $18 bill ion.
of the quasi-public corporation. One way
to avoid this danger is to insure that            Besides affecting the housing and agri-
these quasi-publ ic corporat ions are not      rnltura l programs they were designed to
too greatly dependent upon income from         aid. the policies of these agencies are
the Federal Government. at the same            affecting overall economic stabilization
time recognizing that such assistance is       pol icies of the Government. Some fear
clearly req uired to achieve the purposes      that these agencies. created to supple-
of the corporations.                           ment the activities of the private sector,
                                               are becoming the dominant institutions
Expanding Role of Federally Sponsored          in these areas. These people would pre-
Financing Agencies                             fer to httve the operations of these insti-
  A specia l type of quasi-public corpo-       cutions subject to Federal budgetary
rat ion is the federally sponsored financ-     lOlltrol.

                                                                                       95
Delegation Involves                           problems when a weapons system is
Mixed Public Purposes                         being purchased which pushes the "state
                                              of the arc."
   The accountability issue is clouded
and made more difficult by the face that        The opposite exrreme is the extent to
the Government, in the \'arious form of       which the :-.:ational Science Foundation
delegation or contracting outlined abo\e,     once insi ted on overdetailed account·
is seeking to accomplish, in most cases,      ability by requiring "total effon" repon-
more than one public purpose. In m~t          ing [or academic scientists who received
if not all of these arrangements, I.he Gov-   grants from the National ience Foun·
ernment has the optaon of direct opera-       dation. Either extreme is to be avoided.
tions. Its decision nor to do so may be
influenced heavily by the fact that other
-and frequently conflicting-objectives        The Auditor's Role in Management
are sought by the use of external or~­        and Program Evaluation
nization ·:
                                                Perhaps some of you think 0£ the
  -   trengthening private enterprise.        auditor as the accountant who e role is
  -   upponing educational institution ,      limited to certifying as to the adequaC)'
                                              and completeness of financial statements.
  -Fostering international cooperation.
                                              Jn !>Uch terms, hi role is important but
    and
                                              limited to making certain that there bas
  -Encouraging private investment as a        been an adequate disclosure of financial
    means of lessening public expend1-        data to the Congress, to the executive.
    tt1re req uiremcncs.                      and to the public.
      would not argue, as does Peter             This aspect of accountability, which I
Drucker, that Government is inherently        refer LO as fiscal accountability, is only a
incapable of efficienc management, and        pan of the a uditor 's role. For example,
thus should limit itself to a policy role,    the National Association for the Ad-
but many thoughtful studencs of Gov-          vancement of Colored People com-
ernment argue that pluralism in carrying      plained to our Office that a financial
out Govcrnruent programs, like plural-        audit of gram-in-aid programs by t.ate
ism in the private sector, may in and of      auditors "as of liccle value if the auditor
it elf be an objective which should be        was unconcerned as to whether the pro-
encouraged. It would be difficult to con·     gram achieved the congressionally in-
ceive of a ~ituacion where we attempted       tended purpo e. The stockholders of a
to carry on all Federal activities through    maJOT corporation not long ago sued a
direct Federal operations.                    public accounting firm who certified as
                                              to the adequacy of the firm's financial
   There muse be a balance between ac-
                                              statemencs shortly before the company
coumab1lity and delegation. We now
                                              wem bankrupt. Their opinion wa.c; coo
realize the Defense Department's total         limited. iL was argued, in that it did not
package procurement concept, for exam-        analyze basic managemem problems of
ple, which resulted in Lockheed's prob·
                                               the company.
lems wiLh the C5A aircraft and the
Cheyenne helicopter, is not a viable ar-         Indeed, lhe Budget and Accounting
rangement. \Ve no'' recognize that the        Act of 1921 contemplated that the audi·
Government muse have a continuing,            tor would be concerned broadly with
intimate, day-lo-day relationship in mon-     the "receipt, disbursement, and applica-
itoring developmenc and production            tion of public funds • • •." imilarly, the

96
Legislative Reorganization .\ct of 1946           have been primarily concerned with
directs lhe Comptroller General to make           budget formulation and program plan-
expendiwre analy es to "enable Congress           ning and not sufficiently with whether
to determine whether funds have been              on-going programs are achieving their
economically :ind efficiently administered        imended rec;ult. This is the area LO
and expended" ~ lore recentl}. the Leg-           "hich the auditor has a major and tn-
islative Reorganization Act of 1970 call~         crcasmgly important contribution to
on the Compt1oller General tu review              make. He ha' a tradition of making his
a nd analyze the results of Governmem             findrng independent of the operating
programs and activilies as well as to             offitials: he is increasingly equipped
make scudies of costs and benefits of such        with special skills which go far beyond
programs.                                         tha t required for financial audits alone;
                                                  ancl. most importantly, he is increasingly
  T he responsi!Jil iLy of the auditor in the     looked to by the legislature and by the
GAO embraces three aspects of account-            exerutive fm studies and recommenda-
ability:                                          tit>lh on all three aspects of accounta-
  -Fiscal accountability, which includes          bility.
    fiscal integrity, disclosure. and com-
    pliance wich applicable laws and
    regula tions;                                 Accountability Within the
  -Managerial accountability, which is            Executive Bra nch
    concerned with the efficient and
                                                      It .-.hou Id be emphasized that, in any
    economical use of per onnel and
                                                  :u rnuntabtlity -;ystem, the legislative
    other resources: and
                                                  branch is concerned with how well the
  -Program actountability, which is               manager i'i informed wi th respect to his
    concerned wit h th e results or ben e-         operations: whether he has the necessary
    fits being achieved and whet her pro-         ~taff to deal with operating problems:
    grams are achieving their intended            and whetht•r he is adequately evaluating
    objectives.                                   Im program atcomplishments. When the
                                                  Congress, for example. uncovers va.'>t
   An accoumabilit} system should em-
                                                  1rregularitie~ in the post exchanges and
brace all three elements. There must be
                                                   commissane), of the Defense Depart-
public confidence as to fiscal integrity in
                                                  ment. it~ natural question is why the
the pending of public hinds: there mu t
                                                   Dt fense Department had noc idemified
be assurance that waste doe!> not occur
                                                  and dealt wnh the situation. \\"hen the
through mi management: and, there
                                                   Congre s l'I f-ru~trared for lack of reliable
must be a way to assess whether programs
                                                   information as to whether the economic
are accompli~hing their intended objec·
                                                   opponunit) and elementary education
Li\'es with due regard lo costS.
                                                   progTams arc working, a natnral question
  I do not intend to imply that the audi·          is what evaluations have the agencie!>
tor has an exclusive, or even necessarily          made and what resulLed from them.
the pri mary, responsibility for ma nage-          W hen tht• Congres is called upon Lo in-
ment and program evaluation. O ther                crease fund ing for international organi-
analytical staffs and ocher y terns of re-         1ations. the natural question is how
\iew are al~ available ro the adrnm1c,-            much docs the ' tate Depanmem or the
                                                   Treasury Department know about the
trator.
                                                   effeniveness of international loans and
  Too frequently. however,        uch    caffl>    technical a sisrnnre.

                                                                                             97
     It i important, therefore, thac the lcg-        ' 'ate-under differing statucory pro-
i lative auditor carry om his responsibil-           visions?
ity in part by auditing the agency's sys-
tem of accountability-finding out                 -How do we isolate the impact of
whether internal audit is on top or ICS                  (oreign economic assistance
 job, whether m:magement has the infor-             from d1e political climate and the
mation at needs to prevent cost O\.er-             economic de,·elopmentefforts within
rnns, whether it has the analyses to jus-          an underdeveloped nation?
ci f y additional funding, and o on. This
                                                  -How does the auditor reach a con-
concept is fundamenLal in that it places
the emphallis on accoumabilicy ac the               clmion on how well research grams
point of primary responsibility: namely,            are administered m a g'IVen
the agency head or the President.                   uni' ersicy?
                                                   The form and extent of accountability,
                                                moreover, cannot be divorced tram the
By What Test Shall We
                                                legislative or the political climate at a
Judge Performance?
                                                particular point of cime. All of a sudden
     l ' nlike che market-place test of sales   people ha\C discovered the meaning of
and profics, the Go\'emment auditor sel -       the word · erology" and ''emironment."
dom can apply an equally concrete test          The e have not become household and
o[ costs and benefits. ometimes he can          schoolroom words. Ralph Nader has be-
make co!>t-bcnefit studies in quantitative      come omething of a national ombuds
 terms. Usually he must search the legis-       man. \Veapon ~}' terns, co t overruns.
lative history, the appropriations hear-        and efficiency have become frequent
 ings, and the translation of sometimes         headline items and matters of concern to
broad statu tory charters into statements       the entire Congress, not just to the Ap-
of program objectives of the operating          proprintions and Armed Services Com-
agency. H e m use examine evidences of          mittees.
program impact. of good or bad coordi-
nation, and alternately perhaps he must
exerci ·e subjective judgmencs based on         Concluding Remarks
hi own experience as a trained analy c
and on the conclusions reached b} man-             fhe conc:lus1ons for my remarks can
agement or bv the recipiencs of the bent..      be 'iummed up bt ieflv:
fiLc; of the program. In shore. chere is
frequently no established "par for the            - The tt end toward using external
course'' by which to judge per formance.            groups hy Government will proba-
                                                    bly increase in the years ahead.
  The p1oblem is even more sharply
focmed when Governmenc operates                  -Congressional and public concern
through an external organization.                  with respect to accountability sys-
                                                   tems will grow as Govemmem tn·
    -How do we assess the impact of a              crease!> in size and complexity.
      model cities or a community action
      pt ogram designed in large part to         -As the concern for accountability
      promote citizen action and ocial             increases, we must seek new ways to
      change, complicated !>till further by       evaluate management and program
      the fan that funds may t0me from            effectiveness, keeping in mind Lhal
     several agencies-public and pri-              unde1 ou1 separation of powers the

9
  executi\'e branch will continue tn                  adcq ua le .ind well-understood ar-
  ha'e the priman w'k. in the nc-                     r<>unta bi I1t\ v tern, "e "ill a I o be
  rnum:ihililv' !Item.                                't·rvrng the objective of a more rc-
-Fin:illy. a'i \\e 1ecogni1e the need                 "pomiH: V'itCm Of GO\CfOtnenl and
for. and a' '' e t-.m prm 1de for, an                 :l more democratic c;ocitt).




                     Indispensable Information Aid

               Thro11ghout its long hio,lon. the G \0 h:1' o,upplicd mam
            fact\ on Gnvcrnmenl program\ th.It wo11ld otherwise not
            have 1eachcd lhe Congrc11,, No other \OlllTl', ;10, far as I
            know, p1ovidcs this type of analytic. objective in formation
            to the Senate and Homl' of Rcprc,c1Hativc~. 1 he GAO\
            t.1,k of .wditin~ and rcpo11ing <111 .1tli\itie,, programs, and
            the u,e of public mone}' b\ the l'XCrulivc ;1gcnne~ is. in
            rcalit). an indi,pensablc infonnaticmal ,lid to Congrc~' and,
            < omequcnth. of great 'ignificann· to the \UCTe's of our
            tcp1 C\entati,·c GO\ e1 nmelll


                                            enaror \ll~n      J. Ellender
                                           Chaitman. Senate Apptopriation~
                                              C..ommiuce

                                           J11nt' 10, l'lil




                                                                                          99
                                                        Judge Harold Leventha1
                                                        District of Columbia
                                                        Circuit Court, U.S.
                                                        Court o{ Appeals




    judgr Le11enthal rereived h1.1 A.8. degree in J9J./ from Colttmbia College
rmd his LL.B. degree from Columbia Univnsity Lnw School in 1936.
      Though he is a 1wtive of New l'mk City. h1.1 rrm:er has /;een centered in
1-Va.shmgtcm, D.C. Ile .t/arted as law 1ecrctary to ~11prf'1nr Court justices Harlnn
F. Sto11e (1936-Ji) rmd tnnley F. Ret'ci (19J8). From /9J7-J9 he worked in lhc
Office of lht> Solicito, Genera l r•xcf'pt frJr n months when he worked with Sol1ritor
Genrral Rerd upon Reccrs appoinlrnt•nt as Suprrme Court justice.
      judgt Lt'Ven tha.l u:as Chu~f of L1ltgat1on. B1t111111nous Coal Division. Depart-
ment of lht' /ntc11or, from 1939-10 and Aui.stant Cenual Counsel. Office of
Prier. Admrn1stra1ion, from 1911-IJ. Hr seror.d in the U.S. CoOJl Guard from
19·0-16 and w11.\ di1charged Ol n ilt'uft•mmt co111mandr1. While m the Coast
Guard, hr was ns.1ig111•tl, at just1re jnck.wn'.s reqru:st, lo jack.son's staff at the
.Vuremul'rg Tria/5 (1915 ). From thr l11ne of hi\ d"rharge until 1965, j udge
Leventhal wru ll partnn m the law {trm of C1mb11rg and Leut'nlhal.
       Jn add1t1on to hil private law prnct1cc he uiat Executive Officer of the
Hoovrr Commr.mon Task Force on lndepr•ndc•11l Regulatory• Commilsions
( 19./,9). C l11t•f Coun~el of I he O{fic<' of Prirr· Stabilrzat io11 (I 951-52 ), and General
Coun~f'I of the l)(mwrratic National Commill<'e (1952-March 1965 ).

     ince April 1965 judge L<•venchal has served            flS   U.S. Circuit j udge, U.S.
Court of llppcals, District of Columbia Circuit.




100
GAO Auditorium
October ts, t 971




The Lawyer in Government


Th e Ccnnfll Arcrnmling Offrrc nnd il.1 prcden'ssor orga111zations have
been dt'eply conrrrnrd with the interpretation and applicfl/ion of law in
G0tlt'rnmenl prob.'"''<WIJ and nctiTJi/ic:1 1incf• the begm11111g.1 of 0111 rmmtry.
A majm· rt•Jpon.ubilil)• of G. IO 1.1 lo ir1terpret 1'cdt•rnl and olhe1 laws
affecting Covcrrimcnt opcmtions and expend1ture.1. Th11.1, tlw scnef of
lectures would not br complete without n respected m1•mbrr of the legal
pro/emor1. judge Levt'nthal reunth· wrote that the agrncirs of Govern.
men/ and the courts const1t11te a partners/up in (11rthera11re of the public
interest. In 111.1 lecture he notes that m our democracy the rule of law
and equal ju.Iller undn law iJ basic. Lawyers in Cm,nmncnt, m thc1r
vanmg 1oles, serve this goal and 1n doing so ro11tnbutr tn etficrrnry and
fairness in Go11ernment operation.(,




   My sense of privilege is underlicored               talk this man came up co the lectern and
in being invited to speak with you in lbe              said , "Professor, you did your best and
program commemorating the 50th anni-                   we want to lhank you for coming, but I
versary of the General Accouming Of-                   ~ay. to hcxk with them that asked you."
fice. l do regard the invitation as a                     Of rnun.e, you can't pursue that
privilege and also a surprise. lor Lhe                 t hreacl too  far because Elmer Staats re-
main theme is " Improving \fanagemem                   \ ea led it was he who asked me. And we
for More Effective Governmem·· and I                   h~l\e a 1ela11onship. a per.m nal relation-
ask, "how ran I be inviLed to peak on                   hip. which can fairh be described as
the one: hand on the role of the: Govern-              re pcctful congenialitv, which had its
ment lawyer, and ::ilso in impro' in~ the              origins 1n some stormy scenes 30 vears
managerial cffccti\'eness or Go,ern-                   ago.
menc?"
                                                          1 shall refer to those OP.\ (Office of
  1 feel I ma" be likened to the cotti'ih              Pric"~    \d ministration) davs presentlv.
profe sor who spoke tu the \Ve! h miners               But I want to say. before I forget iL, that
on the final "f" in Chaucer. He wa                     I at le<Jst <Jm glad I was asked, because it
dus1 y enough to make them seek the                    provides the occasion for me to reflect
real Scolch, and as h e toi led on, the                back on my years of service as a Govern-
miners Jell the union hall in twos and                 mem lawyer. They are in the past. I
threes until only a few remained. The                  hope I ha\ e some objec6vicy about them
professor was pleased that in particular               as a rc~~ulL of mv 20 years in prh-ate prac-
there wa one codger in the from row                    tice opposing GO\emment lawyers, and
who did ~eem to be lhtening to e\'en··                 m) 6 yettrs on the bench . listening to
thing he had w ay. •\t the end of the                  both ' ides. But I do recall that in 1946,

                                                                                               101
afLe1 I came back from the service. I was             and therefore i) ne,•er read. He com-
asked to write. for the official OP \ hi'-            memed. as many have done since. on the
tory. a eccion on the role of the price               large numbe1 or large percentage or
lawyers. I said approxim:uel) that lho~e              lawyer in the Government-in the Con-
years were. for the law ers involved. a               gress. He spoke of the tendenc..y ol
high-water mark of commitment and                     .\meri< ans to tum what, in other coun-
 ati faction. 1 J do not recede now from              tries. was a political question into a
that overall judgment.                                judicial qucscion.z He had some very
                                                      complimentary phrases. He glows over
   But I am putting my cart before m
                                                      lawyer as " the American ari tocracy"
hor e. I ha\e a little problem because I
                                                      and !>peaks of "Lhe high opinion enter-
need a poim of reference. Am I speaking
                                                      tained o[ the ability of the profession.'" a
mainly to lawyers? They know how sig-
nificant their role is, and all I need pro-               On the other hand, those were not the
vide is a little stroking. Or am J peaking            majot icy opinions of rhe rime. A n11rnber
to nonlawyers--who are "'lukerool."' if               of other quotations may be ~ummoned
not ho!>tile, lo law,·ers-" ho might ac-              in suppott of what might be called a
knowledge their help on certain occa-                 posrrevolutionary dislike of lawyers in
sions reluctant! ; and who ha\'e their                America.• In fatt, there were mi,ed feel-
most .. ivid rernllections o f one :,cene             ing<> about them e\'en at the time of
afler another in which the lawver~ m-                 rolomal dav in the Con titutional Con-
voh cd were a pain in the neck?                       'ention \llhough there was a prepon-
                                                      deran< e of lawvers at that Con\'ention,
    I thought l mi~hl gafo a point of refer-
                                                      that fan reflected individual popularity
ence b suppu ing that I was calkincr to a
                                                      and a general sense of dependenre on
\'isitor from another country. He would
                                                      Lhcir influence and ability. But rcspec L
not want comments that probe in exces-
                                                      does not generate affection, and. even at
sive depth, but he would want some
                                                      the out<;et, 1 cspect was by no means
portrayal of Lhe landscape, the peak
                                                      univcrsal.6
and vttlleys. che highlights and shadows.
                                                         Indeed. lack of respect for lawyer
                                                      resonate throu~hout the centuries.
The lawyer in Society
                                                        The Go<;pel acrnrding to St. Luke say<>.
  I can begin by saving thaL, if \\'e are             '" \Voe unto you lawyers for you ha\.C
going co talk .1bouc Go,ernmem law11er. .             taken away the key of knowledge. You
we really ought to talk about lawyers in              entered not in yourselves and them LhaL
the society generall . at least briefly.              we1e entering in. ye hindered." 11 Plttlo
Travelers from abroad ha\·e alwa\'S been              ha ome phrases from Socrate in '' hich
interested in that topic. at least e\'er              he says of a lawyer that he is a sla\ e
since a young French lawyer named De
Tocqueville came here 100 years ago                     ~ A . de Tocqw•villc, Drm11f'Tary in A mrrira (Vin·
and made ome observat.ions about law-                 tagt' . I 9'i~) . p. ~!10 .
yers in the United States. His comments                 , /Ind .• pp. 2K7 -290.
                                                        • 0 . Mclinkoff. Thr Language of thr L11w (Little,
reveal an ambivalence. J tell you some-
                                                      .Brown :ind Compan)'. 1963) a. 159, p. ~5: C.
thing about chem becau e he is a classic              Warren. •I Hi~tor-v of the lfmcrrcan Dor (1911)
                                                      pp. 222 <llld 51!!: Chroust, "The Dilemma or lhc
  1 H Lcvc.-nrhal. The Rolr of p,,u Lnu•yrr.1, Part   American L:rwyer in the Posl·Revolulion;1ni Era."
I of Probltrru in Price Control: ugal Ph1ut:. (Gen-   35 ,\ otrt Dome lau• 48-76, (1959).
eral Public:mon I I, OP.\ <.e11c~ or Hi,loncal Re-      • \lchnlo.off. supra, n. ·t p. 102.
poru on W:u ,.\dm1nistration. 19.fi). p I.              " Luke I 1·52.

102
betore a ma'>let, keen and shrewd. has                        he: took 1 t. h<.' made tlie point that. wi th
learned how LO flauer his mac;ter m                           him. law and 1mtice '!>LOod h igher than
words and indulv;t· him in deeds. but hi~                     parlisamhip. tactical ad, ·antage. or fears
soul is 'mall and unrighteous: his sl:l\ i-.h                 of th e then-patnol p:trt). 1 "
condiuon ha' depn' ed him of gt"O\\ th
and up11~htne' and independence. O< -                            The prohlem with u today i!> nm a
rates i sairl ro ha\e aid that Theodorm.                      !>impk one. There are crO'!>'< urrents:
Lhe lawver, tl11nb he i~ a master in \\is-                    the1c " d1 ..se1hion <crtainl} mer '>Olll('
dom, but lhuc 1' no soundnes' in him.•                        of the 1 ulin~s of the ~upreme Court in
                                                              the la.. t I!'> yc;n . But on net halant e
   Retu1 n ing to the Uni ted 'tates. che                     there h;:is been a feeling in the sodety
 I9lh century wri 1ings ot th e o ld \'\'est                  that the lawyc1 can p lay a use I ul ancl
recorded the romplaints o f the min ing                       s1g-n ilica11t rnle in helping society 10
ramp: ·· we need<.'d no law umil the law-                     adapt . lO t>\ohe peacefully to thanging
yers came."~ And th<.' historians have re-                    con<l1uom. 1 he .\ merican Bar .\ssoc ia-
corded how the people rose 11p against                        don has '>11ppurted some splendid p10-
the ,.i e ol th e law yers.-1 wa~ about to                    ~ams for helping to in ure legal c;ervice'
say vice: l11(·y tried lO replan• the com-                    to the indigent and for helpine; lawyers
mon law hy '' ri tten code Y That became                      to be. as they say nowadays, relevant.
very popular and wmributed LO the t1a-
dition of Jacksonian demonan. The                                 \ ~ood index of a widespread fa, or-
people prO\ 1decl for the election ol                         a hle feeling, that the law is a profession
judge . rathc1 than appo1ntmenu., in                          in whirh ont can lead an in teresting
what wa., then ~upposed to be an ad-                          caree1 and \et fight the good figh t, is
rnnce or the democra tic spirit. but ha                       reflected in the enrollment at the law
likely been a major rattor inhibiting the                     -.choob. hn those or you who are not
riuality ol just ice in America.                              lawycn. 1 m ay say tha t th e l:iw sch ools
                                                              are s ti 11 en jnving an enormo us incre;:ise
   H ow stands the m a tLer todllv? I t is m y                in e11rol1111 ent and appl ications. which
impres~ion     that, b1oadly speaking, the                    ate innea,utg at che rate of 20 percent a
lawyer in \ men< an ociet            tand~ .tl.               vca 1, :n a t1111 e when oLher schools are
what is 101 him, a peak in .\merican pnp-                     losin~ ~ouncl and imere·1. \ nd these
u lar ima~l' .•tided no d oubt. in part. bv                   applicants ha\e inc reasingh hi~her
tele\ ision ptograms such a' " Pern                           gradt''i on the leg-al aptitude tests. \\'hen
Mason" and '1 hl' Oelencier'i ... The1e j.,                   I wen t     l.1\\ 'lhool, the median ~adc
                                                                          lo
al leas t th<" hroad uinception or the la\\•                  ''·•s    ~omc t hin~like 500. Now it is 700,
yer a'> the defencie1 of lhe right. That                      anci J <:rn .1,"1re vou 700 is not ea y to
concept •~ 'upponeci h\ an honorahle                          ohtain \, I have often told nt) law
tradition in our tnuntrv. John \dam' e,.                      llc1 l..s l'm happv that 1 \\ ent to law
tablished a cons1der.ible pall of his repu-                   ~chonl    when I did and did not face the
tation hecame he defended Capt<1 in                           rnmpetrdon they ha\e. The hundreds of
PrescotL anrl Ilic British 'oldiers on                        applicatinm that l r eceive eac h year and
charg-es o f c;rimina l ho m icide arising o ut               th<.' clo1c11s ol interviews, from studenL~
of the Boston Ma'isac re. Ha lf Lhe lawyers                   srcking rn he my law c lerks, confirm t hac
in Boston turned down the case. \Vhtn                         impression.''
   r Plalo. Tlirnctttlo, lram. '" Jowell ITh~ \ forl·
ern Libr:m. Inc , l!l'lu). pp. 12'i-126.                          '°
                                                                   P mich, fo/111 Adams (Doubl«lu and Com·
   ·Shinn. \Imm~ Cnmp1 ( 194 ') p. 11~ .                      p:im Inc l'lli:?), pp. I t6--126.
   o P . M aller, Tire l 1ft' of t/11' \find in ,.f mf'11rn     11 Sec gcnl.'r.1lh !\f , \1a)er Th~ l .tlU"frn • llarpcr

 (1956). pp. tO'i t09.                                        and Rn" l~i).

                                                                                                                   103
  .Cl   ~. •   1   II
The Government Lawyer                                  The teinthal opinion says thm ordi-
   Finally. I reach the lawyer in Govern-           narily a court presented with a pre-
 ment. I t.hink I can at least begin my             proc:urement complaint by a bidder dis-
com.men~ by reporting the advice I give
                                                    appointed by a bid protest ruling should
 my law clerks every year when they                 stay its hand until it can receive guid-
 lea\c me and they £ace alternative ca-             ance from the GAO. This opinion points
 reeni that are open to them. Each year l           out-.. The office headed by the Comp-
 renew my thought that assignments in               troller General provide unique experi-
Government can provide the happiness                ence in the area of government procure-
that comes by combining excellence and              ment and a tradition of care and
 lbe use of skills with a sense of devotion         objecth•ity, including a freedom from
co t he betterment of man. I have had 11            prior involvement in t he matter at hand,
law clerki. and can report that six are in          that wou ld have provided 'the court with
government servtce-three with the                   additional guidance in resolving Lhe is-
Federal Government, one with a tate                 sues before it.' " 1a
government, and two in city govern-
ment. The men, jobs. and ratios mav
shift from vear to year, but I think cha~           Lawyers With Adversary Roles
it is likely that there will always be some
appreciable percentage of my law clerks               At trial , the activities of the prosecutor
. en ing in go\'emment. and that wi 11 re-          are noc much different from those of the
flect in some measure my thinking on                defeme counsel, at least on the surface.
the subjecl.                                        He asks questions on direct examination,
                                                    asks que tions on cross examination
   \\'haL kind of la\\')'ers are in govern-
                                                    makes objections co evidence, replies c~
ment? There are two broad divisions
                                                    the objections of other counsel, sums up
t hose who have an adversary role and
tho e who haYe an internal role. The                for the jury, and does a ll things lawyers
adversary model is the litigator, particu-          do in a trial. He also trie to listen some-
larly the criminal prosecutor. He serve             what to the guidelines laid down by the
the government as a party. Typically one            judge.
thinks of litigation before the independ-              .\ big difference is rooted in the prose·
ent judiciary. The same principle hold              cutor's heavy burden of proof. He must
r?r litigation belore an objective .. judge''       prove beyond a reasonable doubt. On
hke, say, a hearing examiner in a regula-
                                                    the other hand, he has the advantages of
torv agency. or in a board of contract
                                                    fur broader im•estigative resources. And
appeals.
                                                    he has the built-in advantage in that he
  Yesterday, the court released cwo                 appears to the jury to represenc the Gov-
opinions \Hitten by me. In the Wheela-              ernmenc in a \:Cry broad sense, without
brator opinion. I point out that .. The             any personal interest in che case other
GAO has cstahlished a corps of officials            than justice be done. In consequence, he
concerned with compliance by procure·               is held co stricter standards to avoid
rnenc rulings with provisions of appli-
                                                    arguments addressed to passion and
cabl~ statute~ and regulations. Its ruling
                                                    prejudice, to avoid any statement of
provide review by an agency chat is
                                                    facLS to the jury as co matters that have
mdependenc of tl1e execucive depart-
ments engaged in the procurement." 12
                                                      n Sttmlhal dr Co., Inc. v. St"amans, No. 24595
  1:   Whula/1ralor Corp. \ . Chafu. "io. !N, 705   (0.C. Cir.• Oct. 14. 1971), p . 17 (hereiruftc:r cited
(DC. Cir., Oct    I~.   19i I), p. 15               ~ Strintliaf) .


104
not been put in evidence,14 and, since                       by an order oE the Court remandin g the
he is an official of the state, it wou ld be a               case fo r a new trial.1u
denial o~ due pr~ess if he knowingly
used pequred testimony 16 or if he con-                      Distinctions Not Rigid
cealed material evidence.in
                                                                I have separated analytically the Gov-
   All of these rule'> carry forward the
                                                             ernment lawyer as the advocate from the
message on the wall in the rotunda out-
                                                             internal Government lawyer. It is not a
side the Office of the United States At-
                                                             rigid disti net ion : there is not a complete
torney General. "The United States wins
                                                             separation. For example, some years ago
its point whenever justice is done its citi-
                                                             I was on a panel that considered what
zens in its courts ... 17 There is indeed a
                                                             we called the Parole Board cases.::o
tradition that the Solicitor General con-
                                                             The~·e were some difficu It questions con-
fess error in the Supreme Court when a
                                                             cerning the administrative processes of
court below has reached a result that
                                                             ~he Board of Parole for dealing with the
pro~es, on. re~ection, to be lacking in
                                                             ts~ue o.f a ~aro l ee who had been charged
ment and JUStlce. Sometimes he is more
                                                             wlth v10lat1~n of his parole. At oral argu-
r~yalist than the king. and the judge!>
                                                             ment we raised doubts about the infor-
wtll refuse ~o agree that the case is hope-
                                                             mal procedures that were used by the
less and will say that the Court is en-
                                                             Parole Board.
titled to more advocacy from the Gov-
emment.1A But the tradition ts a great                          We went a step further and said that
one.                                                         we would stay our consideration of the
                                                             cases. if the Government lawyers would
. It was perhaps very conspicuously
                                                             se~ whether they could work out appro-
illustrated a few years back when Solici-
                                                             pnace procedures with the Board of
tor General Thurgood Marshall filed a
                                                             Parole. ln due course, the Parole Board
memorandum with the Court, after the
                                                             did issue regulations prescribing proce-
Court had refused to review, on a writ
                                                             dures that seemed fair and reasonable.
?f certiorari, a judgment affirming the                      ~nstead of \\'Titing an opinion condemn-
income tax conviction of Fred Black. Jn
                                                             111g the Board for past practices that had
that memorandum he revealed that the
                                                             been abandoned by these regulations,
FBI had installed a listenina device in
Black's hotel on another ma~er. This is
                                                             we were able to remand the case so th11t
                                                             the petitioners could pursue their new
something he learned after the case had
                                                             administrative remedies and handle the
been ru led on by the Court, something
                                                             matter in a straight-forward way. And so
that Black or hi.s counsel could not possi-
                                                             a case that has come up in court can
bly learn about, but he brought it fonh
                                                             work ba~kwards to ca use the lawyers to
in the highest traditions of Government
                                                             serve as mternal Government lawyers, to
counsel. He was rewarded (or his candor
                                                             develop or improve Government procc-
  •• Rn~l'r ' " U11ited 'it11/n, 295 U .. 78. 88 ( 193f•):
                                                             d ures.
King v. f 'nited Stntt'S. 372 F.2d 383, !18!!-397 (D.C.
                                                               Now let me give you another illustra-
Cir.. 1966).
                                                             tio~.There is a case involving 'W omen's
  to Mooney v. Hololum. 294 l'.. 301 ( 193f>) .
  10 Brady v, Maryla11d, 373 L'.S. 83 (l963).                Stnke for Peace, which is about to be
  i r ThiN appeared in :i brief filed in Lhe Supreme         reargued in o ur court, and therefore is
Court by former Solicitor General Frederick Wil·
liam Lehmann, see Frankful'ler. "Tht• Governmen t              1" Dlaclt v. United States, 385 U.S. 26 (1966).
U"-•yer," 18 Fed. B.J. 2'1 (l958). pp. 2i-29.                  20 Shelton ' " United States, 128 U.S. App. D .C.
   is P. Freund. On L'nderstandir1g the ~uprrme              31 I. 388 F .2d 567 ( 1967) . St:c particularly. / l>id ..
Court (Little, Brown and Company, 1970), p. 114.             Smith v. Rivers, p. 576.


                                                                                                                  105
on my mind.:: 1 In 1969 this organization               yers have effective lines of communica-
sought to hold an antiwar demonstration                 tion and consultation-as to the require-
on the Ellip~e and to use as pat t of it a              menLc; of law and the legal requirement
 floodlit displa} with a peace mes age.                 of fair and coherent standards. The im-
They were aim going to hold a vigil.                    plementing of that aspect of rule of law
~ational Park       en ice rei!ulations re-             ic; a number-one task. or function of the
quire a permit for any structure co be                  C.o\ernmem law•,'er.
erened on Parl.. land and the en ice
denied the pennit. The organization
claimed rights of free speech and also                  Impact of litigation
argued that the . ervice had pro\ ided a                   The impact of litigation on the inter-
perrn ll for a structure to be put up by                nal workin gs of the Governm ent is an
another private organization. n amely,
                                                        elementary face of life. W hat has hap-
th<.· Christnrns Pageant for Peace display.
                                                        pened in recent years is that the Court
  Of ccmn;e, distinct ion can be drawn                  has hecn opening its doors at an increas-
ben~een    t110~e two matters. but our                  ing pace. Without getting into the tech-
court thou~ht it was not the court' place               nicalaies ol the matter, especially for
LO draw these distinctions. IL was the                  tho:-.e \\ho are non lawyers, I will simply
fumcion ol die Park en ice to de\elop                    ay that the upreme Court has now
the criteria and to e'\.pres the criteria or            adoplecl enlarged principles of review-
the guidelin~ and rules. The1efore, \\·e                abilit\.::: -\ number of doctrines that
said. the Parl.. enice would ha\e to                    ''ere once ad,anced to say that a party
take into accoum rhe questions raised bv                rnulcl not obtain judicial review have
the women\ peace organization. The                      been reJeCLed.:.=i and people who were
opinion held th:n the Park ervice must                  one e exc luded now do come in to
take a hard look a t t he questions and                 courl.!!4 \ Velfare reci pien ts were once
give them renccti ve consideration. \ Ne                excluded as being merely ben eficiaries of
said chat \\e did not think we ought to                 a pri\'ilege. without legal rights. Now
de termine thi., matter nn the hash; of afh-            they are permitted to bring suit a~ per-
davits or a correspondence. We thoug-lit                som with an appropriate interest in
th.tt \1hat \\e ou~ht ro have for appro-                as~min~ that (,o\·emment officials com-
pnate judicial di.spo it.ion was a more                 pl) \\uh thci1 dut).~' 1t is similar to the
nm1plete and illuminaung presentation                   dnurine that ..ays a finn has no right to
of Park e1\i1e policie:. than was avail-                a (,o,emment contract, but it has a right
able on the 1 ccord and remand the c~e.                 to he free of a blacklisting that lacked
                                                        the prott:nion of a fair procedure.:!41
   ;-..iow jude;es are perfectly well aware
that there is nothing, nothing, that o                     Recently l had occasion to rule on a
clears the mind of the Govemmem offi-                   mil bv the poor people of Alabama, al) a
                                                        clai;s, complaining abouc the way that
cial as the knowledge thac he is going to
be st1bjecr to cross examination and i~                   ~=A /1/mtl          l .ailnratorit"s v. Gardner. !!117 ll.S. 1!16
going lo have LO exp lai n in rnun what                 ( 1%7) .
his policies are. lf a lawsuit raises eriou                =~ 'i<.'C , otiorwl A 11toma11r l .armdry 0- Clt"anrnr,

questions of v:tlidiry. that is exactly what            Co111inl 1 . Srlrull:, -H!I F.2d 6!!9 (D.C. Ci1 ., 1971) .
                                                          ~• Ar..'11 of Dntn Prof'('s.fing S(rt1ic( Org. \'. Camp,
may happen. if chi'i does happen, it is
                                                        397 l     ~.    l'iO (1970): Barlow        1.   Collins. !!9i U.S.
well that the admini trator and his la\\-               15~1   ( I C,170) .
                                                            ~~ llo~odo \' w,·man, 397 l: .5. 59; (1970).
 :i ll'omt"n" 51r1kl" for Pcuu \ , H1rltr/, l!li l S.       "" Cun:a/(: \'. Freeman, 118 U.. App. D.C. 180,
\pp 0   c. 29,   120 F'.!!<l liCJi (l!l6!J) .           !l!\1 F.2<l :i70 (196-l) .


106
the DepanmenL of Agriculture adminis-                        him as ~erving as what is called a private
ters its Food Stamp Program.:!7 This by                      attorney general. in furtherance of the
now has become commonplace. But                              public interest. As the Steinthal o pinion
think of it, a das~ anion b y t he poor peo-                 yesterday put it, "this was salutary, not
ple ol' A labama, receiving free commod-                     only !'o r t he relatively few cases tha t
ities. and they say the Secretary nl                         might result in court intervention b ut
Agriculture has administered Lhe pro·                        also for the g-reater numbe1 of cases
gram in a way that is not in accurdanlc                      which would be handled with greater
with the statutory objectives. \Ve take on                   care and mme diligence wiLhin the gov-
chat k.ind or case u nder the new doc-                       ernment because of the awarene ·s and
lrines that have been evolved.                               the availability of judicial scnitiny." ai
   Recentl y, the Supreme Court issued                          Steinthal a lso pointed out that "the
an important decis1on called Citizens to                     court:i are properly concerned that the
Preserve Ove1tou Park , .. Volpe.:! 8 The                    procurement functions not be permitted
cilizens' association did n ot wane a high-                  to deteriorate into actions reflecting per-
way running throug h a park. Not on ly                       sonal pred ilections of administrative offi-
did they get the Court to listen to their                    cials, whether liable to whim, misplaced
case, but the Supreme Court made it                          zeal, or impermissible influence." 3~ That
quite clear that Secretary Vo lpe would                      is strong language. But there is a but,
have to make a real showing of how he                        fortuna tely. The court does r ecognize
had arrived at his conclusions. and that                     that the Government also has an interest
there was no alternative 'vay o l h::1ndling                 in speedy procurement :i:i and that al-
the highway needs.                                           though the court has the power to exam-
                                                             ine and overturn official action, the court
  And. of course. now we have the Free-
                                                             m ust exernse its powers "with re-
dom of Information Act which gives a
                                                             straint." :l4
broad righ t to a ll members of the public.
wiLhout any particu lar concern in rhe
matter, to examine documents in the                          Lawyer's Role Not Restricted
possession of the Government, unless ic
involves an exceprion like the confi-                           J have CO\'ered the course relating the
dentiality of imernal memoranda, or                          importance of standards and the role of
interdepartmental or intradepartmental                       the Go\'ernme11t lawyer in helping the
memoranda that are involved in deci-                         administrator assure that he won' t vjo-
sional processes.211                                         late the compulsions of law. But even
                                                             priv;:ite lawyers rlo n ot restrict their role
  One o u lpost of Lhis jud-icial marrh                      to that narrow conception . It was said of
came when our court in rhe Scanri•ell                        Louis Brandeis that " he was a devil on
case held that a disappointed bidder                         wheels to his oppanent and an austere
could bring a lawsu it to make sure that                     judge to his c lients." :m After guiding an
procurement officials followed procure·                      employers' ::1ssocia tion to victory over a
ment regulations.an Vl/e were not inter-                     striking union. he convened the con grat-
ested in the b idder-but we looked to                        u latory meeting into a lecture to his
  ~; Peoples v. Depflrt111rnt of Agrrrnltul't'. l ~R
                                                             clients on labor's claim to a greater shar e
U.S. App. D.C. 2!H. 427 F.2d 561 ( 1970)
  ~" 401 U.S. 402 (1971).                                      ~'   Strmtlifli. :.upin.n. Ill, p. 22.
  w Soucie v. David, HR f.2d 1067 CO.C. Cir..                  3Z   J/.Jrrl .. p. 31.
1971).                                                         ~3 l/.Jid•• pp. lll-,2.
  no Scanwell Lflboratories Inc. v. ~lltl{ft'', I3i t; .S.     n• Ibid .. p. 22.
App. D.C. 371 , 124 F.2d !l!i9 (1970).                         :or. P. F1eund, wpm, n. 18. p. ·Ill.


                                                                                                        107
thinJ...s that too often lawyers tllrn prose   Someumes 1 find that my most felicitous
into jargon and add-;, "nol though our         phra e Lurn out to raise the most
law}ers here in Breuon \\'ooch. on the         que, tions.
contrarv they ha\C tumed our jargon                 me of the mo t impressive legal
into pro e. and only too often Lhe) ha'c       draf t,man~hip of modem time' wa.\
had to do o u1 think mg for us."               done, m my \iew, by Benjamin \ ' .
                                               Cohen in Lhe three statutes adminbtered
                                               bv the Et.. wnceming securitie , ex·
Precision With Words
                                               change , and utility lending companies,
   If a lawyer is operating effitiently, he    that were passed in 193~. 1934, and 1!>35.
offers his training that provides or rein-     They may nm endure for ages but they
forces a sense ol form with wha t is prac·     have rertainly served useful ly for a lmost
ticable precision wich words and a sense       40 years. You can't read them as you
of imagination that anticipates the kinds      run. Thev take patient tudy before you
of changes that may take place and the         can ob,erve the order, harmom. and
kinds of provisions that mav be possible       careful interrelationship of the root
for them. This funnion, il well served         concepts. 39
is not a pt coccupation with jargon al-            I think it j, only appropriate if l offer
though it is a preocrn pati on \\ itit words   a nod to your General Counsel, Paul
in the interest of precision. Ol course.       Dembling. I had occasion in the course
someume~ a 1'1\\)er·     pecialized use of     of working on the e opinions issued yes-
words as contrasted with ordinarv usaf?;e      terda}. to look at some of the bid protest
recall Bernard ha\\ 's quip that Britain       procedures of (,,\Q and some of the pro-
and Amerirn are divided by their com-          \ isiom lor redston of them.~ 0 I do not
mon language. I recall to mind. \\'hen I       comment on \\hether they are going tO
was first in law school. how irritated my      be upheld in court or not, naturally. But
m othe r was when she was tell ing me          1 n 111 a t least say, fro m a quick reading
about a friend of hers who had been in         of them, tha t they revea l a disposition to
an accident. My 1 ejoinder vexed her, fo1      grapple with the hard questions of fair-
wh at I said was, "Mother. that was not        ness and expedition , and in this case,
an accidem. that was a ca e of sim pie         inte1agency 1elationships. and reflect an
negligence...                                  effon to vielcl ;10 effecti\'e combination
                                               of ~oal and e'\.ception . of standard'\ and
   The abiliiy to foster a sense of order is
                                               Ae,ihiliLy.
a high railing and a creauve one. The
famous poeL, \\'allat:e Stephens. was a          •11 I h:icl OCC:t'10n 10 reflect on th1\ ~ub1cc1 re·
poet onh on the weekends. During the           Ct'Olh   Ill the COUf'I(' or prcp:iring 3 tribUl(' 10 r.f'r.

week he wa a \'lCe presidem of an insur·       C.ohrn .ind I commented:
ance companv in Hartford. responsible            ' Ctthrn :incl Corcor:tn ancl :h'IOCiatl'~. includinF:
                                               me n lilo.c William Oougla ~ :ind Robert JackilOn.
for claims adjustments and overseeing a
                                               latrr d(•\atccJ 10 tht' h1ghc't Court . ,p;1rlo.t'd what
force of lawver'i. He started as a law\er       \nhur Sl hl<"angt·r ha• dubb<-cl th!' Second        C'\\'
himself. An inquirer once asked him,           Dl·JI "'ot rhc ~m·cp111g pl:in, nr tht' 'l;RA and
"bow can you split yo urself into two such     kindred mc:i~url·~. that opened the way to :ill the
contradictory work occupations?" He re·        dangers or indtmrial self.government. hut limircd
                                               and rcalisLic proicrams, hrillianrlv drafted ilO a~ to
plied that they wc1e not contrad inory,
                                               anrinp.HC' prnhlcm~ and thmk through remedies.
b ut complementary. and tha t they were        programs rhar havl· ~tood the tc'l of wne."
both creative in the (ullest sense of the      11 'i Co11i: Rt'r 31200 (19691       remark' t'ntcrro b,
word. or course that does nol mean that        RC'p. c;1dnc.. R YatC\).
lawvers' pro e reads like literature.            • Stt -1 Cf R. ~O d 9i2).

                                                                                                      109
in management responsibility. And years                is typically useful or frequently useful
later he seized the occasion of a gather-              in developing structures, establishing
ing of labor leaders to get their suppon               sound structures and procedures. I don't
for what was then the unpopular cause                  mean organization charts so much as
of scientific management. And the                      what I might call charters for the orga-
phrase chat was coined for this concept                nization to use in the completion o( its
of the private lawyer was that he was                  work.
"counsel for the situation,'' not counsel
for the particular party but for the situa-               Dean Acheson's death a couple of
tion. in an effort to arrive at a construc-            days ago recalled to my mind a passage
tive approach to the situation and not                 in his book Present at the Creation in
limited to the minimum that could be                   which he discusses the Bretton Woods
defended in court.au                                   Agreement of 1944.38 At a plenary ses-
                                                       sion Lord Keynes referred to the charter
   The General Counsel of the Alumi-                   of the International Monetary Fund-
num Company of America wrote an                        which was actually dictated by monetary
interesting article some 15 years ago in               experts and which he erroneously as-
which he put it that he considered that                cribed to the lawyers--by saying that he
his role at the nerve center of his big                wished the lawyers had not covered so
corporate enterprise could be likened co               large a part of the birth certificate with
that of the chancellor of the king. con-               such very detailed provisions for the
cerned not only with enforceable rights                burial crvice. Mr. Acheson goes on to
and obligations but also with the con-                 say that Keynes did not like that he
science of the sovereign.37 Anyone                     thought the United States was lawyer
aware of what is going on in large cor-                ridden and that he believed the May-
poracions today, the number of "outside"               flower must have been entirely filled
comments they have to deal with, and                   with lawyers.
the various forums in which those com-
plaints are registered, will realize that                 However. Dean Acheson served on
time has not dulled, it has only bur-                  another committee which            Keynes
nished, that conception of a conscience                chaired, relating to the lncemational
for private enterprise.                                Bank, as contrasted with the Monetary
                                                       Fund and drafted a chaner for the Bank
                                                       which Keynes thought had the necessary
Aiding the Administration                              qualities of Aexibility and broad powers.
                                                       Mr. Acheson was naturally proud of this,
   Now how do I think of a Government                  for he recounts from Roy Harrod's biog-
lawyer as not only keeping the adminis-                raphy of Keynes, that Lord Keynes
trator out of legal trouble but helping                thought that the men who served on this
the administrator do his work better? It               aspect of Bretton Woods approached his
seems to me chat one of the main func-                 ideal lawyer. 1 now quote from Lord
tions that the Government lawyer can                   Keynes. " I want a lawyer to tell me how
serve in this regard, one of the virtues               to do what I think sensible and above all
of his experience and training, is that he             to devise means by which it will be law-
                                                       fu1 for me to go on being sensible in un-
  M Sec Br:iodcis. "The Employer :ind Trnde Un-
                                                       foreseen conditions some years hence."
ions in Business-A Profession" (195!1). p. l!I:
Brandeis, •·Organized Labor and Efficiency in Busi -   In that quote he goes on to say that he
ness-A Profession" (193!1), p. 57.
  s; Hickman, "The Emerging Role of Corporate            311 D. Acheson, Prtstnt at the Creation ch . 10

CounSt'J;• 12 Bus. Law 216 (1957).                     (1969); ace p:miculnrly, pp. Bs-84.


10
   The Government lawyer has a contin-                      I spoke of t.he court as having a partner-
uing. con tt uctive. creati,·e role. That                   ship relation hip with the agency under
role goes on from drafting statutes to                      re\'iew. and the opinion goes on to say
developing implementing regulations,                        that there are two functions, the super-
developing st.a ndards, interpreting the                    \'isory function and the partnership func-
statutes. interpreting the regulations                      tion. which must be applied in balance
drafted under !itatmes, and then back to                    with each other. The court will defer to
the legislative process of amending the                     an official or agency if it teels convinced
statutes and of rcsii.ting the amend-                       that he has taken a hard look at the prob-
mentS proposed by other and, of course,                     lem. I do n ot recall any case in which
different lawyers. I speak of "the law-                     somebody has really shown that he has
yer." No one person could do all these                      faced u p to the problem and been re-
things and do them well. But at least                       versed by a court, and while 1 cannot say
they are a coord ina t.ed group of activ it iel>            categorically that this a lone is su£icient,
that offers some ski ll, or makes a\'ailable                at least that i~ a very strong plus in the
to the administrator some skill , that                      situation. Per routm, if the court be-
helps his department or agency cope                         comes aware. especially from a combina-
effecti,elv with problems and also                          tion of danger signals, that the agency
prepares effecti' elv for change             m              has not taken a hard look at the salient
conditions.                                                 problems, then it will intervene in the
                                                            exerci e of its supervisory function.
Importance of Standards                                        Further on in that opinion, having
                                                            taken pains co articu late my philosophy
   J changed course a" hile back when 1                     of judical review, I said: " Reasoned de-
r eached the question ol standards, and                     cisions promote results in the public in-
now I want to reYert to that topic. I do                    terest by requiring the agency to focus
n ot know that there is much more to say                    on the values served by its decisions and
about standards than this. It is the                        hence release the clutch of unconscious
agency's function to select policies that                   preference and irrelevant prejudice. It
it deems in the public interest. I use the                  furthers the broad public interest of
word agency because chat happens most                       enabling the public to repose confiden ce
often to come to our court. (Please                         in the process as well a the judgments
accept the word agency to include offi-                     ofics decision makers."
cial or department.) The function of the
agency i!i to select policies. The function                    The e conceptions of mine are not
of the coun. the function of the lawyer.                    novel by any means, but they are deep-
is to make sure that the agenq has given                    felt and hark back in considerable meas-
a reasoned ton.,ideration co the matter.                    ure to my experience in the executive
that it has articulated with reasonable                     branch. I have served in the Justice
clarity those reasons, has identified the                   Department and in the Interior Depart-
significance of the crucial factS, and, in                  ment. At the moment. I want to revert
short , has shown that its policies effectu-                to m y OPA experience. and to reiterate
ate the general standards that are a p-                     what I have already said in print in a
plied without unreasona ble discrimina-                     portion of the history o f 0 PA that I
tion.                                                       wrote at that time. I suppose what I
                                                            should add is that l believe now that
   In the Greater Boston TV opinion 4 t
                                                            what I wrote at that time was right and
  H   Greater Ro1lu11 1'rln 1i 1io r1 Corf>. ' " FCC. 444   stands up. In effect, I reviewed what the
F.2d R41 (0 C. Cir , 1971 ).                                lawyers had done at OPA in terms of

110
their ha\.1ng worked wi ll1 the admint'-         defi,ion. tlwre being'' hat we considered
u-at0rs. in beginning with a \ery broad          some rca"mahle basis for his di~retion.
standa1d of the 'tatute..,_the standard          Our 111dg111c:nt as IJ\\ yer was of course a
that maximum pii<e' be generally Lair            predini11n of whal would be held by the
and cquic:ible-ancl de,eloping ubsid1-           court. \nd in d11e course the su h~lanC<.'
an· -;tanda1d'Y                                  of n1ir leg.ti ad\lcC wa' approved bv the
                                                 Emers;~t·11< y Cuun of .\ ppeals-which had
   In that hi,tory I relate an anecdote of
                                                 been e\t,1bli!)hed by Congress as a 'pecial
a time when '' e had a meeting. The
                                                 mun 10 cnmider uhje< tions to the \alid-
economist~ had propmecl that the basil
                                                 ity of OP.\ price regulations anci 0 1-
standard ~hou Id be that the industry
                                                 den. 1•1
would ab~orb cost increa,es so long a~
their general profits were a!i good a they            In regard to the working of OP .
had been tor the ind11stn in a ba'e              e\ ct v regulation had \\'hat was called a
period of I 9:rn ro 1939, \\hirh was wn-         . taLcmcm of Considerations. stating the
sidered 1casonably normal, and at lease          reasoning prncess which reflected lhe
u m ouc:hed hy inflationary trends of pre-         tand.11 cl relied on by the Adminb trawr
paring for war. The lawver-; put fon,·ard        and ho'' they were beine; applied. These
the idea that, sinn.• we \\ere now acting           tact mcnt-. of Con ider.uions were fre·
in 1941, it might be more u eful if. in-         quenth drafted by the lawyers, using the
stead of usin~ I C):rn through I 939 as the      material furnished by the ec:onomists and
base period, it should be I U~6 co 1940-         by bmine'lsmen. It was typically the
~orc of bringing it up-to-date.                  thrust of the lawyers to put out a much
                                                 infnrm.mon a~ pmsible to show that we
  The adm1111stiato1 "aJled for an anal-
                                                  h.id cnspged in looking at our problems
ysis of wha t this propo al would mean
                                                 and drnt we were <'ngaged in a rea~nned
I do not r cc:all the dewils of it at the mo-
                                                  process.
ment. but it was something in t his order:
i[ the base period wer e e n larged it might         Some o f the problems of the OPA
mean a much as a 10-penent increase              <ame not with this \..ind of acti\'itY but
m the maximum price lev('ls. At a meet-          with the numerous reque ts fot excc:p-
ing, Mt. I lcnderson said. "Now is thi-.         tiom and adjustments. You all know
rrip necessar)? h this cxlension nece,.          from the freeze that is ~oing on wday
saq ?" \ gener.1! ro1rn,el replied, ''"o.        hm\ h;ird ... hips and inequities appear
we ro11ld not "3\ it W<t!> ncce san hue          like mushroom" after a rain. I am sure
rather that it would be \en helpful. he-         vou :ire all pleast'd to note an editorial tn
cau-;e !Tom J legal point of view we were        today·, H'tt.\hmgton Post which <ia\-. they
charting new ground." ~Jr. Hender 011            -.pe< ifilall., take into accoum the in-
decided, ""ell 1f il. not legally compul-        equ•t) of the po ition of the Government
sory we won'l do it, we' ll just stay "1th       pcr...mrnel 111 the 'alary free1e and tha t
the righter 'tandards that lhe economiw.          thC' onl) reason why they had not written
had propo:icd." 1 ~
                                                     "(.1/lr•p1r R<>l!,l'rl Pyatt r.o. v. /fowlr1, IH
   Thi'i incident exemplified perhaps the         F.2d 31il t fnwr. Ct. \ pp .. 194-l) . The pr1nci1>al
mo~t c fiecti ve way in whic h lawyen can        rUJin~' Of thl\ COUii .Ill.' tli'iCUS~d in pn>cccdanf:l\
                                                 of 11~ hnal ~cssion . fle<. fl, llJtil, ..ee 29<1 F. 2d I
act. 'Ve identified ou1 pr oblem, we iden-
                                                 (l!'l<il ) \ mmc cXll·ndo:d a.nd probing disrussion
tified legal rnnsequences. and the n we          app1·;1" 111 'II. N:11h.111>0n, The Emt'lj!.N•f)' Co1111
left it 10 the admini,irawr to mal..e lhe        t1f If /1J1m/. Part II tJ/ Problrms in Pnrt: Contrnl
                                                  I t'f!n/ l'hn•r> Gt·ncr.il Publication I I. OP<\ Sei ics
  •: Lnent.hal, 1uprn, n . I, p 77 rz   ~~ 'I·   of lll\tor1c;il Report• nn W:ir \dmini•lr3tion.
  u I bul.. pp 8!!- llS.                          1<147).


                                                                                                     11 l
about it earlier was that they just had                     il doesn't seem right to you, and that
not gouen around Lo the point yet.                          something should be done about it, than
                                                            it i to ay ,,hy"-as I learn all the time
   These inequ1ues, and they are
                                                            when I write my judicial opinions.
matched you know, are just inevitable.
In this kind of pervasive program, there                       Thi insistence of the lawyer · on for-
are going to be many inequities. There                      mulating a reason slows the process of
are always requests for exceptions and                      making the adjustmencs. o you have a
for adju. cmems. The OPA lawyers were                       ten ion between these requirements and
very firm on this poinc. I don't say the                    getting a job done East. In addition co
same approach is necessary coday, be-                       this, I do think lawyers find it more com-
cause that is a question tbat the courts                    fortable to disagree with each other and
will have LO rule on, but under the stat-                   argue than do adminiscracors or busines.'>-
ute that was then passed the lawyers                        nicn. lt is one of the things you eem to
said that there are not to be exceptions                    get by going to law school. T think I ob·
and there are not to be adjustments un-                     ~erved in serving my clients when I wa
less some principle is put fonvard. You                     at the bar that, within a private bu iness
are not to have the privilege of saying                     organization, it is hard to state a different
okay for you, not okay for him, \OU                         opinion from that held by one of the
know, hke King Louis of France under                        people on the line. They feel threatened,
his oak tree, passing individual judg-                      that you are que tioning their judgment.
ment like some feudal despot. Every ad-                     I do not say that is rrue of all Govern-
justment has to be related to some princi-                  ment administrators, but it does happen,
pled ba is. 43                                              and it is this kind of difference in ap-
                                                            proach-the arguing approach, the que -
   Now it was thi that led co a certain                     lioning approach-that does make for a
amount of tension between the lawyers                       certain amount of tension belween lt1w·
and the businessmen and to some extent                      yers and administrators.
the economists. It is not easy to recreate
the problem. But it came about ome-                           IL came to exrremes, I think, at certain
thing like chis: The administrator says:                    Lime in the OPA. There was probably
"This .,itu:nion doesn't seem right to me.                  bad judgment on both side as to Lhe
I think we ought to do something about                      way things were put. But at least the
it." The lawyer ay : "Well, you have to                     lawyers did their best to hold the line
state in general terms why this isn't                       against any exceptions or adjustments
right 'o that anybody else in the same                      unles a general principle was put for·
po ition will be able to get the same ad-                   ward or some reason was given, so that
vantage of the ruling. It's much easier                     equal treatment could be maintained.
to know that something is not right, that                      It is not for me to discourse on the
                                                            merit or srrength of that philo ophy. or
  ., Sec Lcvcnrh:il, trtfn'a, n . I, p. 100 rt srq Com·     how far it should apply. Some years ago.
pare-the EmCT. Ct. App. rulings in e.g .. Armour            when I first became a judge, I offered a
f, Ct1. v. 8011•/ef, 137 f .2d 258 (1945)        (general   thought, ar a meeting of the American
ndjustment provision creates right to individuals
governed thereby); 800111 Fisheries ' " Rawle~. 158
                                                            Bar Associacion's Public Contracts Divi·
F.2d 449 (1946) (regulations cannot la) unequal             sion, chat this idea of giving reasons
burdcn1 on pcr'<'.ln> 1imil.irlv situated, in the uine      might have application to actions taken
cillmg nnd condition) .\'ro• Orleans J.c.unrlry v.          on public contracts.4 11 That was con-
Porter, 157 F.2d 1018 d946) (dcsirabiliry " in the          sidered far out at the time. Of course
interest of umCormi~ oC administration" oC ad-
utinutrati\.c nandudJ implementing the general·                u H. Leventhal " Public Conttacu and   Admmi~·
1icd standard~ in the adjuMmcnt pro\111on)                  1r.111w Law:· 52 A B.A.J. 35 (1966)


112
now, very re<.enlly, we have had Lhe                                . imilarly, :H a time when public con·
Scomvell   opinion 17 which establishes                           tracts account for the percentage ol the
judidal re\ie\\ at lhe thre hold. and in-                         total grn national product t.hat they do
evitably leads to a refinemenl of rea-                            today, you are going to ha\'e a very dif-
soned action.                                                     ferent :1ttitt1de about the need for Cair-
                                                                  ne.s than when public contracts \\ere an
Need for Fairness                                                 incidental cupec:t of the entire indtUtrial
   My observation is Lhac, whenever a                             force and industrial produuivity of the
problem involves a large element of soci-                         country.
ety, the importance of fairness brings
this kind of st:md:ml matter or approach                             I mentioned befnre that there are
to a higher elevation. lt is one thing to                         some opinions establishing rights of wel-
respond to complaims of 11nfairne~s by                            fare recipients. It seems to me that this
Government employees with c:he answer                             underlying prinriple is going to be ex-
that Government employment is a privi-                            tended in connection with Government
lege and not a right.•~ Justice Holmes                            grants. The law on thi is not yet cry ·
once remarked about a policeman thac                              talli2ed. But, when you have activities o
he had a right to talk politics, but he did                       c;uh!>tantial in their impact that they are
not ba"e a ri~ht to be a policeman.411                            nm just incidental aspectS of the total
\Veil, that ju!)t doesn't wash at a time                          acti \it)' of Gm ernmem. you are going to
-.vhen we ha "e 15 pen em or perha P'                             have an increac;e in insi tence on fairness.
more of our lOtal population en~ged in                            That leads very quickly to some ap-
working for one branch or another of                              proach in terms of -;tandards. And scand-
 ome governmc.:nl. They are c iti1ens too                         ards, the necessity for giving reasons, are
and they are entitled to basic rights. l do                       what make · t.he difference between a
not mean full civil o;crvice procedures                           demotTatic 'lO( iely and one chat is tyran-
necessarily. but some elementary concep·                          nical.
tion of fairness and constitutional free-
doms.no                                                              I think il i' also true that the idea of
  • r knnll'rll I 11bort1tm1r<. Inc. \' \lraUrr 157 l <;          che complaint!> desk has matured in our
App. O.C. ,21. 1:1<1 F.2cl ll:'i!l ll'liO).                       time-the ombudsman, the idea of .,ome
   • Sec. e.g., Rntlt')• '" f(1r/1ardwn . 116 t _<; \ pp          systematic way in which grievance-. can
D.C. 248, l M!! F.2d 'ill (19'10), :iH d b) an equally
                                                                  be presented and taken up. The .\rcion
divided coun. '41 U · <JI ( J<J;O)
  w M c. I uliOr ' . \ eu· IJrd/ord, I !>5 \la" 216.     !?!!()
                                                                  Line column in the Washington tor is
(ltllJ~.                                                          a 'er; ~od om budsman. Congressmen
  na Quite:   :i   1hlfrrcn1 .1pp1nach from th.tt of Justict'     are of course ombudsmen. for they re·
Holm~ wa' vuict'd an l'irkn-1111! '· lloartl of Er/11
                                                                  gard pan of their work as being effective
ration. 3~11      'I. 563, (1!16i ). The uprcmc Court
rt'H'fSCd a 'IC.hon boa1d • cl1'm"-al of a 1cachcr for
                                                                  in prevencing the in ju tice due to bu-
writing a lclll'I 1(1 .1 11<•w,papc1 LTt11c:i.I of 1hr            reaunatic rigidities. On the other hand.
ho.ird's :illocat111n of puhl11 fund,. II o;aid that              whenever grievances are identified by a
where the fart of ht' public cmplm mt'nr was nt>t                 complaint de !... approach. I chink it will
involved in hi• commu11101uon "11 1~ nccc!l'!llr) 1u
                                                                  be requisite Lhat there be a reasoned
regard t he teacher "' 1lic m1•mbc1 o f the general
public he 'ICt'kS to be" .md 1n the abliCncc of fa.lsc            process for handling them. And I do be·
•tatemenu knowinglv or recklessly made, his " right               lieve it is well to have a complaint desk
to •peak on is~ues of public 11npnrtanct· ma' not                 a pan of total government, so that you
furnish the hasi' for hi~ di~missal from public rm-
                                                                  do nCll sho\e problem under lhe rug.
plo\mem.' Ibid. p . 'iH. \cc alo,o \nttona/ :hs'n of
C,ov'I Emplo)etl ' II /,,le, I 3S l _<; \pp D.C. 2<10,            but }nu identify them and brim~ them
'llR F.!!d 1126 (1969).                                           up for <0mideration .

                                                                                                          113
Concluding Remarks                                      and interchange among the elements of
                                                        the society.
   f\iow for Lhe two mo t important word\
                                                          The 'Kime fundamental holds rrue on
of my rematk~11d finally. And finally.
                                                        a more lowly, day-co-day basi for the
I rclUrn lo my foreign visitor, 1 -..1id at
                                                        C...overnment lawyer who is crying to
the oucset thac he would ofre me a per-
                                                        work with the administrator~nOL in
spective. 1 can imagine him saving tu me.
                                                        tenns of preventing thing-; from being
"This i very interesting indeed, but
                                                        done, or dictating what should be done.
w hal doe-, it have co do with managerial
                                                        but in terms of assuring that whatever is
dfectivc11es.,, 1d1ich is the theme after all
                                                        done io; done on the basis of ~ome rt:a·
of t.he GAO s('rics." 1 could make .1 lase
                                                        'oned cfr;posicion.
in the narrowtst sense of the term "ef-
fectiveness," that if you work with scand-                  Not a ll agencies have Lo m ake findings
arcb you work faster lhan if you work                   as the 1egulatory agencies do, bu( 1 think
without. thac if you jusc handle ea< h in-              Lhey have to be prepared to cope wilh
dhidual rase a., it comes. you ,dlJ find                problems and with inquiries direned to
yonrc.elf ratching around "ilh so many                  Lhem hy lhe Congress or omecimes by
contradiction.. and uncertainties t11Jt you             the co11rts-increasingly so. a~ I haw i.n-
will have lost time. .\lso. if ou ''ork                 d1catecl-by memoranda in the files lhat
"ith c;c,mda1 d.,, you pcrhaP' have some                identif\ and justify their action . ln that
 positions to pm forward at annual grill-               'en e of assuring reasoned dispositions
ing time. \nnual grilling time come"                    :md ad1ieving higher value , this atti-
when indh idual com pl aims are \ oiced                 wde doe~ impro\e efficienC). not nc(c'-
by members of the .\ ppropriations Cum-                 'arily in the number of decisions made
miuec and you are asked why didn' t vou                 and processed, but in the quality of de-
do th is and whv did you do that. It i-; a              dsion . The social cornpacc theor y of
comfort to be able co refer all of these                j:!;Overnmcnt is meaningful for our clc-
individ u ril matte1·s to some ~on of coher-            mocraq . And a basic part of our soda l
en t sLand"rd.                                          rompct( l is the rule of la\' :rnd equal
                                                         justice under law. The activity of the
    Bue I do not rest on chac rather narrow             l:lwyt·n in Government erve thoc;e grc:ll
view of effidC""nry. I think of Chief Ju~Lice
                                                        goals not with the majesty of the rulings
Burger' remarks a couple of week~ a~o
                                                        of the nine J uscices of the . up1emc
at the dedication of the Georgetmvn
                                                        Court of the Uniced rates. but at least in
l!nivero,itv l.;m Center.c.1 when he -;aid:
                                                        lhe same generaJ direction.
' 'EfficicnC) mu t ne\'er be the primary
objcccive of a free people." He "as re-                    Justice Holmes said: "Man may live
ferring to the separation-of-power<> doc-               great!} in the law as el ewhcre. and wear
trine. eparacion of power' i in the                     hii; heart out in eeking the unattain-
first inst.mu~ a concept of inefficiency,               .1ble"··~ I do not ask GO\ ernmenc lawyers
  ince it divides responsibility. But it has            to break their hearts. But I do th ink that
the merit of providing a protcuion                      GO\ ernment lawyers can live greatly,
against desporbm or overconcentration                   and do live greritly, in w hal are o ther-
of power. Jn the last analysis. that assures            wise hu mdrum casks, when they. work-
gTcaLcr ability in the society to adapt to              ing together with t he ad1nin1strative
changing conditions, with a Eree spirit                 official . each in their proper sphere,

  at Rcmarl.• of Chief )U\l1ce \\'arrco £. Buritcr al      •• O. \\' Holmes, '"Pro£cs.sion of the L:iw," in
lhc Cercmonh•\ 01.'dicarin~ lhc "~" Law Center.         ""pcccln·•·· (1!)34) . p. 23 (u.'cturc in l 1ntlcrgr:idu
Gcorgc:rown l..nhc·r,it). epr . t7. 1971.               .111~ of llarv:ird University. Feb Ii, !RAG).



114
evolve an overall t<:chnique for helping       ously you arc erving more than one
GO\ ernmem 1 un not merely for day-to-         function . o long as we have an adver-
day c,ervice, hut for the fundamemal           san: "''tern, chere i~ a funu.ion of being
purpose of mJl...ing this truly a C:o\'em-     an ad,·oc-:tte of th:tc system. The adver-
ment of the people and by the people           sary ' stem puc~ it that the best induce-
and for the people.                            mc·nt to obtaining a just result is to have
                                               two lawyer') <.' at h putting forward his
                                               position as forcefully or as persuasively
                Discussion                     a-; pm,ible and expccli.ng that the person
                                               c hargccl with making the decision "i 11
   Ju the rourse of ortr work we .wme·         petrciH~ f10m these conOicting presenta-
limes find lcg1sfalive rrslrnints and rnn-     tion s wherein the truth lies.
strainls whirh go agoiri.1l the grain of our
legal trnming. fl'hal shoulrl be the m/1•           J hcv '"Y in admiralty proceedings
                                               that 110 member of the crew ever gives
of the lawyers when confronted u•1th
                                               tl''itimon} .1gai1ht his own vessel. Never!
these .1it11atiom?
                                               It', just not dune. This i-;, of course. ex-
   judge Levrntlial. It i true that, in        perted on .111 'ides. Thi'i i'i pan o( their
the world o[ C.ovemment concraccs, there:      game of rnlli~1on at ea.
are multiple objecti\es that are bein~
                                                 I :1m d1gre,,ing. but I think of an in-
pursued. 1 Sil ppn~c that, i [ you include
                                               tcre...ting ancrdote that I read in opin-
something like provhions agaimt di ·
                                               ion' of 'inmc lri-;h judges in Ireland.
crimination on account of race, you are
                                               They fTcquemlv 'ient out la\\ ycrs from
doing .omethrng \\hich doesn't inClcac;(·
                                               the      ruwn to 'ien e a Crown agents
the efficiency of (.overnment comracting
                                               They have the 'i)'Stem of the private law·
or Lhe expedicion of iL.
                                               yer, who is hired as the prosecuting at·
   J wouldn't want Lo gel into a disc.us-      comcy. One of them asked one.: question
sion about all thaL is involved in the         of the witness who w:is called by the de·
Philadelphia Plan, but that's at least a       rcnse in .1 pto~ec uting case and he said,
good example of what I t..hink the qucs-       " \re you the neighbor of the defend·
Lion invokes l here is 'iome purpo~e that      ant?.. 1 he wirness said, "I am," and he
is put forward b) the Congress. \vhich         -.aid. " I havt no further questions:·
doesn't conEonn to che immediate ob-
jectives of the Go,emment rnntran                  The poim of the tor) a'i re laced in
functions but is part of the overall func-     the hook w.1, that this was perfectly fine
                                               if you were in I:.ngland where it woul<l
tion of the Go\ernmenl. L·nle you are
«ertain of e~ttly what the reasons are         jtht he <.''-J>C< tecl that a neighbor not
for the panic ular rc,traint and ton-          gt\e te')t1mon} :t'f<ltmt hi neighbor, but
straim. it i~ not eaw LC> assume that          it h.ld no rele\<t1He \\hate, er in Ireland.
merely because it contradiw, sound pro-        when: they just ac; cheerfully fight as
                                               rnmult with cath other. You have to take
curement pol H ie!l it i!l contrary to the
overall intere. t of the Government.           into accoum from this standpoint really
                                               what the cuswm of the commun ity is.
  At what /Jni111 along the contin1t11m        You can't answer in absoluLes a question
doe~a ltiwyt'r put cm his ndversory hat?       sue It a' you put-\\ here the role of jus-
                                                tice begins and where the role of adver-
  judge Leventhal: 1 think of respond-
                                               san lc:ne' off.
ing with a quip that tho c that have cwo
heads must , .. car two hats. The reason         1 ~uppose that the role to which I al-
that's not purely trivolous 1 that ob\ i       lude th:u C:cl\'ernmenr counsel cannot

                                                                                       115
coaceal-pro'>ecution counsel cannot            them to the conclusion that they wCTe
conceal-highly irrelevant information,         blood taincd when, in faet, he knew
or material information. should be quali-      from a chemical analysis that they were
fied by aying chat he cannot reasonably        not. It was a clear case where you
suppose that the other per on can be ex-       couldn't possibly condone such tactic if
pected to learn by use of ordinary advo-       it was relevant to conviction of murder
cate skills. When · licit.or General Thur-     in Lhat particular case.
good ~larshall put fon"ard the bu ine s          ll' not an ea} question to answer; it
about the FBI wiretapping, he had in-          can only be answered in tenns of the
fonnauon that the other person couldn't        <U'>toru of the commun.i ty-including the
possibly be cxpenecl to have by himself        leading community.
or to acquire by the use of his own skil ls.
                                                  If I w<·re to express a personal convic-
   If, on lhe oLher hand, there's informa-     tion, it would be that the less we relied
tion th:n is in the public domain, so to       on the adversary sy tern and the more '\C
speak, and the other lawyer <.ould get
                                               relied on openne and cornpletene of
it if he were more 'igorous or more dili-      pre:it'nt.ttion, the better off we would be.
gent, I don't think that the Go.,.emment
                                               But, that· - a personal \ iew and there are
lawver hould be required to gi.,.e ic co       many \:CT) responsible people, senou
them. To ome extenc, you have an as-           people. who think that the adversaT) sy ·
 umpuon lhat each person h spending            tem ha... general meri~ and that it should
his resource~ in the way that he elects        not be tos-.ed aside. The matter ha to be
and that it become a mauer of how ca-          approached very carefully one step at a
pable each pe™>n i .                           ume.
  There is a question as to whether the
adversary system is a good system. It is         Will yo11 comment on the lawyer with
perfectly o bvious that in particular cases    respect to the Congress?
records having omissions would lead to
                                                   Judge Leventhal: I spoke on the law-
wrong judgments. This happens when
                                               yer in Government-in the executiH:
the omi sions repn: ent the lack of one        bt am h-becausc I jw.t assumed thal this
of the lawyers for whatever the rea'ion        (, -\0 lecture series was devoted co im-
that lack m.ty cx1st.                          pro\ ing Lhe executive branch. J also
  The jumfication for the advc~ry S)S-           tuck with the lawyers in the executive
Lem hJs to be that you gee a very high         branch because it' really the subject I
percentage of ju t conclusions even            know be t. But, on occasion in my pri-
though you get injustices in some cases.       \'ate yean, in between m\ Government
Jn other countries \\here different ""'! -     '.'>enicc and judicial scr\'ice, I had occa-
tem exi\t thC't don't seem to be getting       sion to deal with the legi lative branch.
more justice. Maybe there are rea om           I was very favorably impressed with the
other than lhe differences in the ystem,       \dde range of the committee staffs of the
but there are reasons why the adversary        legislative branch, the workings of Lhe
system seems to work preuy wel 1.                 enators and Congressmen and Lheir par-
                                                cicular as iswnts, and how much of what
   For the straight answer lO your que -
                                               they concern themselves with is really on
tion. I suppo e it depends on the mate-
                                               Lhe '.'>ame general principles to which I
rialit) as in the case of the pro ecution-      referred.
such as Brad)· \'S. Maryland-where the
prosecutor put a pair of sc..-iined shorts       There may be a particular!) important
before the jury in such a way J'> to lead      contributor for whom a Congressman

116
may wane to do omething and he                elected by his constituent.S. That's de-
doesn't care ''haL the reasons are. But,      mocracy in its purest form. 1 assume that.
putting such tnttllen. ru.ide, if you would   by some son of group thought and group
get a Congrc. ~man or a enator or his         con emus of these people, we gee a re-
staff interested 10 vour matter, it is usu-    ult Lhat is tolerable for the coumrv as a
ally becau..c you have what seems to him      whole.
to be a meritorious proposition or al
least it is meritorious enough to ''11rran1      Regarding lawyers who draft bills in
consideration. It i in this way thac they     the Congre s, I well remember how the
serve the ombudsman function of refer-        first draft was done for the Emergency
ring mauer:.i tu the executive in Govern-     Price Control Act of 1942 and the very
                                              careful consideration given to all the
ment and pursuing thc.:m.
                                              points of view that they could. They
  Certainly there have been cases where       were really doing the same son of things
there ha'.'! been improper intrusion and I    that we in the executive branch bad done
think the execuci\e agencie!I ha\e "isely     in the first place but doing it from their
adopted provisions to guard themsehe          particular pcnpective and doing it very
against that. The regulatorv agencie          carefully and, it eems to me. very fairly.
have. By and large. when the execucive
work with scandJrds, he is better able to        l don' t knO\\ offhand any reason why
channel the legislative ubmi sions and        there should be any major difference be-
the legislathc mquirie\ fairly and reallv     tween the approach of lawvers in the
more expcditiou'l) than if he works           legi'ilati"e branch and the la\ners tn the
"ithout them. 1 chink that so far ai. the     exec;utive branch toward seeing that
legislature is concerned with changing        whace' er i~ done by the Government is
matters, 1 metln pure legi lative policy      done on the b:lsi of equit)'. fairnc~:;. and
obviously, that does depend on the            effeniveness and. as much as possible. on
wishes of every legi lator as the per on      some sort of generalized approach.




                                                                                      117
                                                Alexander B. Trowbridge
                                                President
                                                The Conference Board




     Alexander B. Trowbrzdge's career has been almost equally shared by privatr
enterprise and Government service. He is, therefore, as well known in Wash-
ington circle.1 as he is in I he world of business.
     Mr. Trowbridge was educated at Phillips Academy in Andover, Massa-
clwsetts, and al Princeton Universil)'· from which he graduated cum laude in
1951. Shorlly thereafter. he began scroing with the U.S. i\ilarine Corps in the
Korean co11(fict where he won the Bronze Star. Cu1Tentl)• he holds the rank of
m(ljor in the J\forine Corps R e.ieroe.
     Following a successful busines.1 career, Mr. Trowbridge came to Washing-
ton in 1965 as Assi.sta11t Secretar)' of Commerce for Domestic and International
Business. Ht' feroed as ecretary of Commerce i11 1967-68.
    Leaving Government service, Mr. T1·owbridge became President and Chief
Executive Officer of the American Management 11.l.rnciation in 1968 and St'rt1ed
1mtil September 1970 when he became President of The Conference Board.
     Mr. T rowbridge also serves as a member of the board of directors of the
following corporations: Allied Chemical Corporation: American Moton Corpo-
ration; The Bowery Savings Bank: Cannell Com/Jany. I nc.; General American
Investors Company, Inc.: and Pet ln corpomted.
    He is also a member of numerous o,·ganiuitions in the bu.siness/got1ern-
ment field including the Council on Foreign Relations, the National industrial
Pollution Co11trol Council, the National Planni11g Association, and the h1ler-
national Executivf' Servicf' Corps.
     Mr. Trowbridge is the recipient of the Arthur S. Flemming Award. the
President'J ''E" CertificatP for Export Service, and honorary doctor of laws de-
grees from D'Youville College and H ofstra University.

118
CAO Audltorium
September 24. 1971




Three Paths in Search of the
National Interest


T iu· Co11fcrc•r1rr· /J ourrl co11d11rt.1 rnrarrh and ronjf•rr11rr.1 r111rl i.1s11es
r1t1mt'ro11.i p11l>lir111w111 011 econom1r rwd puuhr aOair.1. ft hu.1 a lo11g
history of serv/ft' Jo lnwne.1.1 and wdu.1/1"')1, Govc111m1•n/ "1£<'1/nc.i, edura-
tionnl msl1t11t1m1.1, nnd labor organi:.atw11.i. Of /Jarl1rnlm 1ntnr·.1t to the
General Acco1mtmg Office z.( rh u•orlt 011 Covelnme11t-lmsine.1.1 tC'hit1om.
In thu /1·rt11rr, thr Pr1·s1dent of the Board nolcJ that orn cl1•r/J 11atirmnl
probln11.> mr )o wmplc:c that tht·1r ~o/u/1011 requirc1 a mn.1m 1• rffort b)'
                                                                       1


a combination of /wbl1c nncl pnvntt• n•.sour(t'S. }fr wggr•1/.1 thnt what is
needed is a 11nu11u', 111dcpendrnt in.~fllute fm re.1t't1rrh and 1•cl11rntton
de11oted cxcl1111rwf") to 1dc11t1f1·111g, roordinatmg. n.ue111ng. and crm1t111mi-
rati11g nltf"nlf1 1it•1• n11timl<ll goal.~. />riar1t1rs, a11d policir.1.




  W ash ington has ::ilways been a city of              ing 1he best mc·thod of con rroll in g pr ices
cere m on y a nd po m p, as be GLs its stacus           and wages, I have to admir e the for esight
of the N;uion's capirnl. Much of the m e-               of th ose who 01"ig inated the program
morializing ;ind acclamation com es a n d                tructu re. I cannot, however. admire my
goes, with l1ttlc permanen t residue ex-                own foresight in accepting the assign-
cept perhap'> m ..crapbooks and inflated                menll
ego . B m I do thi n k that El mer taats                   Perhaps I .im fort unate, ho\\ever. in
and al l of you in thl' r.eneral Accountinn             that the Pre 1dcnt's action of mid- \ ugust
Office are taking t."'( cellent advantage of            doe' illu tt.itc ,e,·eral element wh ich I
your organ i1.ation· 50th anniver:,ar) by
                                                        will try co anahze in my remarks this
this ser ie of leccures spread chrough the
                                                        morning. If nothing else. it drama tizes
year on ''I mproving \Ianagemenc for
                                                        t he rap1d1cy of c;hanae which i ~o evi-
More FffecllH' Gnvcrnmenl." From the                    <klH Ill modem ,\merica, a nd Lhe need
scope of the cop1l\, a-. well as thl: quality           to bl ready for surpr ises and uclden
of the partio pan~. it is evident that a
                                                          hi Il \.
permanent contribution to more effectiYe
government \dll be with us for ye::i rs to                   Jc may be like the man l talked to
com e.                                                  tt lJo u c 3 weeks ago, j usc back !Tom a tri p
                                                         to A laska whe re he went fishing for
   As for the timi ng o f this particular               salmon near .Junea u . H e was havi ng ex-
item of your agenda, in whkh you ~ked                   ccllcm rc-.u lLs. and at on e point hooked
me to reflec.t on business GO\ ernmem re-               a 'llong IO pounder who ga'e him a good
lations during a period "hen ,111 ol the                 fi~ht for ea')il 20 minutes. He had al-
Capital\ attention is geared to a certain-              mmt pulkcl the fi,.h co the side of his

                                                                                                  119
boat, when the salmon gave a mightv ef-         in government and heard it from industry,
fon and soundt:d, extending the line out        becau c I don't think I ever really beard a
with a great heave. \Jy friend beg:in Lhe       description by a bu inessman or his auor-
hard pro<.:~ of pulling the salmon bad~         ney of the public interest that didn't meet
                                                pretty well on all fours ·w ith the busin~s
in when suddenly the line went slack. He
                                                interest. So just as a matter of clarification
was desolatt-, believing all his stTUggle
                                                I belie'e tn a good deal of distinction be-
had been voided by a broken line. Then.         twt:en different competing interests. I don't
about 20 feet away, he SB\\ '>urface a          Lhink it' one thing in which people, all
large eal, taring ri'!ht at him and hold-       men of good wi.11, share one ,;ew of the
ing the huge ·almon in his momh. The            public imc:re~t . 1 think there are strongly
seal shook his head as if co say "Thi one       competing interests and the more they com-
is mine," and disappeared!                      pete the more likely you are to get a toler-
                                                able resolution.
  J ust as 1he fisherman. one can no
longer take thing-; for gi-amed, and the           This hi ·torical competition for the
pace or new developments is steadily ac-        right to define the public intere L, and to
celerating rn a point where only by a far       translate the definitions into policy, has
more coordinated cffon at leadmhip              occupied our society since its political
through efft:cci\'e plannin~ can ''e expect     inl·ept1on :'\ot urprisingly, it is at the
to manage ch:mge.                               heart of busine~ Govemmem relation-
                                                  hips, and h~ brought us co a point
   This city ha always been the hub o(           where we ee taking place toda)', in my
the earch !or "Lhe national imerc'>L" le        nptnion, the confluence of three major
has een many hone'>t :tucmpcs to iden-           pat.hs. While all three have been evident
tify and define that phrase, and 1t ha'>
                                                for ome time nov..., the emerging inter·
 een many mgenious efforts to wrap
                                                'ICction of '"hat were parallel and sepa-
one's own neem in the cloak of "the na-         rate Lracks has created an added demand
lional imerest." Jndc:cd, it is not always       for effective nationa l leader ship.
easy to delinea te between "pcrnmal"
and "public" interest-a!i Congre. man
John Brademas said la'it week:                  Government Intervention in the
                                                Economic System
   It is cruc 1 think for man)' of u~ on the
Hill that business, labor and lobln·i~ts for       The fitst of the three paths is exem-
other group~ tend to equate their own par-      plified by the imposition of mandatory
ticular interest \\.ilh the public ioterc:.t.
                                                conrrol O\er prices and wagcs--anot.her
One could point to :my number of irutance
                                                mile~tone in the historical trend toward
of that in a \t:~ dramatic; way in Lhe cur-
rent CongTes .                                  more go\emmencal intervention into
                                                and control over the private economic
  Harry McPherson, now a '\Vashington-          system of Lhe LTnited. tales.
based hm )Cr after erving a      pccial
Counsel to President Johmon. put 1t this           Our nauonal history was initiated on a
way:                                            strong belief that tbe public interest
                                                would be best served by a maximum
   Now that l am out of my purist posi-         amount of lai.uez-faire economic pol icy.
tion in government and am practicing law.
                                                with full allowance for private interest
I hear and frequently represent my client'
                                                to gTO\\. co employ, and to develop. R ail-
po ition as one which I think is con istem
with the public interest and is larger than     roads, canals, factories, and services all
merely a narrow bw.inc's interest; and even     multiplied in an era of land grants and
as I sa\' it I mistrust m' own words, and       subsidies and tariff protection prO\;ded
1 remember mi trusting 'them when 1 was         by the national Go"\emment. Foreign in-

120
vestment in the U nited States was wel-      safety, and consumer protection . Eco-
comed a nd provided the initial stimulus     nomic enterprise in Amerita is still free
for the great national industrial a nd       in chat it is predominamly privately
marke t development which we n ow            owned. but there are few if any mana-
enjoy. Government entered the business       gers who are free LO make a major deci-
arena only in those vital areas. like the    sion without considering a vast panoply
postal system, where private operation       of governmental regulations or warnings.
was unprofitable.                            This will be especially the case if the
                                             " Phase II'' controls now being debated
   As development cam e, so did a buses.
                                             result in a widespread, d etailed . a nd pr o-
The end of the laissez-/aire era was
                                             lo nged panoply of regulations.
forced by the excesses of an unregulated
expansion which left too many scars in          Hence we have a prime path, consist-
its path. The Interstate Commer<.:e Act      ing of an historical trend line which has
of 1887 brought Government regu la tion      steadily m oved from minimal interven-
into railroad freight rares. The , herman    tion by Governm ent to a point wher e
Antitrust Act of 1890 attempted to put       governm ental policy and practice have a
boundaries around the unlimited con-         direct influence on al m ost every business
cen tra tion of economic power. The Clay-    enterprise a nd decision. If indeed the
ton Act of 19 14 and the Federal Trade       "past is prologue," we can only expect a
Commission Act set up rules against          continua tion and expansion of this trend
price fixing a nd the al location o f mar-   line, and possibly an acceleration as well.
kets. These laws, more than an ything
else, forced the retention of real compe-
tition in the private enter prise system.    Dist rust and Disillusionment in
   A new wave of regulation came as a        American Institutions
result of the 1929 stock. market crash and
                                                The second path has much in it wh ich
the subseq11ent depression . The New
                                             is related to the first, a nd, indeed. prob-
D eal ushered in the Securities Act ol
                                             ably is a major causation factor of the
1933 and the e<.:urities Exchange Act        rrend wward accelerating governmental
of 1934, followed by the cr eation of the    regulation and intervention. While par-
National Labor Relations Board wh ich
                                             allel. ic is of more recent vintage as a
brought the Federal Government to the
                                             highl y visible trend 1ine. It is the wide-
support of organized labor. At no time in
                                             spread and vocal expression of distrust
previous history had the governmental        and disillu ·ionment in the institutions of
role as a regulator and a n economic stim-
                                             America, including the corporate busi-
ulator been as large as it was in the New    n es!l structure, and indeed in the entire
Deal period. Tt ultimately led to an a·-
                                             economic system in which they operate.
sumption by the Federa l Government of       This criticism also en compasses the gov-
the responsibility for creating conditions   ernmental, religious, educational. a nd
o f full employment and economic sta·        social organizations of the UniLed States,
bility, as illustrated by the Employment     bm il is the business sector which is
Act of 1946.                                 probably the m ost vociferously and con-
   Through the postwar era. we have wit-     sistently attacked. lts val ues. its objec-
nessed a steady trend toward greater gov-    tives, and its strategies are generally
e rnmental guidan ce, regulatio ns, and      decried as being excl usively for the "pri-
san ctions in almost every area of eco-      v;ite" interest of businessmen and orga-
n omic activity-most recently in the         n iL.ations with in ufficient willi ng ness to
problems o f environmental quality,          sacrifice for the "natio nal" interest.

                                                                                       121
   The literature of today is replete with     it.\ institutions and traditional American
examples of thi · criticism, much of it        values.
coming from younger generatiom on                  rn the same study, and on a hopeful
school and college campuses. As an indi-       note, ~Ir. Yankelovich found that a "va'it
cation of the breadth of this type of sen-     majority of all college students (6 per-
timem among college and universicy             <..ent) • • • believe that the sylttem is
scudem , consider a poll conducted by          flexible enough to solve problems and
General Electric Co. during 1970 and           oven·ome flaws without radical change."
1971. Over 1.300 )tudents were queried         It was also evident that a vast majority
regarding ho\\ many companies the fol-         of bu mess leaders were deeply con-
lowing statements apply to; the percent-       cerned with the same social dilemmas
ages under each year indicate a belief         facing the country and willing co work
that all or most companies are character-      with students in search of solutions.
ized by t he statement:
                                                   These and other criticisms come from
                              1970 1971        other seuors 0£ society in addition to the
                               Perctml         voices of the young. They seem, in part.
   l. Industry will not                        from t.he search for culprits in the major
      willingly spend money                    .md overJ iding domestic problems of the
      to clean up the environ-                 Nacion; the maldisrribution of wealth,
      ment and will have to                    the maldistribution of the population,
      be forced to.               47   ·17     and che deterioration of the total en"i
   2. Busine~s will not do                     ronment. They also have risen in volume
      anythmg in che public                    a~ the :\ation has been faced with rhe
      interest 1( it reduces                   Ir u~1ration of increased affluence and de-
      their profits.              :34  :n      creased ability to use the affluence for
   3. Big companies exploit                    personal and national improvement.
      consum ers by cheapen-
      ing prociuets and raising                   Part of this criticism comes too from
      prices.                     34   ~7
                                               Go,ernment leaders, who as career em-
                                               ployee, are interventors 01 as political
  4. Bu)iness U!)CS advertis-
                                               leade1c; ate critic.. In part, the adversary
      ing Lo make: people buy
                                               rel:lrionship which governmental inter-
      thing-; they really don·c
                                               vention h~ created will inevitably result
      need.                (not asked) 64
                                               in mutual recrimination, with busine ·s
  Daniel ) anl..elovich, in an extensive        een a too parochial and fascinated by
suivey called "Youth and the Estabhsh-         profits alone, and Go' emment seen as an
ment.'' e"plain the " new \'alue -" as         inefficient entity inundated with a mas-
being                                          'ive bia~ against tho e profitmakers who
   • • • \\ i<lch held today by those youn~    n eate the economic foundation-and
men and women who take for granted their       the resulting jobs and taxes-to allow
education, their ability to make a living      the Government to function.
and to be successful, and their opportunity.
if desired, Lo enjoy a secure niche in our       There follows an example of busine s
society. Taking these benefits for granted.    feeling on Lhis question, from Najeeb
they discount them and emphasize other         Halaby. President of Pan American Air-
goals in life such as Lhe importance of Lhe    way ·, who said last week:
individual. the reappraisal of our society,
aml the de~irabilin of social change • •         The primary purpose of business in the
an intrim.ic part of the new values is the     past ha:, been to make enough money and
que:.tioning of every aspect of our ociety,    enough jobs so a~ to enable u to continue

122
progress on man) fronts in the whole SO·               The same basi< prop<>sition wru. cnun·
ciety. It seem'> to me chat Lhat\ still got to      tiated hv      ecretary of Commerce
be his prim;1r) ~oal so Ion~ ·" he is a busi-       \fau111e Stans not long ago:
nessman an<l if he doc.,n't ..ucceed then the
whole econom' and t.hc \\hole busines.,               If the la~t three decades have taught u~
part O( \Ociet ~ is weakcnrd f non"t chink          an) thing, the' have taught us that govern-
he should dep:m from etting an example              ment alone cannot .. ucrecd in meeting the
of creativit, and productivity through his          great ~oci,11 need<; of our times • • • . Our
companv, to his directm and ~hareholden.            problems are bigger Jnd more acute now
   ow, the more he gets regulated. the more         than C\'Cr before. I believe this is becau~e
regulators that 1hcre arc 'iitting. watchi ng,      goveinrncm has neglected to create a pto-
and listening, the more in hibi1ed he gets.         ductivc partnership with private inclu\t.ry.
We happen to operate in 8:.1 coumrie~ so
we have R·I sets of regulator<; and every 011e         T h ere are some clear examples o l com·
of them i~ li\tening to what J. as chief ex-        hincd lorce:. in the National Aeronautics
ecutive, say and it's incrc;1-;ingly difficult 10   and Space \dminismuion ston. or the
:.a-. an)thing bold and i1Mam:111eous and           "auon.tl Alliance of Businessmen. or the
not have one of them or ma) be all 84 of            C:om111un1c-;nions atellice Corporation.
them knock the hell out of something ffi)           But real examples of the "productive
shareholde1 s need.                                 partllCt,htp" arc Still relatively fe\\ tO
                                                    rnntcmplate. Pei hap~ t.his is becau'ie the
                                                    rc,peunc 1ole of the public and prnate
Need for Combined Public and                        c;cctor'> arc till to be delineated.
Private Effort

    But there i~ muc.h in the wind today            Defining the Public Interest
'' hich indicates the existence of the
third path which J feel is running paral-             The1c 1s ample room for debate as to
lel to the fitst two. and is now coming-            who sho ul d be responsible for what, as
to a point of intersection :n which some            we ~cc horn the rollowing comments.
major drnngcs and deci-.ion will result.            The fir:o.t j, from Leo Beebe. Vice P1 esi-
This third trend line, al o ol relativelv           dcnt of Phiko-Ford. and known to some
recem \image, ts the belier that our                of vou from the vear he spent in \\ash-
deep nation.ii problems .ire so complex             ing-ton ao; the first J:..xen1cive Director of
that the) t ~q u i1 e a mas~i \e effort b) a        the '\auonal .\lliance of Busine '>men :
combwat1on or public and private t e-
sourcc'>. Rudolph Petel"'ion wa Pre ident              Mv po.,ition rather epitomizes the posi-
o( the Bank of \mcrica in I f}fl, when he           tion the bw.ineo;.i.man i'> in toda~. I sit down
~aid:
                                                    here in m) office and until a minute ago
                                                    J wa breaking m~ he.id tn ing to figure out
   For the hnt time in hi~tory. government          how to rn.1ke a profit and 1 thinl; that is
at all lcveb-national. s1a1e and local-             why we're not more articulate on the public
havc acknO\\ led~cd thev cannot cope uni            scene. Blll, I accept the view 1.bat we've got
laterall} with \Itch romemporary puule'             to ~ct into poliliC\. I think as a p1actical
as air and water poll ution. housing, urban         rnauc1, wc'1e not gonna get it done if we
development. mass Lrnmit and racial un              clou'1 J.\Cl with the politiciani. and rccog·
rest • • •. Government i' not only :.eeking         n i1c 1.h.1t 1.he political process ha'> got Lo
the help and advice of private business but         work for all of us to 6ncl our way I think
also ho~ Lo bring the Cull resource., of            1hc bu,inc"m;.in' got co step up to that,
the private ~ector to bear on what we have          hut b' 1.hc s~1me token the polilician\ got
heret0fore thought of a~ public '>ector prob-       10 reali1c he'' done a Jous) job poinring the
lem~.                                               wa) for u~ and giving u~ some leadership.

                                                                                                123
  The same topic was addressed by                  l. Any partnership between govem-
George Caboc Lodge of the Harvard               menc and busine bould be structured
Business School, who said:                      so as to preserve the vitality and flexibil-
                                                ity of the private sector. Private enter-
   I think that notion that business has a      prise can gee things done, but to do so at
[unction in defining the public interest is     maximum effecth:eness it must be able
a dangerous one, potentially in any case.
                                                to function within a framework. of rec-
It seems to me that it's a principal task of
                                                ognized busine s methods, motivation,
political authority in a democracy to de-
fine public interest and if business' task      and genera I p ractice.
to conform once lhe definition has been           2. Business must be alen and ruthless
made. Now political authorit) can call on       in rooting out any corporate venality
business to advise it and to help it to de-     which might appear in any such combi-
fine the public interest but it seems to me     natio11 of resources.
that that definition must re t with govern-
ment. I think that one of the great diffi-        3. Got.emment must minimize the de-
culties i that government has been T:uher       ~tructivcand paralyzing potential of cor-
confused about its job in this respect and      rupt practices in its ranks, and 1.he heavy
rather purposeless in pursuing it.              deterrent of excessively complex bu-
                                                reaucracie mu t not be allowed to mass
  But there are those who worry about           and become overpowering.
delegating too much authority to Gov-
ernment, such as \\Ti I liam Carey of             4. Business must encourage inter·
Arthur D. Little Inc. and formerly at rhe       change among executi\'es of both sectors,
Bureau of the Budget. He replied:               and mui.t educate shareholders, investors,
                                                and employees that business attempts co
   George. there is much in what you say.       join an attack on national social prob-
but I am a little concerned 1.hat there is an   lems are in reality sound long-term in-
impression 1.ha.t government as a govern-       vescments.
mental institution has a monopoly on de-
fining the public interest. 1 don't really         5. Business must be clear and honest
view it that way. It seems co me that the       as to its capabilities. It will best be able
government tends to be a mirror of many,        to \Vork for solutions to national prob-
many imcrcsu. which have public benefits        lems by u ing its own genius and not
and are formulated all through the y tern.      attempting to be something it really can-
                                                not be. When it talks of putting private
                                                enterprise co work on social problems,
Guiding Principles for Business                 business shouJd demand recognition that
                                                profit motivation is needed. 'Vithout it.
  Whatever I.he meritS of I.he respective
                                                only econd priority effort and initiative
debating points, I think that there are a
                                                will be forthcoming.
number of key principles which will
guide the business approach to this                Any casual reading of the operating
emerging coalition of forces. They              principles just enumerated will show
 hould be recognized by governmental            adequate room for debate and chal-
leadership, and indeed will generate            lenge. But it is precisely because the
considerable support from those who             sta kcs are so big, and the field of maneu-
recognize the need to capitalize on t.he        ver so very cloudy, that the growing
best resources of both the public and           interrelationship between private and
private ectors. The business attitude           public enterpri e wi1l be the most excit-
will include insistence upon the follow-        ing and innovative of any facing the
ing.                                            economic dccisionmakers of this Nation.

124
New Mechanism Needed for Policy and            comes increasing:ly clear that piecemeal
Program Analysis                               and hon-term attempts to solve prob-
                                               lems arc often at cross-purpo es. and
   For the same reason, the ways chose         frequent!~ create new problems that in
dccisionmaker' will operate and che cri-       the long run are worse than those they
teria they bring to bear on their decision~    cried to sohe. \\'e must ha\e svsternatic,
will be subject to Lremendous variation.       well-researc..hed, thoughtful. and objec-
'Ve !.hould move now co at least creale        th e assessments of our progress and our
the supporting elemenl.S which will make       prospec~. On th~ basis we must then
their decisions as well supported by fact      make comparisons of comprehensive
 and clear analyc;is as possible.              policy choice bef01e us.
   The variety and depth o l the problems         T h is need is to create, therefore, a
which the public/ private coa lition must      unique, independent I nstitute devoted
solve is so brreat that many are over-         exclusively to the identification, coordi-
whelmed by the difficully of knowing           11atio11. asu~sment, and communication
how to choose among alcemati\'e solu-          of alternative national goals, prioritie$,
tion once identified. The " public inter-      nnd com/nehemive policies.
est:' being claimed by each adherent i:.
noc really capable o( clear measurement            The new Institute would conduct.
ac present, and our anal tical re ources       'Pon or. coordinate, and integrate both
                                               re~eanh and education on national pol-
are so fractionated that a single overview
                                                ic1el> and alternatives. It would be, in
is wday essentially unavailable.
                                               effeu. a new management information
   Joseph Charyk.. President of Commu-         system for decisionmakers who are con-
nications atcllite Corporation, puts the       cerned with ba ic alternative nacional
n eed this way:                                directions and destinations-whether
                                                these dedsionmnkers are in the White
   Would it lJc appropriate to give consid-     Hou ·e, Congress, State or local P'Overn-
eration to establishing some sort of na·
                                               mem, corporate management, labor,
tiooal program to define goals and objec·
                                               education, voluntary organizations, or in
tives? We're living in a ~ociety where
technology can have all kinds of profound      the general public. Thus it would make
effects. and \Cl there is no real direct1on    no ''master plan ," but would analyze
being mapped oul a~ to where we should         altcmatiH·~ and inform the democratic
try to head l'llo'' thi i 'omething tha1        political proce<..s at all lei.els.
requires the talents not only of people in
                                                  The In~titulc would duplicate no exi~t­
government. in industrv. in labor and so
                                               in~  re earch on specialiLed economic.
on, but in education and preuv much all
walks of life. .\nd would it be practical to   soda!. polirical , or technological prob-
thank of a national program under which        le1m. Instead, ,,herever possible. it will
business could contribute hy makiog peo-       make full u e of available studies and
ple available for a ceri:1in period of time.   assessments, and draw upon existing re-
removi ng them fro m their normal daily        search resources in order to build more
routine, pennilting them LO reflect and        comprehensive and long-term frame-
cogitate.                                      works. IL will identify gaps in existing
                                                lUdies and devote a significant share of
  More than ever, Americans need im-
                                               its budget to commissioning nei,· work
proved analyses of both lhe immediate
                                               by existing inscicucions as needed.
and the long-te1 m con eq uences of a II
major policies and programs. in both the         An essential feature of the Institute
public and the p1 hace sectors. It be-         would be the invol,ement of key deca-

                                                                                     125
and $5 million in each year thereafter.           tried in the past with little remits, it's damn
A funding program uf 5 years, or about            well worth u-ying again now.
$20 million, shonld be assured to make               Listening to Bill \Vh yte's comments
possible the desired staffing and prepara-        makes me want to respond as a Pentagon
tion of some long-term projects at the            master sergeant responded i n Ma1·ch of
outset. The Institute should be evalu-            1968. Secretary Mc~amara had just
ated after 5 years, :ind if the results do        been given a retirement parade on the
noc justif7 continuation, the Institute           Pentagon grounds and President John-
should be phased out rather than endure           son had come to review the troo ps. As he
as ''just one more research center."              did so, rain fell in buckets-and the
Funding should come from business,                President had no raincoa t. As President
Government, foundations, labor, State
                                                  Johnso n spoke to the crowd, the loud-
and local governments, ::ind priva te citi-       speaker system went out. The Presiden-
zens. No one sector should gain, through          tial party went to Secretary M cNamara's
budget impact, undue influence.                   office. and e n route the elevalor got stuck
                                                  between the floors.

Conclusion                                           The sergeant pushed buttons and
                                                  flicked swilches. and began LO sweat pro-
   It is my belief that the incersection of       fusely. At that m oment a voice came
the three paths 1 have described is               through the intercom from outside and
bringing, in this decade, an overr~ding           asked, " Ha,·e you got a bi~ load aboard?"
demand for new definitions of "nauonal            The serlJ'eam   looked to his lefc and saw
                                                           0
interest.'' To serve that demand we must          the Secre tary of Defense. To his right
be far better prepared to measure and             he saw the President of the United
calculate the costs and the benefits of the       States. H e a nswered, in a very quaking
alternative " n ational interest" decisions       voice, "AFFIR1HATIVE, Buddy!"
available to us.
                                                    To Ilill Whyte, when he says. ''I t's
   William Whyte, a Washingcon-based              damn well worth trying again now," I
Vice President of thct U .. Steel Corpora-        say, "A ffinnrilirie."
tion, summed it up when he said:
   Thinking bC1ck 10 the Eisenhower C_orn-                         Discussion
mission on Goals, I remember certamly
zero results. Superb people participated in          As a former oil compa11y o[/icial and
it- leading thinkers, political men and           as Sec1etary of Commerce, would you
others of our times. But I abo think there\       care to co111111t:nl 011 a recent .1latement
a factor here that we.: can't <li~miss and that
                                                  by Secretary of Gonmun cc 1"1 ~w~ice
is the climate o( public opinion ac any
given time. And it !ilrikes me that today
                                                  Stans in whirh he supported the lnulding
there's more of Cl dcm:mcl and an unrest,         of a j11'peli11e throngh Alaska /01· bringing
more uncertainly, more yearning. almost,          oil from the 1101th slope? In other words,
if J ca n use the word, throughout the so-        do you agree with the building of the
ciety for some goals, for some directions, to     /Jipeline a11d do you agree that proper
try to su·aighten the disorder out and put        c.onsidnation has bee11 given by both
it together as 1 expressed it a little while      /Jusine.)S and Governrnenl!
ago. And I think Lhal this climate is a very
important factor. The qllestion is, are we           Mr. Trowliridge: Basica lly, it's clear
going to take adva ntage of it? Are we            that we have several things to consider.
going to let it run away from us? From            You've 0uot the trade.off, if indeed there
that standpoint. I think even though we           is one, between the economy of Alaska

                                                                                             12i
 ionmakcr.. :ind cmzens from all walks          J think we may be getting to the point
of life in many kinds of give-and-t.aJ...e      where it is very neces ary-the creation of
discussions of what is emailed in (und::i-      5ome new kind of bridging instiLution in
mental policy alternaci,·es. By putting         which all parLs in the society will have a
                                                \'Oice in which institution ,,;u have ac-
stress on interaction and communication
                                                countability. That's the critical question
the Institute can avoid adding Lo Lhe
alreadv exce sh·e number of reseat ch                inc.e the Institute would be deigned
and comm1s ion reporlS which are rarely         to serve as an integrative element in an
read and may never be acted upon.               ex isting nationwide poljcy research net-
  Thu'i. prim:i1 ily, the Institute would       work, it would comribme to the overall
                                                prod11ct in three way -by conducting
analyze and clarify major alternative
                                                a nal yses which other-wise would not find
courses of action open to the Nation. IL
would a ..se\'>, a nal yze. and make explicit   a <iponso1 or a research team elsewhere,
                                                by intcg1ating results from other re-
Lhe bases for choice among these-coses,
benefit'i. c.radeoffs, priorities. interac-     search £acilities into more c.:om prehen-
uons. ron'>i,tcnC\, feasibility of imple-       ,ive rnthc es. and bv stimulating addi-
mentation. and hJ...elihood of success.         t1ona I and needed research.

    pecial attention ''ould be given to            The Board of Trustees, the pol icy-
the informauon networks linking the             maki ng bodv. would consist of belween
cenLe1 '' ith other re carch and educa-         15 and 30 members. It should probably
uonal acthHie, in order to (1) obtain           include reprcsentath·es of the admini~­
the bc't a'<11lable talent. lull or part-       tration. majority and minority represen-
Lime, w work, a t the lnst.iLUte or eh.c-       calion fiom both H ouse~ of Congres, the
wherc. on the Nation' most perplexing           Nalional cicnce Foundation. and per-
and crucial c1uestions, (2) achie\'e objec-     haps one or more Governors and ~tayors.
tivity through deliberately promoting           The majority representation should be
examinadon of these quest.ions Crom             of pri va le sector leadership to keep oper-
diverse points of view, including some          a cion · of the Institute from being n .. er-
strongly opposed to the mainstream              iiddc:n by excessively political considera-
opinion. and (3) majncain l·redibility          tions.
with di,erse elements of Lhe c;ociety
                                                    Joint invohement of public. prh·ate.
 through open analy,is of conflicting
                                                and \Oluntary sectors would be achieved
view'\.                                         t.hrou~h a mechanism called an Advi ..ory
  .~ \\'illiam Carey of Arthur D. Little        ,\ ssemhly which would pro' ide a broad
lnc. adv<xatcc;·                                repre cntational base of advisers and re-
                                                \lt'W Juthorities. It should undertake
   I'm not reall} advocaung an elitist kind
                                                di'<:ll''iion and criticism of the Institute
0£ group to deal with the question of na-
                                                and its p1oducts to insure objectivit) and
tional objewvci. and goals. ll can't be
elitist became that will not be trusted any     cred1hility. It could have up to 50 mem-
more than the relationship of business and      bers elected for 3 years and perhaps in-
govern ment is mutualJy trusted either. I       clude '.W additional members who would
Lhink there have to be third par1ies. J think   be elected by the Advisory Assembly
that there have 10 be bridging instituriom.     ic elf.
J think the function of Lhe business com-
muniL} here i Lo help create them, to sup·        1t is e timated that the minimum oper-
pon the ones LhaL do cxi~t. 1 think that it     ating budget necessary to do a good job
means the investment of resource in these       '~ould be approximacely $2 million in
bridgin~ in..,tituuons and, if nece. 3.T)-and   the fine )Car, 3 million in the second,

 126
and what such a project could mean to         ordered something in the neighborhood
it, and we have the question of potential     of $100 mill ion worth o[ pipes and other
damage to the ecology of Alaska.              equipment and thought that they could
                                              install it immediately. All o[ that equip·
   We know the dimension of that 6rst
                                              ment sits there, uninstalled, and I really
problem in thac the Go\•ernor and just
                                              don't know when the go-ahead will be
about everybody else have cited an un-
                                              given.
employment level of about 12 percent in
the State. There is a tremendous hesi-           J gaLher that most of the problems
tancy on the pan of the business commu-       which have blocked the pipeline either
nity- investors--everyone to cake any         have been solved technically or have
kind of forward step until they get the       been solved to the satisfaction of those
impetus of this pipeline project. There's     who are looking particularly at Lhe eco-
a real economic doldrum there-real            logical impact. Assuming that to be the
economic problems of jobs, of earnings,       case, I would strongly favor proceeding
and o( the future of the tate. Not too        with the projecL I think that we are
many people outh of Alaska have been          looking at a very. very serious energy
as worried about that part of the prob·       shortage in chis country, which the Alas-
lem as have the Governor and the others       kan north slope oil deposits would be
in Alaska, naturally.                         extremely important in helping to alle·
                                              viatc. I ran only guess that it's a matter
  The second part of the problem i
                                              of 3 or 6 months before the decision is
ecological. 1 have not been there, and I
                                              taken , and I think that the 3 01 4 years
don't know precisely what progTess has
                                              chat this has been under study have pro-
been made, but I have talked with peo-
                                              ' ided ;i great deal of time for the tech-
ple in the Atlantic Richfield Oil Com-
                                              nical and engineering factors to be
pany and with people in the Standard
                                              worked out; and I think we ought to get
Oi l Company o( New Jersey about the
                                              on with the process.
technical progress made in the last 2 or
3 years. They have dealt with problems            Do yott foresee the advent of a 4-day
such as the damage to the permafrost          work. week in the near future? If so> how
which might come from crossing the            do you expect that this would affect pro-
permafrost wilh a heated-oil pipeline,        rf uctivity of the national ecotiomy?
and have developed an ability techni-
cally to move that product at tremen-            Mr. Trowbridge: I think thac there are
dously cold temperatures and tO build         about 300 companies at the moment that
the structures to make this possible.         have gone to the 4-day work week, some
                                              of them till experimentally. A 4-day
   I think that most of those engineering     work week is, basically. a 40-hour week
questions have been solved, from what         with I 0 hours at a clip. It is highly suc-
I'm told, in a way which will have mini-      cessful for certain types of operations. I
mal, and indeed some say no. damage to        gather that the majority of the compan-
the ecology. The law says, as I under-        ies that have experimented and found it
 tand it, that this really has to be proven   useful have been relatively small manu-
Lo the satisfaction of the governmental       facturing companies with fairly .central-
authoriLies before the final permit can       ized productive facilities. How far it ·w ill
be given.                                     spread, I don't know.
  The oil companies obviously made a            Chrysler Corporation and the United
very serious mistake when, immediately        Auto \\'orkers have announced that they
after finding oil in the north slope, Lhey    are Conning a joint study ceam to see

128
  whether it's applicable to an industry as     the central city, to provide jobs for it.
  large as the automotive industry. Those       The Conferen ce Board did a very inten-
  people I've talk.ed with in Detroit are       sive study of this problem. We con-
. ·'Doubting Thomases." They wonder             ducted our study over about 2 yean.,
  whether there's any way of making it          during which we spoke co over 300 com-
  work there. Frankly. I don't see it be-       panies that had. at one point or another,
  coming the pattern for the majority o(        attempted programs of this kind. We
  American industry in the next 5 or 10         worked up a series of 30 very detailed
  years. I think that there will be a grow-     case studies, and our findings al·e a
  ing small segment that will find many         mixed bag.
  advantages from it, but I think that it's
  probably going to be Lhe exception               The factors o f the general economy
  rather than the rule for 5 to 10 years at     have a great deal to do with it. I recall
  least.                                        that in 1967 and 196 we saw a very real
                                                and high-pitched level of interest and
   In terms of its impact on productivity.      dedication of many. many business peo-
 the 4-day week obviously leaves a great        ple in moving to help ghetto residents
 dea l more leisure time. To the exten t        and minority groups in the central cities
 that this leisure time is occupied in lei-     to develop these companies, to become
 sure, fine. To the extenr that it frees peo-   management personnel, and to develop
 ple for second jobs, we are going to have      their skills. There was a certain amount
 some important trade-offs when we still        of euphoria. I think, at that point and a
 have a sizable unemployment problem.           somewhat naive attitude of "let's get in
 If it releases a lot of high-skilled persons   there and solve the problem" without
 who will then move on a supplementary          recognizing all dimensions of the prob-
 basis into a second job, they might be         lem. Then in 1969 and 1970 came the
 bumping or keeping out some people of          economic downturn, indeed a recession.
 lesser skills.                                 Direct investment in the form of a com-
    With respect to the productivity im-        pany investing in a p lant in the central
 pact in the companies that have experi-        city almost came co a halt in 1969.
 mented with the 4-day, 40-hour week,              The trend for company action then
 the majority of reports that we get indi-      took the form of working as an advisory
 cate that it has increased productivity,       group, or aiding in purchasing skills, or
 at lease at the outset. The employees find     developing supervisory training. This
 it in many ways a happier combination          developed in 1967 and l 968 and is still
 of home life and factory or office life to     going on a L a fair ly level pace. Govern-
 have 3 days off instead of two, and there-     ment aid, so far, has been largely in the
 fore they work at a better clip in thaL        manpower training area, the Labor De-
 40-hour period.                                partment's Mai;ipower Administration
   Whal can the Government do to en-            programs, and the Small Business Ad-
 courage banks and business lo partici-         ministration's ( BA) loan and loan
 pate more in the development of minor-         guarantee programs and small business
                                                set-aside contract authority. SBA, I
 ity   enterprise~
                                                think. has been a little bit slow in this
   Mr. Trowbridge: I think you've got           regard. Bue all of those programs have
 several parts to that problem. The first is    been helpful at one point or another.
 the attempt by private industry to build
 a locally owned or at leilst target a             I don't think that you can call the
 locally owned manufacturing racility in        efforts to date a great success: and in-

                                                                                      129
deed Lhere are a number of failures.            ing imo this relatively new and affluent
 ome ol those failures occurred becau e         type o[ housing (even though at low
expectations were too high al the begin-        rnst).
nin~ and didn'L jibe with realicv. \l ·o
                                                   There's an organization there called
 ome of them occurred because the econ-
                                                LIP.\CA, which is the Upper Park. Ave-
omy jw1t brought alon~ coo man} 1esist-
                                                nue Community Association. It has a
ance factors. For ins lance, we saw a
                                                couple o( women working for it who arc
heavy investment by the aerospact• in-
                                                ab-.olute mover; of mountain . They are
dustry in nearby minoricv-owned busi-
                                                marvelous people and they'\'e generated
nesses, and the aer~pace industry as
                                                tn·mendous rommunity support. The
you know hac; taken a tumbling in this
                                                bani,. has come in with the funding and
pa rt ic u la r recession.
                                                lht     tate has cooperated with some
  Bu iness has not been a:. ready a cus-        g uar:rntees. The bank gets the building
tomer or consumer ol the products of            built, ells it to the State, the tale rent
the't<: plan1s a-; was origin;illy expected.    it at a romparatively low le\'el. a nd the
There have been some ·erious mistakes           comm11niLy has by its support and its
whc1e (Ornpanies ha\'e rushed into hir-         tena nt preparation program!> made it a
ing people and getting a plant going            verv. ve1 v exdting success. That kind of
~itho uc k.no\\ ing whal thev were going        program has all the elements of good
to do \\ah the produc l once it wa made         progress fo1 the future. I know that Lhe
-not \·ery much marl-.et planning. On           Ln•'>tee' of the bank look at it as not only
1he uthe1 hand, the '"hole aspen of             c;omcthing they want to do. but are terri-
 ound imegration into lhe communit)' of         hlv proud of ;is far as results are con-
the p1oject has worked pretty well. Most        cerned.
of the companies that have attemplcd
th<!!>e projects have gone to the commu-           ill your statement you pro/JOsed estab-
nities, have cons11lted with them. nnd          lishi11g a new institnlion coni/;rised of
have foun<l that, given prim consulta-          n:j)rese11tatives of all sectors of society lo
tion, the welcome mat wac; a genuine            conduct lo11g-ra11ge analysis of alternate
one. I thin1' chat Lhe major problem was        ~oals for govrrnmental program~. rnce
that of wo man\ high and unrealistic            nny ruom1r1tmdat1ons would affect
expeci.at.iom in the beginning. The net         changes in apprnpriatiom. wit) (Otddn'I
result, " )ear~ later. is a number of suc-      u rangrc.ssional committee or 11nivenity
ce'>'>l'' but with a number of prett\i bad      1r.\cm·rl1 group accomplish the .~ame
failure~~ well.                                 thing'

   In term of the bank. . my own expo·             Mr. Trowbrid~e: It seems to me Lhat
sure to lhat effort is a limited one. I h;ip-   there a1 c two major problems. One. you
pened w be a director of a bank. that's         don't want LO have the organi1.ation ·tart
worldng in New York on housing reha·            out \\ ich an excessively political orient.'l-
bilitation, particular!) in Harlem. Ir's a      tion in Lhat tho e who may be of opposite
very exciting program. The core of 1he          poliucal persuasion wouldn't give it
success has heen a joint effort, involving      much c1·edence. econdly, if you tie in
some tremendously able people in the            entirely to the executive branch of the
communitv who were willing co work. on          Federal Government, you are forced to
getting land cleared, ~etting tenants           deal in 4-vear timespans.
selected. getting them into training               What you renlly want co provide jo,
classes, and indoctrinating tenants who         something that has the prospect of con·
moved F1om a horriblv substandard hous-         tinuit 'and the prospect of c.Tedibi lit)' in

130
all sectors of ociery. And that's why it         The Economic Forum of the Confe1-
seems to me sensible to think of a multi-      ence Board-about 12 b usiness econo-
supported institution involving business.      mists-had projected the fourth quarter
Government, foundation, ci tizens, Labor,      Gross Nation a l Product a l a rate of
etc. W e need an institution which would       about 1,070 before August 15th. The e
use our existing t e o urces. such as exist-   economists were polled as to their im-
ing research organii.ations. and which         pan estimate (post Nixon Economic
would try to pull divergent work to-           Plan) for the fo urth quarter of 1971, and
g·ether for a presentation to those who        their consensus figure-and it was no t a
have to make the decisions regarding           unanimous o ne-was about 1.081. In
cost and the benefits of the alternatives.     other words one trillion a nd 81 billion
                                               GNP at an annua l rate (in the fourth
  What a.re yo11r views on tli e />rnposal
                                               quarter), with a total 1972 GNP estimate
submitted by th e De/1art111e11 l of Com-
                                               for the year at 1, 150 (one trillio n, 150
merce for conversion lo /,he metric sys-
                                               billion) more or less, contrasted ·with an
tem over a I 0-year period!
                                               eslimated I.050 GNP (one tri llion , 50
  Mr. Trowbridge: I think it's necessar y,     billion) in the current year.
and I th ink that it's going to come. '\i\fe
                                                  There's still a certain amount of hesi-
are the only major exception to a world-
                                               tancy in the business community to be-
wide pattern o f metric measurement. I
think that it will come a lot easier than      lieve these relatively q uite bullish
most peo ple feel. There's recognition in      figures. The people I talk with. includ-
                                               ing many chief execu tive officers, say
the business community that we're be-
                                               "that's all very wel l but I'm waiting to
hind now and we might as wel I get on
                                               see what happens to Phase Two and to
the bandwagon . I t's going to have its
                                               see wh at o ther g uys in my industry do."
rough edges in implementation across a
country as large as ours; but the British         W e are operating with an underutili-
changed from sterling to the decimal           zation of productive capacity which is
currency, and iL didn't seem to ruin their     quile serious; n percent m or e OT less.
economy. I think that we can do this           W e're o perating under a series of un-
and I wou Id very much 1ike to see it go       knowns for the near and distant future
a11ead full steam.                             as far as governmental polic}' goes.
  Will t he economy come out of the dol-       There's a "wait and see" attitude still in
drums in lite next 6 to 12 months'?            existence eve n t h ough there w~ a no-
                                               ticeable rebound in con fidence and self
  Mr. Trowb1·idge: Well. the cloudy            assurance af tcr the President's August
crystal ball department is active these        15th message. What was judged to be a
days. The economists who ha ve been            ,·acuum was filled by a decision. There
consulting with us a l the Conference          was a feeling that leadersh ip had been
Board-most of whom are business econ-          exercised. tlun ;i plan had been pro-
omists, bank economists, and such-do           posed. and that we cou ld m ove to the
see an acceleration of the recovery pace,      next stage. The next stage is still unde-
which, they ay, is already under way. I        fined, and I know that rhere are Iinger·
think that you've got a leadtime factor        ing q uestions and do ubt~ as a result.
which is hard to gauge beca use the eco-
nomir indicators show you o ne thing but          Wilh on ly 73 perce111 of production
the confidence Cactor doesn't show you         cn/Jacity ot;erating riow, what effect do
the same thing among business leader-          you think the 7-percent investment tax
ship.                                          credit will have?

                                                                                     13 1
   Mr. T1·owbridge: The 7-percent in-          in the Commerce Department. This pro-
vestment tax credit would, as the House        gram was based on a very simple theory;
committee has now worked it out, apply         that there was such a tremendous rural
to everything delivered since April 1 of       migration of population to big cities be-
this year and presumably would be per-         cause life down on the farm and in the
manent. One of the problems of that par-       small villages was dull and rather dreary.
ticular policy is that it's been in and om     Many people came to the cities in search
again like a Yo-Yo. When I was here in         of jobs, or to join their families, or to
Washington, Secretary of Commerce              find some sort of excitement that they
Connor and Secretary of the Treasury           had not had previously.
Fowler and others said that it should be
dropped to slow down inflation, but then          The theory behind the Economic De-
it was put back in again, taken out again,     velopment Administration was to set up
and so forth . I hope that, whatever hap-      a series of alternative growth centers out-
pens, this time it's judged to be a perma-     side the big cities. Governmental assist-
nent factor so that people can plan on it.     ance would be provided through
                                               industrial park areas and intrastructure
   There's a time lag in the impact of         investments, such as systems of roads
that particular policy because there           and water, sewerage, and power and the
aren't that many shelf items which people      addition of cultural, educational, and
can go and buy and put to work and get         medical facilities. All of these were to
people in the jobs to operate. You don't       provide towns and small cities of 50,000
just go out and buy a Boeing 747, or a         to 200,000 population with enough at-
major power plant, or a lot of rolling         tractiveness so that instead of heading
rock for railroads which can be available      for the megalopolis, a person would be
in a month or two. There's a certain           tempted to head for the alternatives.
amount of crankup time needed. The             Jobs would be available for these people
immediate impact obviously would be to         coming from the farms and the small vil-
improve the bottom line of many com-           lage communities.
panies for the year 197 l. But, I think,
the long-term impact would be benefi-             I can only assume that they would still
cial, and it would very much go toward         be leaving them as great mechanization
restoring the confidence factor, which         took over the agricultural sector, and as
is very hard to define but very major.         television brought the so-called "joys of
By and large I think it's a good move.         city living" to their knowledge. The
                                               availability of an alternative would lead
  What can the Government do to en-            the rural population to go instead to
courage industry to expand in economi-         these areas where growth through gov-
cally distressed rural areas to provide        ernmental assistance and through indus-
employment opportunities for the unem-         trial development could provide the nec-
ployed?                                        essary support for them. I think that
   Mr. T rowbridge: I think that, frankly,     makes a lot of sense. It's probably going
the program that has the greatest              on at a slow pace. Many of you probably
amount of logic to it, but probably the        are up to date on EDA's progress far
least amount of results so far, is the orig-   more than I am, but the concept still
inally conceived Economic Develop-             provides a logical alternative to greater
ment Administration (EDA) program              central urbanization.




132
                    Keeping Pace


   The 67th Congress, which enacted Lhc Budget and Ac-
couming ACL of 1921, deserYes a vote of thank' for its wis-
dom and foresighl in recognicing the need for, and in
ca eating. the General Accounting Office and the Office of
the Complroller General.
   Over the years since ei;Lablisbmenl of the General Ac-
counting Office, we have added new responsibilitie~ to that
Office, and have given it additional authority LO carry them
out, through enactment of such legislation as the Govern-
ment Corporation Conrrol Act of 1945, the Accounling and
 \uditing Act of 1950, and the Legislative Reorganizalion
Act of 1970, to mention a {ew. The General Accounting
Office ha.s kept pace with the challenge of the ina·eased
re~pomibilitics through internal reorganinuions and the
expansion and upgrading of it!> professional staff.


                              Congressman F. Edward Hebert
                              Chairman, l lou'e Armed Services
                                Commiuee
                              Cori,,.rrr..1~1 0 ,rn/   Rrr orrl

                              June 9, 1971




                                                                  133
                                               H . M. Boettinger
                                               Direclor of Management
                                               Sciences, American Telephone
                                               and Telegraph Company




     Of all the leaders in the field of management sciences, one name always
comrs to the forefront, that of H. M. Boettinger. As Director of Management
Sciences for the American Telephone and Telegraph Company in New York,
he directs one of the new and vital functions which lend.s support to the man-
agers of one of the world's most complex organizations and certainly one of
the Nation's most s11cccssful enterprises.
     His career with the Bell System began in 1948 after graduation from Johns
Hopkin.r University with a degree in engineering. He h<LS served with various
divisions of the Bell System in Mary•land, New York, and Michigan. During
this period he has taken graduate work in ph)'sics at the University of Michigan
and in economics at New York University.
    He has had a very productive writing career inclttding numerous magazine
and professional journal articles. His books include: Moving Mountains, or the
Art and Craft of Letting Others See Things Your \Vay and Some Aspects of
Management and Technology, British Institute of 1'\Janagement Lectures, June
1970.
    H e is n member of the Planning Council of the American Management
Assoriation, the Advisory Council of the American Foundation for Manage-
ment Re.rt'arch, the Institute of Electrical and Electronic Engineers, and the
New Y ork University Advisory Committee on Educational Policy, among others.




134
CAO Auditorium
October 7, 1971




What Is New in Management Sciences


As tlw Geneml 11rrmmting Office conside1s its sub.1tantwl and {{l'OWing
manogement revil'w and .1'y1te111.1 developmn1 t n~1po11sil>ilitlf .1, thl' pos.\iUI<'
contriu11li1m of mm1agcm1,11/ sciences berom1•s more• and morr• f/1f'1111ingf11/ to
GAO .1/nfj 1111·111!Jt•n. Proj1f'r 11pplicntio11 of mn·1wgr•111l'11 t 1<fr11rr. tr•rhniq11<'~
has p;reat pott·11 lial for tlu• GAO in virw of its broad 1/a/11/0111 mandate to
reTJzr•w a11d mialv:.1· tlw 1r.11Jlt1 of federal progrmnl. fifr. Boelltn[!.n. onr of
the t1bk1t pro/m1w11/1 of flit' {wld "/ marwgrmo1/ .ff1t'11rt'1, m"kn th1· trllmg
point thnt w1th<mt iclea.1, lendns art: mert•I)• carctak1•1s and u•1tho11L " leader
to rliampum thrm, 1dras an: 110 more llum i11tr.ll1·rt11fll tvv.1. Tlt11.1, a kt•v role
for rn11nagemn11 ~rirnr1'. a11rl i/\ greatest opport1111itv. ;, 111 111• a .10111n• and
fond point of ult•fl1 for lead~n to 1m'.




Introduction                                               p u blic cl u tic, in later life." ' Ve are
   Esta b lishm<:n t o l the O ffice of th e               goat herccl here Lo celeb rate a m ilestone in
Com p t roller C c:nera l con notes ;nnue-                 t he hi'> Lory o l C:mern rnc nt m:111agem e 11 t
11es!I o f a d eep i1111igln imo the na w re ol            a11cl its q 11<.•st fo r efficiency. '' i\fa n ag-e
hu man affa ir,. ,\, .t deci,iun leaYes t he               nien t ." snys Sci van- chreilw t . " is the art
a b, tra< l 1ea li11 o l w01·d, a nd e nters th e          n l arts, because it i~ the organizer o f
h ar~h wm·ld o l' n·nli ties, real ization or t he
                                                           ta lem." .111d the 111a nageme n t svstems of
de( ision's o b 1t·c l tve requi res comin 11al            g rcJte\t srnpe arc fo u nd in t he rea lm or
mu kin~ o l the <leplorn1em of the men                     \40Yernml'lll.
and resourct·.., allocned 10 the proe;ram                        0 1 \\hat doe., mana~ement cons1 ~t?
uf i111 p1uH·111t·r1L.     I he c_, \ 0   · t lo,,es che   Orw . tll \\H.'I, ba~cd on tire dvnan1ic., of
loop'' bl· tween 1 he intent of r lte people               Lire pr rn c--., m i ~h t be:
(a' artiuil,1tecl by Con i.,11 es~) and the
an11::i l re'11lt~ .1chi<>ved h, t h<> executiH~                    tic:< lion of a prelerred course
arm,. Tt " an .11H 1rnt nllin· who-;e f unt                      • ~ orm u 1:11 ion of p laru and methods
tion is described l>y the name itsel l:                          • Orga11i1.ttion of      t he   ht1man     re-
"Com ptrnlln" dcll\C., lrnm the ·co11 n-                           soun e'> req uired
tcr-10 ll" kept in med iev;:il ti m es on whid1
                                                                   D a il y atten tion to d eviatio ns fi om
wer e wn tte11 the reso urces cl islJu rsed in
                                                                   t he c o m se a nd a pprn isa l of unex-
operati ng a fe ud al m anor. so tha t they
                                                                   pl'ctecl c.levelopm e nts
cou ld be tral kcd and "accounted" lor on
a dai h· basis.                                                    C:orrec t inn lo ree!'>ta bl ish a nd ma in-
                                                                   tai n cnur1.e
    John L ocke in h is essay on education
(169~)   ad\ i'e': "tra i ni n.~ in anomptes is                  Exploration of an y one o[ lhese tasks
neces!l.ll \. fm Jll\ g-enlleman aspiring L<>              111   dt'pth could    <Kn1pv    a lifetime. fhj,

                                                                                                           ]~5

 <Ill   4::7 • I   •   I
paper will nol attempl chat. but instead          Progress is hard to achieve, but
will assess the relevance to the e tasks of    enough is known oC the behavior of such
that comparatively new adjunct to man-         sy tern to uggest that intuitive imer-
agement known as the management                vemions to correct symptoms of disequi-
sciences.                                      1ibrium are nearly always counterpro-
                                               ducuve. This explains many of the
    ''\'hat are they? The management sci-
                                               failures and di appointments of well-in-
ence consi t of many traditional disci-
                                               cencioned leaders. But constructive work
plines organized in a special way so as
                                               demands I.hat management science pro-
co be applied directly to managerial con-      vide the nece sary analytical framework3
cerns. In our management sciences orga-        co help guide I.be will, pas.5ion. and intui-
nization you will find experts in the
                                               Lion of managers who must cope with
fo llowing disciplines: statistics, physical
                                               those symptoms of instability which now
sciences, engineering, cost analysis, com-
                                               plague mos t activity in our world. To do
puter sciences, accoun ting, mathematics,
                                               this requires realization of what I believe
sociology, psychology. biology, econom-
                                               to be the most exciting development in
ics, and political science. Why? Simply
                                               management science: a new perception
because the diversity and novelty o( cur-
                                               of its role and interactions with decision-
rent management questions demand a
                                               makers. and methods to allow that role
new depth and broadened scope of anal-
                                               to be played with enhanced effectivene s
}' is which the e disciplines can contrib-
                                               of both.
ute. Management Science i an applied
science, stri\ ing to add more dimensions
of insighL to aid the manager who must         Command, Leadership, and
make those choices characterized by            Intelligence
condicion of uncertainty which we call
decisions.                                        Succe sful leaders throughout hislOry
   Now what is new in management sci-          have carried out their tasks by combin-
ence? We could, of course. discuss new         ing two aspects of man: thought and ac-
techniques, but most practitioners arc         tion. The results of their command of
 well up on tho e and men of affairs do        other appear as interventions, but ante-
                                               cedent pCTsonaJ cerebration has always
 not find rhac type of novelty congenial.
or closer interest is the emergence of         made u'>e of mtelligenct: to sugge l and
new concepts. chief of which is the grow-      refine their strategic and tactical concep-
ing realization both in management and         rion . \to e used Joshua and Caleb to
in management science: that real prog-         guide hi., march to Canaan: Alexander.
re lies in understanding the nature of         Hannib.11, and Mithridates relied on ad-
systems rather than in further elabora-        vance intelligence far more than their
                                               l e~ successful contemporaries: and      1r
tion of our knowledge of components of
these systems. When a large number of          Franci · Wal ingham's information erv-
variables interact and mutually infl uence     icc wen~ of inestimable value in the
one another, the "whole becomes more            pol icy development of Elizabeth 1.
than t11e sum of the parts." This insight          The worth of foreknowledge and anal
is a old as Gestalt psychology. but how        )'Sis accounts for the scouting function,
to manage such interactive systems has         whkh exists because a sensible com-
become the central problem for leaders         mander wants to digest, use, and ap-
in every area of modern life, in educa-        prai ·e all relevant facts before he irre-
tion, churches, business, medicine. social     vocably commits the resources in his
welfare, ecology, and government.              care by i'> uing commands of action.

136
Modern management is n o exception,           that the management scientist is more
and while their concerns are of more          interested in displaying his own exper-
limited scope, the complex.ity of inter-      tise than he is in bringing expert he! p
actions often transcends the power oE         co the manager with a specific problem.
simple analysis. This fact constitutes the
                                                 The engines of history are leaders plus
latent demand Cor management science;
                                              ideas. Without ideas, leaders are merely
the body of specialized disciplines con-
                                              caretakers; without a leader to champion
stitutes the potential supply.
                                              them, ideas are no more than intellec-
   Many current management science            tual toys. Management science can be-
practi cioners express disappointment at      come a source and focal point of ideas
the gap between their original expecta-       for leaders to use. Perception of this key
tions and their accomplishments. T o me,      role constit utes the newest and greatest
this disappointment has two roots: FirstJ     opportunity to management science. The
the success of management science in at-      impact of external forces, changing social
tacking military problems was mislead-        goals, more stringent public interest cri-
ing in that such problems have fewer          teria, and advancing technologies have
dimensions, data on variables involved        created an extraordinary management
are usually available, and the measures       hunger for new ideas, but it will be fed
of improvement are clear and agreed on        only when management scientists de-
by the commanders who assign the prob-        velop new forms of d iscourse with orga-
lem in the first place. Second. those who     nizations and their leaders. Since ideas
undertake to use these techniques in non-     inject power into affairs and alter power
military management have not realized.        relations, staff specialisrs must become
to the extent necessary, that their poten-    sensitive co methods usual to politics,
tial contribution is a function of how        where tradeoffs between various and
well they link their efforts tO the central   equa II y good courses of action in complex
concerns of top management.                   situations dictate the actual course em-
  They have often produced solutions in       braced by a particular leader at a partic-
search of problems, a procedure suitable      lar time.
for securing eminence in technical publi-
cation, but not for influencing policy        The " Futures" of an Organization
decisions involving the entire array of
dimensions o f corporate responsibility.          Persons in an organization often speak
Such behavior does aot match supply and       oE its future. This is sometimes too sim-
demand in management science and is           ple a view because any institlltion or
akin to inventors who develop an inge-        organization has many d ifferent futures.
nious device in ignorance of the market       hs possible futures are limited only by
for its use. Success then becomes a ran-      artisti<.: imagination, but its probable fu.
dom, chancy business of discovered rele-      tures are subject to scientific, or at least
vance rather than a directed effort where     rational, analyses of strengths, weak-
relevance is planned from the start.          nesses, skills, experience, markets, and
                                              technology. However, its preferable fu.
   A side effect of the failures is often
                                              ture is a matter of politics, internal and
found in the language barrier involved
                                              external, and represents the resolution
when specialists refuse, from various mo-
                                              of diverse personalities and the system
tives, to translate their vocabularies into
                                              of values they hold.
expressions and concepts congenial to
managers. This sort of pedantry is inex-        In periods of relative tranquility, man-
cusable to a manager, and a sign to him       agements often pose this question:

                                                                                      137
"\Yhat u our business?" This is anually             "Don't call me sir, sonny." the ·c1
3n easy question to answer becau'c il            gcant shot bac I... (which is a viewpoint in
requires onlv the skills of a reporter.          itself).
The more difficul l que.;Lion is: .., \'hat
                                                     "Due co the rotary motion of the
should our busines~ /1aome)'" becau~e            human arm," Kieffer began, ·'it is ne< t••;.
that is the only lJusine-.s the manager c.1n     ,:try w bring the maximum shearing
inOuence. Every healthy organiz:uion             force at an angle less than the perpend1c.-
-;hould ha\C~ th.n que-.tion comtant]\ be·       u l.11 ·      ." .\.nd on he wen t in an in·
fore it. and a blendin?; of management           t redihlv ernciite lecture that included
art ;rncl srie11<e is required for sensible      t:vcry1 h.i ng From Saracen tactics and the.:
answers. Like technology and sciem e,            mc1a ll 11rgira l tech n iques of Toledo lo
on e inf111crn.cs th e other both by SC'tling    tlic rise of Western civilization it.elf. I k
houndarie-. 10 what is pns'iible and by ar -     hdcl u all -;pellbound-that i~. all b u t
q uaillling each ot her ol new possibili t ies   the old 'ergeant who kept spitting to·
to en\argt• 1he bo11ndaries of previous          b.1cc o inco Lhe d11sc Lhroughout tile whole
thought. When done \\ell. che interaction        oration.
com hi tic'> the imigJu., nl analysis \nth the
holistic 'iewpomts of experience. \ly               \., 1'.ieffer <one: I uded and stepped had•
penonal e\.pcriem e d11ring: \\'orlci \\·ar      into the ranks, I t.hought I almo t c;aw .1
 I I ma) illustrate ''hac happeru. ''hen nTlf'   halo form :nound bis head. The old ser·
of the'>e \ icwpoints 1'- <;tretched too f.ir    gcant stopped spitting and looked up.
                                                     "You'te wrong. sonny!" And this kid
   Batkin 1hme d;ns I wa put into ,m             It.tel never been called wrong in his life.
.\rmy program in "hich officer c:mcli·           "I hi' here ~aber is cuned Ml it'll fit in
da te" ''ere crained in meteorolog)'· The        t his here ~cabbard."
h unch I wns with was comprised m ostly
of hornrimmccl lcchn ical rypes from Cal               .lkmu:-.ecl by tools them selves, we often
Tech. ~f. l.T.. :md so on. But we wnc            forget that a tool's value lies on ly in whar
<il~o s11pp0Sl'O to be soldiers: so one rby
                                                 it he l p~ proclme. Management sciellle is
                                                 a kit o f tnols. Deciding what LO put d1:ll
an old cavalry sergeanc. complete wich
                                                 J...iL to worJ... on j, Lhe essen t ial slep. N"
campaign hat .mrl C'hewing t0bano. tts·
                                                 amount of recondite sophistication i 11
semblcd mall on a drill field.
                                                 tuhnique rnn o\·crcome the lack of good
                                                 cleplovmenl rlecisions How can om im·
   ':'\m\ vou men are supposed co he·            pro\'e the qualitv of deployment? " e
come officer' in thic; here Army:· he said       me· severa I different methods, and each
srornfullv. ··and anybody that·:. gmng to        In, its scren~h-; and weaknec;ses. All arc
be an offitcr in thic; ltere Anny has ~ot to     geared w one objectiYe: LU discern the
learn to 11\e thi~ here saber:· (This            c cmral ronrems of top management and
worried us. ''\'e were out to win the war,       lo ,trucrure and romm unirare those con·
not with sahers, but with dean sluIT from        n•rns in ways that others can then ro11-
the lahonnories.)                                tri b1 n e their specia list kn owledge toward
                                                 prodm ti on of good decisiom.
  "Can any o( ynu c;man guys tell me,"
he contin ued, ''why this here saber is
                                                 The Quest for Convergence
curved?'"
                                                   I low can mana~ers and staff spec iali,l~
  "Yes, ~ir," '>houced a brainy kid nameci       he encouraged tO look at lhe same things
Kieffer from ~J.I.T.                             eYt·n if from different points of \ant.1gc?

13
First, human rn nven;ar ion of the kind          icine. Early in his career, a good physi-
11scd in depth interviews. where a n xie-        nan learns this seq uence of procedure:
ties can surfan:. When these anxic:tie,
a rc articulated, r:ither t han left as float-      History    +   Symptoms ~        Diag n osis
                                                         ~    Treatment
ing fears, they can then be structured
into problems and panitioncd men area~               We cal l :i "quack" someone who jumps
of work.                                         immediately from symptoms to treat-
   .\Ve also keep an up-co-date invemory         ment, yet Lhe exigencies of ma11aocment
                                                                                       ,,.,
of work clone-and being done-on                  can lure ils practitioners into short cuts
sludies throughout the emi re organiz;i-         dangerously akin to such unprofessional
tion which has a bearing or1 corpora Le          conduct. In medicine these short cuts
policy considera1io ns. Such an inventory        often result in what are known as "iat-
is a library of th e corporate rulLLll"C a11d    rogenic illness": i.e., illnesses caused by
r epresen ts those past and present rnn-         the doc tor. In rnan:wement
                                                                           I:'>    '
                                                                                     Lhey can
cerns of top management. H one is not            cause an originall y difficult problem
aware of such worl... r edundancy and "re-       to become impossible. Management
inventio n of the wheel'' i:-. the price nf      scienc.:e, rightly c.:onceived, can assi!.t the
negligence. \Ve use our large im·cntory          manager in fo llowing the sound pr oce-
so much that \\'e have plated its contents       dure calling for correlation of sym ptoms
under computer and micro-fiche re-               ,\·ith hi-;cory and by ·uggesting several
trieval. The incentive for other arms ol         diagnoses before those "treatments''
the organi1,at ion co place Lhcir work in        known as decisions. Highly complex sys-
file is the additional opportunity for rfr-      tems require appreciation of th eir inter-
ognition :i.ncl 11se by higher management        actions if 11nwanre<l side effects are to he
and Lhe collateral knowledge available           ;ivoided.
from other de1x1nmencs· \\'Ork. Tt repre-            The physicia n en joys one advantage
sents a central capability to evaluate and       over the manager: he knows the objec-
pattern such srndy inrurmatinn rrom th e         t.iv<· of his intervention, viz., restoral of
point of view or top m anagement.                good health to the p:niem. It is essen-
   \Ve have also clevelnped a "sit11atio11       tially an objective of return to a known
room" where th e corpora te problem              equilibrium before the disease. The ob-
areas arc listed o n the wal ls, status charts   jective in managemen t is more elusive
and personnel assignment:. of varinu ~           and req uircs Lhm Lhc manager become
                                                 expli~ iL abo ut ,.,melhing tht· doctor
projects are dispbyed, and a udim isua I
communic-aLions and retrieval apparatus          take~ !or granted almost unconsciousl y.

from computers, hard rnpy. slides. and           Before any program or intervention
video tapes are arranged f'nr convenie n t        t:ikes place. th e nwasure o f performance
use. The room has been cle~igned to en-          effectin-n ess must h<" articulated.
hance shirt-:o.lec' e in tcranions bet weeu         The most fruitfu I collaboration be-
managers ;md management scientist~.              t wten management science and manage-
Suc:h a r oom soon becomes a "comm1 1ni-         ment arc ti'lkes place at the initiatio n of
c;ition center" for the infrastructure of        the task. Unti l the manager can state
pol icy studies and theiT development.           ho"- he will judge the attainment or fail-
thus offsetting that centrif11gal tendcnc v      ure of a particular program. i.e.. what
of specialists which often makes their           quantitati,·e or qualitative indicators he
work teeter o n the edge of irrelevancy.         is wil Ii n g to use to test the effects o f his
  One way to approach a ma11agement              decisio11. m ;rnagemcnt science h:.is little
problem is rooLed in the practice of med-        Lo contribute.

                                                                                             139
  There is one exception: when the            However, they can be assisted in power·
manager asks management science for           ful ways in carrying out th.is prime
suggestions on what such a measure            responsibility and such assistance consti-
should be. Once the "figure of meric" of      tutes the prime opporrunity for manage-
performance is agreed on, then research       ment science to make its contributions.
into the controllable and uncontrollable
variables affecting that performance             Planning means selecting from among
measure can begin, relative sensitivities     alternatives for the future and guiding
of the measure to changes in the vari-        the organization to achieve that "future"
ables can be tested, and various sug-         preferred by the top management. It is
gested interventions can be appraiscd-        thinking ahead with a view toward ac-
                                              tion, or as Robert A. Nisbet states in his
but not before.
                                              Degradation of the Academic Dogma:
   In this process, both art and science      "The sole objective of planning should
reinforce each other and the manage-          be the highest possible combination of
ment scientist moves from conflict to-        the desirable and the feasible." Here the
ward alliance with hi management as           interplay of experience and imagination
they converge their very different talents.   reaches the heights and depths of an or·
to the same problem. It is sometimes          ganization's life. Alfred North White-
stated that more sophisticated analysis       head once remarked that: "The tragedy
will make management intuition and            of the world is that those who are imag-
judgment le s necessary. In my expe-          inative have but slight experience, and
rience, the opposite is true: the greater     those who are experienced have feeble
the understanding achieved by analysis,       imagina tions. Fools act on imagination
the greater the need for the intuition ,      without knowledge; pedants act on
"feel," and judgment for intangibles in-      knowledge without imagination .. ,
volved. A faster, powerful racing car re-
quires better coordination and reflexes          Top managements of successful orga-
than a run-down jalopy. Likewise, more        nizations must be particularly on guard
sophisticated techniques are too danger-      against the enfeeblement of their imag-
ous to put in the hands of inept man-         ination, because the dynamic momentum
agement, simply because they are too          of Lheir success is difficult to alter in new
powerful for them co control. They            directions. They cannot ttl low the mo-
either try to use them where inappropri·      mentum alone do the planning by omis-
ate or become captured by the analysis,       sion, since such momentum will merely
unable to transmute its insights into         carry the organization along a projection
workable programs for human beings.           of past performance. All good things do
Management science deals with cause           come to an end. and a management that
and effect; managers deal with means          has allowed its planning muscles to atro-
and ends. Both have a place, buc the          phy will be hard pressed when they must
 higher realm is that of ends-the ulti-       wrestle with new, unanticipated forces.
mate reason for any organization's exist·
                                                Alert managements constantly reexam·
ence.
                                              ine their premises, tesLing whether or
                                              not they are still geared to their operat-
Some Aspects of Planning                      ing environment. After all, every exist-
                                              ing organization structure is a memorial
  Planning is top management's most           to some problem of the past; if that
demanding cask and cannot be delegated        problem is not a valid one for the pres-
without making their job meaningless.         ent, such structures are subjected to con-

140
stantly increasing stresses which may            Top management, however, is con-
prevent solution of current problems           cerned about the effectiveness of the
they were not designed for. A problem          overall job, and gets little comfort from
is an erstwhile anxiety which has been         detailed subsidiary indictments. Its con-
transformed into answers to these two          cern with efficiency is also an overall one
questions:                                     -does the system use the least level of
                                               overall resources for a given level of per-
  What do you have?                            formance effectiveness?
  What do you want?
                                                  Trade-offs in one or two components'
   Until such answers are forthcoming,         efficiency may be necessary for every
one does not have a workable problem.          other component to operate efficiently.
The clasb of the images of the unsatis-        Finding such linkages is difficult, but
factory present and a future desired           some of the present techniques o[ man-
state allows alternative tracks between        agement science allow understanding of
these two points to be planned and one         the behavior of such systems-a necessary
chosen for action. Pure dissatisfaction        condition for intelligent setting of objec-
with the present allows any action at all,     tives for all components' efficiency con-
since there are an infinity of directions      tributions. The king who lost his king-
away from one point. A management              dom for want of a horseshoe nail during
which says that "Anything is better than       one battle was probably the victim of
what we have now" sends signals of des-        some blacksmith who had been overly
peration which dissipate energy. But ar-       needled about his wastefully high inven-
ticulation oE a desired future state con-      tory.
centrates resources in ways that amplify         Another growing concern for top man-
the chances of its achievement.                agements of all large business and Gov-
   Yet even well-articulated problems of       ernment entities is the need to justify
a systems character can cause a trauma         their decisions to hostile parties. After
of decision where functional division oE       initial reactions of outrage, this has stim-
labor prevails. This arises because of the     ulated search for beuer methods of eval-
nature of systems, where one can strive        uation prior to decision. The allowed
for either maximum efficiency in the           variation in the ranges of component ac-
small (components) or in the large             ceptability has generally been narrowed
(overall system effectiveness). There are      in technical structures b u t widened in
probably no systems where one can find         human structures, with al I the uncertain-
both simultaneously. The jargon for            ties ampl ified as each component's prob-
maximizing efficiency in the components        ability of failure is chained to the next.
is "suboptimizarion." This is fo und in        This has led to intense interest in the
organizations where each function is           understanding of the molivalional forces
judged solely on its own use of resources      in order to insure system success in an
without regard to the effect on other          ovenll sense. M anagemenc science in-
funcliow. Jurisdictional disputes, inter-      cludes psychology for just this reason. No
nal competition for resources, and laying      longer are neat mathematical formulae
off blame to others for overall system         enough. Feasibility of a total package,
breakdowns are the symptoms character-         not e legance alone, is the hallmark of
istic of this disease. "If everybody did his   good management science work today.
job as well as I did mine, this wouldn't       It may not win Nobel prizes, but it does
have happened" are the words of the            influence men and affairs--its central test.
dirges accompanying postmortems.                 There is need for increased emphasis

                                                                                       141
on detection of the emergence of a pol icy            omist won the toss and elected to shoot.
question. Increased leadtime between                   t\.fter !>t:lll ing in. the second economist
in it ial realimtion of a problem area and            arranged his knives, equipment, and got
the need to act Gill help eliminate the               a fire going, while the first went out to
unlonun.tte behavior of a management                  find the first bear. A few hundred y;ird ·
careening from crisis to crisis. fhe more             from the c;ibin a huge bear reared before
rnmple'\. the question. the worse such                che first economist who briskly shoul-
improvi-;ation becomes. In thio; connec-              dered his rifle for the: shot. He took aim,
tion, policy analpis--tl11nking through               pulled the trigg~r, and heard a loud
the ramifications of a change-< an gi\'e              "click,'' \\ hich did not deter the bear
both a pnori apprai als for propoloed                 who began to close in. The economist
c h.mges and a posteriori eval ualions of             tlwn flung the rifle end-over-end hut
past decisions. This !..incl ol knO\dedge is          missed the now-rnnning bear. Finally, he
im·aluable in future g,tiidance for rnan-             t urncd .tnd ran at top speed toward the
ag<.'rnent interventions since it constitutes         c:-ibin, with the bear in hot pursuit.
the arcretion of rnrpornle experience.                Crashing through the c.ibin door. he
                                                      shouted LO his colleague who was c·as-
   Time horizons for planning are
                                                      uallv .,1i.1rpening a knife.
lengthening becau e of tht· complc:xitie..,
of W'>lem management. ·1 hi~ adds uncer-                " Herc\ Lhe first bear! Take r are of
t1inq to an already uncertain world. hm               him while I go out for another."
it i\ th<.> only way lO a\'oid cli ...astrou~ \Ur-
prises and learn from pa-.t '>II< n:~s and                Jn 1his -.on o f situation. one is" i'>e to
f.tilure.                                             secure rhe lOnen division of labor. h111
                                                      organi1ations ...ometime "plan" for th<>
   One illustration of short-tinw hori1.0n            unexpe( tc:d in jnst this way. I n today·~
was found o n the vacation trip of two                world the only th ing one ,~/1011/rl expect
ernnomists. As they approached the                    is the unexpected, yet rigid structtirt:s
cabin which was to bl' the: ba'c fm their             continue to be rattled by any dc .. iations
 bcar-b u ming vacation, one economist                from romine. The greater di'>Lance-in-
'>aid to his partner. "\\'e're approarhin~            time het"een "demand'' and .. ,uppl) ··
this trip inrnrrectly."                               in arlvanced ~onetie~ adds it · crnnplexitv
  "'\'li.tt d o vou mean?"                            to the management task. If operational
                                                      la~ i~ noc to be excessive, lorecalob of de-
    "\Ve teach our !>tudcms .ibout the cm-            mand in space and time arc required in
( 1c.·n( y of cli\.ision of lahor, and yet he1e       order to h;ive orckrs for supply fond
'\C are boch planning to do the '>ame                 emergence of dem;ind. ;ind the .1ddi-
l:tr~e ~et of funnions. If we were to                 t iona l 11tWL'l t.tinty calls for more flexible
specialize, our bear n11tpt1t-per-week                and 1.1pici rnntrols to adjust the inevita-
would go up. our labor inputs would be                ble rli-;rrepandes between forecast and
brought in line with investment. ;md '>O              actual \'Olumes.
on.
                                                         Once one enters the world of resoun.c
   "What do you suggest?"                             allocation he enters the world of costs.
                                                      and when he then searches for the "opti-
  ''That one of us speciali1e in shooting
                                                      mum" .1llocation, he must enter the
the bears and the other spe< ialize in the
                                                      world of analysis. usually the realml> of
skinning and preparinµ; [or transport
bad.. "                                               higher mathematics. imple optimization
                                                      requires only elementary Lalc11lu~. but
   "0.K. Let's flip for it." rhe      first   econ-   the real management game is optimiw-

14 ~
tio11 1111ric•1 w11.,11r1111/l-and requires thl'     worst kind of education.ti di ..tlog11c rnn-
 methods of Lagrangt-melhuc:b usually                'tsLS of dec:larau\.e nnd impcrau\e '>Cll-
<l\aalablc: in .rny good manageme11t 'c i·           tenc:e!\ pronoun< ed by che tcache1. to
Clll t; S gn>U p.                                     which only ,1,.,cm is expected or :,ale:
                                                     the best rt.>q111rc' the interrogawry mode,
    llt:H' one ~lmulcl point ouc che subtk,
                                                     o;erved frotn both 'ides. Bui /ht q111.~/1011s
but cruo.d, cliffrrence betwt:en oli11'1-
                                                     m11.1t   fit• Jrnmt'd   u•1th lllf' grt'tllf\/ Wit'
1itre5 and comcrairw. \!any lower kHI
                                                     and 5hi IL
-aml some high It vel-manaaer um' ll
ungly cmbratc m•mclann! of a con,/rf/111/               Re'>eanh 111en of excel I enc c in .my
as their overridin~ ohjcni ... e, th11-. mi"·        field know thaL the most difficult lep in
ing dw merall ohjt·c tiH~ nl thdr ~llJll:ri·         their \Wl k. i~ cu ask the righ1 question.
ors. Ma11agement -.cicnlt' tcthniques .11 c·         Only Liu: \ !mighty knows hm' muth
part irnl.11 h good at cfoemangl ing llH'se          l111naan effon and resourct·s have been
penrersitic \\ ith \\ hkh norrrrnl ma11agl'-         \\a)Led because emhusi.asts (wilh more
me1w. u'uall) encountc:1 ~Teat diffiutll\.           energy Lhan hrams1 refu e to pause in
The management -;c ience emph.t'lh on                their rm.h tu w.e new gadgets and co
 election of proper pc1 fot m.tnte c nteri,1         cake time to frame their n.·,carch quc:-.-
i~ the most power£ u 1 ~oh cm in ches<'              ciuns properly. " Researd1 tor n.· earrh's
cases.                                               i;akc'' is the mindless motto 011 thc:ir
                                                     'umdards.

How To Use-and Abuse-Experts                              rhei1 rt''llh!) rnn be imanablv and
                                                     fairly d1't1a< teriLed as: ·an Jll\\\CT in
  '\ 1eh Bohr and \\'trner He1'\t:llhl rg            ..eard1 of a que'ition"-mually a qut'\lion
onr-c cl1.,tu:.sed the proper definni11n 11£          no one of \Clhe would ever rat'it'.
a11 expen. I Iei,enbcig said that an ex                  t•nthinkm~ manager' ran \t•ncl their
pert wns ~omeone who knew a great deal               'iLaffs on far-r:rnp;ing-:md expe11Sivc-
aho111 ,1 " 1bjec t. Bohr n : plic:cl that no one     wild-gonse rl1ast·., when Lhey rns ual ly toss
rou lcl !..now ::i gieal deal .1bmn :111" '111>       the trivial fallrntt of a ca'iuttl lunch w
jen bt•tame e\t'l\. .icl\'anre in knO\dedge           men \\'hn h:tH' Lo take all tht' hm.,., ques-
opened up a gTeater arc.1 of ignut.ttlle.             t11111' '>Cl i1111 .. ly.
. \fll'r an hour. lht') ag1ct:d on chi, mo.             Yet, !>tnc t they must pa\ attention to
 pan dcfinicion:                                     his q11t,L1n1h. \\hen he puts the right
   An expert i, 1,omcont· whw                        que,tiom 111 1hc right form, he c.1t.ily1es
                                                     the ent11c mg-a1111,nion into pruc111cliH:
    l . Knows the wursl rni-.tal..t'l> you   '"'11   1 eanion. It 1~ Lhe mo:.t ITC.tt t\C w.e I
         111.11..e in "1mt· ''1 h jen. and           kno'" 111 bier.in hit relauon ... and when
   2     K110\\'' hm\ to '" 01d chem in a            clone \\t'll. 1h111oughl) jlll>Cifie, the rom-
          spcci fie <, !l n.ll ioll.                 ptmauo11 ancl pnwcr of tho'e at the· Lop
                                                     becau ..c. tlwy an: Leaching thl i1 pc:ople
   \\Then expert' are med by top-l11w                IO lt';I( h lht·m~t.·h C,.
111.1 n.t~(·ro;,
              lht'. t•ntin.• organizalion elllt'l'
                                                        l-\cn in ..,t,11Jle periods, the nt<:thnc.1 is
.1 lt'arni11g mode. :'\o longer can n isp
                                                     hcaltl1\: \\hen lac ed \dth d1a,lir .tllcra-
order<> llnw, Lrig~erini.t immediate .tn<l
                                                     lion'i tn previous. shared as-.11111ptions. it
hab1L11al responses. In the be r ecluc.1-
                                                     nt•I) ht a 111.1ue1 of <orporate lite and
cio11al ttH.·thoch, tea1 ht·r and 'tudent c.tn Y
                                                     death.
o n a dialogue. each iml'rrhanging role·,
or hammer and anvil 3'i chcy shapc· lht•                 '.\ow l<l the form of que,tmns manag-
 ma11:rial of cheir common subjeCL. The              e1 .. ,f1011ld mt :rnd a\oid.

                                                                                                    143
   First, all qu<:!>Lioru beginning with           thing a manager wants to do to col-
"Why" are forbidden. Of all the i.nLer·            leagues and as:;ociates whose help he
rogatory prefaces, this one caw;o Lhe              needs in de,eloping new response co
worst havoc in a hierarchical human                changed condilions.
sy tem-mcl uding families. (There is a                ometimes a quick-wi tted subordinate
flippant 'ariant, viz., "Don't ~k '\\'h\?',
                                                   will twist his answer co a "why"' qucsuon
ask, 'Why not?'," but my feelings coward           mto a statement such as, " because that's
ll are the same.)
                                                   what your last instruction cold us to do."
   The reru;on J "\' hy" question is dan·          When that happens, planning suffers a
gerous in management lies in two aspects           setback and question time is best ad·
of its nature and effects. It provoke!! an         journed.
immediate emodonal reaction 0£ defen-                 Let me illustrate the different effect
siveness, which implies, ol course, aggrcs·        produced by the form of a leader' ques·
sion on the pan of the questioner. This            tion from the life o( a very great man-
dekn!>ivene. thus fo1ce~nd allows-
                                                   one "ho occupies the pinnacle of Amer·
the man on the spot Lo employ the rich             ican ' admiration. His reputed method
variety of possible ways to an.sw~r a              of forming questions has been remarked
"" hy" question. A dever man can lither            on by several writer!! who knew him, an_d
about in all permutation , wearing do'' n          all agree lhac it kept everyone on their
his boss in the process, and realizing the
                                                   toes, night and day, every day of the
addiLional objective o f imparting Lhe
                                                   war
least amount of information co him.
                                                      Churchill's questions were known as
  A subordinate placed on the defensive
                                                   "prayer " because they usually began,
by his superior believes that all's fair in        " Pray, tell me why ... " going on to ad_d
war-especially in one he did not stare.            phrases such as " ... Lhe seaman's food ts
An answer to a "why" question can he               so deficient in nutrition?," or " . . . our
based on any one or more of the follow·            tanks in Italy have insufficient fuel?," or
ing: I
                                                   " ... we cnnnot advance the date for this
  cause              motive        reason          c1mphibious operation?" ir 'Winston was
                                                   ..aid co be impatient with excuses, but
  des<. ri ption     process       purpolie
                                                   such forms have the unfortunate tend·
  j us ti ficarion                                 ency to breed them. His subordinates
                                                   were astonished at the detailed knowl·
   Each of thc..e, in human situauon:-.,
                                                   edge and interest disclosed by the "pray·
furnish a wealth of subjective evidence
                                                   er. ·-an im·aluable gift in a leader-but
and far less of information useful co deci·
sion-;.
                                                   con ider how a change in the form of
                                                   question could produce aetivity leading
   Most answers will ·crike the que•..             to entirely different answers:
tioner as excuses, triggering escalarion of
                                                     " How can we improve the diet on
an already deteriorating dialogue.
                                                   board our ships?"
  hrcwd barri ·cers cross-examining hos-
tile wimes e often shoot "why'' ques·                "Where can we secure fuel to augment
tions, when the: judge is careless, for just       our reserves for tank in Italy?"
this rca~on. fheir goal i to destroy creel·          " \Vhat must we do to advance the
ibility of testimon}. but th.is is the last        date for thi amphibious operation?"
 l David  Hacken Fi~er. Historiar1s'   FollacicJ    These are sufficient for the point.
(Harper · Ro...-) p 14.                            Churchill was an unparalleled war

144
leader, and had little need lO alter his           Second, persons in a hierarchy spend
assumptions once be had formed the              a great deal of time a nd thought in try·
strategic plans. In fact, one can cond ude      ing to W)Cem the motives and interests
that with h is unique experience and in-        of the management above them. These
tel I igence, he conscio usly chose this form   drives determine the effectiveness crite-
o f question mere ly to maintain discipline     ria of everyone in the organ ization, a nd
a nd adherence to his plan on ce it was         everyone knows it. ome managem em s
decided and promulgaLed.                        keep their real concern., hidden Erom
     A manager tryi ng to develop a plan.       t heir subordinates (usually uncon-
to    redirect his people. and tn sol icit       ciously) and thereby came confusion.
their suggestions. is better advised to         But when the upper management sends
substirnce question s beginning wi th :         down well-form ed questions, they also
··How," '"Whe n ." "What," ·'vVhcre:· or        send clear signals as to what their inter-
"Who."                                          ests and those of the organization as a
                                                whole currently are a nd are going to be.
   T hese. unlike "vVhy?," produce spe-
cific answers, often with lacwal content           This property of management ques-
useful to reducing uncertainty, easing          tion s make them the best of comm unica-
choice, and eliciting alternati ve courses      tions media.
of action . A man's answer to t hem need            One of the ways we use to augment
caiTy no burden of defense and he usu-          the comm unications between manage-
ally feels complimented that his superior       ment i;cience experts and top manage-
expected him to know and be helpful.            ment is the White Paper. These d ocu-
   T his latter effect is the mosl s ubtle      m ents. usually less than 20 pages in
a nd powerful for the planning process.         length . address a specific corporate issue
:rnd works in two ways.                         or question set for investigation. They
                                                are w1·inen in clear E nglish. free of jar-
   First, a question (except "why?") is
                                                gon, to bring those faced with decision
an adm ission of ignoran ce, a nd connotes      lo a common understanding of the back-
a desire to learn. 'Vhen received by sub-       ground fanors. chronology of significant
ordinates, either line or staff, they sense     events, departmental views (including
that their superior views their ind ividua l
                                                dissent and references to previously ex-
abil i tics with respect.                       tant documents), and the probable con·
   Deep wellsprings of motivation arc           sequen ces of various a lternative re-
tapped. and the increment o f personal          sponses Lo the issue. They sometimes
security produced allows them to take           include recommenda tions for additional
greater risks. ince the question does n o t     investigation or studies where gaps in
put them on the defensive, the :.taff and       information have been disremed in pro-
line men potentially involved w ill n ot        ductinn of the ·white Paper itself. They
fear a shirt o f hlame between themselves.      have proven useful in stimulating the
They will be willing-indeed fee l a com-        dialectical process so necessary in model
pulsion-to produce a joint. well-               con struction w here the contro llable a nd
rnunded, practical, and thotwht-through         uncontrollable factors affectin g perform-
answer. When I.his happens. the leader          <1 nce are arranged in the logic of their
who formed the question receives a              interaction. Those factors which acceler-
bonus of cooperative planning effort h e        ate o r retard a program of implementa-
can gee in no other way. In fan, some           tion are important co know, because it
ask such question s with Socra tic iron y        is on those that intense m a nagement at-
just to achieve this invaluable effect.         tention should be fornssed . We use

                                                                                       145
critital path diagrams on important pro-       ;ippraising longer run effects. One cla<is
grams primarily to gain Lhis toncentra-        of such mechanisms are long-term plan-
tiou effect.                                   ning models, where logical interactions
                                               among LTucial variables, together with
                                               the methods of statistics, are used to pro-
Models and Patterns of Perception
                                               duce answers to various "What if ... ?"
    Management science models are of           questions. The construction of these
 many kinds, but all are intended a'l          models subjects an organization to an
 "Maps for the .\l ind" of managers. Some      exhilarating learning experience, as the
 types of models we haYe produced arc:         different funcLions of an organizacion
'erbal, mathematical. simulation, ant\-        perceive their interaction with sharp-
lytical, accounring, and financial. They       <:•ned vision . . uch model of complex <>y~­
 have all been useful in adding to our         tems force attention to common and
'\Jnderstandingof complex affairs.             ultimate goals, attention which is hard to
    Our operational definition oE "to un-      get amidst the demands of daily opera-
derstand" is that it means "to be able to      Linns.
 explain to critical intellettS what is hap·       fhe ·e models represent a planning
 pen mg. l\ hat cau!>eS what, and the rela-    wol for management. an analytical tech-
 tive importance of the various forces         nology. which ca11 help assess what Peter
 involved." l mil we can do that, our un-      Drucker has called "the futurity of pre -
 derstanding is deficiem. In dialogue wiLh     enc dee isions.''    me people feel that
 Lhe manager, the expert must a sume           thc:y ha\e 'lt1ch a planning cool in budg-
 the burden of tra ns lation.                  t·ts for a lew years out, but I th ink this
   Management scientists who undertake         a misapprehension. A budget is Lhe
to bring their work to bear on important       authorized implementation of one plan.
human nffairs must master those arts of        ;.i)rcady agreed on and approved by top
per uasion built on the tripartite foun-       management. It represents crvstalJ ized
dation of reason, commonsense, and             a-;s11mptions about Cuture operations
emotion. An analytical breakthrough            which they have selected from among
must be recast into commomense form if          many alternative nc;sumptions which
a manager (who must implement its              \\t'n: con idered, modified, arrepted or
gmdance through dis emination to an            rc1ectcd during the planning process
organizacion's per onnel) i to find 1t         "hich precedes the budg-et-making
rnn~enial. Recondite packaging of an
                                                proce:.s.
idea doe~ not meet this test, and in my            fhe budget is a <loc11ment where die;-
experieme. such ideas are ne\er coupled        ( u"ion h<1' been transformed jmo com-
to the \\ill and leader~hip whith can give     mands, and it tells e\·eryone who rnn-
Lhem a chance to show Lheir intrinsic          u ihutes to one of its lines what mer;tll
merit. The old advice, "When in Rome.          monetary constraints he must avoid in
1>pe:1k Latin" has its counterpart maxim       delivering the functional o u tput ex-
for the expert who journeys to the habi-       pt>cLed of the resources in his chaq~e.
tat oE a manager willing to li"ten co him.     " ' ht·n budgeting is the onl-y planning
                                               ;ict ivity, one should expert a concentra-
On Planning, Budgets, and Data                 tion on tactical operations at the expeme
                                               of 'trategic thought. In stable conditiom
  One result of lengthening the time           there i little danger, bm when the orga-
horizon of top management can be a             nization is buffeted by internnl and ex-
heightened interest in mechanisms for          ternal envmmmemal change~. the minds

116
of manager... mu'l expand lo ;in-ommo·                   Some Notes on Organization and
dale ne\' kno'' ledge and lls application.               Performance Criteria
That j., the realm of 'tr;ne~h dt·< i ... ion.
                                                             Pt::rhaps ,1 ,,·ord or two on how we
   . \not her   t•mcr~1ng l    olc. for      m.rna~e ·
                                                         haH· c\oh t·d an nrgani1...11 iun ~tn11. tu1 e
       '< 1<.'tl<' C <<Hiles from the need ll>
llll'llt
                                                         101 man.1gement '< ience £!.<.'.tred to cm-
s1ruc111re 11P.w cl.Ha 1cq1111emc11L., to fill           p01 He nee<h ma} be appropn.1 le here.·
g.1p:. <>plned l>v the earthquake~ nf                    \ \ l ' h;n't' one-fi flh of our lm Le dt::ployed
chan~c \ 111odcl without data i, not ncl·
                                                         111 a problem formulation and rnrpnratc
e'>sanh ·1 \Jee, bm daLJ        \\~ ichuut
                                        a modtl          li.ti,on f1111{1ion and four- htch~ 111 a CO! ·
is no \irtue. \ /)(lf/f'Tll     nr po,sihle rcl.l-
                                                         I""    lll' ;rn,1lri" group.
tion~htpi. '>ugge~ 1 .,   what inlorm;1uon pc.·o-
 ple should be set to p;athc1. hlll r<rn d.tl.I              I lie lia1~on .md for111ulatio11 group
'.'>tnpped ol its menninA' rm anio11 mert:I)             t.1kc an original i'>rne .incl, af1tr initial
adds LO informal ion overload. One often                 i11vt•,tig.1wm, Mrunure it 101 more th01 -
ht a rs thc (ompl.1im \\hen a new prob                   011~h .inalysis. l hev cry to answer two

!em ari-.e., that "1111 cl;11.1 exi'" on thi'            ri11<,tiom <I ) \\'hJl i · required to bl'
'ubject." That thi' ... u1p11.,<:'i a manage·            done? a11<l (~ l Ilcl\\ best to cln it?
 mcnt '>C'icmi-.c m.11 k, him .1' ,uJI in the                One of our t.1\ unte aph >ri m' cate'I:
immal111 e 'cage.                                        ••,\nHhing flUl \\Ol th doing i.,., nut \\Ul'lh
                                                         clning Wt•ll." \Ve try in this \\::t~ to :tllu·
    \'\>'hv does any cl.na cx1,t .u all~ Be·
                                                         c:tll" 1111r ".ire e rc<iourtt:',) to the 1110'1 i111 .
cau'e nmcont: in the p~ht a.,kc.·d a que'·               po11.int j.,.,,1t·· and not alto\\ the .tnalysi'
t1on 111 ex.pc< tt·d 'on1<:01H: (w.ually in              gn11q>' to ht' perturbed by random. un
hierarc hie~ above him ) to ;rk une. Tnil>               t v.1luaLed     req1u:'t'. Thc'e can keep
Ill\\ <}lll'.,llC>ll\ cfft: ,1llllO~l al\\a\'i U>ll·
                                                         1hem HI) bus\ but thev \•.:ill almo~t
homed hy ,, t.uk of tla1a llll Lhci1                     ~11rely produte wa\lcf11l cleployruenl.
answer \ \'hc11 '>llC h a cp 1 e~Lio11 :iri,es. the
first s11 b ...idi.tl] q Ul'Sllon to be addre\~ed               I he cwpmatt· analv~is g-roup<i C"alr't
i..: ' \ ' hat i11f01111clti11n 1' worch de' elopinp,
                                                         11111    ongoing lll\ c~ti~.1uom on various
                                                         .l'>(lt'< ts    of our business: e.g.. demaucl.
with limiLCd f uncl<.?
                                                         '>lll'(lly ancl inH''>Lmem. frnJncc, en>nom-
   NC\\ inlorniauon l ' 1/fJ{ free. cl!ld the             1< "· .111d 'odal sc 1ences. 1 hei1 proje< ts
d10H t:: of methods w hl· 11\ed to ~et it i'             dl'' t lop t lie <ore t·xperusc and ma1ncai11
not a Lrt\ 1al qutc,ll o n \II of the methocl,           1011111 1'1 \\Ith expcn' 1hroughom the

of .. tati,ll< . !>:lmplinA, \IJrYey.. in£eren1 l",      Bdl "''Lem "hic.h i, couplt·d Lo .. penhr
ind111 ti11n, and anal)'i' are most ,·al11:i-            111rpor.lle i-.~ue:-., 11 nder A"uidance from
bk wltu1 they <';Ill ·"''l'l thi · cTucia l              lht· " pl'll11thahlt · fcm11ulatio11 ~rnup
'earc h \u..uunti11g d.n.1 rcprc,c nt rnll                Imm ini1i.1tion 10 final preo;emauon w
                                                         111 .111.1gt· 11H·11t. In thi., \\<l) we haq: tried
tinizt::d c.0111ptl:u1011' ul data in re,pome
                                                         10 .11 ht< \e c1 ' u,ilallle between -.peed of
lO \H ll-.1n cptec.1 qut::'>tions which need
                                                         I t''l><llhe        :111cl   thnro11gh. 'ounclly-bast·d
u1n1in11111g .u1cl nin t'lll answers. 1 he)
                                                         I ('\<.':ti<   h.
 <11c a ric h source of m.ae1ial EOT begin-
ning Lilt qlH.' 'l for an,\\ers to ne\\' quc'-               If .tll tilllc is'ipcm 011 figluing hres. no
 tiom. hut usu.tlh 11ccd to bi: refined a11cl            0111  ha' ttmt' to build heller hre-fl~htll\A
'>irted Jiv the llC'\\'Cl lnrnh Of analnic ,11           app.1ra111'; bm if men ''Ito prc'\ume LO
 Le<hnolog~ . Tht' t'> ,1 fulile fi1•lcl for tht.•       cl1·,1~n fill' .1pp.1ralll' h;l\e ne,er 'teen a
~eecl'     of m<m:t~t·ment "icnn..' umtribu-             1111· f1111ght . their \\ell intentioned ani-
tion                                                     1.i<t' will l'robahly nc\er be prnctical or
u ed by firc.:men. We believe manage-          rics. It !>Cems to me I.hat you would ha\'e
ment ..0.encc work must be firmly rooted       to know much about your "customers." if
in the reality of the manager·s world,         1 may u:.e a comruen:.ial phrase for our
conducted in way~ that allow imen e            fellow cttizens. You arc delivering some
involvement in that world, but which           sort of se1;.;ce or preventing tenain un-
also allow the "ithdrawal necessary for        desirnb lc things from happening and it
concentrated reBecuon .ind anal y i            seems to me that the behavioral side of
whu;h produce wonhwhile innovations             it is e.xcremely important; i.e., the idea of
for use by managen of complex systems.         i..nowing \\hat their performance criteria
                                               arc.
  Our criteria of !>Ucct:ss for a piece of
manag<.'ment science work are these:              The other side of it is the linkage of
                                               various departments with the variou
  • Did iL help the man:tger avoid an          mis ion-oriented activitie<1. How those
    error or ob tacle to his objectives?       are co be brought together in some over-
  • Did it help the manager make a             all dlkient sense is the great problem of
    better decision than one possible          our (ounu '. \Vl1ether it's in transpona-
    without the work?                          tion, in education, or in welfare, and all
     • Did it help the manager seize an        the re.t of our national problem , people
       opportunit} he may have mi sed by       making ~mall gains in ~me ub~ction
       deepening hh operational under-         are not ~ing to do the job. There ha to
        tanding of Im own ta~k?                be ome look at the interaction of all
                                               pa1 to; and contributor to the'ie ystcm'>.
   The e are harshly practical te ts for
                                                  1 o me the really weat challenge of the
spec1alL't knO\dedgc to pass. But enthu-
                                               next two decade is finding ways to ime-
 iastic. acceptance of su<..h Le ts by these
                                               gracc components t0ward elfcetive per-
newest of auxiliarie11 LO one of the oldest
                                               fonnance criteria. As far as l know, a
of an11 furnishes my answer to what is
                                               great deal of the Government work in
truly new in I.he pracricc of management
                                               the management sciences has been in
science.
                                               the military pbere. There are various
                                               enclaves of work all through the Govern-
                                               ment which appear in the journal . but J
                Discussion                     do not know exactly ho'\ to evaluate that
                                               agam t your opportunities. In our case
   Dotf the Government rompare favor-
                                                rd ay if I 00 h an index of where we
abl) wilh fJTivate ind11.St1)' rn llu effu-
                                               c-an go, in business, we are probably
tive use of management sciem·es? If not,
                                               around 25.
how ca11 it be improved7
                                                  In the Depanmem of Oefcn e, I
  Mr. Boettmger: I'm going to avoid the        thi11k they might ..ay that they are some-
direct rcspon:.c to the value judgment         wht:.rc around 50, but they had a little
invohcd because I don't have enough            rnntrovcr v recently about professional
inform.mon for a definilive answer. Let        standards of operations research on cer-
me shift the question. If you asked me:        tain public q uesLions. I have no views on
Doc · the Government have a greater
                                               that particular area.
opportunity Lhan bu ·iness? I'd say .. un-
doubtedly," becau~ vou are dealing               ln the civilian ectors, the index might
with a very rich mixture of human moti-        be about 15. \ fy O\\n view is that tht~
vations, and your clicmele is the entire       type of investigation of multidi ciplinary
popubmon within the national bound.a-          dimcno;ions on highly complex' structures

14
i preferable because we want to avoid         the jury. Top management is the jury,
simplistic so lutions of one dimension to     and any e.xpen who is foolish enough to
problems which have many dimcmiom.            go into court and use high·Aown lan-
Thi is the reason for the imerdisnpli         guage in order to influence a decision is
nary approach.                                not vt~T)· sman.
   1 believe that the opponuniry in thi<>        \'Ve have made it very clear to our peo-
area for management science '' even           ple chat they are judged on three ele-
grealer in the Government than in pri-        ments. Expertise, which is a matter of
vate busine-.i., even though it's of great    ct1pacity and ability. Contribution,
potential in private business. Compared       which is J yearly apprai~I where we
wiL11 our opportunity, we probably have       ask: What specific contribution did your
gone a little further than the people in      line of ;ictivity contribute to the manage·
Government have. That would be my             mcnt of this enterprise? This is a very
personal judgment, but 1 chink that only      big incenlive to find out what will be
because vour opportunity i greater th:an      judged as a contribution . The third ele-
OUTS.                                         ment i, their leadership, which means
                                              their abilily to mobilize men o[ diverse
  How can interartion between manage-         disciplines in an attack on the assigned
ment science and the top dedsionmakcrs .      problem and all the aspects of it that
be improved!                                  emerge.
   Afr. Boe/linger: " 'e believe that's the     The e are the three dimensions of
central political question oC connening       appraisal for our management science
staff expenise to the top management. It      people. .\ man may be a tremendous
is essemial that the top manager be able      expert. but if he has veq low leadership
to trust these people. You give them          potential and can work only by himself.
great potential for influence. You don't      this is a minus. We value ~kill in inter-
give chem power to give orders to peo-        action with managers. We put that bur-
ple. The management scientist has to          den on the management scientist. not on
discover interest in what appears at fir"t    the manager.
to be mundane rnncems.
                                                 Some people fre h out of school in
   J£ the management     sciemis~    cannot   management cience think that when
get managcri. to articulate their largest     Lhcy romc into the bu iness che prob-
problems .md concerns, they "ill turn to      lems are siCLing on a i.helf. that the whole
i.olvang the problems they know how to.       'ct of top·managemcnt «oncerns are all
 It will be -.hcer opportunism , of the M>n   neatly structured ready £or application
 you sometimes ee in phy ic:tl setcnce.       of .tnalytical tec·hnique . like linear pro-
Thev will do what chey can do.                gramming. inventory theory. queueing
                                              thcorv and all the re)t, They don't realize
   I belie'c chat any management "cien-        that nobody has those problems sining
tist who interacts with management has        on a helf that ''""Y· You get those prob-
to use the vocabulary of management.           lems by dredging around. You have to
That is, he has to (ranslate his methods      interact with people in order Lo find out,
and results into understandable lan-          almo t by depth interviewing, about
guage. He should not try Lo win the bat-      processes inside the organi1ation so that
tle for his point of view on the basis of a    you can preci pi talc the range of choices
foreign language. You wouldn't alJo,\'        which represents a managerial concern.
that in a couri of law. You have to trans-
late it into a language understandable to        1 kno\v it' an   °' eruscd word today. in
                                                                                      149
many context~. buc management -;ciencc                   Mr. Boetti11ga: This is a central. pro-
'' hich i' nm rele .. ant to the top n1anage-       found question. If someone savs at the
ment\ <oncern i~ u,e(~ \\'e 'itart with             c..'lld of the ltldies. o "hal?," then the
thal FH'.rV now and then. of coune. ''e             \\hole thing j., futile. It seems to me rhat
take m.rnagcmem to new fielcb of in-                 the only P~"ible way co an wer this i., in
q ui r). On cxcur.,1on'> of that 'ion. V<llt        the policy analysis area, and l don'l
open up your hori1ons . .\he1 all. "e .au:           know i( you have l'Xperienced this in
allowecl to be professional hc.:reuc-c,,            \our mis!>i<>n agencies.       Ir someone is
which means lhat "e continuilll) n:ex-              going to propose an im ervcntion in the
amine the pn·mi<ie'> of our enterpri c.              political proce ~. i.e .. he wants Lo pass a
   i\ lauagers .m.: 11ometimcs like law)el'!..       law or in itiate a program. t here has to be
~l hey  are :ilway~ o n the alert for an orig-      'ome !if ,t~l' wbere one di cerns a µ u rpose
                                                     to iL, if it i' a rational proposal. The pnr-
in.ti ide:\ \\ h ic h h,1, '>toocl the te'it or
 lime. Ir vou get Oil<.: of chose, it is ( lear      pmc of the irncncntion is to altet the
'ailine;. but mmt men of affair.. have a             tour'ie of human affair-; or to prevent
 tendl nc \ to look f 01 ~ome prercdcm. l           ...umethrng from happening.
am fm prc«·clcncs and prudence. If \H'                \\hat   l'i   oflen mi'i<;ing. from the point
 found 0111 'omething 'iimilar wa~ cione in         of "iew of the> managemt'nt 'c-ic..·nn t, is
the time..· of Ju,Linian O\er in Constanti-         the "ipt:rifiration, at lhe initiauon. of
 nople th.IC genernlh .;ati~fies the lawvcr         what Lhe mea,11re of performance ought
 Hm people an· c;w t ious hecau'e thev              w be. I low will you know iL things
know hrm 1t1ilny things ran go '' rong.             imprO\cd or not• This is not .1 trivial
fhc m.m.1ger "ant' to get through ea( h             quesuon. One of out mmt difficult ta'>kS
day with thing.. held together.                     in dealing \vith managers is determining
     The.· 1rlt:a of longer term planning hnri·     .rnswer.. to: How \\Ould ,·cn1 judge?
1011 c 11111es w1 y ha1 d, too, became the          \ ott' ve got a problem here, granted. By
number of th ing<1 tha t can go ''rung j..,         \\hil t measure., will you be willing to
c'.\.prt''>-'rcl hy a i.impk mathematical r01 -      judge it.. solution ?
mulil: H you have "n" level'\ 0£ detisiom
or en·nb, 2" 1-. the number nf thing' 1h.1c            I don't me1n number neres<;;irilv-
r.111 go wrong. ~o if )OU ha\e fi,c concin-         thcy are c::a!liest-bm also qualilatiH'
gC'nl clcet..,iom, lhe pm)ible nult·omc~ .ire       jll(l~ments.       Before we are goin~ to start.
 t?, or 2 11 \veil. no manager in hi' righl         )1H1\·e got to tell me ho\\ you are going
mind thinl~ Llrnt way. but he doe., ~ay,                   ''ti
                                                     to b<.:       I ing to judge the lai I ure or sur-
"l l r can get through tep one. I'll worry          l< .,, o[ this program. J'\·e no real exper-
<tbout ~tcp two, and then J'll worry abn111          li<ie in the political area bm it seem that
!ilt'P Llan•t•." Bul in t.u~e inten1<..ti\'c )\.,   a lot of (ai(urc in h11miln action IS cam.ed
wm-., ''e nel·d ~ome appraisal put nn                h\ 110t thinking Lhrough how to judge
those lh.11n-. of rnmingem ouccome-. a lot          c..·1thc1 .. uc<ess or failure, imp1m·emcm or
soonu th;m ''c ha\e been ac.:tU'>Wntt:d              1 urogrc,.,ion. \\'hen the men who are
to in the pa t.                                     d1.1rged wilh implementing programs-
   I t i\ d1ffirnl1 to find clt•ar Pvidn1ce of       01 approvi ng them or proposin~ lhem

tllr r{frtl rm legislfltit1P or exerntivt· />ol-    -~LdTL asking lhose kinds ol qucMiorn.,

iry of t'1H'n thr /Jrst of st 11rlies '1wt'd         then I th in k you'll begin co see t he ad-
11/Jon 111nnag1•ment if'it•nce. How rn11 1/11        \·amage of lhe nrnnagcment C'it.·nc-c ap-
l1t·11e{il~ of surli 1t11d1e.1 /Je drtt•rmined tH    proach, bec<1use the man who has to go
a helft•r g111dr fnr tht· n.llorntio11 of ,,.        ,111cl te.,tih for re~o11rces ,110uld have
SOUfft"l /OSIHh   \llldit's?                         thought Lhis through. To me, the process

150
of tntencntion ha., not been dosed umil                        will know what is happening, we \l'rnal-
you speufy the mea.. un· of performance.                       11c ·11 the tan the ··aiim of the prngram."'
                                                                •Jmplcmcntation" follm' , but then
   \\'e tJn 1111 .1 mana~l·mcnl scierHc
                                                               \Ollll'thin~ c. dkd "error.. happens. be-
projen b> 'tri' ing to make ome mea,.
                                                               c•111 c \\e knuw that any rime people
urt:' of perf01111ance explicit '\\hen you
                                                               take an .1i111 and try lO implement it,
do not l•tre .11Jo11t that, tht·te's really nn
great room for cloin~ .rnythi ng wilh ma11-
                                                               thinA" ~11      ;i,,
                                                                                1y. 'omc:Lime' wm ~e. 'orlle·
                                                               timt•:. hrttt•r than expected. 1£ more nght
.1~cment "i!!IH c. It ' 11nh \\hen vou ,tan
                                                               th.111 \ou tltou~hl, you hould exploit it
to :.ped fy IHm you \\ti I 1u<lg-c progres~­
                                                               The "t•nor ·correction is il!lelf a pt<xess.
or lad. ol it- that yo u ran start Lo apply
                                                               But if you d on 't l..nnw thing' went
these t<·thniqucs. Ontc you do tluu you
                                                               wro11A, yo11 don 't know exactl y what to
c:m begin to s111dy what lac tors will l>c~r                   do. J his pro< e'~ ol <orrcnion may mean
on im prcJ\ cmcm and wlrnt factor \\ti I                       1h;11 \Oil h.tH' w wncn the "aims" side
noc. l 1 ntil th1' t'> clone. you don't h.a\e .1               or you han to <·mrc< t the ··implem<·nta-
real demand fur management srienle
                                                               1wn" ,ide. \nd that's not a trivi.tl dl·d·
approacl1c,. fht· 'f>C< d1(,Hion of the pcr-
                                                               c;m11 Tlwrc .ire 'omc men "ho bclic\c
fo1m mce mrasur<. ''the \itir qua non of                       that the aim' frnm on hi~h can ne,cr be
all mana~e1m nt -.ticnce applu ations. If                      ,, rnna . ncl t h.11 .ti I la ult Iie, in them-
                                                                       ~
J were a le•+•l.1wr I \rnuld que~ peuplt                       ,d\C~' 1>r in their people. generally the
\\ho arc te.lilvinA bcfoie me almo't                           laut·r. Otht"r 1nt·n hclie,·e that their
entirely with tlHhc t}JIC' of qut·:.tiom.                      i111plt•mt:111arion can nc:H!r be wrong and
How \\ill we judge the pcdurmancc of                            that 1h<· t11111bk lit·, in the aim thq \\l'lC
this p.1rti( 11lar prog1 .1m whid1 ·ou a1 c                    ~j \l' ll I I) I ,nr, Oll t.
a,J..ing 11[ nw?
                                                                                    '>()(•ti f y the ffiC3'illr<: ment
                                                                   \ Clll fl,t\ (' I Cl
    /11 virw of nnrlenct• //tat rulf'rJlfnlr                   "'''l' lll  il }Oil ,tre 'erious abou t rnr rcc·-
c'rt/1•1itJ r111<I dolo r1n· n ot availa/J/t• /01              ti vc.• ;111in11 fnr k('t•pi11g a program on
1111'tL.w1111g      1111r111/a/1t 1elv llw rPs11/11 of         t·o111 'c or alterin~ nrn r~c. h nec·d no t he
Ferll'ml ~wnl Jnof!,rtll11.1 , do you hat•t'                   H'f\ c:L1lmtatc, hut 1t h<t. LO he some-
tlll) Jllf!.f!.r.1/icm rl\ lo t!'/1111 i.s nurlr.d 1mrl        thing-, btu1use 1£ you have an aim and
liua• to olitai 11 11?                                         LIH.'n an i111plt-mentation and no mcas-
  Mr. lfoc1ti11J!,1'1: It':\ a '11bclas." que tiun             u n•mt•nt 11r cletct t ion .,\i'ltem. 1hen you
to my prcdou' .Hh\H'l. Fir,t. for a cor-                       haH· 1n1.tlit.11i.1n plannin~. which mcam
recch e prng1-.u11 '' c.: t. n 11,e che ....um                 that 11ub1xl} d.11 e-. teport th:it anvthing
data as the initiaung mea,ure, bet.iust'                       h.1, ~Ill wrong a1 .tll. \\.ith thi.. kind or
''e wam the 111u11bl't' \\C .ue geuing to                      pla1111i11~ you end up \\ith all 'i<Jrl'> of
luol... bcuer in 1he l111111c. Thal is \1.h.n I                p.11 h11lop,1c al '"'rems of trying to ke<:p

\\tll tall .in cq11ilil11 i11111 progum. Ilut .1               1hi11g' hicltlt·n from the man who ~v~
UC\\ qu<:,llClll 1>1 p10".,1illll          \\'ill,~}    i~'s   '"" 1111 .um in 1hc ft1,c place. fiut if you
                                                               .Ill' ,< 1 icn1'i .1hout managerial imprO\('-
n.twre. ht• clcht i"nt           01   wt.Ill} lacking    111
                                                               n1c111. \<HI 11111-.t '>pt·tify the dat:l roller-
rl;lla for ,111 clll'i\\'l'l".
                                                                tio11 w~ Lt' lll and Lhc data itself. If it is a
   Our JH'O('c•ch11 c i' thb: hrlore any nrw                   llt'\1 p1 0~1.1m. it ,,ill require nr'' data
program " t''>t.1hli,hed 111 c1111 emeq>n..,e,                 111 l1t· l111ni,lwd a' to \\hether 1hi' svstem
we '>pet i r tht• d.ll:l rnllc:C'l ion nwthc~b.                 j, '' orkin_g an nrclm~ LO plan. I h:n " the
the clata it-.t:U. .md the tollc:u1un                          11111\ ,11l11tion "~have.
method.., in .1 rcponing ...u11<ture Im th.tt
program bc:ln1t· it j, prumulgat~ci fo                             \ \'l' d11 11nt .diem j program to be
clcH•lop 1h<· cl.tta '~'tt·m h) whit h ,,·c:                   ,1,11 tl'cl in 0111 operation ,,·ithout '>f>t'lify-

                                                                                                                 I:; I
  11,;   -t..     II
ing, even if it is a very trivial program,     vested a great deal in educating its
what is going lo be the reporting-back         people, or the Nation, we, in effect,
 ystem by which we know whether we             would have produced a human profit,
are achieving our goal, whether we are         but we would not have produced one,
\~Sting resources, or whether the whole        say. in a monetary sense. We had made
thing was a bad idea in the first place?       an investment in human potential. Pen-
If you start an idea which is really illy.     !>ionc; then would be considered a depre-
but is not transparently silly, and if you     dation account of some sore, provision
don' t have a detection device as to what      for the superannuation of the human
it's to accomplish, that program will go       as ·ecs. and so on. My own view is that
on forever because you don't know what         the chance of doing that in any organiza-
lo do about it. You have no criteria of its    tional context would be somewhat fruit-
effCeli veness.                                less for this reason: Any human being in
                                               any organization. any hierarchy, has a
   1'm not n<lrrowing this idea to profit or   dual nature. He belongs to both a hier-
loss. or anything like that, which is inap-    archical system and an associative system
propriate for Government. I mean, did it       throughout his service and life. You are
meet the criterion of success? Did it          member of a neighborhood; you have
feed more people? Did it raise che in-         fumilie ; you are members of churches,
comes? Did it raise the IQ scores in           lodges and professional groups, etc., and
·chools? You can pick any kind of data         even inside the hierarchies you have asso-
at all that you wane, but you have to          ciative groupings that you belong to.
pick some kind. \Ve know we can' t start       The measure of success in the associative
the proce s tmtil you specify the data.        grouping is your personal reputation.
The man who initiates the program or is        The measure of success in the hierarchy
charged with implementing it ought to          is how much your particular conttibu-
be charged with designing the data re-         tion conl.l'ibutes to the aims of the hier-
quirements before he is allowed to stan.       archy-che organization.
                                                   Human-asset accounting, il seems co
  Do you see any possibility for develop-      me, would have to come in on strictly
ment of effective human-asset account-
                                               limited dimensions of hierarchical rele-
ing systt'mJr
                                               vance. So here you are a human being,
   Mr. Boettinger: I think, as I bear chat     with maybe a hundred dimensions to
concept discmsed. it means to augment          your personality, but for the asset ac-
the balance sheet, which is usually a          counting, we can consider only a few.
stockholder-oriented report. In other          \Ve would measure you, in effect., triclly
words, in the accounting system of an          on the basis of those relevant aspects of
organization the numbers are all related       your personalicy. The old manufacturers
to value of the artifacts assembled or the      used co call their people "hands." Well,
cash that flowed through the enterprise,        thal was not a slip of the tongue. The
and nowhere on the balance sheet are           only dimension of the human beings that
 hown the enormous human resources             they were interested in at work in one
which constitute the real strength of an       of their mills was their hands. They
organization.                                  didn't care about their feet, their head,
                                               or any other part, much less their aspira-
  Lee me try a verbal model of this             Lions and other abilities. Hands--thac
process. If the company should stand sta-       was what they hired. In fact, the Navy
ble on its balance sheet, but had devel-       still use chat expression, and if everyone
oped Lhe skills of its people or had in-        t0ok the order "All hands on deck!" lit-

152
erally, a ship's company would look like         The idea that different analytical Lech-
a bltnch of Moslems at prayer.                 niques applied to what appear to be o ld
                                               problems can be very helpful. We have
   But the human assets in which you
                                               put literary people on product tests and
should be truly interested are a function
                                               product development because they un-
of the tot.al dimensions of the people in
                                               dersLand something about human nature
it. What we count on is something like a
                                               of a normal type. The psychologists often
random process. Everyone has much
                                               concentrate on the abnormal. Men who
more capacity than he has turned into
                                               study I iterature know how normal
ability, and what we try to do-since the
                                               human beings are motivated and resolve
business is randomly hit by requiremenu;
                                               conflicts. Biologists can work on cercain
for expertise o( all kinds-is keep crack.
                                               technical engineering problems, because,
of a man's professional kills, his amateur
                                               after you build certain artifacts up into
skills, his dilettante skills. even his hob-
                                               collections of tremendous complexities,
bies and his avocations.
                                               things start to behave more like biologi-
  Every now and then we'll assign a            cal organisms than erector sets. There
man co a job for which we do not have          are ways of studying biological problems
professional skill on the basis of his         that are different from those of studying
avocation. Or he might simply say ''I've       assemblies of componen ts. l nteresting
never worked in that are:i. I would like       suggestions o n the measures of perform-
to have a shot at it." Now th<it horrifies     ance of a biological-oriented system can
professional personnel men, but some of        be used for systems made up of hard-
our civilization's greatest contributions      ware. "The system doesn't malfu nction ,"
have come from marginal people who             says the b iologist, "it becomes ill." Well.
are very competent in one field but wbo        chat's a very startling thing to an engi-
are at a dead end-a sort of rul-de-sac         neer-the idea that a system is ill. Ques-
--or tired, and who enter or are put into      tions like: "Can you test it for vital
another field.                                 variables like Lemperature and b lood
   Accelerated-depreciation q ue ·tions are    pr essure?" ini tially baffle the engineers.
very important in our kind of capital-         but start interesting new approaches for
intensive business. We assigned t hat          measuring systems which have become
problem-after engineers and account-           very complicated.
ants argued for a long time-to a mathe-           We don't overdo that sort of thing, but
matical physicist. H e approached t hat
                                               the important C'Ontri bution is a way to
whole problem in his dealing with the
                                               get a new a ngle of view on old problems.
accountants and the engineers, as one of
                                               It is a very fruitful source of discovery.
handling asynchron ous delays in decay
                                               A'i for developing the measuring of
rates, which is similar to radioactive
processes, and so on. In doing the mathe-      human assels. just as soon as we've
matics of this, he made some unusual           figured one out, I believe the marvelous
discoveries: for instance, the original        ingenuity of man would frustrate us. vVe
feeling that if you could grow fast            have a saying about that: "No tariff can
enough, the accelerated depreciation           a nticipate the ingenuity of customers."
wrnaround would never catch up w1th            The one corresponding to that is, "No
you. He proved analytically that it al-        personnel pol icy can anticipate the in-
ways caught up wi th you, and occurred         genuity of people." So I hope that we
at half the mean life of Lhe plant. Some       continue co think of personnel as an
original, genu ine discovery of high rele-     enormous, untapped resource. That
vance came ou t of this.                       sounds 1ike a geologist's atti tude to oil

                                                                                       153
r~enes.  But \\(' should constandy ap-              thing a-; human potential. That' admit·
prcuatc the capacit) of our people and              tedl} a per,onal baas, bul fal'>C quantifi-
help lt1m it into abilitt~ in the dimen-            cation in human affairs is "4.lllletimes
'iom. in which we are intere ted and                wor-.e th.m no quantification at all, bc-
\\hi< h au gm em a pen.on \ O\'era II               cau~e ll um mt lead decisionmakcr inw
growth. 1 .1m not ea~er to push for quan·           thinl..mg that more i known than trul}
tificauon of such a rich and precious
                                                     "·




                               Serving the Congress


                 \ \'e are rOl lLill'1lC i11dc:c:d ill h~t ving avai lable lO US 3
                       organi1:Hion or 1hc cnl ihc1 of lhc Gent· ral Arcou nt-
              \t:l"\' J('C
               ing Orfi<e lo furnhh u' e:\perl, in<lepcndcnc. a11<l profes-
              ''onal .1pp1.ii,.11\ of lhc manner in whith Gmernmen1
              dep;1rtmc1m and agcncic' are clbdlarging 1hei1 rt''f>On,ihili
              tie. in the m.1nagemcnt of the p1ogra1m \\l' .nuhon1e and
              in llw uw of the fund~ \\e appropri.1tc. l'hl' OH1cc not onl~
              .1nticipa1<:' our nt•c:ds for ..uch information hut st.ind'> read\
              to re pond quic-kl) to our rcque~t\ for ·'") 'pecific informa-
              tion we may need in our deliberati011' on the .111thori1.u ion
              .111d £unding 0£ nC\\ progi.tm\ ::ind the C'Ontin11:11io1t of exic;t-
              ing program.\.


                                                Congrcc;c;man Frank llonon
                                                Cot1J.,TT('Hiot1nl 1ll'rt11d
                                                junr-   to. 19il




15·1
             Reviewing Effectiveness of
              Government Programs


    111 acldiiion to continuing it'> ciucsL for cconom} and
cft1cicnq. howc\'cr, it j, anolhcr "E"-cflcc1ivcnc,s-wilh
\\hich the General \ccounting Olhce ha., liccomc increa!i-
ingh concerned in receltl \Cal\ Thi' ~igmfican1 dcvclop-
menl i' one m which I like to feel I have h.id \OO\C part.
.\., m} colleague., will recall. an amendment to the Eco-
110111it Opponunit) Act \\hich I offered on ihe 11001 of the
Senate in 1967 directed the Complroller General to under-
takt• a \ltld) or the :rn1ipovcrt} prognm' .incl Jtti\.iti~
financed un<le1 that a1.;L.
    The C \0 wa\ ;1 kcd to make an imc!>tigation 11ot on!) of
the efficienC\ wilh which Lite. e program., and activit1e~ were
heing Jdmani,tcred hut. more imp011amh. tht' extent to
which they we1e ;tchi<'' ing the ob1cct1vc~ th:11 the Congress
had o;e1 for them. In other wo1d~. the G.\O \\"' to look at
the~c prog1 am~ and activitic~ and j 11clgc: how {'(it-nivc they
l1 ad been.
    This was no 'mall ta~k bcc:all\C the mc1hod .. or C\':tluating
\OCial problem., ~uch :i . thc~c and the \anhtitk' to 111ea..ure
their progrcs~ 01 :.iccornplbhmcnL' wc1e not well dt:\'cloped
or 1111de1 <,tood. The C..-\0 re,p<>ndccJ 10 tl11s cxu emch com·
plex and cliffirnll t:t\k \\ ith the mo'>t fact Cul .ind in-depth
~t11<l\ C\'Ct m.ide of anlip<)\et l) proJ...'l<tm!> and actl\·i1ics. The
rc!tult!> or at!> r1·vic.,., .tnd lhe recommcncl::niom 11 made for
1 evisions in amipovert) program' .111d organin1t1on!t were
rnmiderc<l by the Congrc\s during the hcari11~' 1h,11 led to
enactment ol the Economi<. Opponunit\ Amendments of
 I ~69.


                                    . cnatot Winston L Proul~
                                    Cm1r,rr.H1m1nl   l<rrurd
                                    June 10, 1!171




                                                                           155
                                                 William Gorham
                                                Pres idem
                                                The LTrban Institute




     William Gorham's career i11 Government and Government-related organiza-
tions /Jrgan in 1953 when he joined the research staff of the RAND Corporation.
His fn"ogrcss has been rapid 11.1 shown by the following milestones in his career.
     Jn 1962 he served as Deputy Assistant ecretciry of Defense for Manpower.
He buame Assistant Suretary of the Department of Health, Edtteation, and
Wt'lfarr m 1965. and m /9fi7 hr uias appointed Chau-man of the President's
Tash Forre on Child De'T.ielopmr.nt and Cocl1airman of the First Federal Panel
on Sona/ Indicators.
     Mr Gorham bream,. the (mt President of the Urban Institute in 1968. The
Urban ln.<t1lute an independrnt, nonpartisan, nonprofit research organization ,
                1

U'as l'stabluhed to study the Nation's urban probll"mi. It responds to current
rireds for disinterested analvses and basic information and attempts to facilitatr
tlu: application of thi~ hnotdedge. As part of this rffort it cooperates with
Frdnal agn1c1es, tales. cities. assorialwns of public officials. the acadrmic com-
munity, and other sectors of the grneral public.
    Afr. Gorham was educated in New York City public schools, thr Massa-
rhwetts Tnstitute of Technology, and Stanford University. H e received his
B.A. degree at Stanford University in 1952.




156
GAO Auditorium
August 16, 1971




Ignorance in Government Is Not Bliss


The natt~re and quality of information made available to Federal policy-
making officials, including the Congress and program managers, are
matters of great inte1·est and concern to the General Accounting Office
in its evaluations of Federal programs and activities. These mailers are
also of interest and concern to Mr. Gorham, a former Government
executive and now president of a nonprofit research organization devoted
to the study of problems of the Nation's urban communities. In his
lecture, he refers to weaknesses in our decisionmaking process which
have led to ineffective programs, waste of money, and a squandering of
public confidence and he points out that although wasted motion and
wasted money are bad. wasted confidence in a system such as ours can
be a disaster.



   This opportunity to share with you          upon one such smaJI but striking indica-
some of my observations about the func-        tor in connection with work The Urban
tioning of government is a great honor         I nstitute is doing on financing public
and a great pleasure.                          education . From 1963 to 1970 the per-
                                               centage o f school bond issues approved
    My text is adapted from De Beau-           by the voters fell drastically-Crom 72
marchais. Two centuries ago he said:           percent to 53 percem. Moreover, the
.. It is by no means necessary to under-       voter·s inclination to turn thumbs down
stand things to speak confidently about        had gained momentum steadily despite
them." Experience suggests that for our        the fact that school officials, rrying to
purposes the following paraphrase              counter the trend, were becoming far
would be more appropriate: It is by no         more cautious in going to the electorate
means necessary to understand things to        -putting only 1,216 issues on the ballot
enact laws and appropriate money.              in 1970 as compared with 2,048 in 1963.
   My concern t0day is about certain              1 he voter's quiet message, expressed
weaknesses in the decisionmaking proc-          as a rejection of what bureaucrats and
ess which have led to ineffective pro-          elected officials propose, is loudly rein-
grams, waste of money, and a squandet._         forced in Lhe media by other segments
ing of public confidence. Wasted motion         of the population. The left calls for
and wasted money are bad; wasted con-
                                                power to the people; the right. for law
fidence in a system such as ours can be a
                                                and order. Perhaps the most insidious
disaster.
                                                varia tion o f the message comes from a
  Signs of lhe decline in confidence are        substantial number of the young. They
increasingly apparent. Recently, I came         ask neither what they can do for their

                                                                                      157
countrv n<>r what their country can do          :md the poor legislation to disappointing
for them: the gieening of America is to         program~. Let me remind you of some
take place in 'ipiLe of government. :'\'one     of the national agenda items that, in
of Lhe signs are persuasive, if cal.en          rapid ~unession. have been sec forth
singl). But, c.1king them together. I am        o\'er the pa L cwo decades as goals that
persuaded that if we had a Dow Jone~            < ould and would be attained.
a\·erage reflecting the public's confidence
                                                   '\"e ded,1red our intent to achieve full
in their governments, ic.s direction these
                                                e111ploymcnt, stimulate smaJI business
past JO years would be down.
                                                ,mcl minority enterprise, provide every
   I thinl.. t hi is had news. 13ad becau~e a     \merican with a decem home in a c;uit·
disaffetled publi< will not give its gm-        .1hle environment, e liminate poverty,
ernment t h e go-ahead to do things that         wi pe om h u nger and maln utrition , t•nd
need doing and I personally am cun-              racial discrimination in public places
"inced th.it more, not less, does n<.·ed        and in housing, protect the voting rights
doing.                                          o[ all citizens. assure quality education
                                                and equality of education fo1 all children,
  If ccmficlence is so crucial , why has it
                                                re,·it.di1e cilies, crack organi1ed trime,
heen dropping?
                                                ~uaramee afe treets, enable the aged
   Let me fir.,l dismi s several explana-       and indigents to afford high levels of
tions frequently uo;ed to explain the fuil-     medical care. protect consumer<., save
ur~ of gmcrnrnent :                             "1ldemc• s areas. l·onsen e the environ-
     I. Our leatlerli know \\hat Lo do but      ment h} halting and cunng the ravages
                                                of pollinion, pump new economic life
        lack the rn11ra~e to do it.
                                                 into depre ~ed areas. and more.
        The bad guys are in power and du
        not wam to do the right thing•..            In earh case. c.he public <lialoguc pre-
                                                <Tc.I i ng- 1he acceprance of the goal :rncl
     '.L 'J he good guys arl· in power but
                                                ils prohl'fams implied that •he Govern-
         tilt' bad 011tside are blockin~ or
                                                ment l..new what the goal should be and
        :o...'lbmaging their good efforts.
                                                had the means Lo attain it. The mc:m ,
   A t any given moment one is likdy to         ol emir~<.'. varied-m assive expendi nn es.
find examples 1h,1t give nedentt: co            Ill'\\      regulations  and   enforcement
these explanation-. But ..lS uni"ersal ex-      pmH~ro;, rewards fnr good behavior and
planntions fo1 the failures of trn\crn-         plnahie~ for had. direct Federal auion.
ment, the vari.ttions of the villain Lheurv     1ran fer of funds and powers 10 Late
are painfull1 naive. . urpri~inglv few          an<l local g-overnment. creation of new
fools or k.n;n e ha' e occupied the key         departments. a~encies. and mhet in tru-
offices of gm crnment in our ci mes.            memalities, ·ub idies, loans at fa\'Orahle
Blaming our croubles on Lhe cupidit' or         I llC'i,   ind ~O forth.
 rnpidicy of our leaders is as dileuantii;h
a~ it ii> predictable.
                                                    \ lmo'>l every agenda item offered a
                                                rl'a~onable   area for Government anion,
                                                bur effective modes of intervention gen-
Admirable Goals                                 cr:tlly were not-and s till are not-
                                                l..nown. I I ence the prescri ptwns adopted
  The trouble i., deeper; the weaknesses
                                                1 anged from counterprod11ctive-that is,
are in the ~rtem. The rapidly expanding
                                                ''nro;e than if nothing had been done-co
agenda of the pa~t 15 year., has ·trained
                                                fair.
the sy~tc:m to che point where those
weaknesses h.n t' led to poor legislation           Let me give several suppotting exam-

15
pl<-"> .ind on that b:hh nffet 'ome gt·ncral           chic.,, .incl Fngli,h : tdth a eparnte hill
reason why Wt> ..,ec.:m .-,u..,ceptiblt" co lcg-       cmt:tine, 'llf'J>Ull for l1hrarv c·on:-tru<.t1011
i-.laung \\'l'ak or dan~crous medicine for             and 'er._: ic c': and \dth sel ecciYe aid,
our '><>cial ilk Firnlh. out 011 thimll'r i«:.         undt:t the ('i,il Ri~hts .\ct, £or c;rhool
I will o fft•r some '\U~•Tc,tinn\ fo r imprn\'e-       sy!>tcms ha' in~ prohlems \\ith de e~ega­
mcnt.                                                  rion

                                                           \\' ith the g1011ncl thus prepared. b}
Compensatory Education:                                 iru;, it ,t•t·med time 101 education to
A Futile Try                                           ha\C' an an ol it\ cmn. In tensive politi-
                                                       c al huhe ll admg final ly brought 10-
   For scvC'r;1 I dcc..tdc::., f1ie11cls of p ubli c   gcthct tlm•t• interested groups: those
education h,l\·c bt•c.·n working to'' a rd a           wl10 rnrl'cl .1ho11t the poor, business a nd
tap on the Fc.·rlcr ti ft,, 1 lnouah 1<1;;7            ch i1 lc.·a<l(•r, rnncerned about preser ving
onl) one ,mall Feckral '11pport t~rngr;im              the Im .d t.ix b.i..e for 0 1her purpose:., and
wa' on Lil<: book. "-no \\ 11 .1' "impancd              the <'elm atinn e<,t.1 hlbhmcm that wi,hed
aid." it auth11rin·cl tund, lor loca l '>thool         to initiatl' £-ecleral operating aid £01
di'itric ts basc.·d on th e 1111111 her of <hi ldrcn    local '>< hools l he rt',11lt wao; pass,1gc of
''hme p:nt'llh liH·d m \\011..t·d 0 11 Fed-            the Elc.·mc 11t'1f\ 111d ~econdan Fduca-
eral mstall;uions in the :irt:.1 "imc tho.;e            tion •\ <l F I· \ l fot both pu bite and
inst.illation' p.iicl nu property tax, the             part!( hi.ti s< hoob. The fund,. l.'.?5;1 hil·
~ hnnl aid wa' c11mi<lerccl ·'' a kind nl               liun in tht.· fir,t \e.n .md about tht same
in -lit•11-of-r.1xe" plan. But a part from thi,        leH·I '>lllH' tlwn .' \\'ere to he pa-;se<l on to
limited prngi .1111 rhcre had been no                   I h,000 lcx·al " ·hoot ni'itri< ts according to
brt>Cll..through to prmide Fcrleral operat-            .1 f11rnltlla b l'ed nn their poor popula-

 ing 'ill ppo1 t to elemt·man .ind sec nnclan           timi
schoob. '1 ht•< h urd1·slatc barrier aga inst
                                                          Tlw le~islation w.1s passl'd and th <'
aid to parnchi.il sdwuls. pl 11s fiscal cn11-
                                                       bi llion dol lar s were appropria ted. on the
o;enatt'>m ;uul th tradition nf local
                                                       ' " 111 f>l'<.' llll'>t.'' Lil.It there wao; an edut'a-
school "n c•rei i..111 ty, had pre-;ented too
                                                       ti11n.il hanclirap .moc iaLcd with poverty
fot m id.tblt. 1 -;et of ol,..1.;.u It::..
                                                       and the )()(al ,chnol system' lne\\ hm'
  \\ ith tht.· l.11111< hing o f ~pumil.. in Oc.       to n \ t•rcomc 11 Pt an 1ca II y no C\ id<.· nn.·
robrr !9)i. J-ederal funding of educ.i-                -.uppm lccl the o;enmd prcmi'ie. On the
Lion rt'CC'l\ t:d suppott f1 o m a nm el ind           c o ntr:tr\ , tilt· le\\ competent 'itud1e' .tnd
potent alh \'i.,-a    ,j.,the <;miet '>liCntific       pilot dfott, .1imt:d at upgrading the ef-
at h11.:vernc.:nt. the imprm ement ol cd11ca ·         lct ti \C' nt.''' n l the sdtool w tern wilh low
lio n 111i~ht he <ri t ic:1lh needed fur n a-          i111 lllllt.' ( luldrt.·n prm ided woun1.h unh
tional clefrmt:         It '~;i,, accnrdingl) .        fm f'l'''imhm.
under chc hanner of the National De-
fome Edmation \ c..t ol I C)58 ( ~DEA)                     rl11·   Titk I        lllllllCV   has pem1iuc.·d   ,1

t h.tt Feckral luncls were \oted for. pri-              f C\\ L;il elll cd t:d llC ;H o rs l o l('\t idea-, Oll
m arily. the improvement o f teac hing in               how to .1clva111·c th e C'ause of compe11sa-
scienc.e. 111athe111a1in. an<l foreign lan-             wrv Nlll<atiot1. But Lhe p;rcar 1>1111.. of
g 11age' Dunng the vear., immediately                  '< lwol ..,,,tem' cl id llnt ha\'(' the foggieo;t
following. the exi.,ung p1 og,Tams ''ere                11nt 1011 of ltnw to make ~ond educational

not onJ... ma11u.tincd hill \\ere funha                 IM' o l lkpat unent of I lealth. Ed11c.ation.

expanded Thi' \\<t' paniutlarh true i11                 and \\'elf.ire ( HF\\' fun<l~. "um1e ~)''>·
 1964 wi th lht.· t.'Xlt' l1'>inn of ?\DE\ sup·         t~·111~ simply ,uhstit1ned Federal dollar'
pon to ,ud1 arc;" t'I lw,wn gt:ogra p hv,               fm l11c:tl   l1111<b :   ' o mc 'pent the funds on

                                                                                                          1·,q
non-poor children: some school districts    questioning. In the heady air of a legis-
used Lhc funds for breakfast or equiJ>      lative assault of the magnitude of 1965,
mem they had been waiting to buy any-       such quc..>stioning would have been re-
way. M~t did just a little more of lhe      garded as "hair spliu.ing." There is evi-
same-with the same outcome. l n short,      dence of an abortive try by the Budget
16.000 flowers did not bloom. And it has    Bureau to cighcen the Title 1 guidelines
been hard to find bud~.                     by eying future allocations of funds to
                                            educational attainment.
   Perhaps the excilemem of first open-
ing Lhe Federal Lill for education still       Congress appeared more interested in
sustains Lhose who participated in the      sharing in the glory by passing the pro-
victory. Certainly neither the conception   gram than in asking hard questions
of Lhe program nor its outcome did.         abouL it. Further, the strong contjnuing
                                            distrust of Federal involvemem in local
   What was in the minds of those who
                                            schooling helped to discourage detailed
passed lhis legislation and funded this
                                            debate on the measure, since such a de-
program? Were they aware of the diffi-
                                            bitte might re-ignite fears of more gen-
culty of generating more education by
                                            eral Federal interference with local pre-
simply providing existing systems more
                                            rogatives. Moreover, Congress labored
money per pupil? If they were not aware.
                                            under its perennial handicap of having
why nm? If they were, did they support
                                            to rely heavily on the executive branch
the program only after considering the
                                            for facts and research. The House Edu-
alternatives and after rejecting them as
                                            caLion and Labor Cornmirtee, with only
even less likely to achieve the goal?
                                            a small full-time professional staff, took
   Appnremly. the key actors in the proc-   up over a dozen major bil ls during the
ess did not ask whether local schools       same legislative session.
coulrt do what the legislation was giving
                                               Finally, besides Government spokes-
them fund.ii to do. Although the Nation's
                                            men, Lhe public hearings as usual at-
schools were seen to be wanting in many
                                            tracted chiefly those who had vested in-
respects-people had asked why Johnny
                                            terests in the legislation. They were not
could nm read and how Ivan had out-
                                            about to raise questions which weakened
·maned us wiLh <iputnik-most of the
                                            the case for passage. Only rarely are the
actors in the Administration and the
                                            public hearings designed to fully inform
Congre s simpl either had enough faith
                                            the legic;lators. At best they are a device
in the existing delivery systems or be-
                                            for ventilaLing vested views. ESE.A was
haved a · if they did. If more money were
                                            no exception. In the end, those who
spent for poor pupils. why. of course,
                                            ~new didn't talk, and those who talked
these children would become better ed-
                                            didn't know enough.
ucated.
                                               . pending on Title I continues now at
   For his pare. Lyndon Johnson was
                                            about the same rate as at passage, de-
anxious to make his mark as "the educa-
                                            :.pile the poor performance of the prcr
tion President." Taking on man-siied
                                            gram. Outlays most likely would have
goals and making large spending starts
                                            been expanded were it not for budget
was (from his perspective) an achieve-
                                            tightening due to Vietnam.
ment in it. elf. one that could be placed
on the corecard at once. Knowledge            In spice of discouraging subscamive
Lhroughout the executive branch that        results, Title l bas had three positive
this kind of commitment existed at the      re ults. First, it did get the educational
top was not conducive to substantive        nose under the Federal funding tent

160
where, io my judgment, it belongs. ec-          The 1970 co ·t of the program was $5
ond, the que::.tions raised about the abil-   billion and it provided payments for 6
ity of schools to serve disadvantaged         million individuals.
children led many more people to see
                                                A really satisfact0ry evaluation of
that, for the sake of all children, the
                                              Medicaid has not been conducted but
educational system needs close and con-
                                              several things about it are clear.
tinuing attention. Third, a precedent
has been set for focusing a national effort      I. Before Medicaid the services to the
on substantial edu(.ational gains for the     indigent were provided at below custom-
poor. These are not mean accomplish-          ary charges. Now, a substantial amount
ments. but they are simply stage sercings.    of Medicaid funds is being used co cover
It is difficult for me to believe that our    t he full fees of the medical establish-
system requires such an expen ·ive rev-       ment. In effect t his has amounted to a
eille.                                        transfer payment to physicians and hos-
                                              pitals. Between 1965 and 1968 physi-
  The same year that Tide I was passed
                                              cians' median income increased from
the Social Security Ace was being
                                              $28,960 in 1965 to $37,620 in 1968.
changed in a number of ways which af-
fected not only the aged but also those         2. The a ll-or-nothing characteristic of
covered by the welfare provisions of the      the program is recognized as absurd and
act. Our next example is one o f these        inequitable.
pro,·isions, Title XIX--commonly called
                                                3. Tbe weaknesses of the existing sys-
Medicaid.
                                              tem for delivering medical care to low
                                              income families were brought into sharp
Medicaid: A Paper Solution                    focus by the substantial rise in demand
   Medicaid covers medical care costs for     for service with little or no increase in
specific groups of low income people and      the supply of providers.
involves Federal and tate parcicipation.         4. Finally (and this conclusion is based
The Federal Government sets minimum           on the least empirical information).
standards of service and pays between 50      there is little evidence that those covered
and 83 percent of the total costs for         by the program have received a higher
States with approved programs. Two            qual ity of care than before, or that their
basic types o( coverage ar e provided:        level of health has significancly im-
coverage for all persons on categorical       proved.
public assistance and coverage for the
medically indigent. T he laller are typi-       The Amer ican Public Health Associa-
cal ly people wbo have too much income        tion in a 1969 asses.sment concluded:
to qualify for categorical assistance but          The Social Security Amendments of
not enough for suitable health care. Ben-       1965 were a beginning response to the
efits and eligibility requirements vary         public demand for improved health
widely among the States.                        services. l.Tnfonunately the programs
   The legislation allows for no help at        have not fulfilled the high expecta-
all for those above the qualifying in-          tions and purposes toward which they
come; almost full medical coverage is           were originally directed.
provided for those below that level.               Medicaid has been particularly in-
   The bill provides only for t he pay-         adequate in this respect. It has not
ment of medical care, not for increasing        only failed to correct existing defi-
its availabil ity.                              ciencies in the provision of medical

                                                                                     161
   care lo the need) hue has perpetu;ited               political maneuver the two were made
   and accemed manv of the mn~L glaring                 into one pac;kage. This deci,ion was
   incquillt'' .111cl .ndignilies.                      made literally ovemighL.
   lL \\a' as clc.11 in 196'.l as it j, 11ow th:ic          Thtrd, at Lhe time of passao-e (in-
the anmer to the mmt serious med1< .ti                  deed e\Cn now) there was very little
(are problem' ol tht: poor \\Ottld not be               -.ystemati<.: thinking on way' and
'olvt'd In providing a \ledi c.aid card to              me.ins of impro\'ing the medical sen
inchgt'nl\ and Cull 1e1mhurl>emenc to prn-              ir e a\'atlable to the poor. The liLera-
viders nf ~en in. If the gTeate1 availabil-             ture ' ' i i ' le:111 and the e\.pcns were
ity of luncls fur 'ervi((: re ulted in more             few
medic.ti J>l'rsonnel, then one wuld argue                   fourth. ii\ wilh ESE.\ . thtTe wa'
th.it \ft·dicaid rnulcl 11lt1ma1ely, though             very greal pressure to g·et legisl.nion-
indi1euly, do lht' jnh e\.pected of it. nut             e-.pe< 1all y M edicar<". 1 he crush of the
nll'diu1I ..,en ice:. wet t: .111d are extreme Iv       agenda did n o t :makt.' the delibera te
inelastic parw ularl) in plales '' ith a                cons1deralion or die nmseguentes of
high c011ccncr:nion of low income fami-                 lhe leg1'l:uion. I Incidentally. in 848
lic,. \f ore dem.md simply puts pre-;s11n:              pa~e' of       Hcrnse hearin~ tt:~ttmony,
on pr u es.                                             \feditaid wa\ discu sed in onlv thret'.
   inc t: all of these ronclu 1om <01dcl                "\m 11111<.: h fm a 5 billion program. It
haH.: been fon:wld at the time T1tlt'.                  \\<J'> t."Stimatc.d   lOO m1lhon .1 year
:-..ix wa' acldecl to the 'i0< ial St'curitv            \\'hen it reached its maximum.)
lull. \\hy \H'rcn't tltev?                               With both Title I ancl ~feclicaid. the
   I don ' t I-nm' all Litt: n~a,011' Ba,ed on       k~i,lati\e prm e's failed to ( hurn    up the
.m t:\.ll'll"' e ri:;ic!ing of the record and        inform;1tion ''h1ch would have m.1de !or
cCJrt' t'tsauon' 'd ch 'iome of 1he ke\ .tc·         hl·Cler lc:gi-.lacion. :\ majm came in each
1ors, I conclucle that we ha\'e a pood)              c"tse wa' the suddenness '' ith which the
n1nce1,ed, expensiH· ath\\'er w .1 real              i-;s11e "a., moved to high priori cy on the
prubll'm. ume of Lhe reasons .1n: ·                  n.ttional agt.'nr!a I lasty political dead-
                                                     lirte'>.   1m11Rkient      information   and
      F11r,L,   administrncion olhd.il., and         analv'e'· boomeranging butll.{t:ts, and
  the c 011gre.,,.-.iunal lcadcrl> lll\ oh ed in
                                                     mo11111ing t'\.f1C< tations from the publit
  the legi,Jauon ail' lrnined, experi-
                                                     - all rompired to produce the'e di~trc' ·
  enn·cl. 1nd 11uere,Leci \ery large!) in            ing,onal   pa11ace:J'i.
  in(ome tramft•r and ' ocia l imurant c
  maucr . Framing Lhl' medical ca1 e
  problem of the poor as a pw~'IUl'llt               Housing: The Old Order
  problem ancl not a dc:live11 probkm                Changeth Too Little
  t'\ an 0111growth of the person.ditie-.
  inrnh eel.                                             Let us tum now to anOLht'r f·ederal
      lil•tond. for ,e,eral )'ea1s Llw     m.1111    <tgc·ncla item which ha. a much longer
  i~sut· 1><·uq>\ing both the J-e, aclrninl'·        l,1,torv l1t'>ofar as thty exist, f.iilu1es of
  Lracion olfli<ials and the 'Vays ;ind              F cderal housing progran1s do nut ~tern
  and /\,Jean' C.ommiteee was l\Iedicare,            from hasty consideration The cvol ution
  not l\fedicrud. \Tedicaid ''a' a version           of housing policy in this country is com-
  of thl' \n1erican \,fc:dical :\ sociation·,        plex. I will dra\\ jmt enou~h \trands of
  (AM\) ;rns\\er to \fedicare. It was                the swrv lo suggest -.ome differenl prob-
  ofkreci ,1, a \11bst1tule for \fedic:arc .1c       It nh in our dccisiunmakina sy~tem.
  the elevemh hour, ;ind in an adroit                  Dming \Vorld \\'ar II . home ww.truc-

162
Liou ''"' 'it lllall) 111me:\i't('nt except tn                 come £.1n1ilic·, li,e<l in ,ulhtandard hom-
prO\i<lc ..heltt' t ne.11 ''·'r t•rf'11n .1ni,i1ic...          in~. abn111 iO pern·nt 11,c·cl i11 "~tanclard"
f ollowin ,., \\'111 Id \\'.1r IJ there was .1                 nlcl hnu<>ing, and :ihout 5 pl·rcenc 1n
widely rec 0~'1111ccl hmhin~ -.horca~c i11                     puhl ic h11mi11g.
thb 1011ntr) <hc1 10 pcr1 cm of \nu: 1
c:in' liH·d i11 h1>u-.ing '' hi1 h " ·" 'tn11 t11r                   In tlw 111111-;ing . \ct of l9fi . :ittemion
all) dilapidatt·d or dicl 11nt haH pluruh·                     """ ..till lo< mt:d 011 huilclin~ or on m01jor
in~-the       ckfinitin11 of sub~tandard .                     rehabilic.uion 11£ oldc:r homing. •\ spe-
llo11sing Wi!'i nll\'i1111,1~ .1 lllJj01 problem               dfic IO·vc.1r huu.,in~ comrructicm go01l
                                                               \\':t\ '< t, including .. ubtargN' for lo" and
LO a larAt: proportion ol Ameri< am.
                                                               mnrleral<: ("1b,icli1ed) homing. rr the:
   One rcs('<>ll'c " · •~ Al Cath c'p<1mlcd                    go;tl \\en· .1chi1..·\ed by l!Ji , no :\ men-
u11c of h·ckral I lo11-.111g \ dministratltm                   <an wo11 Id IH I hi ng in ,ttlmand.ird how..
im,11reci morip;ag1.· loans. a rnncept ''hit h                 i11g. 1 h1.· b.it t ic ;igaimt '>ll b'l tandardncss
w:1c; an 011tgr<H\ th of tlH Dt'pre::ssion. GI                 \\as lJClllJt won Publit homing-and the
loath \dth no <Ill\\ npavment ano C.o\"•                       ti it l..lin~ dc)\\'Jl pnKt'''-was '\ nrk.ing as
nnment guarantee~ tq:n: i11\'entecl to                         a ... trnt1..'g) .
mal..e it t·a,ic:r for 'ctt·r.111' to financ c
houc;in~. The p1 ~1 . 11m "'n essf u lly fa-
                                                                   Bm the outlook in I ~JG!; w. eocourag-
cilitated the hn11,ing CIJll'lruuion boom                       rne; "nl} if me:"ured a~1imt the hrusin~
of the postwar \C:, lr~. Mirlclk da'' .\met ·                  .. nncl.ml 'et in tlw l ~l !SO\, when a stand-
icam 1lt'ecl1.•cl hel I' .111<1 thc\ ~ot it.                   ard unit wa .. dchnt•d "" 011e whic:h It.id
                                                               intt·rim pl11111hin~ .mcl \\Cb '>lntll11rally
    The 11c:t·ch ul 111\\' income familie,,                    .,<11111rJ- ,,,t., nut falling apart.
who benditcd not .11 a II from tlit ea,in~
of mm t~age <1t:d it, wc1 t 1he nrgu of                              .\ lan~t· li.11 ttcm uf the .,,H .ti led "stand
the Ilo11sing \ ct of l !l l <) Thi~ .\Cl pro-                 :1rd" ho11~111g in wh1th the poor of cnd.t)
dainlC'd t he ~cm l o l "a dt>('t'lll ho111c 1111<1            live \\lltilcl ' imp l y llol lllCt'L any \ mcri-
                                                               (;ttl <lef111i1ion of the I 'ltJ!J an goal or '".t
,uiwhle Ii' ing t'll\1rn11ment for etery
.\meriran famil ·" With o\'er :~!i pt·rc e111                  dccelll hnrnc." I h e 'Ill llCtllre provide-.
of \111ctirn11 l:m11lrc:' ,till li,ing in s11h-                only tht• fi1.,t a1tnb11tt.., ol a clerem home
,t,111ci.t rel hott\l 11~. l hml \\ 110 rramcrl the            _ ,, incipwol. dry, and llonro. that will not
act quite nat11rall} lhuu?,ht of progrmm                       nillap,c. 01he1 :ittrihuu.... ul dc:tent huu,.
td1it h ''ould .1dcl holl'•ing unit-.. \                       i11g p111h01bh induclc -.uc:h f<:atmcs a ..
gn:ath l'Xp;indnl puhlic· hma-.ing pro·                        ....1 lt't v. ht'al \\'ht·n needed, reasonable

~till-. fHl.ClOO 1111ic~-\H1.-. :rndwri1ecl                    c1uici .u ni •In.•ukqu.1tc u.1,h 1ollc:lliun.
rluring th(' nc'\:t (i ~c-.11".. The ho11<>in~                 a clcc elll nt:i!,!hh111 hood, .111d ..o Fm th .
llc:t·ch of tht• pour '' c1 c Ill he me.t by th i<>            C t' t t.1i11h '" l!JCi ' thl' 'truc.wral ~tand .
pro~:1m ·rntl ll\ the tric ldinl! do\\·n uf                    :11 d '' ,,, .111 .111o1c hr11ni .. m.

uniu. abanclom·n hy the ncw-homt'-buv-                                I lowC'\ l'T . the l 'lflH ::in cl id not ;mempt
ing micldle < 1;i,~. I Jm,e\er, the public                     .1 ftnt·t cld1n1tinn ol a clcn:nt home.
homing .1u1hmi1.111nn W<h ne\Cr tram-                           Rathrr. it 'lt.1yccl \\ith the earlier deft
latecl into units, due lnrgcly to 1he Ko·                      J1ittc111 .tnd. quite nau11ally, thetefore. fo-
rt'.tll W.11 and the Fi,<:nhower \ dmi11 i'i-                  1 ll'it'd t''< ltt\l\l'ly on adclmg n ew or reha-
ll a ti on\ lad, 111 cml111si,1'm fnr pu bl ir                  biltt.1wcl 'tancla1cl unil' ln the homin11,
housing. ( In l.lCI the I '11!1 6-year p;ual                   ... tll( k.
h.1s been ac. h1ctl.:'d only thi' )eat-:!'.!
\Cats later! )
                                                                  I 11 I !J I!I when J:> pen en l of housing
                                                               ''a' '' rtt< 1111.tl I} 1111 ...ound, fot ui;ing na-
   B) I !1fi~    . 1ht111L   '.!O   J>Cll   em of   low 111-   tion.ii pwgr.1m' 011 building 11<."\\' unit.,

                                                                                                                 HHI
made sense. A more refined standard           needs further testing and exploration.
probably would have been impractical          These include the possibility of housing
for preferred program -;rrategy.              sub idies to lo" income families, new ar-
                                              rangemencs of ownership and tenancy
  Bo,,e,·cr, by 1968 ''ich only a fract10n    providing an incentive structure more
(about 5 percent) or housing units in         conducive co improving the hou ing,
need of replacement bur with many
                                              more efficient techniques co maintain the
more Americans clearly not housed de-
                                               tock, and so forth.
cently, a finer assessment of the problem
would seem to have been required.               To achieve an efficient balance be-
   The "sL:indard" stock into which the       tween housing strategies, the cost and
pour have been moving during the past         bcnefit!I of the construction strategy
decade is depreciating at an extremely        should be compared with programs
high rate, mainly because there i ·n'c        which affect the existing stock, such as
enough money in the budget of low in-         those suggested above. The outcome of
come families for housing to be properly       uch c.:omparisions is by no mean clear:
maintained. The re~ult is that a great        lheir de:>irability seems to be beyond
deal of basically good stock ceases to de-    doubL.
liver adequate housing ervices. In manv
                                                Two mu wally reinforcing re015ons have
of our largest cities structurally sound
                                              cau ..cd our thinking about housing to be
hou ing stock i being abandoned-
30.000 to !i0,000 units yearly in !'\cw       'iingularly unimaginative and anachro-
York, 20,000 in Philadelphia (in spite        11istic First, tired blood on the official
of extensive rehabilitation).                 side. The prime movers simply have not
                                              had their thinking challenged in years.
   The individual abandonmems arc             There is no history of analylicaJ chal-
on ly the tip o f the iceberg. for rwo rea-   lenge in the old housing agencies of Gov-
sons. Fin.t. bc.-fore acwal abandonment       ernment. Second, lazy thinlUng was rein-
took place. those units were probably al-     forced by a powerful sec o{ interest
ready delivering unsatisfactory housing       groups who saw their own advantage re-
to their residencs. And. of course, on che    lated exclusively to a housing policy
verge of abandonment there may he 20           which emphasized new construction.
or a hundred times the number actually
abandoned eac.h year. , econd. abandon-         The'e two factors combined to nuff
mem!I arc caused by, and in turn concrib-     out pt.riodic reassessments of what the
ute lo, the downfall of a neighborhood,       problem was and how it was changing.
'' hich leads to further deterioration in
                                                 There are signs that a fresh breeze is
hou ing '>erviccs and further abandon-
                                              flowing through some corridors of the
ments.
                                              houi,ing establi hments. A recent report
    By 196 , this process-the abandon-        by a subcommittee of the Hou:.e Commit-
ment of strucrnres capable of providing       tee on Banking and Currency raises
decent housing-was becoming evident           many of these questions and puts forth
to a number of housing experts. ub-           some alternative housing strategies. IL is
standard houl!ing a such was not lhe          too !iOOn to say for sure, but on the face
major problem anymore and new con-            of it, this congressional initiative could
scruction not the only answer. \Ve ha\ e      u her in an era when today's programs
now come to the point where a wide            will be designed around today's prob-
\'3.Tiel) or alcernative program strategies   lerm.

164
Environment: The Newest Priority              programs at besl do much more during
                                              lhe next few year than merely prevent
   The education, health, and hou!.ing        still further environmental deteriora-
example are primarily from the past.          tion? Probably no t, primarily because
But the old pattern of Federal behavior       major sources o{ pollution. such ai. auto-
is continuing. Major items for the na-        mobile., and power plants, will inuease
tional agencti are still accepted before      fa t enough to off et the beneficial effe<t'i
we adequately consider \\hat we realis.       of control measures. In my judgment,
tically can accomplish with available re-     therefore. the public' expectation i'I not
sources and IU1owledge. Consider, for         rnn istent with the ability of the Govern-
example, the Federal programs dealing         ment to perform. The public ha!> not
with the environment, although many of        been given a rea li tic evaluation of what
the general points I llhall make apply        is likely to be achieved. The August
equally wel l to our recent efforts to re·    197 I report by the President's Environ-
duce crime.                                   mental Council displayed a refreshing
   Without question the public is widely      degree of candor on this score.
and genuinely concerned about environ-           l fear that many actions in pollution
ment. .\nd with reason. Our increa ed         abatement ha'e been precipitous. I mer-
population, indu ·trial activity, and life    cury more dangerous than lead, or 0:
 tyle are placing increasing burdens on       more dangerous than photochemical ox-
nature. The Federal Government has            ide:.? In .,ome imtru1ces I believe we are
been eager to re pond to the public out-      proceeding ''"ith unsure knowledge on
cry. Recal I tng the pattern of the other     courses that wil I prove ineffective and
cases I have been discussing. it is the na-   co tly.
ture of this response that worries me.
                                                 Some o f the c costs stem from the es-
    The Government proclaimed the goal
                                               tabl ishment of :i•<lndilrds. ociery pay
of a clean environmenL To ilchieve it. a
                                               for them, not Lhrough public o utlays as
new Cabinet-level agency, the Environ-
                                              line item!> in the Federal budget, but
mental Protection Agency (EPA), and a
                                               through higher prices LO cover increased
large number of policymaking groups,
                                              production co ts. The public should be
such as the President's Environmental
                                               prepared lo bear the coses, blll only if
Council. ha\e been establi hed. Federal
                                               there 1 '< ientific and economic evidence
funding for all environmental activities
                                               that the mmdard-; \\ill help prote< L the
h3.11 bc:cn increa'icd enormously: The
                                              environment H we :tre ignorant and un-
EPA outlay ro e 96 percent. from 695
                                              certain LOd;iy, instead of setting tand-
million in fi~I 19il to 1.359 billion in
                                              :mh, we \hould e ·plore a policy of tax-
the 1972 budget. Pollution roncrol and
                                               ing the pol luter.... Producers might even
abatement expenditures increa!>ed from
                                               he given an option of adopting control
$751 million in fiscal 1970 to over $2
billion in fiscal 1972, with lhe largest       measure'> or bearing the tax. This should
share of the increase designed fo r grams      tend to retnrd the rate of pollution in-
for municipal waste tremment facilities       crease by harnessing market incentives
and local pollution control.                   witho11L <ommiuing the Nation prema-
                                               turely to single-and often mistaken-
  With · uch outlay,, the public. includ-      views of which types of pollution arc
ing citi1en con crvation groups. will e_x-     more serious.
pect c.:oncrece, visible improvement in
environmemal quality. But can even the         Present ignorance about the environ-
present massive Federal, . tate, and local    ment and the efficacy of possible control

                                                                                       165
programs need not be prolonged if re-             like· to call bridging persons-per.on
seanh i' gi,en its in1portanl role LO pl.iy.      ''ho know '~hat is known or ho\\ to find
I lu'"e\'cr, de\elopinc a en ·ible research       out .111d have ac-cess to those who .tre
strategy ''ill be blocke<l--denied support        < ro,.,111g- the t and cloning the i's of leg-
-unlc's we admit ignorance openh l.e              1slatlve or budgetary enactment. The
than 10 percent of the current l· PA              < hcc ks and balance in the syi.tem he! p
budget i:. de,·otecl to research and de\ d-       but the.} h;we not been sufficient.
opmem. I c seems to me that giYen our
                                                     ,\ fany   slH   h   individual   now   exist
state nt know lecl~e that percentage i!'I too
low.
                                                  They are ahsol 11tely in Ya! uable. \Vu hout
                                                  the. rn, random events determine whuher
                                                  cir 1101 the I igh t ol tru t h finds its way inw
St eps To Change the System                       the l.m of the land.

    Throu~h thc~e examples [ have tried               The} are as needed in t he execu tive
to COO\'C)' that we ha\e not done \\ell in        .1s in the legi'>lathr branchel>. fhur num-
fmrnul,lling rhe .ipproach 10 some nf the          ber must be incre:tsed w cover each new
problem' on our national agenda. I have           .1n·a of intc:nc:ntion. If one of them had
tricd to 'ugge-.t that 'omehO\~ the S) tern       been nn hand when ~led1caid wa'I hemg
used for u·ac.hi11g these legislative Jlld~­      rnm1dt•recl within the administration or
rnents mmed inexorabh fon,ard with·               in Ccmgre~'· Tide XI~ t\ould ha\e
nut the right que~tiom being a!>ked ur            tunu·d out better: Title l of ESr ,\ rnuld
the right information being bruught w              h:tH' heen much more produniH than i t
bear on the i'isues ill q~1~1ion. rrc·            h.i, ht•t·n: hou~ing problems would ha~e
quemly the information was nm evt·n               het n looked at through .1 widtr sropt.
there \nd often it wasn't there beca11,e
''c didn't crv l<l get il. The resulung           Our 'i)'\/t'm is loo clo~ed for romforl.
wcakn (·ss in pcrformn nre i~ cmt ly 11ot
only in wastecl resource'\ ancl in unreal-           l\fonumental dee isions are mncle with-
ized ~oods. hut, perhaps more impor-              out -.1tfficicrn airing. withoUL .iclt'quatc.·
liHHly, in the Im~ of public rnnfickn<e           opportunity for diverse. much less icon-
whith remains crucial for cominuini:t cnl-        rn I.Mic. vi<•wc; getting a proper lwarin~.
lt:<.:ll\ t: .iuion.
                                                    John Kennedy's description of "ienator
   If the f1Hun· will demand more 1.1lher         \lagnuson\ St}le and impact get.s the
Lhan le collecti\e anion. we must t-<>n-          point ;u-ro-.' ai. well as an) thing I \..no" :
sicler \\hat c:in be done to make the
                                                     He l>peak'> in the ~enate ~o quiet!~ thai
m.tchinen of (,O\t:rnmenr work better.
                                                  few can hear him. He looks down at hi'
   I have no un1v<:rsal an~wer to the    proh·    dc.. k-he comes into the Senate laic in the
lem' I h<I\ c outlined. and r di,rrusc   thOSt'   afte1 noon-he is ver\ hesii tnt ahom m1er-
who cl11nk th<"'y do. Bin l do have      some     rupti11~ other members of the        cna1c-
suggestiom which would allevi:Hc         snme     ·whe11 he rises lo speak, most members of
of the weakncs,es in the process.
                                                  the Senate have left-he send~ his mcl\Sages
                                                  up Lo the Senate •md everyone S:t)'S. "\i\1 hat
                                                  is it?" And Sena tor Magnuson sny~. "It\
Tht•re tffr· m.w[/1r1el/t linhs uet·ween th1'     nothing important." \nd Grand C:oulce
hey dt•e1Hmwinlu11g j1oi11ts atlll the fact:.     D.un i\ built.
that 5/1011/d /1rar 011 the dnisiori.
                                                      The pra' tice on the part of -.nm<.• rom-
  In each subject area there are sever.ti         111i t1<: e,, and parncularly che . \ppropria-
places "here i 1 is crl•<.ial Lo h~l\ e "hat l    liom ( ommiuee,, uf holdingclo'iecl hear

I 6fi
ings is inLOnsistem with bringing a full,        legislators and administrators. In my
penetraling light to legislative and budg-       judgment it has not been used as effec-
etary review.                                    Lively as it m.igh t in improving the legis-
                                                 lative process.
   Only slightly beuer is Lhe frequenl
holding of hearings which are little more           E:ich newspaper's geogi-aphical region
Lhan ri L11als for anointing decisions al-       of influence and each magazine's clien-
ready made. They are one-sided presen-           tele h:is its 0wn experts and nitics whose
tations at which administration witnesses        views should be given a full airing. The
and committee members (perhaps under             advocacy posture taken by editorial
the thumb nf a forcef ul chairman) seem          wri tcrs and columnists is most useful,
intent only on avoiding questions that           not only (or the positions argued, b ut
could raise legitimate doubts abou L the         [or its help in sti m ul :iting a full-scale
proposals aL hand.                               public debate. Outside of Washington
   At times, however, a congressional            and New York. journalists generally ap-
committee conduct5 a hearing that truly          pear less sensitive to the impact of the.ir
airs a controversy. The best minds on the        local newspapers on elected officials.
topic, in and out of Government, have            They th us miss the opportunity to af-
their say. Committee members play                fect new laws and chan ge old ones
devil's advocates to clarify difficult           through the kind o( compr ehensive treat-
point<;. Il luminating facts as wel l as ideas   ment of particular issues that 1 have been
are brought im o th e discussion by good         urging.
commitlee staff worJ.... To resolve difficult       The greatest potential for changing
points, new witnesses are called. This is        the sy tern rests with concerned citizen s.
what hearings in the Senate and House            Ralph Nader led the way in the early
generally could and should be. During            :,ixties in organizing citizens co make
the past decades many of th e legisl<1tiv<.:     their views known to the Congress and
fiascos d1at ~lipped through in the dead         other appropria te organizations on con-
of night or in pro forma he<ffings rnuld         sumer problems. Common Cause has
have stoppl'.d righ Lat this juncture.           followed 1r. ~ader's initiative in form-
   ' Vhere were Lhose ·w ho fel t the school     ing a citizens' lobby on a variety of is-
system did not have the necessary abili-         sues. Early returns suggest a productive
ties when Title 1 passed~ \Vhere were             role for lobbies committed LO the public
the auth orities on health delivery system        imerest.
when the AMA answer to i\fedicare be-
                                                    Rut Congress also needs its own r e-
came a supplemenl Lo ic?
                                                 search backup. Without it, Members
   Further ventilation has it~ price-it          an d their umuniuees are overly depend-
can slow things down. It can decrease the        enc on administrative agencies for infor-
possibility of political compromise. A.nd        mation <lncl analysis. The latk of it helps
it wil l he hard to achieve bcc·au~c few         LO explain the shallowness of many hear-
in the system really want it.                    ings, and also ro explain why so man y
                                                 Federal programs. such as those in hous-
   How c.:an ic be encouraged?                   ing or health care for indigents, have
  The press, radio. and television have          remits Lhat utterly surprise those who
often helped-particu larly the press.            supported the original legislation. The
with its combination of immediacy and            unhappy -.urprises lea\•e the public in-
in-depth reporting. It is a powerful in-         crea:.ingly disenchanted with Govern-
strumem for reaching the attention of             ment and the democratic process. Even

                                                                                         167
selfishly, Congress needs to restore pub-      i best suited to technical rather than
lic faith by acquiring for itself a strong,    human problems. In fact, most of our
permanem investigative and knowledge-          dome tic problems require a combina-
building capability.                           tion of technological, behavioral, eco-
                                               nomic, and political research efforts.
The feedback system workJ poorly.                 Domestic research, then, should be
   The improvement of legislation and          funded at a sub tantial level. The pat-
administration depends on how sensi-           tern of Tesearch and development in de·
tively the legislative and executive           fcnse need not be followed, but I.he por-
branches adj u t to the known strengths        lion of defense spending set aside for
and weaknesses in a program. Good new          research-a whopping I 0 percenr-is in-
legislation is based on a grasp of what is     l>truuive.
actually going on under current pro-              The flow of this money to scholarly
grams.                                         pursuits should be steady, and the tend-
   Executive branch evaluation is barely       ency of purse-string holders to limit
getting off the ground; it needs nurtur-       studies only to "what really counts" must
ing and good central quality control,          be avoided. Most certainly some trivial,
which it i not getting. It till relates too    frivolous, ill-<:onceived projects will be
poorly to central decision and is fre-         undertaken. But if "what really counts"
quently misplaced in the organizational        were known in advance, research would
 rructure.                                     not be necessary. To increase the state of
                                               knowledge significantly requires a wide
  Congress, in addition to research back-      range of efforts sustained by funding
up, should also have its own independent       commitments for many years.
program a.sses ·ment capability. The start
given GAO in this regard is promising.            Most problems jump across traditional
                                               discipline lines. Research that is to be-
Gathering knowledge to understand our          come directly useful to program formula-
present problems arid immediate oppor-         tion simply must follow the problem
tunities is not enough in itself: also crit-   wherever it leads.
ically needed is the further investment          The NJlional Science Foundation
for converting ltnowledge into successful      ( SF) Re earcb Applied to National
programs and for maintaining a broad           N eed'i Program is a promising begin-
research base lo insure the success of         ning. The new thrust of the Office of
these and other programs.                      Economic Opportunity toward social ex-
   We are deluding oursdves iE we think        perimentation is another.
that we can remedy our social proble01s
wilhout investing in the answers. We did       Promises of performance continue lo
not expect that in defense or in space ef.     outstrip capabilities.
forts. But in the social arena-except for
                                                 It is time to take show business out of
major funding in the battle against di~·
                                               public discussions of existing or pro-
ease being carried out by the National
                                               posed programs. More candor wiJ I have
Institutes of Health-the research budg-
                                               benefits.
ets arc puny. ome have taken this as
evidence that the Nation does not want           We need a restoration of reality to the
to wive the domestic ills. My own opin-        national debate. \Ve must di cover
ion is that this underfunding reftects a       mechanisms that assure I.he simultaneous
popular but mistaken view that research        public discussion of ways of achieving

168
goals along with the establishment of the      observation to sustain my confidence
goal. Our error has been to permit Fed-        that we will have something better
eral performance to fall short of the ex-      tomorrow.
pectations formed during the process of
setting the goal. If we can achieve a
better balance between goal setting and                       Discussion
goal fulfillment, I think we will have
gone a long way toward overcoming the             Am 1 correct in my conclusion that at
feeling of malaise about Government.           least in your book there isn't a whole lot
                                               of change between 1965 and the present
                                               time as far as forward planning in con-
Conclusion                                     nection with the Legislation of programs?
                                               Do you see any big improvement in
   In summary, we have a very demand-
                                               techniques, or do we still have a long
ing national agenda which is bound to
                                               way to go'!
make great demands for collective ac-
tion. The demands will be placed on all          Mr. Gorham: I don't see great im-
levels of government.                          provement. I think in the early 1960's
                                               there were some very good starts that
   In acquiring the agenda we have over-       spluttered and didn't get full backing.
simplified our problems and oversold the       Those starts have not been picked up
prospect of quick soluLions-and we             again. For example, the concepts be-
have paid the price. Since we have not         hind Planning-Programming-Budgeting
delivered in area after area, the people       (PPB) are absolutely essential and
have increasingly come to distrust the         there's just no substitute for them. I
substitution of new agendas and new            think they have had only limited support
solutions for the old ones. It has become      and consequently produced limited
and will continue to be more difficult to      results.
bring together the consensus we need to
do the things we will have to do. If              A nolher thou.ght that came through to
those of us who care don't get busy in         me in connection with your remarks was
improving Government perfonnance, we           that you were somewhat critical of Con-
will have less and less chance to perform      gress, the way they hold their hearings,
at all.                                        and their failure to really go into propos-
                                               als. Would you say that an equal share
 Let me end with what another French-          of that blame belongs to the executive
man said-this time about us.                   /Jrar1ch or the sponsor of the programs
  They [the Americans] have a ll a lively      for riot lhinkiug them through /Jefore
faith in the perfectability of man; they       they are proposed to Congress?
judge that the diffusion of knowledge mll!it
                                                 ,\Ir. Gorham: I certainly think a share
necessarily be advamageous and the con-
sequences of ignorance fatal: they all con-    of the blame does go to the executive
sider society as a body in a state of im-      branch; however. Congress responds to
provement, humanity as a changing scene,       what it is presented. What Congress
in which nothing is, or ought to be. perma-    wishes, Congress will get. If Congress
nent; and they admit that what appears to      will not consider proposals that are not
them today to be good, may be superseded       thought o ut, it will not get proposals
by something better tomorrow.                  that are not tho ught out.
 That was De Tocqueville in 1848.                Going back to PPB for just a minute.
There is enough truth remaining in his         I think there was an important tactical

                                                                                      169
elTOr made in introducing PPB. PPB               to get mes ages between the health and
should ha\e been sold to the Congress.           hou'iing agencies than bet ween the De·
J£ it had been old to the Congress and           panments of Health. Education. and
Congre s set new tandards for the kind           Welfare (H E\\1) and Housing and
of inCormauon that wa acceplable to 1c,          l!rban Development (Hl.'D) here. . o
then the executi\e agende wo uld de·             that whereas the problems do come to-
\Clop that information. 111 the absence of       ~eth~r in citic'i, their abillC) to imple·
such standards, inadequ<tle :.u pport of         ment prog-rams o n an integrated basis is
exbting and proposed progi am~ wa'               \c1y. \t:rv w<.'ak. Their ability to know
presented.                                       \\hat w d o is rully as weak as lhe Fed·
                                                 era! Go\ e1 nmenc's.
  Some of I.Ile mayor.\ of the big cities.
as well as medium si::.e e1/ies. have said         In rliis mfJf/er of Medicaid you ,\(Jiff
freqrtently that one of the troubles of          rhot i r i 11rreased somelhing li he 1O·f old.
tryin~ to solve   soc1al problems   011   Ille   ll'ho waJ responsible for that increase?
national level is that the solutions come        h it poor pltmning fJTld poor thinking
fragmrnled . The~e mayors said tht"\             out of the d1{firulties by HETV?
brought these problem.s-integratrd
                                                    1\11. G01/1am: Medicaid was costed in
houswg, rd11ratio11, Federal care. etc.-
                                                 lhe middle of the night-I mean, the
to (.ougJeH but the Co11151ess would 11ot
1e.)pofl(f 011 revnwe .t hm i rig and ot he1
                                                 middle of Lhe night. The package \\a
                                                 deli,·e1ed to HE'V at 5 o'clock one after·
sorts of integrated solutions. Do you
agree with these mayon that perhap:i u e         noon and at 9 o'c:lock in tbe morning
could rure 011r jJroblenu a Lot belier if        there "as a vote on chat bill. The es ti·
we listen more to Jome of our mayors?            mates were very difficult to mal..e. This
                                                 ts a State-Federal program. and H £\V
   "1 r. Gorham: The mayors have a               had w gue~s which States would take it.
point. Ce1 t.ainly the problems all come         what kinds of programs they would
together in a city. That's where they all        have, who they would define a.\ medi-
ar~that':. where housing and environ·            ral ly indigent, etc., etc .. etc. The param·
ment and health and education all c'Ome          ctcrs of the problems were not verv well
together. HowevcL even their ahilicy to          11nder~tood. They assumed that the
perceive thO'ie problem.~ as a whole doe.        St<lles would pick it up prettv much the
not impres.o. me. ·\lthough the problem          ''a" they picked up the Kerr-~lills bill
do come together in cities. the way chat         which wa'i its predecessor. .\t that time,
cities manage their affairs is, in a ensc.       only 17 rates were into Kerr-:\lills. and
in the ame rompartrnemalized, f unc-             thev had defined it in a \'CTY limited
tional way that the Federal Government           way. HF"' a'lsumed that the '>ame thing
perceives lhem. The Model Citie Pro·             would be true in \fedicaid. They a"
gram, when it was imented. was an                ~urned wrong. So the estimates or pro-
auempt lo provide al a neighborhood              ~am participation and contem were
level a bringing together of progTams in         way off.
a rational way. That was a Federal
attempt.                                           That's the first thing. The second
                                                 thing is that medical prices between
   Virtually all cities function very much       then and now have gone up about twice
like the Federal Government does--in a           lhe rate ol the overall Consumer Price
veq compartmentalized way. The com·              Index since l 965.
munication between functional areas is
verv limited. In many cities, it's harder           Fve11 if all information resourcrs could

170
/Je put iri plaa. do you think the       legi.sla-   wrong.    o Jar. I would say it has had
11011 would /Je better?                              'eq limited '\Ucre s.
  ,\Ir. Gorham. Yes. There nre only two                  The ~ood thing about re,·enue sharing
kind-. ol am\\en. to that que:>tion. The             ic; that the ntie<.--manv of them-are in
one am\\ Cl i · Ye-." and lhe olher an \\Cr          trouble. I sec re,enue sharing as a finan-
i " \ e:." .111d l<l!it'i ahouc a ha! [ hour. I'll   dal bailout. l don't think it i.s ~oing to
cry an inlet mediate one.                            ,ohe any mhe1 problems.

   There\ a large p1 ice that '>Ociety pays             Jn a.1se.s.1111g evaluation activities to
lor being a democracy and having a                   dllle. ht1ve the returns been commen.wr-
political process wlrn:h work~ in the way            ale with tht• irme.stmentr
it does. We have a lot of "irrationality"
built inw our ystem. That'~ the price we                .\Tr. Gorham: I can' t provide a full
have to pa> for having the kind of ys-               as'e~smem    because I haven't seen all the
tem we have. But mer and m ·er th:u                  evalua1ion a( tivities to date. I think that
price which we chrn.c LO pay. \\ie're pav-           m m,rny fields, c.a., biomedical research,
ing e\cn more for the wa\. 111 which we              in the beginnina one pumps in a lot
go about Ii\ in~ with our p~licic:al system.         mon money lhan vou have talent. It
I think that we could do a Im berter                 ~tarts the en~rn.:. Jim hannon \1 ho ran
within the political sv ·cem il we just              tlH' '\J.nional lnstilutes of Health had
knew more. I think we ( ;m know more.                th.tt phtlmophy. He c;aid. There are no
                                                     cis~uc researcher . · Put a lot of money in
   l'n11 111e1111011ed tht• 1\Iodl'I C.1ties Pru-    gram~ for t"s11e research and pretty soon
gram-(/ /01rn111ner of revenue .1 hnrmg.             you i;et tissue researcher . .After a while
I'd like vo11 lo share '\'Our vine~ of the           the\ be~in ~or11ng each other om. ome
.mcr<~ss 01 !ht• ltJrh of succesJ you sfe rn         of them gtt good .
 //u· 1\.1odel Citir.1 P1 ugrcm1.
                                                         \Ve'vc begun to p u mp some money
  M1. (,01/tnm: \short arn.wc1 i · not lair          111w    e\aluation. That was a necessary
to toom:111y people, buL I'll rry it. I chink        fi1,1 step. haluation i'I going to gel bet-
Lhe ori~inal concepl of t\lodel Cities was           tc1 with more and better people in it.

a \er) altl acth e one. It wa'i never tried.         l 11 to OO\\ its succe s has been 'en· Iim·
Tht· ong-lnal concept. then called the               ited. Evaluation i'> \ery difficulc. It in-
Dcrnon'>tration Cities Prognim was going             \ohc.. building on a very fragile base of
to pump .1 \Cr) l:uge amount of monev                under..,tandmg ol "1<x.1al interactiom. I
imo se,eral neighborhoods 1n the cuun·               think 'omc of the be~innjngs haYe been
try to 'ee what coulct happen through                pi omi,in~ I admire '\ome agencie.. who
imegr;ned plannin~ 011 a neighborhood                li;I\ e   not sp<·nc money \\hen they
ba.,is. It tlt'\CJ happened because politi·          rnulcln't gt·t a promising group to do the
cal fortc!i wok hold or it and forced its            t'\,tlu.11ion. l thin).. '"e're in the begin-
immed1:ne intrndunion 1nw first 75                   n1nA ol the t'\alunlion era and n 's too
                                                     -.0011 to judge 1L
cities and 1llen Lo 150 cities. They didn'L
arid m11ch money. In the end, each was
                                                       I wa.1 111trig11ed hy your st11lt:111tml to
du-.ted with a mnclc!il amoum of cash.
                                                     tht e/}t•ct that Congw~s gets what Co11-
  The le\ e I of resources is .,o different          ~1"1'.1.1 wi.\lie.1. Obvio11.1/y Congress lia.s
lrmu what was originallv contemplawd                 wi•hl'cl a 11t~rv largt• .1trategu dt'fense
that )OU t·an 't real I) <omrnenr on                 /mn!,rnm u11d a .1pnce program. Why
whcthet the 01ig111al idea wa right 01               rfor1 ' 1 yo u /Jeliev l that Congress htH

                                                                                               1 ii
wished a large research and development     well and you can find that we are, the
program on social programs1                 Congress can be encouraged to do more
  Mr. Gorham: I think if they had           of the same. If we are doing badly, Con-
wished it, they would have gouen iL         !!Tess can urge or require the executive
They've been getting a little bit in the    branch to look elsewhere for solutions.
pasl: some funds for research in HUD,
                                              Robert F. Keller, Deputy Comf1troller
some technology funding in NSF. I don't
                                            General: I Lhink your remarks were par-
think these programs really came for-
                                            ticularly appropriate for those of us in
ward because Congress wished it. I
                                            CAO because, as you know, in the last
think those were executive branch sug-
                                            3 or 4 years we have put a great deal
gestions. I would say Lhat generally
                                            more emphasis on evaluation and taking
Congress has not wished it, but they
                                            a look at programs results, as distin-
have been willing to go along when the      guished from purely looking at the legal-
executive branch proposed it. i\s far as    ity and properly accouncing for the
research itself is concerned, t.hey have
                                            funds. I think it's something that GAO
moved very, very hesitantly in terms of
                                            can play a very important part in. It's
developing capabilities which are re-
                                            been recognized by the Congress and by
sponsive and responsible directly co
                                            the Legislative Reorganization Act of
Congress.                                   1970 which gave us specific tasks in look-
   In view of your statement that part of   ing at the results of ongoing programs. I
the problem with our lack of solutions is   think that's where the real need is today
I.hat we don't know what to do, how can     -at leasl in my experience and in work-
the Gent:ral Accounting Office help in      ing with Members of Congress. It is the
controlling tht! amount of resources that   type of information they're looking for.
are being wasted1 How can we supply         They're seriously concerned about it,
answers where there are none1               because when they establish certain pro-
                                            grams, set up certain objectives, they
  Mr. Gorham: I think the traditional
                                            wane this feedback. Is it working out?
mode of GAO does provide limited rele-
vance in the context of my talk. How-          I don·t think you necessarily have to
ever, the mode that was begun by t..he      know or have a recommended cure. A
request co evaluate the Economic Op-        sure-fire one is pretty hard to come by.
portunity Act seems to me was the door      I chink that by disclosure that thi<> pro-
opener for tbe Office to provide Con-       gram is not working. is not achieving the
gress with a great deal of information      results (if it's possible to measure them),
which is relevant Lo the context that I'm   then at that time, the Congress and the
talking about. Existing program perform-    administration both can examine what
ance against congressional intent is a      they have and what have been the re-
very fine way of understanding what the     S\llts. Perhaps col1ectively, some changes
next steps ought to be. If we are doing     can be brought about for improvement.




172
          The Need of the Congress
               for Assistance


   Congress i~ in a period-perhaps unparalleled in our
hislory-when it must sit in judgment on the merits of
admirable programs which are far Loo numerous and far
too complex to be digested and comprehended in the time
a\'ailable 10 us. ·we are presented with much learned and
persua ive testimon on the vital need of the numerous
propo~d programs and the grc:it benefits that will ensue
from them. We are al~o often presented with equally
learned and pers~i,·e testimony against the!.e ~ame pro-
grams.
   In more placid years, we were ;ible 10 moderate these
adversary posit.ions, extract from the crucible of ideas of
the substantive issues, and discard Lhe specious and $elf-
serving ones. Today we are often nearly overwhelmed by
the volume and complexity of the matters we must con·
~ider, and we feel the need for expert, proressionaJ judg·
ment from an independcm a.ad objective source.
    rn enacting the Legislative Reorganization Act of 1970,
Congress gave emphasis to thi' need and recogni1ed the
Comptroller General and the General .\cc:ounting Office
a.' a mearu of fulfilling it.


                              enator Robert     J.   Dole
                             Congrt'uional Rrr ord
                             June !!ti. Hl71




                                                              173
                                                                  John W. Kendrick
                                                                  Professor of F.conomics
                                                                  The George Washington
                                                                  l l nivcrsity




     D1. John W . KCT1drick is a Pmfes.wr of Ecnnomir.~ at The Georgf' IVnslt·
ing/011 Univasil)'· He is also a r11f'mbN of thr senior research staff of thf'
National Bureau of Economic Rcsrarrh tmd a consultant to ind11stn1 and Gov·
crriment.
      He   is 110   llrang1•r to   //1r.   Fedn11/   G0tl('1"TIT11t'11/,   ltnvrng ll'TVt:d as   011   rrmw-
mi.~t 71'ilh the Nntionnl R cJorirce.\ Plannmg BrJ11rrl, 19-11-IJ. After J ''ears Ill
statistteal contrnl in the Air Forcr, he wa.s a bu.fine.rs economist with thf' De-
partment of Commuce, 1946--J. While al tht! N11t1onal Bureau of Economlf
Researrh in New York, he wrote Produclivit) Trend~ in the United St:itcs
which rltabfohed him as "Mr. Prod11ct1vitv" both nationall)' and inlf'rnation-
all)'. H e is w1dcl)' known rn the United States aud oveneas for his work i11 this
fit'ld. Dr. Kendrick lectured on produclll'tty i11 rite U.S.S.R. at the irmitatron
of the Soviet Aradrmy of Srienres.
      Sinre 1956, he has been a profe.{sor at The Ct>orge lVa.sh1ngto11 l/11ivers1tv
and ha.r rontinued to be activr as a con sultant to Gotiernment agencies, i11clud-
ing being on advi.!ory committees to the Bureau of the Ccnsu.\ and the Oflirr
of Scienre and Technolog-y. /ti thr early 19601.\ 1 Dr. A.cnd1·ick headed a tasli
group to stu dy the feasibility of establishing f>roductivit)' mea.su.rrs in five
Federal agenries. The resulting n:port, published b)• thr. Burea11 of the Budget
Ill 1964 entitled Measuring Productivity of Federal Govcrnmem Organi1a tions.
was widrly distrib11ted.




li4
GAO Auditorium
March 22, 1971




The Construction and Use of
Productivity Measures for Federal Agencies


In 1970. /111' .Joint Eccmomic Comrniltce urged Gl10 lo a.m~.1.1 thr• pnssi-
bilities for t'.'l:lending the 111r• of productivity mearnrt'rt1r•11/ in' /hr Fr·deral
Govern men/. In 1 t'sponsr, arrangements wt:r(' madt• lo cnr1r/11r/ 111ch r1
~tudy jointly with t/11• Office of Mnnngemtnl a11cl 81"/gt•/ 11nd thr Civil
Service CommiHinn 1mdn thr Joint Financial /llnnngrmr.nt l m/1rmw·
men/ Program. Tl11s 1/udy 1s now in procrss. Dr. Kcndrirk pm11t1 nut
that productiv1/) measures for governmental orgn111zatio11.1 a:r(' dn1rab/t',
                   1


needed, and be11rficial. and they are not costly to develop and 111wntai11.



     Be lore becoming a professo1 1 had                  in a rrrem rnllertion of essavs edi ted by
worked in the braci ng b reezes or b u-                  my rn lle::iA'u e ;:n Ceorg-e \Vashin~ton
reaucraq 101 some years. o I k n ow                      lln l\ e1sity. Prn lessor D a\'id S. B1own.
something a t fi r st ha nd abo ut th e d iffi-          e n ti t led F1'dnal Co11Lriln1tions to M a11-
c u lties o f. a nd che needs l'or, continu ing·         fll{<'111rn 1. 1 It is to o n e o f those ar eas J
ma nag·en1 e nt efforts LO im prove t il t op-           am :iclch ess in p; m yse ll today, the meas-
eratin g t!Tiriency ot Federal agencies.                 u1 emen t and a na lysis of producuviry-
This docs nnl 111ea11 th at I am o n e of                t hat b, the relatio nsh ip nf o utp u t lo
those cri t 1<~ \\ho habit ua lly carp ahn u t           ;i,,<X ia1ed input'i. in real terms. throt1gh
Government wa~ Le a nd rnefhciency. I n                  time:.
ITI } ohser\':Hion, GO\ernment workers
a re j1m a' 1nrelligem and indust r ious, on                 .\ s 1 shall dc,·elop l;ller. ch:in gc~ in
a\eragt' .•1s those i n private i ndustry. But            p1 od11c ti' it\  ratios 1eflen p1 im;irily
 the r r itio rl o h a\C~ •I point w hen they            lt'l'h n ologica l and organizaLional im-
note that Gm ernment opera lions are nm                  prmements, and thus prcffide a mea~ure
su bject to the d isri p l ine~ o l t he market.         o l tlte 'urce~s of management i n its m ml
espcda lly the need w {Ontrol costs so                   dmi11cti\e f11 n nion- inn0\·at io n .        \s
 tha t the bo n om lin e o [ th e profit a nd loss       s11c h , prod uctivity m easures can be ci u ite
sta tctn e ut m ay be wri tten in b lack in k             11ser11 1 in ~ ti1111il :ning- i1H"eslmentl> cle-
 instead of red. Conse'luen tly, public acl-              'iigned LO reduce uni t costs and prov iding
rn in is tra ton have had to d e\'elop a vari-            a   lllC-.llH   lor e\ a lua ting their resul t.'>. Fut ·
 e ty o f tech n ique:. for prom o ting· elli-            t her. histot ical a nd current prod uctivity
c ien ry and tee h no logical advan ce.                   e'>timates p1 ovide a 11,efu l backgrou nd

  The more ... ignifaam tontri lrncions bv                   1 for i;o111plc1c c11auon, 0£ 1his ancl e>thc1 worl..~
Fedeial admi n i,tia t01 LO ma nagement                   1dc111•d   ll• 111 Liu~ lcttct. '><'C rhc Si:kllcd Bih h -

ciencc and praLtiu~ ha\<.: been detailed                  "llraplt1 1111 pp lll~fl',

                                                                                                               li5
for projecting input requirements and         tions. I shall refer to the methodology
coses, both in budget making and in           and findings of that landmark study
longer term projections.                      later.
   Significant progress in measuring pro-        The study was important in demon-
ductivity has been made by a few Fed-         strating che feasibility and usefulness of
eral agencies- but I believe that pro-        adding productivity data to the m anage-
ductivity measurement systems could           ment information systems o( many gov-
profitably be extended to many addi-          ernmental organizations. It bas been
tional agencies and/ or to some of their      estimated roughly thac probably three-
organizational components.                    £ourths or more of the activities of Fed-
                                              eral Government civilian agencies are
                                              amenable to this type of measurement.
Historical Perspective
                                              After publication 0£ the 1964 report,
  By way of historical perspective, Fed-      measurement programs were begun in a
eral statistical agencies pioneered in de-    number of additional agencies. But in
veloping productivity estimates for pri-      1965 the sharp step-up in national secu-
vate industries, particularly during the      rity expenditures, and the diversion of
1930's when there was concern with            qualified personnel into tl1e burgeon-
alleged "technological unemployment."         ing    planning-programming-budgeting
Productivity estimation was made a            (PPB) system developm en t, aborted the
regular part of the program of the Bu-        further expansion of productivity meas-
reau of Labor Statistics in 1940. In the      urement systems at the Federal level-
late l 940's the Bureau began a program       although some progress has been made
of plant-level productivity measurement       in State and local governments, spurred
and comparative analysis. Since then,         in part by the Budget Bureau report.
many private firms have inaugurated
                                                 The present Lime seems auspicious for
productivity measurement systems and
                                              resumption and extension o( productiv-
found the estimates of value in manage-
                                              ity measurement systems. I am indeed
ment evaluations and projections. (See
                                              pleased that the GAO, in concert with
J. Kendrick and D. Creamer, Measuring         the Office of Management and Budget
Company Productivity: Handbook with
                                              (OMB) and the Civil Service Commis-
Case Studies.)
                                              sion, plans to proceed cowards this objec-
   Although there had been a few at-          tive during coming months. My purposes
tempts at productivity measurement in         t.oday are to explain the significance of
Federal Government agencies them-             productivity advance in the private and
selves-notably in the Social Security         public sectors, and the nature and mean-
Administration-it was first in l 962 that     ing of productivity measures; to review
a concerted effort was commenced,             some of the major aspects of measure-
u nder the leadership of the then Bureau      ment methodology, illustrated by case
of the Budget. Bureau officials, in collab-   studies: and then to discuss some of the
oration with technicians from five agen-      major practical and important uses to
cies, carried out pilot studies for the       which productivity measures may be put.
agencies, or selected organizational
components, developing historical series      The Concepts of the Production
for a succession of postwar years, ending
                                              Function and Productivity
with 1962. The studies were published in
1964, under the title Measuring Produc-         In any organization the volume of pro-
tivity of Federal Government Organizn-        duction of goods and / or services is a

176
function o[ the volume o[ inputs, or cost       improved labor skills, and improvements
elements, employed, and of the level of         in organization. In the short run, changes
technological and organization efficiency       in rates of utilization oE facilities and of
of the producing unit. Thus. O = f (L,K)        labor potential may be significant. In the
(T), where O=outputs, L=labor inputs,           longer run, in addition to innovation,
K=capital and other nonlabor inputs.            Lhere may be economies of scale as an
and T =level of technological and orga-         organization or sector grows, as a result of
nizational efficiency. This formulation         increasing specialization of men, equip-
immediately suggests that changes in            ment, and organizational units, and, as
technological and organizational effi-          certain overhead functions may be spread
ciency may be measured by changes in            over increasing numbers of units of out-
the ratio of the physical volume of pro-        put.
duction to the physical volume of in-
puts.
                                                Distinctions Between
   As illustrated in c hart 1 (p. 188), the     Productivity and Related M easures
values of output, input, and the produc-
tivity ratio are expressed in terms of in-         It is desirable at the outset to distin-
dex numbers, set at 100 for the base            guish productivity from certain related
period, year I. Note that when output is        types of management measures. In the
heterogeneous, as indicated here, the           first place, note that productivity meas-
physical units of each type are multiplied      urement starts where the market system
(weighted) by their average prices (or          of the private sector and planning-
costs) per unit in the base period, in order    programming-budgeting systems of the
to get quantity aggregates in the base-         public sector leave off. That is, produc-
and given-year(s). The same is true of          tivity measures take, as given, the output
inputs; chat is, man-hours would be             and input mixes of the producing organi-
weighted by average hourly pay, and the         zation , industry, or sector in successive
other input units by their prices, in the       periods. and focus on changes in effi-
base period in order to get real input          ciency in producing that which manage-
aggregates in constant prices for succes-       ments have decided to produce.
sive periods.
                                                   In the private sector, market prices
   Now, productivity may be said to have        detenn ine the allocation of resources
increased when more output may be ob-           among competing uses, with each firm of
tained for the same tangible inputs, the        a n industry producing parricular outputs
same output for fewer inputs, or more           up to the point where the added costs
generally, when output increases in rela-       equal the additional sales receipts-
tion to input. In the chart, we show that       which results in production in conformity
between periods I and II, output in-            with the community's preferences (given
creases 20 percent with 20 percent fewer        workable competition).
inputs, so that productivity rises by 50
percent.                                           In the public sector. a more complex
                                                system of cost-benefit analysis is required.
  As managers, you are well aware of the        As in productivity measurements, esti-
sources of productivity advance. Most           mates are needed of the outputs required
important over the longer run is techno-        to perform the functions assigned to vari-
logical progress, as a result of innovations,   ous agencies by the political authorities
which involve investments in improved           who interpret public demands for gov-
machinery, equipment, and structures,           ernmental services. Estimates of costs

                                                                                        177
per unll are .tlso needed, so that in each          prove in rela t ion to the norms during the
pe1iod unit costs can be compared ,-.ich            earlier phases of the learning experience,
expected benefit'> to che communitv in              and then gradually to level off in later
order to determine the compo.siuon of               ~t:ues. Each time technologv and equip-
programs. program elements. and speofic             ment are changed significantly. new
outputs that will maximize the total bene-          norms are established. and new work
fits obtained from the available re,ources          tnC'asu1 cs are compiled.
or inputs
                                                       In contrast, productiviry measures 1e-
   In both the pt hate and the public sec-          Aen not only impro\'ements in efficiency
tors. input pricei. are known, which en-            with g1,en technology. but more impor-
ables mana~ers to select from among                 tantly in longer time periods they reflect
available technologies that combination             1he cffl'cts of technological changes chem-
ol inputs which minimite costs of produc-           sch c~ on output-input relatiorn.hips.
ing the uni ts nf the various cypes of              '\lote al\o that work measurement is a
OU t pu CS.                                         more 'pecific mana~menc tool. that may
   Thu,, in both produni,·itv and PPB               be <•pplicd to \'ariou component g-roups
syo;tems, it is ne< e"a n · to mea,ure the          w11hin an organi1.ation· whereas produt·
numbers of units of the , ·ario us types of         tivit) e'cimates indicate the efficienry of
output . and their u111t co~cs. and tlie            the m.111agemem of the organization as a
n11mbe1 of units of the \'arious tvpes of           who le. Further. the basic uniLo; in work
                                                    measure~ may relate not onh to final out-
input~ . •ind their prices. But in procluni\'-
ity measuremem. it is not nece.,ary tu              p11b of an organi1..1tion. b\ll a)'\O LO the
e~timate benefit .. inc ere nits o f the <lc.:ti-
                                                    internal intermediate outputs d1;1t fac:ili-
sio11s or 1he politicians and public admin-         tat<' the production of its "final " outputs
istnllors in choosing the outpm mix is              ''hose tlients are other organizations or
aneptccl. Likewise, the input mix is ac-            L1 1c public.
cepted as gi\ en.                                       It nrny also be useful to distinguish be·
   It ~huulcl also be noted that in p1oduc-         tween    e~timates of producti\'it and unit
U\ it} analv~is, unH costs and input prices         < ost~. Jn 1ea I tem1\, unit cm ts are merely
need he d<.'ll' r m inc<l oil I) an lhe base        the 1eupnxal of the corresponding pro·
period lor weight111~ purposes (SnH.e the           du1t1\ll) ra1ins. \\' ith icference to chan
movcmenrs of .1~~,, e~te oulput and input            I. Im example. instead of showing pto-
1efktt c han~c' in physical volume,, not            clut ti' ll\' inneasing 50 percent. we could
111 price.,) whereas in PPB chan~es in              'ho" 1in1t real costs decreasing t" one-
unit c·osl\ .ind input prices musL he.:             third, Lo 66.7 in period II (chat i'\. in
known from year-10-'t·ear a:. input' into           inclt'' number'>. 100 -o- 150        61i.i' : the
the decisionrnaking process.                        qme reo,ult is obtained by di,idin~ input
                                                    ln output: 1'0 -'-- 120 = 66.7). If we Me
    :'\' ext\\ e must distinguish between prn·      intc1 cstcd in unit costs in current dollars,
clue 1i' ic., and work measuremem. \\101 k          \\e lllll'll multiply the unit real costs by an
llH.'ttSuremem indicates the relatiomhip            in1.kx of tl1e prices of the inpucs.
between the time accually requited by
individuals 01 groups to produce 11nits of             In our example. if inpur prices rnse hy
work , and " scan<l.1rd " time that ~hould be       r,o per< em between periods I and II. then
required. based on engineering studie~ or           the 50 percent produnivity advance
statl\li(al noml'I. \\'ich ~iiven technology        \\011ld be exactly off~et. and unit <Ost in
and equipment, it is usual for the e01-             pt•t iod 1l wo11 Id remain at the 100 lc\el of
cienq of in<ln idual and gro up' w im-              pe11n<l I (fifi.i::.. 150 = 100.0). Th1o; points

17
up an important consequence of prod uc-           o f the 19 ~W's) . Labor and capital inpu ts
tivity advance-that it at least helps to          together grew at a rate of close to 3 per-
offset inflationary pressuTes from the cost       cent a year up to World vVar l, but there-
side.                                             after at a slower rate of around l Y.i per-
                                                  cent. Thus, total factor productivity,
   Finally. let me make dear the distinc-
                                                  shown in chart 2B (p. 190), grew at an
tion between meas u res of " total produc-
                                                  average annual ra te of a bit over l per-
tivity," which we have been discussing,
                                                  cent u p to World War I, accounting for
and "partial productivity" ra tios obtained
                                                  less than one-third of overall economic
by relating output to only one category of
                                                  growth. A fter World \ \Tar l, the rate of
inputs. such as labor. The fam iliar
                                                  productivity advance accelerated sharply
"ou tput-per-man-hour" variety of pro-
                                                  to a hout 2.3 percent a year. accounting
ductivi ty measure is useful, but it must be
                                                  for more than half of economic growth,
understood that in ad d ition to reflecting
                                                  and [or almost all the increase in planes
changes in un it-labor req uirements i t also
                                                  of living as measured by real product per
reflects substitutions o f other factors, such
                                                  capita. That is. since inputs increased
as capital equipment, for labor. Inpnt
                                                  but little more than popula tion , which
substitut ions also affect the other partial
                                                  grew at an average rate of I !h percent a
producti vity r a tios. Only by relating out-
                                                  year. tbe gmwth of real product per
put to all associated inputs can the net
                                                  capita of about 21!2 percent a year was
savi ng of real-cost elements per unit of
                                                  only slightly above the growth in total
output be measured and thus the change
                                                  factor productivity.
in productive efficiency generally. Never-
theless, in pr ivate and public services, in         Tbe n umbers for the period 1948-69
which labor is frequently by far the most         are shown in table l (p. 193), first col-
important cost elemen t, output-per-man -         umn. The second figure indicates a con-
hour measuTes are good proxies for total          tinued trend-rate of growth in total factor
productivity. Even when total prod uctiv-         productivity of 2.~ percent a year. Note
ity measures can be constructed, it is de-        that due to a continued substitution of
sirable a lso to estimate the par t ial produc-   capital for labor at 2.4 percent a year, out-
tivity ratios, so that the areas in ·which        put per man-hour rose at the aYerage rate
cost savings have been achieved can be            of 3.2 percent a year-tbe famous non-
pin pointed.                                      inflationary wage-gnidepost number of
                                                  yesteryear.

Productivity Trends in the                           Before going on to the su bperiods, let
                                                  me em phasize that the estima tes for the
Private Economy
                                                  pTivace economy are. in effect, weighted
   Before considering meas u rement meth-         ave rage:; of estimates for the com ponent
odology. with particular respen to the            industries. ome industries, particularly
public sector. you may be interested in a         those which are technology intensive.
quick summary of productivity trends in           show high nites of advance in excess of 4
the private economy, based on a new               percent a year: for example, airlines.
study I have just completed for t he              pipelines, commun ications. electric and
National Bureau of Economic Research.             gas utilities. and chemical manufactures.
As shown in chart 2A (p. 189), real pri-          Others showed increases well below aver-
vate gross national product (GNP) since           age. The prfrate services sector, for exam-
the late 19th century has grown at an             ple. appears to have increased its produc-
average a n nual rate of almost 4 percent         tivity by little more than 1 percent a year,
(if one lea\'es out the stagnation period         less than half the rate of increase in pri-

                                                                                           179
vate industry as a whole. This raises the      President's Advisory Council on Manage-
question as to whether there is Jess poten-    ment Improvement is likewise interested
tial for technological advance in services     in promoting productivity measurement
compared with commodity production             and improvement in Federal agencies.
and distribution, or whether too few re-
                                                  The plain fact of the matter is that we
sources have been devoted to promoting
                                               do not really know the extent of produc-
technological and organizational advance
                                               tivity advance in the Federal establish-
in the services area. (It is probably some
                                               ment, apart from the several organiza-
of bolh.)
                                               tions mentioned earlier. Yet as shown in
   As shown in table I, there is consider-     table 2 (p. 193), governmen ts absorbed
able variation in rates of change in pro-      a bout one-quarter of the total GNP in
ductivity among subperiods, as measured        1966 (and a bit less in 1970 due to the drop
between peak years of the business cycle.      in national security outlays), about half
These are frequently associated with vari-     of which was Federal Government pur-
ations in rates of change in output. Thus,     chases. In terms of factor income (which
in the first subperiod 1948-53, both real      leaves o ut p urchases from the private sec-
product and productivity showed above-         tor), Government absorbed more than
a verage rates of gain. In the next two sub-   one-sixth. Obviously then, improvements
periods between l 953 and 1960, there was      in Government productivity can make a
a retardation in the growth of both real       significant contribution to overall eco-
product and productivity. The best gains       nomic growth and also help mitigate in-
of all were shown during the long expan-       flation with respect to tax rates.
sion of 1960-66. But in th e final subpe-
riod 1966-69, when real product grew
not far below its secular rate, produc-        Measurement Methodology
tivity advance retarded drastically to 1. 1
percent a year, on average. And in the            In discussing methods of estimating
recession year 1970, preliminary esti-         productivity, with particular respect to
mates indicate that there was no increase      Government, I need not go into detail.
in total factor productivity, and even         The Budget Bureau study, Measuring
output-per-man-hour grew by less than I        Productivity of Federal Government Or-
percent. While productivity advance            ganizations, describes methodology in
typically slows down in recessions, the        much detai l, both generally and specifi-
decline in 1970 was more than is usual.        cally, for the five organizations th at partic-
                                               ipated. But I should like tO review some
   Concern with the apparent slowdown          of the main points with regard to measur-
in productivity advance since 1966 was         ing output, and the inputs, in real terms,
one reason for the establishment of a          which are the component variables of
National Commission on Productivity in         productivity ratios.
] une l 970. One of the four working
groups of that Commission, which is
                                               Output Measurement
headed by George Shultz, Director of the
Office of Management and Budget,                  In the private service industries, two
covers the topic of Government activities      approaches to output measurement are
-not only those designed to promote pro-       possible: ( I) measurement of the num-
ductivity advance in the private econ-         bers of units of output of the various
omy, but also those designed to promote        types, which are combined by applica-
productivity within the Federal Govern-        tion of prices for each type of service out-
ment itself. I might also mention that the     put in a base-period or (2) "deflating··

180
(i.e., dividing) current dollar expendi-        essed represents 5 percent more output,
tures by a price index reflecting price         and we would adjust the new data for
movements of the major types of services        comparability with the old by dividing by
produced. Since general governments do          a factor of 0.95. In some cases, the output
not sell services by the piece at a specific    and derived productivity measures may
price, only the first approach is open. And     be supplemented by recourse to separate
even there, instead of using prices as          qua lity measures. In the IRS case, the
weights, we must use unit costs as an           "tax gap" is such a measure, showing the
approximation to the values of the vari-        ratio of tax collections to estimated taxes
ous types of public services.                   owed.
   During the pilot study of productivity,         Before looking at some examples of
we thought one advantageous byproduct           output measures, it is only fair to note
was that it forced public administrators        that not all economic activities can be
to define the functions of their organiza-      measured adequately. For example, no
tions in measureable terms-that is, to          good method of measuring outputs of
specify the programs, program elements,         research and development work has been
and individual types of outputs by means        devised. But most outputs of most Federal
of which the organization fulfilled its mis-    civilian agencies are routine or standard-
sion. By now, this exercise has become          ized enough, or are susceptible to adjust-
more or less routine in many agencies,          ment for qual ity change. so that useful
and output measures are regularly com-          output and productivity estimates can be
piled as part of program budgeting, work        prepared. in my j udgment.
measurement, or other phases of manage-
ment information systems. For productiv-           Now, to look at some cases: table 3
ity purposes, however, it is necessary to       (p. 194) shows the outputs of the Divi-
select the final outputs, as noted above,       sion of Disbursement in the Treasury
and to aggregate, using unit costs of a         Department. The outputs are simple.
relatively recent base year. The year 1967      consisting of two types (since the aban-
is now designated by the Office of Statis-      donment of cash payments): the numbers
tical Policy of OMB as the recommended          of savings bonds issued and of checks
base-period for index numbers compiled          issued. An interesting feature of this case,
by Federal agencies.                            however, is that it was possible to estimate
                                                output per employee by method used in
   One difficult problem in measuring           issuing checks, as shown in chart 3
output<; is adjusting for quality change.       (p. 191 ). Thus. the increase in output per
This is usually done by adjusting units of      employee in the Division may be ana-
the new quality service by the ratio of its     lyzed in terms of increases in efficiency in
uni t costs to the unit costs of the previous   the use of particu lar methods and as a
quality service, at the time of changeover.     result of shifts of output from lower pro-
For example, assume tlrnt processing tax        ducdvity methods, such as addressing
return forms of various types is an impor-      machines, to higher productivity meth-
tant part of the output of the In ternal        ods, such as semielectronic or electronic
Revenue Service (IRS). Assume further           data processing (EDP).
that a new Revenue Act results in a more
complicated Form 1040 for reporting the           Table 4 (p. 194) shows the outputs of
individual income tax. As a result. aver-       the Department of Insurance in the Vet-
age processing time on this form is in-         erans Administration. Of the eight out-
creased by 5 percent. Then we would say         puts which were identified, the servicing
that each form of t h is type which is proc-    of policies in force is by far the most

                                                                                        181
important, cost-wise. . in the Division               Inputs
of Di-.l>ursemem. adoption of EDP led                      Methodology for measuring inputs
to major prod ucti' ity gain .                        ('30   be reviewed quickly. The input,,
     \ more complex set of outputs is                 .ll1d the methods for measurement, .ire
'>hown in table r; (p. 195) on the Post                e ·'Cntial ly the same in the public as in
Ofbce Department. Fourteen types of                    the private sector, except for the weight
 mail han~ been distinguished. which are               ing or capital inputs.
mea,u1 ed in term5 of numbers of piece·                  It ts cu!.tom.1ry to measure labor in-
tarned nr pounds and cubic feet in the                put' in term~ of man-hours worked
<<t'>e of hea\'ier items. ln addition, .,e,en         (rather than paid for). lf hours data are
 types of ervices are shown at the l>oumn             not avilil.tble, average employment. pref.
ol thc table for a total or 2 1 outp11c.s. The        crably full-time equivalen t employmenl,
rn-.t a.;cl'rtainmcnt system of the Depart ·          ma) he u'led. Jan-hours or cmploymem
 mcnt provided estimates of unit costs in             are we1Ahu:d by average earnings (in
 the ba-.e period, 1962, by which the var·            t Iuding fringes) in the base period. If
 iou-. outputs were combined.                         ft'a .. iblc, it i desirable to weight labor
     In the Sy,tems Maintenance ervicc                input by grade or other clas:,ificauons of
of the Federal .\viauon .\genn FA.\                   emplovees, so that shifts among st...ill or
as sho\\ 11 m cable fl (p. 196). outputs              experienre categories will be ref\ern:d in
were measured in terms of "standard fa-               the l.1hor input measures.
<.il ity years." Within the three ma·                     Pun ha.,e of intermediate input) uf
 jor tt"fo11p.,_.....,ir na\ 1~tion. air craffit      matt:rtJl'i, supplies, and senices from
control. and nonaeronauticaJ-arc :~                   <HIC ide indu.. try are muLh less important
'>mallet &,rrnupings and 318 classes and              in lhe st:rvice :.u;tors than in commodity
s11hc las'>C'> of faci lities. Separate mea .. ures    production. These inpuLs can u ·u;11ly be
were prepared for the six FAA regions,                meas ured easily. Q ua ntities can be
pe1 m itti ng com parisons of productivity             wcighu.·d by base-period prices. Or. pur·
level a11d change. IL was subsequently                l hase., can be deflated by an index of the
cliscmerNI that the outp11L mea<1ures                  pnc·l':. uf the chief intermediate inputs.
cho en dtd not admit of signi fie.int pro-             It ,1wuld ,tf,o be noted that real inter·
dttt ll\ ll)' ad\ance. If output had been              mcd1;lle pun.ha:.e'>, iru.tead of being
ddined in terms of the .,.o) ume of air                ueated "" inputs, may be deducted Crom
traffic .1idcd and controlled by the SY\-              ~oc;c; ou1 pm to .,. ield net output or rt:.tl
 Lcrn, 'uhstamial productivity increa es               \'alut a<l<lcd e'umates. In thl!i ca~e. net
would have he-en registered.                           output i:. lompared with the labor and
                                                       capital fan<>r inputs only, in "total fonnr
    In the Bure.iu of Land \lanagemcm
                                                       produnivity" mea ure:..
of the Department of the fnterior, out·
puts wcrt~ developed for 17 programs, ih                 C.1pital inpuc measurement b more
shO\\ll 111 c,1blc 7 (p . 197). This was the          n>mplic:ated. but I shall skip the compli·
only one     or  the five pilot studies for           rntiom. B.1sically. one est imates tht· real
'' h1rh prodtH tivity measures were not               su>t l..s of str u ctures, equipment, land,
t0mpletl'd. It \"\as found that :llthough             and im cmories used by an organ i:ration,
c urrem omputs rnuld be mea ured, it                  and weights O'i' ba:,e-period rental rates
was nm J>O~'lible to de\ ise adequate meas-           If 1e111al rates are not a\'ailable, rtntals
ures of the investment outputs, such as               may be con lructed as the um of im
increase~ in timber stands and range                  putecl mtcre ton the capital imestment,
cover.                                                depreciation of facilities. and maime

 I 2
nance costs. A special problem in Gov-        Uses and Benefits of
ernment prodttnivity estimation is thaL       Productivity Measurement
not all capital cost.s are charged to the
agencies using the capital goods in pres-        This brings us to the final topic. Of
ent Federal accoumin1T prauic e:..            the various uses and benefits of produc-
                                              tivity measures. T believe that one of the
Productivity Indexes                          mo!>t important is that such measures
   Once the estimates of output and           inc.:rease "productivity-mindedness" of
input have been completed. the former         public offic.:ials. focu~ing attention on the
are divided by the latter :i nd the ratios    need ror innovations to reduce unit real
expressed as index numbers o( produc-         costs. and providing a means for evaluat-
tivity. Or inputs may be divided by ou L-     ing the results ol investments under-
puts to yield unit cost measures. as          take::n towards Lhat end.
shown in ch'1rt ·1 (p. 192) for the Divi-        Cost-reducing innovations usually
sion o( Disbursement. The partial ratios      stem from applied research and develop-
are also interesting in showing where         ment programs, both formal and infor-
the economies in unit costs have been         mal. It is surprising that so little re-
ach ieved. Thus, in the Division of Dis-      search and development has been under-
bursement case, almost al I the increase      taken within or !or Government, with
in total productivity was rlue to labor       the objective of developing cost-reducing
savings. Inputs o[ intermediate products      equipment or procedures. Agency man-
and of capital grew more or less in line      agers and engineers should also, of
with output as indicated by the horizon-      course, work with suppliers of equip-
tal movement of these two p'1nial unit        ment or intermediate goods, and con-
cost measures.                                struction contractors, in stimulating
   Before leaving t he case studies, it i~    them LO develop products that contri b ute
interesting to compare rates of rhange in     to greater efficiency of governmental op-
the productiviLy indexes for th e four or-    erations. This was an important factor in
ganilations whose studies were carried to     the Division of Disbursement's rapid
completion. As shown in table 8               technological progress. Government pro-
(p. 198), the results are mixed. with         grams for training ancl retraining em-
two organizalions showing rapid produc-       ployees in the use o( increasingly com-
tivity advance and the other two linle or     plex technologies is al o an importan t
110 advance.                                  aspect or prod11ctivity·imprnvemem pro-
                                              grams.
   The Budget Bureau repo1 t noted that
the two progressive organiz<itions were         The important thing is that each year,
characterized by: ( 1) radical changes in     in each agency. c:os1-reducing projects be
production technology. (2) rel<ttive uni-     developed, and the necessary invest-
formity, rather than diver ity, of outputs,   ments be provided in the budgeting
and (3) comparatively few locations.          processes for those projects which '1re
Contrary tn the findings of private in-       economic, i.e., which promise a n et rate
d u stry swdies, there was not a positive     of return gTeater than the cost of financ-
correlation between relative chanP"es in      ing. To ci te an example, the Kappel
productivity and in output. four studies      Commission repon on the organization
do not provide a good basis for general-      of the Post Office Department brought
ization, of course. Once the base has been    m1t that a prime reason for the poor pro-
broadened, further meful generalization       ductivity performance of that Depart-
will undoubtedly emerge.                      ment was tit<: inadequate and erratic na-

                                                                                       183
turc of the research and development            they may be, and have been, used by
and tangible investment programs.               OMB in budget review. Needless to say,
                                                congre~ional      ppropriarions Commit-
   I would hope that expansion of pro-          tees are also very much interested in evi-
ductivity measurement systems would             den ces of improvement in agency effi-
hel p to systematize capital budgeting          ciency.
procedures within Government, compa-
rable with the procedures used by large            For all these reasons, I am convinced
firms in progressive private industries.        that it will be desirable to extend pro-
Further ince productivity indexes meas-         ductivity measurement systems to all
ure cost-savings that are achieved, they        Government organizations where they
provide a means of following up on              are applicable, but have not yet been
agency investment programs to see if the        tried. lt i no t costly to develop produc-
anticipated savings have actually been          tivity measures and even Jess so to main-
realized.                                       tain th em. If they produce only a small
                                                fraction of the benefits clai med for them,
   Prod uctivity indexe have other man-         they will have more than paid their way!
agement conrrol uses, which I can men-
tion on ly briefly. Poor productivity per-
formance in a given quarter or year                        Selected Bibliogniphy
raises a red flag, signaling the need for       Brown, David ., ed., Federal Contribu-
investigation to pinpoint the possible              tions to Management: Effects in the
causes. Funher, differences in level or            Public and Private Sectors. New York.
changes in productivity among like or-              Praeger Publishers, Inc.. J 971.
ganizations, such as regional offices of a
                                                Fabricant, S. F., The Trend of Gnvemment
given agency (such as the Veterans Ad-
                                                    Artivity in the United Stairs Sinre
ministration), can serve as a spur to the           1900. Princeton University Press for
m anagers of the Jagging offices, and pro-          the National Bureau of Economic Re-
mote the transfer of technology from the            search , 1952.
m or e efficient to the less efficient opera-
                                                - - - "Productivity," International En-
tions.
                                                   cylnpcdia of the Social Scie"ces, Vol.
   The other chief e c of uses has to do            12 New York, The Maanillan Com-
with budgeting and longer term projec-              pany and Free Press, 1968.
tions of input requirements and co ts.          Hinrichs, H . M., and Taylor. G. M., Pro-
That is, given projections o f activity             !{Tam   Budgeting and Benefit-<o.~t
levels or o utputs of an organization, pro-         Analysis: Cases, T exl, and R eadings.
ductivity projections result in estimated           Pacific PaLisade , Goodyear Publishing
input requirements. To obtain cost esti-            Co.. Inc., 1969.
mates, the input projections are multi-         Kendrick, John W., Productivity Trends
plied by inpm price forecasts.                     in lhe United States. Princeton Uni-
                                                   ver~ity Press for the NationaJ Bureau
   The hi torical productivity estimates           of .Economic Research, 1961.
furnish a useful background for projec-
tion s. But past trends must be modified        - - - Postwar Productivity Trends in thf'
                                                    United States, 1948-1969. National
on the basis of known technological
                                                   Bureau of Economic Research, m .,
change which are expected to take place
                                                    1971.
during the forecast period.
                                                - - - Mea.suring Company Prodtt(tivity:
  Not only arc producti\'ity estimates             Handboolc with Ca.se Studies. tudies
helpful to an agency for budgeting, but              in Business Economics, No. 89. New

184
    York, National Indusuial Conference           Washington, U.S.     Bureau    of   the
    Board, 1st ed. 1961, rev. ed. 1965.           Budget, 1965.
- - - Progress in Measuring Work. Bu-         - - - "Objectives of Public Expenditure
   reau of the Budget Management Bulle-          and Measurement Systems." 1968 Pro-
   tin (August, 1962).                           ceedings of the Busint!ss and Economic
                                                 Statistics Section, American Statistical
- - - "Exploring Productivicy Measure-           Association.
   ment in Government." Public Admin-
   istration Review Gune. 1963). Re-          U.S. Bureau of the Budget, Measuring Pro-
   printed in H . Cameron and W. Hen-             ductivity of Federal Government Or-
   derson, Public Finance: Selected Read·         ganizations. Washington, Government
   ings, Random House, 1966.                       Printing Office. 1964.

- - - "The Government Eyes its Own            U.S. Department of Labor, Productivity:
                                                  A Bibliography. B.L.S. Bull. No. 1514.
   Efficiency." The George Washington
    University Magazine (Summer, 1964).            Ouly. 1966).

- - - "Summary and Evaluation of Re-
   cent Work in Measuring the Produc-                         Discussion
   tivity of Federal Agencies." Manage-
   ment Science (December, 1965).                What is the relationship between ac-
                                              crnal accounting and productivity meas-
Lytton, Henry D., "Recent Productivity        urement?
    Trends in the Federal Government:
    An Exploratory Study." Review of Eco-        Dr. Kendrick: Accrual accounting pro-
    nomics and Statistics (November.          vides the appropriate data base for pro-
    1959).                                    ductivity estimates. The outputs of a
Mansfield, Edwin. The Economics of Tech-      period (including the real net change in
   nological Change. New York, W. W.          finished and in-process inventories) must
   Norton & Co., 1968.                        be related to the real costs incurred dur-
                                              ing the period. The timing of payments
Margolis, Julius, ed. Tht! Analysis of Pub-   may differ from the accruals, and it is
   lic Output, Universities-National Bu-      the latter which is relevant.
   reau Conference Series, No. 23, New
    York, National Bureau of Economic            Why is there a hesitancy on the part
    Research, 1970.                           of Federal managers to apply productiv-
                                              ity measurement?
Terleckyj, Nestor E .. "Recent Trends in
    Output and Input of the Federal Gov-         Dr. Kendrick : Many public adminis-
    ernment." 1964 Proceedings of the         trators do not understand the nature,
    Business and Economic Statistics Sec-     construction, and uses of productivity
    tion, American Statistical Association.   measures. Others, while they may under-
- - - "An Economist Looks at Cost Re-         stand productivity measurement, fear
   duction." Lecture al the U.S. Civil        that the measures may be misused by,
   Service Commission Institule in Public     for example, the setting of unrealistic
   Problems and Federal Problems, mim-        goals.
   eograph. Washington, U.S. Bureau of
   the Budget, 1965.                             What is the difference between pro-
                                              du ctivity measurement and work meas-
- - - "A Review of Government Produc-         urement?
   tivity Measurement... Talk . . . at the
   National Capital Chapter of the Amer-        Dr. Kendrick : Work measurement
   ican Institute of Industrial Engineers.    compares actual performance with per-

                                                                                      185
formancc .,tandnrds under a given tech·                 perf01mance measures covering at least
nology. Productivity measurement does                   two-thirds of their activities.
nor require standard.,, hill compare-. um-
puLs with inputs in successive time peri-                  What effect do quality factors have cm
ods, th lh reflecting the dfectS of ch an g-            f1rod Ill" t ivi ty measure men/s'
ill~ technology on ouq.H1t·input relauom,                   Dr. Kendnch : As is true o f nutpuL
a-. wel I ::ts che changes in efficiency under          mea.'\ure'\ genl'rally. for pri\'ate indus-
gnen cc:chnological and organi1.ational                 Lnes as ''ell a~ for Go,ernment organi-
condiciom reflected in work measures                    1.ttiom. it is difficult to adjust adequjtely
Work mea.,ure are more limiced in                        for quality change. Where: quality
.,rope. in that they do not refleu tedmo-               t h.tngc::. are associated with change:, in
logic-a I < h;-inge, and they are usually a p·           unit teal rnsts, adjustments nm be mnde.
p lied to component J...'TOll ps, not to a              Jn other ra!:ies, the ou tput and prnduc-
tumple'- organi1ation.                                   t1vity mt>a~ures should be supplemcnted
                                                        by qualitative mea:iures. For example,
   TV011lri you t'~/1lam the prol>lem.1 of               the a'c:rage time required Lo mU\e the
fldeq 11n I,. man t ives or ri ism re 11 f lt'es i 11   mail from sender to retipiem for lOm·
 the UH' of prod11ruvil>' 111easure.me11/?               parable distance over succe\ i'e period.'
   IJr. A nulnck: ln the pri vale econotm               \wuld he one index of the qualit) of
the inremi'e of widening profit margins                 postal \en ice. It i.s important, of cour e,
by reduc in~ unit COSl'• more than t.om-                to imure that outputS and productivity
peung firms is the chief impetus for the                are nm heing increa-,ed at ll1e expeme
innovations th;u underlie producuvitv                   ol qualat) deterioration.
ach .inrc In the (,overnment seuor,
                                                           1Vhat .111cre5s has there bun 111 ol1tn111-
where there is no profit motive nor in-
                                                        111g011f/mt mni.111res for sorial progra111l?
come sta tcmcn 1, productivity mea!>un·s
help mal...e m;inagers more consciom. ol                    Dr. Kendn rll: There has been much
the need to cu r 11nic real costs by inno\a             imeresl in recent years in the develop-
Lions i11 the Le< hnology and organization              ment nl social indicators and expanded
of prod union. Pet haps bonme-. to ( .m                 "" ioenmornic. JccounLS. The: Federal
ernment man.1gcr:., based on some frar-                 ,t.1tistic:al agcncies are coopcrnting wid1
cion or the rnst reductions associated                  \Ol ial 'demists in this effort, but \O far
t\ith producti,itv ad,ances, ''ould t.•n-               prow("'> ha been low because of many
hanl'e the mothatiom to inrrease pro-                   difficulc conceptual and statistical prob-
<lut tivity. They would cerrainly help                  lem im ol\'ert The re<:ent HEW publi-
neutralize the bureaucratic disincenti' e'              r 1tion 1 ou•ard.~ a ~oria/ Report was a
co productiviL} advance epiLOmized bv                   useful progrc~s report on the subjett.
"Parkin <>n's Law."
                                                           rf' hat   11   tlu applirabilil)' of fJrod uc-
   !low riirl )'Oil deterrnme that 7; per-              t 1vity m<·a.mremt'nls to ad111i11i.1trative
cent of tlzt' civilian agencies could rw:               proce,11 t>s!
/Jroduct1v1ty 111ea.111rement.s?
                                                            Dr. Kf•nrfrirh: By measuring d1anges
  JJr. .!\ t'ndrirh: This estimaLe was                  in productive efficiency of an organ iLa-
based on a re\ iew of the full thousancl-               t ion as a result of innovation-rhe mosl
odd page l I.S. budgeL ducumem. I dctt•r-               d1~un<.uvc [unction of managemcnL-
mined that apprnximatelv three-fourths                  prnd11nivity indexes a.1so measure man-
of Feder.ti civilian GO\·emmem em-                      .1gt·ment efficiency in this regard. They
ployees wo1k in agencies which have                     do not, however, measure the: efficiency

1. fi
with "hith routine administrative proc-             '>igncd to rcdt1lC unit real co~ts and thus
esses .tre c:irri<:d nlll. They do hcl p fcxu'      mcrt'a'c prodtt<ll\ it . The) also prO\ iclt
allenuon on rapaal budg-et'i--includ111~            a mean" of follmdng up on imestmt:nl!>
int.rngible inve,tmenh in re'iearch. dc-            by mc.m11 rng the: c O\C reduction ar.tu·
ve lopmt·m. ed111 •Ilion, and training-de-          :illy .1e hievecl.




                                  The GAO Function


                    \\bile million'> of \mcriram h:J\i; heard of 1hc C..\O.
                 1hc11 lrnowkdgc of the 01 ~.111i1alion olte11 ,c;11 c l'h ~ocs
                 hl•,ond the name.
                    In :1 dcmocr:icy the G,\O ro11Jd i>c rnmparcd w the press.
                 'en ing .1., .1 balance ag.timt unlimited c:overnmcnt. an
                 1ll(k pc mlc.111 a u di to1 o C p<m er
                     \, Jmt1cc 111herland omc w1otc abou1 thc press. the
                 (. \0, too. \Cf\ CS "al> OllC of the ~C:lle" lrllClfll Ct Cr~ be-
                 1\\t:t'll men and ~o\·ernmcru .ind 1ltt people." lh [unction
                 '' w hold £01 con~ei.,11m :1l c,.1mi11J1io11 .111d 'n utin" the
                 op1;1.11ion' of gtl\CI nment .



                                                  'enatrn :O,tu.m "iv1mng1on
                                                 Cnnt..h     '"' 1 R1 1u 1l

                                                 Juul' I I. I '171




                                                                                               7
                                  CHART 1


       ILLUSTRATIVE PRODUCTIVITY CALCULATIONS
                       (INDEX NUMBERS, YEAR 1: 100)
 INDEXES
 160
                                                                150

 140

                                                       120
 120


 100

        OTHER      E
                                             80
  80
                   D
        LABOR
  60
                   c
 40
                   8




         INPUT   OUTPUT   PROOUC -          INPUT     OUTPUT   PRODUC-
           (1)     (0)    TIVITY              1         0      TIVITY
                            (0/ 1)                                0/ 1
   - - - - BASE PERIOD ----~r....i------ GIVEN PERIOD - - -
             YEAR I                         YEARll




188
                                            CHART 2 A




      A CENTURY OF U.S. ECONOMIC GROWTH OUTPUT, INPUTS & PRODUCTIVITY
                    RATIOS U.S. PR IVATE DOMESTIC ECONOMY
                                INDEX NUMBERS . 1889 - 1965 (1958-100)



100




 so




 10    "'-~~~~~~~-'-~~~~~~~...._~~~~~~~-'-~~~~---I
      l889                   1910                       1930                      1950               1965

    Source: John W. Kendrick, Postwar Produrtivit-y Trends ill the Ut1ited State.1, 19-18-1969 (New York,
National Bun:·.rn or Economk Research , in press, 1971).




                                                                                                    189
                                            CHART 2 B




      A CENTURY OF U.S. ECONOMIC GROWTH OUTPUT , INPUTS & PRODUCTIVI TY
                    RATIOS U.S. PRIVATE DOMESTIC ECONOMY
                                 INDEX NUMBERS, 1889 - 1965 (1958 100)

              B   PRODUCTIVITY RATIOS

100
             OUTPUT CAPITAL



so



                          OUTPUT L ABOR




10 .........~~~~~~~-'-~~~~~~~......l....~~~~~~~....1-~~~~~~
  1889              1910             1930         1950    1965

     Source John \\ " t·ndrid., Postu.·ar Producttvtl'y in /hr I   11111·1/ \flt/n.   /0./.9-/969 (;>.ew York, '-a1111rt.1I
f\urcau of Economic Re\C::trch, 1n pre"'" 1971) .




190
                                                                                   CHART 3
                                                            11 I          f)     .... " . llf

                       Clll< K-.                   \\.ll t:r>,:\1)-., I'll{ \1\'.\ . \1 \I' II'                                                          l'l.\C H I ' "
                                                     (>I l'f{ I.I' \I' \ 111 >.:'\ I'll I l'lft.!

             Thou'o"a'   or                                                                                                                                            lh o~o••a of
          Cl.cc;l.s ar•d Sands                                                                                                                                    Cl'\('CI..~ anj Bono1
           300                                                                                                                                                                             0




           250 -                                                               Scm1· e l1:clro n1c
                                                                                         Checks                         .,                                                        t Z50

                                                   ,.,
                                    I                    '
                         8111 Fud II                         ' '                                                             I
                                                                                                                             I
                          Chuk1 I                                  '                                                         I
                                 "1                                    ,_                                                        I

           200                                I                                   -,                                             I
                                                                                                                                 I
                                                                                                                                 I
                                                                                                                                                    ;-    -.
                                              I
                                              I
                                                                                    \
                                                                                            \                                                      ,,•
                                          I                                                     \
                                          I                                                      \
                                          I                                                          \
                                      I                  A utomar1c                                       \
                                      f            Transfer Posrtd Checks                                     '
           150                                                                                                                                                                        150
                                      I
                                  I
                                  I
                                  I
                                                                                                                                           \
                                                                                                                                               \         The1ma l Pnntcd


           100
                                                                                                                                                   \..

                                                                                                                                                          -- . Checks

                                                                                                                                                                - - -1                1uo



                                                                                                                  M anual Transler P osted
                                                                                                                                     Chuks

                                                                                                                                           Sovrn91 Bonds /                 -
                                                        Typtd Checks                                                                                              /
            50
                                                                                                                                      ,,.,, .,,.-
                                                                                                                                               ' ../                                  50

                                                                         ~------
                                                                               .,,,..'/
                                                                                                          ,.
                       Cash Pa yments
                                                         ;   ---             """""_,,,,. ..............




              o. . . . __. . . . ____._____1 ___.____.____1___....1____...___                                                         ~--'--~-----~o

              1949     50        SI               '52        '53       s.:            55             '56             '51              SB           59        60       61       '6'2
                                                                                  F "o1 Yeo"
    'i<iur~t'. \lc1uu1111i; P rtJ1l1Jrtn·1 l\                n/ Jcdcml t.ovc1n111t'nl                               01w1111:i11in11                cl
p l:.!O
                                                                                                                                                                                               19 1
                                                  CHART 4


                  l· ~rT     co ·T OF PROCE :r~G (lit.CK'°\ \"\D BO~D
                             1=" co~. T\"\T 1962 DOLL\R'->. 1919- 1%2
   Cents per                                                                                Cen ts per
 Check or Bond                                                                            Check or Bond
   9                                                                                               9


      8                                                                                                  8


      7                                                                                                  7


      6                                                                                                  6


      5                                                                                                  5


      4                                                                                                  4


      3                                                                                                  3


      2                                                                                                  2

              ___0th~ ~r:_"
             Equ ipmentRental andPurch~ - - - - - - - - - - - - - -                      =:.:-:-
      0         · ~ - ~-~·-·- - -.... I    ......_ __ - · - · ----~
                                                                 I  - --- -
                                                                                                         0
          , 949 ' 50   '51    '52   '53   ' 54   ' 55   ' 56   '57   '58   '59     '60   '61       '62


    Source: Meosurmg Prnducl1vily of Fedrral Government Orgar1i:ol1011 (U.S. Bureau of the Budget, 1964),
p. 121.




192
                                                              Table I


                                TOTAL AND PARTIAL PRODUCTIVIT\' RATIOS

                                                  Private ()omcmc Economy

                                   Percentage     Rat~     of Change. l!HH9. b) ' ubpcrio<h

----- ----- ----------------
                 19411-09 Sobperlo<b

                                                                1048-G:l        t Oll3-G7         1907-00   1960-06

Private dom ~tic bualncs., economy
  Real product     ... .. .. ..···· ·· ···          !1.9           4.6             2.5               2.6      5.2           3.4
  Rc:al product per unit of
    total !actor input ....       ·······....··    2.S             2.8             t.9              2.3       2.9            I.I
       Ubol'"·Weighted man -hours                  2.9             5.5            2.6               2.9       5.2            1.6
         nweightrd man houl"ll ••......            5.2             -i.I           2.7               2.6       5.6            1.9
       Capital                                     O.!I            0.5           -1.2               0.5       1.8          - 1.0
  Capital l:ibor r:nio •....•.•• .. .....          2.4             5.2            3.8               2.6       1.5            l.O

    Source; John W Kendnck. Postwar Produclw1/y Trends                     in   the (, nlted Slate$, 19-18-1969. 1'ew York. 'a.
uooa.I Bureau of Economic Research, in p~. 1971.)




                                                              Table 2


                THE ROLE OF GENERAL GOVERNMENTS lN TH£ U.S. ECONOMY, 1966



                                                                                                                        Perei'nl
                                                                                            In   bHllOD~              dl~trlbudon



Total gross nauunJI product•                   .......•.....•.•••••.•.•••.•                      $799.8                  100.0
  Go"cmmcnt p11rch.1x-s of ~s & sel'"Viccs •.•.•.•••.•••••••••••••••                              206.7                   25.8
      Federal . . . . . . . . . ..... . . .. ... . .. ..... .. . ...... .. ....... .              107.6                   13.4
       talc and local ...•..•...... • .. . •.. ... .. . . . ... .. ...••• . .....                  99.7                   12.4

Totnl gross national Income originating• . . .. .. .... .. • . ..•. . ..... .. ..                 734.4                  100.0
  General govcrnm(.'nt . . . . ................... .. ... . .•. ••••...•.                         126.5                   17.2
       Compensating of Government employee,, . . . . . .•.•••••••...••                             76.6                   10.-i
       lmputc..'Cl intcrdt on public capital . . . . . . . . ...... . ........... .                18.5                    2.5
       Imputed dcprcciauon allowances .....•.. . • . .. . . . .. . .•.• . .••.                     31.6                    u
    • lncludmg imputed interest and depreciation on public capital ';ourceo Oflire of Bu<inc                          Econon1ia.
plus 1mputa11om a~ c~timatcd by Jobo W . Kcn dnc:I..


                                                                                                                               193
                                                                Table S


                 DIVISION OF DJSBURSE.l\fL""7: NUMBER OF AVJNGS BONDS ISSUED, CASH
                     PAYMl:.NTS, AND CHECKS ISSUED BY METHOD OF PREPARATIO

                                                   (Selectc.'11 eus; m    lhous:u1d~)



                                                                                                            F ls cal y PIU'll

                                                                                               10:>0                             1962

 avanlt'I bonds issued .. . ........• . ..•••...••..•..........•.•.. • . •..                    2.486                             3,!)99
Cash paymcn1a . . ...........••.•....•........... .....•...•.......                               664                                 0
Checks 1s~u cd (by mc1hod)
  T pcd . .                                                                                    51.204                            12.!184
  Addrc,,ing mad1inc .                                                                        129,921                             8.837
  M:inu:il tr.in~frr po'ted                                                                    l!l.823                                  0
  8111 reed                                                                                         0                           107.199
  Automauc n:msfcr posted ••. , ...•.• •••••••••• -. ...•.••••.••• , .•••                           0                                 0
  ThC'rmal pnnted        . . . . . . . . . . . . . . • . . • .•.•••... .. •.....•....•.•            0                             5,029
    emiclcctronic . . ••.• .. •.• . , .•••... , .•••..•.•.••••..•.•..• , .••••                      0                            67.941
  'itcncil    •.•.•...•••....••....•...••••.•••.•••••••••••••••.••••                                0                             3.552
  £.DP ..................................................... .                                       0                          114.120
        Trital                                                                                l<lS.098                          321,661

      Source: .Hrasurmg PfQd11etit•1ty of Federal Gon•rnmrnl OrKnni:.nt1on.f, Table 21, p. IOI>. !\nnual data are
~hown in th<' origin:il tahle.




                                                               Table 4


                   VA DEPARTMDiT OF INSURANCE: VOLUME OF OUTPlITS, BY TYPE




                                                                                                   19S~                           1962

:\vcr:1gc number of policies in force: ...... .. ....................... .                        6,469                           6,052
'\cw pohc1d L"ued ("..cn ice disabled" and "othe r') ..•••.•..•••.•••                               212                                 I
 elected cerminat1onn:
  Death                                                                                                20                            27
  I aps1•              ..••••.... .. ..•...•. · ·• · · ·. · · · · · · · · · • • · • · • •           3!15                             91
  Cash surrender ;ind matured endo"·mc111 .....•. , ................ .                               30                              15
Disabi lit y claims:
  New clai m~                                                                                          29                           20
  Review dtc1 inm                                                                                      65                           58
Loan applic:111om                                                                                      97                          I J(i

     Source:· ,\fra1urir1g Produetnoity of Federal Cot•ernmt"nl             Or/(nni:atior~.   r.;ible IV -1· 1. p. 183. .Annual data
;ire shown in the original t.tble.


194
                                                                   Table S


         PO'iT OHICl. DEPART\fE."'\T, Ql:\"llTITll:.S OF OUTPUT BY                         Cl.A~<,   OF \fAIL SERVlCE

                                                    FJSCAL YEARS 1953 and 1962




                                                                                                 1011:?                    Ill~:!


ht-cla•\ m:ul .                                                         Picn·,                  ~5 .332                   27.!?!i7
l>tJmestit' a im1a11. k11ns and ia1ds . .. .. ....... . .                 do.                    1.5 l 'I                  1,4 12
Dorm"'illC .111mail. pands                                                do.                       32                         18

:!d 1l;m 111ail ..••••.•                                                l'iccr'                  8,0!JO                     6.762
                                                                        Pou nd~                   2.1llls                    :! ~97
                                                                        Cuu1c lcet                   133                       113

Controlkd nrcul.uron puhht.1tro115 ........ .                           Piere'                    165                          '•G
3d clas~ mail               . . . ... •••..••.                            tlo.                  11.tm                     12.210

4th-cl~s     mail- hook•" (l'<h11 ~monal
  amt    liurar. m;11t"ri.1I') •..•.                                    PiCCC'll                     l'i3                      68
                                                                        Pound~                       636                      !100
                                                                        Cubic: feet                   !Vi                      15


Other ·llh cl••'<S marl                                                 Piece,                       1171                     <!70
                                                                        Pounds                   ·l.!138                    G,l'l7
                                                                        Cuh1l rcet                   'iOll                    ~II


lnlc rn:11 l1111al su1 fat l' mail       . , . . . .. ..... . . • . .   Pi etc~                      287                      336
!111c•1nn11onal a1r111;1il. 1<:11c1s ;ind carrl• . . •.•••.•.•             do                        2 l !l                   148


l 111cma11011a l ;iir111a 1I. parcel'         ..... ..............      Pieces                           1.:1                    0.86
l'cnall \ m;11l                       .......................             do                      t.'tm                     1,6')8
                                           ....                           do.                        Ill                       ~Q

                                       ...... .... ··············
l·ranlwd m;iil
I rt.~ for· blind m•ul                              .. .... .. ....       do.                            ti                      2.7

Rt•gistn ~cr\liCl·          •••••.•••                                   itClll\                       55                       !10
(;nllhl"<l   111.111   't:l\llC • •                                        tlo.                       31                         0
l11~11r.1111 "   wniH •                                                    do.                       165                      1!18
Collt·n-11n-d ..1t\•1·n ~rr' ice·                                          1111.                      24                        19
'i J>l'CI a I <ld 1HT\ se r. 1u·                                           do                          112                    114
                                                                                                                              :'\70
Monn order crv1ct" • • • •
rostal    \a\illJ.':'I '<'r\JCt
                                                                        \it""'\ order'
                                                                        Ct-1 II ftCJlt''
                                                                                                     252
                                                                                                         ., .
                                                                                                         -    I                ~o


       -;ourw: .\lt·a111r1111: Pror/rir/1111"· nf 1'nlt'rnl C.1wrr11mr111 Ori.:t111h1tirm1, 1.1ht.- l't, pp. 208-2<Y.l. \1m11;1I da1a
art   'hown m the oni:mal tablt".




                                                                                                                                195
                                                        Table 6


        SYSTLl\ts MAINTENA.'IJCE SERVICE, CR.OWTR OF OUTPUT BY                                   ~!A)OR    TYPE OF
                                     FACll.ITil.S, 1958-62



                                                                                             Stll..Dd&rd Facilltr Yean

                                                                              F111eoJ rear 1958              F IHcal year 19()2

Air navigation:
  VHF omnidirecuonal facilities ............•...... . ....•.....•.                10!1.12                           610.55
  TACAN and dis1ancc: mc.uuring equipment .... . .. ... .••• . ..•.               12!.31                            592.49
  Low. frequency ranges and fan markers ........... . .... , .•.....              294.71                            262.26
  Homing beacons . ................... , ........ . . .. . . .... . •.•.•          59.82                             68.72
  Instrument landing aysu:ms ................•.... . . . ... . .. .. ...          285.06                            37-t.67
  Appronch light sy,tcms ...... . ....•.............. . .•. • . ..•....             '1!1.52                         187.52
  Beacons and fields . . ..•...........•..•.•.••.. . ........• •••.                1!?0.85                           60.50

       Croup I-subtotal                                                         1.530.37                         2.156.49

Air tnllic control:
  Towel'!I, stations. and cen tel'!I . . ................. . ........•.••••      1.709.27                        5.888.62
  IUldar sys1ems .        . ................•..• . ..••......••.••••.•             259.25                          88B7
  \'HF and m1cro":ne linlu ......................... . ......... .                 115.59                          48U5
  Direction finders                                                                51.26                            <f9.55
 Tclc1 ypcwnt~r s stems           ........ . .........•.••.••...•••..•            126.01                           206.81
  Engmc generating equipments ........••.••••••••..••.•.••••..                     52M                              46.87

      Group Jl-subto1al                                                         2.27 l.iO                        5,557.57

Non acronautical :
 Housing, utllitit-s. and miscellaneous . . ...• , ....... . ....... .. .•        !118.!lO                          !186.21

      Group lll-subcolal ...... . ... .. ............. .. ... . . .... •.         518.!lO                           386.21

         To1;;il                                                                !1.920.!Ji                       8.100.27

     Source: Measurtn1t Productiuity of Fedt'ra/ Cm•emment Orj!ar1iuit i ons. cable 58. p . 26'1.              ~e   Appendix
Vl· I £or a complete lmmg of all types and classes of facilities.




196
                                                                           T able 7


             BUR£A U O F LAND MANAGEMENT, ESTIMATED DISTRIBUTION OF T OTAL1
            MANHOURS WORK.ED, BY PROGRAM AND TYPE O F O UTPUT, FISCAL YEAR 1962



                                                                                                        l11111 - bour~                 Man·buur"
                                                                                                        ullocntrd                      allocat('d to
                                                                                                        to   CUM'eDt                   lo.-,...tm~ot
                              Prntrram and tnie or output                                                outpu1-                         ootput•

Lands and minc:ral pl'(1gram total ...............•. . ..... ..... ..                                    1,805.541                        6111.751
  Agricultu rnl caacs . . . . . . . . ............ . ....•.. .. .....• . •..•..                            165.085                         n.:t.
  Exchangci .••.....•........... ........ •.. . ... .. .. •. ...... . • .                                  195,702                         do.
  Sales of land . . •.• , . • • . • . • • • . • . • • . . . . . . . • • • • . . • . . . • • .. •••• .     271,808                          do.
 Selections ..•.•.••.. . .. .. •. . . .. ..... . ..•.•••...•...•..••.•.                                    184.830                         do.
  Land tit le cru1t:~ . . . . . . . . . . .. .. .. .. . ... ....... . ..... . .• • ....                    lGS,085                         do.
   Lea!ICS   ;inti penni 1 ~     (land) .....•.• • .............••.••••.••• , ••                           108,723                         do.
   Mineral cntnC1            .............................. ....... .                                      179.077                         do.
   011 :ind gas least'$ (on land)   .............................. .                                      558,155                          do.
   OU and       833 leases (OCS:) .   . ..••........•...... .. .••....••.                                   71 ,651                        do.
   Material sales                     ...•.. .....• .•.....•.•.•..•••...                                    !15,815                        do.
   Lea.~.     penn1tS. hcen!!C\ (mineral) ...•...•...••...•..•... .• • ••                                   71.651                         do.

Forest!") program total ..................... . ................. .                                       664.589                         791 ,861
  Timbt-r offerc:d for sale ....•..... •.•.• .•. . .••........••..•.•                                     551.671                         n.a,
  Timber cut . . . ... . . . ..... . ..... . ... .. .................•••                                     152.918                       do.

Cadastral aurvcvs for other agcnacs Lota.I . . . . . • . . . . . . . • . • . . . .•.•                         77,056                               0
  Miles 0£ sunc hnc: . . . . . . ......... ...... ...... .•... . ....                                         30.81-4                              0
  MonumcnLS set                                                                                               46,222                               0

Runge program total • . . . ...•.• ... •.... .... ....... .... ...•.....                                     557,897                    1,156.055
Recrealion program toual • • •.••...•..........••...•....••••...                                               1.548                        6.194

       BLM total •. .. ....• . . .. ...•. .. . .. . ... ...•. ...... . .. . .. .. ..                    5,104.612                       2.655.539

       o.a. =   '1;01   avail:iblc
   1Excludes 10.056 man.hours devoted to fighung of hrcs.
   •Outer Continental Shelf.
       Source: Mramrmg Produrrwll)' of Federal Government                                   Ot·1tamuit1011s,      t.1blc 65, p. 526.




                                                                                                                                                   197
                                                                 Table 8


             A\'£RAGE ANN\HL CAI?li~ CN PRODUCTIVm' OF FOlR FEDERAL GOVERNMENT
                                         ORGANIZATIO!lo

                                                           ( PC'tccnt per   ~car)



                                                                                                       A ..~r•l:t' OU cpo t   A<"l'raitf' outr•ut
                                                                                                        ~r l'OD6tant           llf'r r.m"tant
                                                                            A v1•r11i:1•   nu 111111        dollar or             dollltr nt
                          Ori:anlxl\tlHu nntl 1wrhltl                        .,..r man·hcour             rnrrllll cost           totnl en     t


lkp.1111n..n1 of lnsur.incc,
Vrtt•ran\ \ dm1111ur.auon,
19!iS- 62                                                                            9.8                         lt!I                  r..9

DJvmun or Disbu ncmcnt ,
Dcpar11n1·111 of lht: Trc:m1r.,
l!llD--02        .... ................ . ......... .. ..... .                       9.4•                         8.6                   6.t•

Post Office Dcp:irtmc:nt,
lll5:l· ti:? ••.•••. • •..•••••. •••••                                              o~                           02

S\\t1:m      \f;untt·nancc \ m·1cc:.
r t'fh:ral   \\iatinn i\itcnn,
19>~:?                                                                            .... 0                         0.1                    n.:i.

     •Output pcT man ·\·c:it
                                                                                                             -------- --                      -
     • fxclucks pmt:ig.=
     • lnd utlc' pt.·ro,cltl.11 'ol'f\ICC,. transport.11 1on, ;111d ~.ice o~cuv.i 11c\ en~!\
     n .1.-ncll avoiilable
      Noi-rN: The rl:ica ~h own 1n 1h1~ table do nut warrant wmp:iri!iOll\ o f m:inagcmcn1 cffcc1ivcnc·ss in In
           diviitual orga11i1;111on~ bt \.IU:.<.' thc..e '''tim:11c' uf Jctual produtt ivll\
                                          0
                                                                                                       If.I'"'
                                                                                             l't'alucd do not makt• all)
             .11lowana.- for po"1hlc d1lferen,,., '" 1hc potential for proclucll\1t' impro\emcnt~ lh:11 c!\i~ICd duung
             the pcnod.

             f'eric;.d ;ncr.11:c' 'M:te calrulatcd b the compound intn1 t fnrmnlJ (:innualh tompoundcd) :ipph1'd
             lO lhc 'alUt'> OI UIC procluctl\1(\ mclc>. Ill lhc hr~l and l.l\l \l.lt or thC' pcnod.
     "c>uru·: ,\fr11J11nn1: Produr.!1t•1h of f,.dr.ral Covt>rnml'nl Or11an1:n1 o" • 1;ihl<" I . p. 11.




19
                                     Economy and Efficiency m
                                        Public Expenditures


                         •\ , a member o[ the Joint Commiucc £or Reclunion of
                      Fcde1al 1:,pendirnrcs. nn intcrc,ti. f01 yean ha''t' coim.ided
                      with the b:i~ic duty laid on the (;cneral Accounting Office
                      bv law to seek out meam o f ach ieving greater ec.u nomy and
                      cf11cit·ncy in public e'pemliture,, Tho'c imc1c't', of course.
                      a•c cquall) -.,ital 10 me in m, caparity ::"chairman of the
                      Wav' anti !\l eans Commince-,incc a dolLtr '!>a,ed is a
                      dollar earned.
                         fhc Comptroller General\ .rnnual report' co the Con-
                      gres' romi\tentl) show ub\rantial mcaH1rablc ,aving!> that
                      a1c di1ecLI} attributable to the General Accounting Office\
                      WCJI k.. • • •

                         \ side from the reported mctt'iurnblc '>a,·ing'>. the 1ecord
                      ~hem\   th.tt there are rn:ln\ other ,ubstanual economic~ a~
                      a rc,ult of the General \ccounting Office\ wm k Thc'e take
                      tlH: form of dc~i.rcd 1csu1t~ :ichicvcd at t rdurcd cost. more
                      or hct1c1 re~ulL'i for the \amc mone'. ;ind tc1luc cion or
                      clinun.111011 of planned ;1uivi tie~. The) :11e b.t,ecl on artiom
                      t.1kcn hv the Congress or iLs rommilll'C' that 1cflee1 informa-
                      tion and 1 ccwnmcndation-. prO\ idcd u\ the General Ac
                      rn11111ing Office. and n} agcmy head' as" IC\lllt "' Ceneral
                       \nounting Office recommcnclatinrh • • •
                         On the other side of the coin. Lht. Gcner;d \ccounting
                      Olhcc h;1s hccn instrumcmal. throu~h its rt'pOrt\, in un-
                      C:ttthing for the Con~n:s' infonnation rc~atdin~ literall}
                      IJiJlmm of doJl.1n of: tlfldCTC\timatc' of prnj.,'TilTn CO t.<;;
                      co,1 oven 11m.; unnece:."'r) cosLs borne b~ the Government;
                      1C\ cm1c~ foregone; and uneconomic.ii. inefficient. and in
                      elfccu'c ll!i<! of      rcsourc<:~   in   term~   of acrnmpfi,hing   le~s­
                      latt'd   objcni\f.:~.



                                                                CongTC\\man Wilbur 0. Mills
                                                                Ch.iitm:in. llow.c \ \,ns and
                                                                  !\leans Committee
                                                                rm1~·r11101111/ /~norll

                                                                Juuc 211. 1971




                                                                                                   199
"   •   ..   •   J4
                                                 Hugh Sidey
                                                 Chief, Time-Life
                                                 Washington News Bureau




    Hugh Side)• is a fourth-generation journalist. His great-grandfather fourrdrd
the Adair County Free Press, a weekly paper in Gretmfield, Iowa, subsequently
owned and operated by his grandfather nrrd noui run by his father and brother.
      Mr. Sidey learned the mechanical i!rrd of the business first-fuding presses,
setting t•ype, and sweeping fioors-when he was irr grnde school. Later he sold
ad.r, wrotr stMies, took pictt1re5, and made the photo·engravings. After a hitch
in the Arm)• at the end of World War 11, he romplrted his t!duca.tion at Iowa
State Collegi'.
     Tht!n bt'gnn the classir fournalistir m1grati<m from the heartland to Wa.sh·
ingtorr. Mr. Sidry started on thr Council B!tlffs (Iowa) Nonpareil. where he
covered every t\·pe of story, then moved arron the J\.frssouri R1vt!T to the Omaha
(Nebraslta) World-Herald. reportmg from city hall for the next 4 )'ears.
    His next move wa.s to a 2-yenr stint with Life in New York, then to Time
magazine in Wa.shmgton, D.C. He remained in Washington, as White House
correspondrnt and deputy chief of the Tnne-1 ife Washington News Bureau. On
January J, 1969, he became chief.
     In 1960 Mr. Sidey traveli!d with presidential candidate john F. Kennedy on
his campa.ign trail a.nd was one of the reporters in Dallas with the presidential
party J years later when President Kennedy was assassinated. During the sum-
mer of 196J, Mr. Sidey's book, John F. Kennedy, President: A Reporter's Inside
Story (Atheneum) was published and quickly made the best seller list.
   His latest boolc, A \'e11 Personal Presidency: Lyndon B. Johnson in the
White House (AtheneumJ was published m July 1969.



200
GAO Auditorium
Ma y 21 , 1971




Improving Public Understanding of
Governmental Affairs


Public and co11grernonal interest in the work of the Gt'nt'ral A ccounting
Offire has increased with expanding Government tmd i11rrN1.1cd b11dgets.
Although GAO doe.1 1101 promote its reports with the preu, wdio. and
television, it has undertakeTl lo malce tlw~e reports romm11mcate better
and to mahe GAO more accessible to the media. Both 1teps have created
an awareness and mteresl in GA 0 far bn•ond that of earlier daj t.
Tht:re is, however, a .substantial need for improved rommllnication
between all Government and the public. Agenne.1 surh as GAO and
such outstanding 1ournalists as Mr. S1de-v can play an important role
in mutmg this need. Afr. Sidey emphasizes that Government u people
who work for people. He suggests lhat the key to acl11ev1ng better under-
standing of governmental affairs i.s to keep the human facton m lite
forefront m govenrmental uports and rrleases a11d m press stones.




   I feel it is a special honor to be a~ked      people who got married tended to stay
in on your Colden Anniversary to talk            married. So I was blessed with a rich
about my favorite· ~ubject. the public un        trade in golden wedding anniversary
demanding of gon·mmental affairs. and            picrur~. Once or twice a week or even
perhaps leave with you a few thoughls            more often I would load up my huge
aboUL how to improve ic.                         camera and be off for somebod} · tidy
                                                 from parlor . .\fter taking two pictures-
   I am somewh.n of an expen in the
                                                 'iOmeumc'I four, if the couple was of un-
mauer of 50lh anniver~ries. A a bov on
                                                 u,ual prominence-I would ha\'e a piece
my father's \\eekly newspaper out in
                                                 of cake and a liule punch and lea\'e feel
Iowa I was, at quite an early age, taught
                                                 ing lull and warm and quite gratified
how LO u e a camera and assigned to
                                                 that people and institutions endured so
funerals, weddings, school plays, and as-
                                                 long that they wanted the evcm rc-
sorted other soc ial happenings. One of
                                                 rnrded.
my most frequent subjects was golden
wedding ann iversaries. Out in l owa for           I did no t b ring my camera today.
reasons not yet fully fathomed, accord-          There will be no cake or punch. Bm 1
ing to Dr. Paul McCracken. Chairman              must ~::iy that I come here and hopefully
of the Council o f Economic Advisers a nd        wi ll leave with a gntified and wam1 feel-
a fellow Iowan, if you live through your         ing thac I have participated once again
fir t year you tend to live forever. E,·en       in ~omething that has endured for 50
more myslerious, when I was a boy tho. e         vearc;-a wedding of sorts of the CAO to

                                                                                       201
superb public service. My congratula-          apt analogy, we have jumped as a high
tions to you all. The institution, to the      jumper would the first 6 feet and we are
best of my knowledge, has come through         now working on those last few inches. It
these years without any serious blemish        does not make achieving better under-
on its record. It is bigger and stronger       standing less important, or less difficult .
than ever, fu lly a part of legislative Gov-   But it is a task that should be ap-
ernment and a permanent resident in            proached in optimism and good will and
this city ready for another 50 years. If 1     the feeling that we have gone Ear, but
am around for that one, l very much            now must do a bit better.
want an invitation and I will bring my
camera.
                                               Washington Does Not Reflect
   The most important thought in this
                                               the Nation
meeting is that it was called in the better
interests of the United States of Amer-
                                                  I would suggest first that we get some
ica. I know that may not seem to be a
                                                better idea of the Federal City and the
very sLartling concept-so terr ibly simple
                                               atmosphere it creates. It is not like most
-but it is, in an unusual way, quite re-
                                               other parts o( this Nation. Government
markable in roday's environment. We
                                               is our entire life. We eat it, drink it, and
have for the moment forgotten that we
                                               sleep it. We digest The Washington Post
live in an adversary culture, or that we
                                               and The Evening Star which cover Sen-
are to be friendly enemies, or thnt one
                                               ate hearings like other papers cover
of us is an "effete" snob. or that the best
                                               rezoning problems. 'Ve are assaul ted by
way to look at a bureaucrat is down. We
                                               panels and news programs featuring
are here in an atmosphere of civility.
                                               Conhrressmen and Cabinet officials with
something Chief Justice Burger pleaded
                                               the frequency of western movie reruns
for so brilliantly just this week, and this
                                               out in California. Washington has be-
is a rich treasure itself.
                                               come some special state within a larger
                                               state. It has taken on a life of its own
Fine Tuning Public Understanding               that no longer truly reflects the :--lacion
                                               in many important ways. There is so
   It does in its way illustrate a point       much power here, economic, military,
which I would like to begin with. There        administrative. that much of what we do
is probably far more understanding of          is magnified out of normal proportions.
American government by the American            But in the hinterland, they are not al-
people than you or I realize. The people       ways so captivated by Senate debates on
-"peepul," as Lyndon .Johnson used to          new bil Is, or by the state of national a p-
say-are remarkable. Wherever I go              propriations or inter-Cabinet arg·uments.
they raise the darndesc questions, about       My judgment is that most people are
people and policy and aboUL institutions.      far more concerned with some of the
So when we talk about improving public         smaller things of government that bear
understanding of government, let it be         directly on their live~lassrooms, crop
understood we are not discussing fi lling      payments, traffic lights: that they are
some huge gap in awareness. We are             happier and more optimistic than we
talking about fine tuning. We are talk-        who must endure the dissenting few,
ing about the subtleties of power. We          who must wake up every day to charge
are pursuing an excellence in the affairs      and counter-charge; that they are far
of men that no other society has sought        more "normal" than you and I and
for its citizens. To use that old but very     therefore are profoundly interested in

202
who is doing whnt and at w hat rnsL and         passed. masses enrolled, gross national
whether i t is worthwhile. And if that          product produced. In the end we some-
idea can be reduced further, i t comes          times produce a bloodless, dull , and
down to the scory of people.                    often inaccur ate narrative of the affairs
                                                ol the Government. It in tum is too
   A while back one of President Nixon's
                                                often ignored by the people, or half read
speech writers. 'Villiam Safire. had a
                                                and thus half understood, or al lowed to
short essay in The New J"orh Timrs
                                                become part of the record which d iston s
abou t this mau er. "Mr. Dooley's dic-
                                                and a lters meaning.
tum," he wrote, "politics a in 't beanbag"
has a m odern c:or o llary: "government             It is my belief that much o ( the trou-
ain't machinery.'' Then Mr. Satire re-          ble b egan during the New Deal days
lated a story abou t the President, who         when jo urnal is ts were faced with the job
was told by an aide that a certa in request     of assimilating new con cepts, new quan-
would be relayed ''to the appropriate           tities. The box score, which reaches its
mechanism."                                     highest form in Corigressiorial Quarterl)',
   Mr. Nixon began to re minisce about          became an easy shorthand to events in
a visit he had made to a nation behind          W ashin gton. It had in those days a cer-
the Iron Curtain in 1959. "There was a          tain accuracy. The crises were nor of the
steel mill on the itinerary,'' th e President   spirit, as they are today, but o f material
said. ''The diplomat who was my escort          -food. clothing, housing. In that rela-
officer-a brilliant fellow-turned me            tively simple and new governmental
over ro the plant manager for the usual         structure the jobs created, wages paid,
guided cour. The manager was espe-              relief handed ou t were directly measure-
cially proud of the new machinery in the        able. lt was reasonable for any journalist
plant, and he told me all abom what it          to assume that, in 1933 when the Civil
cost and how it speeded up the process.         Conservation Corps was created by Con-
He got a little impatient when I stopped        gress, within 4 months 300,000 boys
co shake hand s with the workers around         would have jobs and there would be visi-
whatever mac:hine he was showing off. In        ble improvements in nation al parks and
the car on the way back from the mill,          forests.
the diplomat said someth ing I've always           But 40 years later that measure doesn't
remembered. ' It's n ot hard to find men        work. £low does one assess the impact
who understand machinery,' he said.             of the H ead Start program? We are still
'Our trouble is we d on 't have en o ugh        arguing over that. It was Pat Moynihan's
men who understa nd men.' "                     con viction hefore he le ft the White
                                                H ouse this year that the n ewest and best
Government Is People                            s<.:ientific eviden ce strong ly indicated
                                                chat most importa nt patterns of life were
   And that, I would sugge!.t, very neatly      set in children in their first 3 years. be-
sums up the problems of better under-           rore any o f the kids under the Federal
standing of governmenta l affairs. Gov-         program got into Head tart.
ernment is people, who work for people.
Ye t, far too many of us bo th in govern-          I do not disparage the gathering of
me nt and in the press consistently try to      statistics, o f data, and reporting it in
filter o ut the human factors in our stories    those very terms. That will always be
and reports. 1,.Ye have developed a box         basic to journalism in this city. But I
score mentality which deals with billions       feel that we m ust turn more to the hu-
of dollars appropria ted, numbers of bills      man dimensions-who devises these pro-

                                                                                       203
grams like Head Slart and why? What           of any nature, or what be construed lo
is the experience of one, two, three, or      be defeat. And he thought in the tradi-
more kids who go through the program?         tional manner about courage. You stood,
Who are the critics, and what do they         fought, won. Some of us believe that
say? Almost always I feel there should        Johnson was afflicted by something we
be, in accounts of Government activities,     called " the Alamo Syndrome" that com-
a view of the men and women involved,         pelled him to go to the aid of South
both as creators and participants, or at      Vietnam.
least the feeling that behind each event
is some human concern.                           l have often in these recent years
                                              thought back to Dwight Eisenhower's
   There is a legend in these pans that       Presidency and why he was able to hold
goes that public servants are entitled to     such a majority of the Nation through 8
private lives, chat somehow they can sep-     years. I could not find that many clues
arate their office hours from their time      in the Republican Platform or in his
on the golf course or at the symphony. I      messages co Congress. But the accounts
don't believe that. And I further believe     of his boyhood in Abilene, his years at
ic co be one of the parts of our problem      West Point, and the book of his remi-
of understanding. In my view, you are         niscences delineated superbly that basic
very special people. You have in a way        decency and honesty which underlay the
almost taken the vows by coming into          trust the people put in him.
government. And let me say here, that I
apply the same standards to myself and           I chink it significant, for instance, that
other journalists. Every part of us, every-   Richard Nixon was, and is. so taken with
thing we do, affects in some way our          the movie on General George S. Patton.
work. Therefore, within reasonable lim-       I found countless clues to John Ken-
its, I believe that we all should be sub-     nedy's behavior in studying his upbring-
ject to scrutiny that if need be goes into    ing. One 45-minute interview with old
our homes. our family relationships, and      Joe Kennedy up in New York shortly
our backgrounds.                              after Kennedy's election, I believe,
                                              yielded more truth about why he was the
   Let me illustrate. I have dealt over       man he was than any thing I did in my
the past decade with the highest level of     reporting career on Kennedy. It was a
this Government, so forgive the use of        story of fierce love, pride, and money all
Presidential references. T feel they are      mixed together.
valid, that the same principles apply.
even more so in some cases, on lower             I never really understood Ezra Benson
levels.                                       or his agriculture policies until I spent a
                                              couple of weeks with him and heard
   I am convinced that the clue to our in-    from his lips about his days in England
volvement in Viemam, whether you be-          as a Mormon missionary and how he
1ieve it right or wrong, lies in Lyndon       dodged eggs when he preached, occa-
.Johnson's background and personality         sionally had a fist fight or two in the
more than our treaty obligations or con-      name of the Lord, and in the end rather
cerns about regional security or the          thrived on adversity. Just a few days ago
threat that the Communisrs, if not            I was struck in doing a roundup of all
stopped in Southeast Asia, would soon         seven potential Democratic candidates
be coming up Wilshire Boulevard. John-        that six of them came from small tmvns.
son was a Texan, nurtured in the legends      I believe that now I see, for instance,
of the West. He could not abide defeat        what drives Harold Hughes and I sus-

204
pect I could predict with rnnsiderable       with me about something being too com-
accuracy just what course he would es-       plex for the reading public, I, in the
pouse for the country if he were to be-      words of Lyndon Johnson, reach for my
come the Democratic nominee.                 wallet. I suspect that 1 am about to be
                                             had.

Tell It Like It Is                              One of the first lessons that I learned
                                             in covering bigtime U.S. policies came
   ln short, what l am saying Lo you is      from John Kennedy in 1959. We were
that all of you are the Government, lhat     discussing some of his rather lofty and
you must be talked to and wriuen about.      learned prose and I ventured that it
And then the things you do must be con-      might not appeal to many people. He
sidered for what they do ro people out       gave me a cold stare and said, "Never
there. In a packet of maLerial given to      underestimate the American people.
me several weeks ago, I read a reprint of    Too many men in this business look
an article in Reader's Digest entitled       down on them. They are smarter than
"GAO: The Taxpayer's Best Friend." 1t        you think." If that was true then, it is
was an accounc of savings made here and      doubly so now. Television, massive
there, of mysteries unraveled in ledgers     higher education, leisure time which has
of Government agencies. But l must con-      led co greater involvement in public af-
fess that had I not been engaged to come     fairs--alI of these things have prepared
here today I might not have summoned         the "reading public" to absorb just about
up the extra adrenalin to get a ll the way   as much as we can throw at them.
through even that shore piece. Somehow
that fellow "the taxpayer" has become          1 don't mean some of the learned
one dimensional, a cartoon figure who        papers which are cranked out of our uni-
suggests to me, and I suspect a lot of       versities. We are talking about journal-
others, a meek and flavorless resident of    ism now, the traditional means of com-
a mythical village. And I further suspect    munication from government to public.
that had there been in this account at       Henry Kissinger has joked that at Har-
least part of a story of a real life man,    vard obscurity was often substituted for
wic.b name, home to·wn, family, and ~ir­     profundity. He claims that some re-
cues and faults, going about his business    viewer of one of his books after reading
of saving millions of dollars it might       it declared that he was not certain if
have meant a lot more. To be brief           Kissinger was a good writer, but he was
about it, and put it in the language         sure chat anybody who finished the book
which has some currency today-tell it        was a good reader. No, I am talking
like it is. We have for too many years       about the daily and weekly and monthly
been filtering out of our communications     com munication which is the bulk of our
about this Government the facts of life.     knowledge. I recall not long ago finishing
                                             a seminar at Yale Un iversity where I was
   In some instances this process is ex-     beset by some of the best young minds
cused on the basis that the American         of the Ivy League. They were good. l
people would not understand the com-         swe:ned through Vietnam, the balance
p lexities, the human variations, the sub-   of payments, even the effect of sex in
tleties of the Government's business. It     The White House, and then I drove
is conceivable that this was true 50 years   from New Haven to LaGuardia Airport
ago but I really wonder. It is ridiculous    and caught a plane to Des Moines, Iowa.
now. Whenever I hear someone in the
Federal structure begin a conversation         I drove 30 miles   to   my alma mater,

                                                                                   205
 Iowa State College, set out th ere among      I began in this business that we can work
the corn fields. l r ecall the great calm      together toward a common goal, yes,
which came over me as I worked on my           with certain tension, with certain dis-
speech for that evening, and how I felt        agreements and frictions, but always
I could idle along with this audience.         with the understanding that we are a ll
Well, when the question period came, I         the same people and we in a very basic
sweated again. I went through Vietnam,         way want the same things. We have lost
the balance of payments, and yes, the          sight of that a bit these last months. We
effects of sex in The White House. Liter-      are the people. Well, the press is one
a lly, ladies and gentlemen , t he same        pare. intellectuals ano ther, labor unions,
questions asked with the same vehe-            doctors. We hrt.ve heen excl uding too
mence as at Yale. Out there they know.         many groups.
They are ready for anything we can hand
to them .                                          That is not far removed from Justice
                                                Burger's appeal for a new era of civility
    You have beard of late a good deal          in our national life. He singled out law-
abo ut t he adversary relationship, which      yers and the press but it applies across
is necessary in good government. I would        the board. I hope we will not look back
not discount that. Ambassador Harlan           several decades from now and label the
C leveland. a distinguished member of          .Justice "the last gentleman." But there
the Foreign Service, once said that out of     are days in covering this Government
the web of tension comes creative policy.      ·w hen I wonder. '\i\Te must argue and dis-
But there is a danger that we should per-      cuss, but there is no call to be permanent
ha ps take note of and it bears directl y on   enemies, to be vindictive or impolite. I
this matter of br inging better under-         have ceased listing tbe number of phone
s tanding of this Government.                  calls that have not been returned in the
                                               past few year s. I am an adult and have
   T here are times in this city when one      rather a thick skin , so that when a man
gets the d istinct impression chat there       in Lhe Government does not want to talk
are three, four, or five governments.          to me for any number of r easons, all of
There are times when a reading of the          which could be valid, then I can absorb
morning papers suggests that the press         and still smil e at almost any response
is some kind of foreign power to be dealt      from his secretary, even that he doesn't
with with suspicion, contempt, down-           want to see me, doesn't trust me. doesn't
r ight distrust; that the executive branch     have anything he can give me. But the
is a fiefdom totally isolated from the rest    infuriating thing is to be told by some
of the Government, indeed the 1ation;          sweet voiced young thing that the man
and that Congress is a separate kingdom.       in question will r eturn your cal l or will
Lost in this great exercise of adversary       surely respond in some other way, and
government is the fact that we are all         then co have days of silence. I must say
one people under one Aag and in one            my first reaction is one of suspicion.
country. Certainl y, tension must exist,
b ut sometimes we go too far. The press           .Justice Burger suggested that more
needs to shoulder its share of the blame,      wars in this world have been prevented
but Government, too, should look to its        by the politeness and civility of diplo-
easy posture of assuming that anybody          mats over the ages than had been won
who comes before it with a question is         by the generals on the battlefields. I
one of those rotten apples that needs to       must agree. I can r eport myself as a test
be thrown o ut. I beli eve, today, just as     case in which, when con tending in gen -
strongly as I did several years ago when       tlemanly fashion with a news source

206
.1boul a <onLrmer!>ial que~t1011. hrs '"k          unnal ,et ret~. Bue I do belie\e we must
of the affai1 .:ippcarnl a lol <1e,1rer than       be cn 11 t inrn, as we go down c.hat toad.
in c;ise'> wlwre llw phone wa' slammt.·d             fhc1 c .u-e [ewer .111d fewer real national
d<I\\ n or lhere ''ere lhme nnnc'i'tent            -.cnct.. t•,en H~ar .\ncl yet there 'till are
call, to wit me rhe fellow in question             .m .1l:1t ming nutnbt·r n{ men in ( •O\Crn-
co11lc1 not 'cc me. l ha'c ah,avs been              fll('nl v.ho helicH' that more and more
amazed in th is hmines.. or gathering and          tntt\I ht. c la~s1ficd, or at le:m withheld.
reportin~ tht· affnirs of publir men, ho\\           \nd 1t'.il cli.,;i,1cr waits in Lhis age at the
inevitably. if une wl..t.") the time to lool..,    end of Lha L line for men who detein~ .
there arc cwo or more side-. co e\ er')'           di"crnble. or lie.
problem. and how, wht.·n one is allowed               Did we gain by lying about the l '-2 or
a glimp)lc of whv .tnd 111"' some anio n           till' Bay of Pig-.? Wm. there reall> bene-
was tal..en. and thal glimpse i' hriven l\llh      ftt rn tning tn hide ~JO billion in Viel-
ci\ilicv. the repm t of lhl' 111t.idc111 almn!>L   n:tm t•xpen~e.,? Did the i\fylai roverup
ah' ays la l..e' on .1 mo1 c ha I.in red dt.•\,    ht'! p .111yone? When on <:anh :11 e we
than it mii.tlH have mherwisc.                     going to learn that truth is lhe best de-
   Ah. \ ' Oil 'iii\. what of the objectivity nf   fen t·-the onh• tlefeme-and along with
the press. \ \ell. I mu'>L q11me mv late            that, co learn that em>r is noc politic~lly
Edi Lor-in-( hief and Ir iend. Henn R              fat,11 , rh.11 again , Lhe American people
Luce. There i-; no sm:h thin~ ns ohjel             ire read · to 11ndentand that. I do not
thity. There arc fact, ;md there an·               '>11gge-.t th.ll truth i alwa)'s easy. that it
j11dgme111-. .md men just ullimarely com-          does nm brin~ pain. or e\en thal it aids
bine them to form the printed word and             a <;pe< 1fi<: cathc. T <;ay \Cry 'limply lhat it
all the human pn1blc:ms emer that equJ              j, 11(.'( ('SSJry in OUT W:l\ of life.
tion.                                                   Tht• grt·awst n .·a'>nn d1ac I yndon
                                                   .Johnson is hack on r.he ranth is the cred-
The Case for Candor                                 ibili ty gap. It was rea l. I li\'ed through it.
                                                    It wa' not :i ''crv pleasant expt•rience.
   l.el m mm e from the t a~e for good              '.'Joris 1t enjn •able to have il dert.. in any
m.111ncr' to lhe ca'it' for c-andot. This Ja,t      branch of (.mernmem do the same
ta~e is CH' n 'trnnger. fhere aro<;e with          Lh in~. I sugge-.t a -;u hsti tute for the I ie
ne,,· vi~1Jr i11 Lhe Kt.•nncdy vean the idea       i'i a " no (ommen t" or simply a ~ilence. I
that chc C.<n'emmcnt hnd .1 1 igln. pt.·r-         rathl'r like the dicwm handed down by
hap cH·n .1 dul 11ndt•r cerr.1in <in 11111-        tht.• I.He pe.lker :tm Raybrun t<> hb
stances. to lie. One of tht• public sen:u11'        ne" men. "Kl·ep vour mouth <:hm. You
of rha t ti mt -..n cio'' n .rncl \Hole a rather   dnn ' t h;Hc to eJ1..pla111 what you don't
lengthv pil·re m1 the i'i-.ue for the S11t111 -     say.'' Ob\'iomly. l don"t advocate a ron-
do·v f~1lf'11i11[! Po.11 I find Liu.· whole irkn   spirat v of silence. nm in this age. wilh
an outrage f11nher. I find 1c utterly 1111-         ,11ch a 1 r:n• in~ For information. I 'uggest
producll\C. I cannoL think of a ... inv,lc          thal, in chmc rare moments when disclo-
ca,e, big or small. ''here the CoHrnmt.•nt          .,111 t> of c errain fact~ would truly injure a
lierl to the \ merinm people and it \\as            <-.111~c. the per:-.on on the spot decline to
ei1licr necessary or beneficial. Perhaps            :tnswer, a1?;ain with civi lity and under-
there are rnch case'> buried somewhc1 e             'l inding. but ckcline. Don't lie.
in the file, of the CI \ . But I d o ubt it I
clo not for an imtant <;ttggest chat e\ery         The Problem of Truth
 fragment of information which the Cm -
ernmenc pos es..,t.•, should be 'hared '' ith         frttth . howt•vcr. is not alway~ il'I sim-
 che people. Of t our-;e thtrc must be na-         ple ;i, I ha' e ~ugge;ted in the fore~oing

                                                                                                20i
remarks. Total and instant communica-          would appear that after a given time the
tion have made a very simple change of         awe of their position wears off and they
heart seem sinister. On the campaign           come to believe that they own the Gov-
plane in 1964, LBJ insisted that he            ernment.
would follow the advice of General
Douglas MacArthur and not commit                  I tell the story of Lyndon Johnson at
American boys to fight Asian battles.          El Toro Marine Air Base several years
Confronted with the facts of Vietnam, he       ago. After reviewing some of the troops
changed his approach. He was not al-           destined for Vietnam, be headed back
lowed to forget it.                            toward his helicopter. He went, however,
                                               towards the wrong machine. A Marine
   Rid1ard Nixon has had his problems.         major stopped h im and said, "Mr. Presi-
One year an unbalanced budget was con-         dent, that -is not your helicopter. Yours
sidered almost immoral. The next year          is over there." Lyndon Johnson looked
he hailed it as the salvation of the Na-       down at him and said, " on, they are all
tion. It is perfectly logical to assume that   my helicopters."
conditions, or Mr. Nixon's heart, quite
naturally changed over this time. But it          I believe that in no small way this was
is also quite apparent that more temper-       one of the problems which arose in the
ate language, taking into account the          case of former Supreme Court Justice
total rerall today's journalism affords,       Abe Fortas. For many men. who helped
would have served him better.                  create the Government as we know it
                                               today, who served it in many capacities,
   Problems of truth arise in getting          who knew the great leaders in it, the
faulty facts, in making careless errors. I     Government became a personal piece of
suggest that no other problem in our           property, the rules to be written. or dis-
time, in governmental affairs, needs           carded, as that person saw fit. I believe
closer attention than this matter of           that men in the Government must con-
truth. It requires first the courage to tell   stantly remind themselves that they do
it, the intelligence to understand. as         what they do in trust, that they have
Abraham Lincoln did, that it is the ulti-      their portion of the Government on loan,
mate wisdom in the affairs of men, and         that it belongs to all the people and that
finally, in our electronic age, to perceive    is why their job is so special.
that there are so many special ways that
distortion and contradiction can arise
unintentionally. When they accumulate          The Press
sufficiently, they have the same effect on
the American people as an outright lie.          1 have talked at considerable length
A credibility problem is composed of           about you in the Government. Let me
faulty facts, hyperbole, and the hard sell     turn now to the press. Contrary to what
almost as murh as deception.                   you may have been led to believe re-
                                               cently by some very high authorities in
Government Belongs to                          this Governrnem, the press is not perfect.
All the People                                 As a matter of fact, there is woeful mis-
                                               understanding of what it is, what it is
   One of the dangers which confront           about, and its general level of compe-
men who dwell in the Federal precincts         tence. 1 do not believe that there will be
seems to me Lo be the feeling of total         much improvement in the understand-
ownership or possession of their jursdic-      ing of governmental affairs until those
tion. From The White House on do"vn it         within the Government begin to under-

208
stand better than chey have so far, lhe        attempt to find the truth. We try to be
press (electronic and printed).                fair. But then we do it o ur way.
   It is composed o f humans. who err in         It is common when I go out on Jec-
all the rradicional ways, sometimes in         t u res these days for the audiences to ac-
even more exotic fashion than o cher mor-      c use us of being outrageously inaccu-
tals. Much o f Vice President Spiro            rate. W e have our share of faulty facts, I
Agnew's criticism is justified. Much is        agTee. But the press makes no more er-
nonsense. But eno ugh i s on the mark to       rors than bank clerks, or schoolteachers,
ma ke him worth listen ing to. The press       or lawyers or doctors. We must at the
has grown fat, arrogant, a nd even lazy.       end o f every day or week or month lay
And yet it serves this Nation becter than      out all o f o ur work for you and the pub-
ever. Let me attempt to explain the par-       lic to see. There is no hiding. A journal-
adox.                                          ist's soul, heart, and gut is committed to
                                               paper and that is a pretty o pen place to
  The press. and 1 speak of te levision        be, as I am sure those of you who have
as well as print, is caught in the same        written can attest. So, the errors, along
wave of skepticism that ocher institu-         with the truth , are handed every morn-
tions are-the a uto industry. medicine,        ing or night to the critics and dissection
the law profession, and the ch urches. We      is not a ll that hard particularly when
are alone in being summ oned before the        there are differing opinions coming in
public for scrutiny. That is good . B u t as   from all points of the compass.
this review goes on, keep in mind som e
facts.                                            Fifty years ago. getting the news was
                                               a relatively simple function. One got up
   The press is a free enterprise institu·     in the morning in Chicago and read
tion, accepting no mor e specia l support      Colonel McCormick's Chicago Tribune.
from the Government than other busi-           The world was all neatly contained in
nesses, less in many instances. It must        those few columns. There was n ot much
suTVive in the market place. r am not          radio news to infiltrate one's mind. no
certain yet that that is the best method.      TV, and magazines ·w ere largely written
But nothing better has been devised, o f       out o f the newspapers. It was a tidy and
which I a m aware. So we must lure and         comfortable way ta live. One could go
keep readers in order to keep publishing       to work safe in the knowledge he knew
and broadcasting and tha t means we            wha t was happening. That of course was
muse no t only be relevant and enlighten-      untrue. T he reader of the single paper
ing, but entertaining. \Ve come in m rmy       was woefully ignorant of events, condi-
forms for many people. Some of us do           tions, people. But we had not reached
one thing, others have different audi-         Toffler's Future Shock , the age of accel-
ences. T o this d ay l still have to pause     eration, so it did not matter much.
and explain to irrita ted Government
staff members that Time Magazine has              But now the assau lt on the sense is
never attempted to print news like The         awesome-TV, radio, half a dozen news-
New York T ime.s, that Time Magazine           papers if you live in Washington, maga-
chooses up sides. and with its limited         zines, and movies. I suspect pan of the
space cannot run a ll the facts in any         new anger at the press comes from the
given debate. I have been singularl y un-       heer weight of it. Yet, I contend that
successful over my 16 years in this city in    never have people b een so well served
 convincing members of the b ureaucracy        by the press, never have they been able,
 that that is the way Luce planned it. We      if they wane, to get closer to the real

                                                                                      209
truth or the world'!> events than today.        "'ashington or that nothing one reads
It is not easy. 1t demands elective read-       can be helieved. then to turn away from
ing, hard personal editing, ~kepticism.         making any effort to solve these prob-
diliaence at the news stand. But if one         lems. I believe that the public needs
rares in Lhis life to get some 'ague idea       gemle reminders that they have a re-
of the truth of this age, one can.              sponsibility-to be civil, LO be informed,
                                                to be tolerant. They must work at un-
    ome people, of course, belie\'e that
                                                dt'ntauding the nature of the conflict in
geuing information should be a gratify-
                                                thi-. city, in this Go\'ernment, and not be
ing and rnmfonable experience. Not so.
                                                O\'en-omc when they see it in its raw state
\Ve do nor promise our readers that we
                                                on their living room screen. They mus t
are going to be romforcablc or that they
                                                be willing to live with the fact that their
an: going to be satisfied with what they
                                                Government will en-, and so will the
learn in our pages. Pan of che public
                                                pres~ who bears che news. They mus t try
anger with us, in my opinion. is as basic
                                                harder co understand, fim11ly, as you and
as that-they want to kil I the mes:o.enger
                                                l must, th;lt we are, in the end, all one,
of 11npleasant tidings. My friend Tom
                                                headed in one direction. and while we
Wicker. of The New York Times speak-
                                                cannot even begin to solve all the difh-
ing at the Kennedy Center the other day
                                                c ultie:. that confront us. we can move
reminded his audience that the Vietnam
                                                just a bit do" n that way to a better
war would go on if The .\'eU' York
                                                \rnrld.
Times were terminated tomorrow.
There would still be hungry people if
NBC ~igned off permanently at noon
w<lay.                                                           Discussion

   We simply know more about our-                   One of 011r f1mdamP11tal objectives in
sel\ es. I like to th ink that we lee! deeper   t.he Ge11(:ra/ A cco11nling Office is to try
drnn we ever did. And of course compas-         to'"' objalivt', impartial, and fflCl11al in
sion brings pain. Yes. I believe we must        011r nitici.1n1s of the exerntive branch
guard against the journalism of dispar-         ageiicil'.1 and in 011r oversight role. One
agement which foynihan warn about.              of tht! co11et·n1s we naturally have is,
We are Loo faddish, too easily led to crit-     Jmrtintlnrly i11 tim1•s of stress, that n11
icize. \Ve: need 10 be reminded of this.        111dit1id11al or group of individ11nl~ might
\Ve need to have the men of Government          '1e inflw:nced. This may be by a pro/Jlem
understand our condition, human and             in Vietnam or n problem of tmemploy-
mechanical , and give us suggestions.           ment or concern over pollulio11 or a
                                                1w111/Jf'r of things. We therefor£' try to
The Public Also Has Responsibility               /wild in /J11lances a11d rheclu internally
                                                to obviate this danger to the extent we
    Finally, I would not leave the public       can . h there a comparable prol1lem or is
out of this equation for better under-          there a comparablr mechanism in llu:
standing. I am disturbed, a· ochers have        ,IJress to concern itself with this same
been, about the response of the public co       pro/Jlem! TVe frequently hear individu-
some events and public debates. The             als say that so a11d so feels so strongly
question has arisen: are the American           a/Jo11t an is.n u· that he has allowed il lo
people loosing their nerve? It is a very        color his trt•<1tml'11/ in the 11t'ws. that he
simple matter when faced with diffirnlt         is 11ot including all the facts, that he is
problems, like pollution and racial con-        not jJn•senting his case in a factual man-
flict, to suggest there is no leadership in     ner. that lu· is writing editorial.s instead

210
of new.1 .storit•.1 /Jo -vo11 havt' a11y COlll·            ,\Ir. \1drv: rhis h;1ppens when people
1111· tll 011 I h 1.1!                                  \\lho .ire pas-.ionate about causes go in
   1\lr. 'itdt!")i You have put your finger             .111d i~non.· the lans or use them as they
on one of clie big debate~ in CJUr profes-               want. Thi-. i~ unfortunate. I would sug-
sion Loday-Lhi., rn,mner of how far do                  ~l''l th ;11 Lhat question is a liule O\·er-

vou ~o in i merp1 cLi H'. 1eponing. It i~ a             •a:1tl'cl I don't think we are wrong most
f.ttl of life Lhat .t <,tory \\hi(h simply li'>LS       ol the ume. \\ e are wrong more than we
the f~u t'>, ri1?,hL·ll'fl. pro·con, \1·hatever It      need be. rhat i'> all f can tell you. \Ve
is, can frequently be far more an uracc                 try our hl'st. ~ometimes the sources are
than a man's opinion . I mean it jusL can't             wrong. Sometin1es, again. the old hum.in
very often reflect the true wnditiorn. uf               l'quation goes bad-you know, it was a
a ~illlatio11. 0111 of' t hat understand ing·           IJad morni11g or a bad nigh t-the same
evolved thb agt• uf imerpreLive reporl-                 elcmenb 1hn1 enter your trade. your
ing.                                                    prnfcs~ion. T don't, as I said in the calk.
                                                        think we are any worse than anybody
   My judgment i'> chat it has probably                 else but w<. have goc to get betcer. That's
gone too fat. The pendulum has swung                    for '>lire.
LOO far, o chat on some day<; \\'hen you
read the front page of the Was/1111gto11                   Du vo11 Jr-y to control yo11r reporting?
Post. a. a parti(ular e"Xample. vou gee a               Jr/w/'~ thflt g0111g to do to the reporters
whole edllnrial page on which all of                    tht•m.wlvt•.\ ? Tl1/l ll1t:1• worh undt>r tho.1e
these hot-eyed yn11ng men are tr}ing to                 ni11r/1tio111'
tc:ll people what in do rather than report
                                                             Mr. S1rii"v: Well, some of them don't:
the story. That h~ happened at our
                                                        -,on1e of them quit. .\s a matter of fact
maga1ine; in fort, iL happened just in
                                                         that is \vhaL h<1ppened to the under-
these lcm demonstrations. \Ve had a
                                                        ground press. Some of their reporters are
young man who was pan of the move-
                                                         penplc who fo u nd t he restr ictions of
ment. H is objective was to use our maga-
                                                        normal 1ournalism to be a li1tle LOO
zine. Yes, Lhat is a serious problem and
                                                        );.,"re::ll, so they c reatcd these forms that
we don't h.1ve enough imernal checks
                                                        rhe\ think will give them freedom of
and balances yet. Bm we are trying w
                                                        txpressinn. but that hasn't wor:ied me
work on it. i\1 Lhc T1'fLl!ti11gton Posl. fr.
                                                        one hiL Jn11rnali m , like anything ebe,
Richard Han,•1md i-; undertaking- tha t
                                                         rnkc' di!i< ipline and it is just nonsen~e Lo
kind of inrcrnal examination. " 'e".e
                                                        ' uggc'>l th.It pl·ople nmld come in with-
done it w some extent. lL i n 't good
                                                        out e'perienre or "ithout C'enain re-
enough yet. The pcnd11l11m went Loo far.
                                                        '>trarnts and wri1e accllTately. knowingly.
1 think hopefully 1c "111 <;wing hac k.
                                                        am! inten•-;tinJ.?,h· .tlmut e\ents. IL 'till
    TV011ld yn11 please e,"Cplatri lo 11.s u•hy it      ha-,n't happened .
i.1 /hat thr nt'ws/Japn, a11d news mngfl-                   It is 0111 intent tn insist on people who
z.i11f'S 1110/!e    10   mf111y erron of fart alJ011f   "ill rlo their best to reflect bmh sides
subjerls that arr· µre.1e11ted to tltt'il rt•ad-        ;:ind cln tht:ir be~t to g·ec che facts. \Ve slil I
ers! As r111dito1s WI' ofle11 /mow n grmt               insist 0 11 1h;it and we sti ll fire people be-
deal a/Jou/ given sit11atiow. in (;ovrrrt-              cause some don't. We still move people
menl a11d it is 011r experienre !hat most               b('c;wse they gel tao involved with cer-
of !he /11111• tlu:sr p11hlications distort //11'        tain ,ouncs and certain conditions. We
picture lhnl wr !tavr of !he same s1turt-               are working on it. IL is not perfect by all
tions. As n rrsull. n1·uispaper.s and nr·u•1             mean .
magm..111es arr 110/ considered reliable 1')1
many Govenim1 11t professionals.
                          1
                                                           Do ' '0 11 thi111i lht' 1eleuisio11 coverage

                                                                                                      211
of lhe recent demonstrations put the             type-(lnd justifies its lack of disciplines
demonstrations in pro-pt:r perspective?          and professional standards under its con-
From the new.r programs rarried by tele-         stitutional freedom to publish.
vision that rmmy of us saw, a viewer out-            Mr. Sidey: These are very good ques-
side of Wa.shington would have had the            tions. J su pect a spy in my midst. That's
impressron that the whole city was torn          right on the head-the pres has done
up by the demonstrations which was nol,           thi . J am orry to say that I have to crit-
of course, the case at all. It seemed to          i7e my trade, my profession or whatever
manj' of us al GA 0 that a murh worse            you cal l it, for doing this very ching-for
situation was presented lo the co11ntry-          no t being self-critical eno ugh. Were
and to the world- than actually existed.          there some of us years ago, who said,
    Mr. idey: Yes, I mean, I agree with           " Look, we are going to have to cake our
the criticism. We come right back to this        own :u.tions into account here or other
matter of what do you do with that 15-            people are going to do it?" It is my great
minute newscast. For that 15 minutes               orrow that it had to be piro Agnew in
and for 60 million living rooms around            the manner he did it. He did it in cCT-
this a tion every night, Lhat is lhe total       tain ways and, yes, we need more inter-
world . It dislorted Vietnam because you          nal di ripl ine. We need more criticism.
had battle cenes that came in o in-              '\Ve must watch ourselves.
tensely that people were upset. It was the          However, l don't agree with the part
first time they had seen killing or seen         or the question that we take refuge be-
th_ese things. You bad the same thing            hind the constitutional right of freedom
~..·1~ the demonstrations. The irony of          of information. That freedom, I believe,
it 1s that, of course, the demonstrations        is terribly important and, as imperfect
grew out of te levision showing the war          as this press system is, it is vital to our
and when the demonstrators grew vio-             way o[ life. Whenever you go lo Russia
lent, the ame thing happened to them-            or other Iron Cur tain countries, or
a great revulsion against them took              places where there are great human
place.                                           problems. you find that the press has
   No. it i n't di:.tortion. \Ve don't have      been restricted-totally controlled. I
                                                 must agree with Thomas Jefferson that
an an5'\ler. \Ve haven't calculated the full
                                                 even given the glaring imperfections and
dimension of television and how you
                                                 the problems that we have, the press i.s
gauge its impact. Again, though, I must
                                                 the best thing going to really assure a
say, it take~ some selective viewing. It is
                                                 comin ua tion of o ur democracy.
going to take the people out thCTe to un-
derstand that thac I 5 minures isn't every-         What do you lhink of GA 0 reports lo
thing. The} have to work at that but, I          the Congress as public documents1 Do
believe. we al o have to improve our             you think that they communicate the es-
editing process. Just as simple as that.         sential message of each report well
                                                 enougM Should they be better written?
   Do you. thin!< that the press-includ-
                                                 Sho1tld they be shorter? Would GAO be
ing all media-is justified in relying, as
                                                 a more effective Government agency if it
heavily as it does, on its constitutional
                                                 made more of an effort to communicate
right of "freedom of in formation" to
                                                 its message- in its reports-than is now
jusl_ify its activitie.t? I t seems to many of
                                                 the rase1
us in Government that it is we who are
always wrong, that the press seldom ad-            Afr. Stdey: Yes, I believe so. I think I
mits its mistakes--excepl in very small          covered that fairly well with my speech.

212
I would like to see more of the human        not even read the good news. The good
element involved here-and how it re-         news tends to be boring and you don't
lates to our country. Mr. Staats touched     even go through it. I have tried this on
on that in his opening remarks stating       several of my audiences but I won't this
that you were acLUally being forced to       morn ing-I don't want to embarrass any-
the public eye more, simply by the im-       body-but what I do when I have studied
portance and the size of your operation.     the paper is I say, "Did you see such
I believe that, yes, it needs more study,    and such a story?'' "No, I didn't see
it needs more thought, more facts need       that." "Did you see such and such?" "No,
to be laid out.                              I didn' t see that." But people do see the
                                             story about the rape or murder or bank-
   Newspapers are a powerful factor in       robbery and they read them too. So we
the forming of pt~blic opinion and yet it    come back to this problem of the mar-
seems to me in the last several years in     ket place. you know, of what people
Washington that predominantly the            want. What their appetites are. You
news media tries to take a negative tone     know. I regret that Playboy is 300 pages
ort any President, almost any public offi-   and Time only JOO pages. But you have
cial, against almost any program or ad-      a point. Let me say there is a point there
ministration regardless of what party. ls    -just too much negative.
there any way for the media to be con-
stru.ctive, looking for some positive as-       I suspect part of it is that it's easier to
pects to build up rather than tear down?     criticize. You know how it is, it's easier
                                             to be against somebody and this town
   Mr. Sidey: We come back to this ques-     tends to encourage that. I was amused
tion of Mr. Moynihan about the jour-         some time ago by a new minister in my
nalism of dispaTagement-the cliquish-        church out in Potomac who said he
ness and faddishness of it. I want to        found Washington to be totally different
challenge you on a few things.               from the city he came from. People got
                                             up arguing. That sort of thing. So there
   First, without having done it at all      is that problem. We need to watch it-we
and I have not even read the morning         really do. We need to be told about it
Washington Post, I believe that if you       and that's happening. You people are
went out and you measured quantita-          telling us about it. You people are quite
tively all of the stories here in your       mild. Most of the audiences tear me limb
morning paper, you would find more           from limb but it is true.
good ones than bad ones. I have tried
this on several occasions with magazines        Now, secondly, I want to really ques-
and papers and it is almost inevitably the   tion you. We don't topple Presidents.
same. It runs about 60 or 70 percent         The press doesn't. We can' t do that.
with stories that either don't take a side   They do that themselves. A President
or are about sewer bond issues or ladies     holds all of the cards. I mean, they have
aide society meetings. This can be con-      got the power not only of the media that
sidered good news over the bad news.         they can control in their own way but
                                             they have got the power and the struc-
   Now the play of the bad news is the        ture of Government. They have got the
problem. Your headlines and your front       economic power. No, I just don't buy
pages tend to be dominated by the nega-      that. Lyndon Johnson is back on the
tive. But I do believe there is a tendency   ranch because of himself, not because of
by too many people to remember the            us. You can't break a President. I just
bad news and forget che good news--0r        believe that is a total myth. Sure we have

                                                                                       213
difficulties in chat but they control all of       . o I think it would be a grave disserviC'e
Lhc cards. l don't think our power is that         to make them produce all of the da ta
great.                                             bm che point of it is that they have pro-
                                                   grams up there. I mean that's public.
   Regarding t ht• T 1' speria/ "/he Sell-         (.ct up then· and look at it. Critici1e it.
ing of the Pentagon" and the controversy           Que~cion it. I think out of chose hearings
otwr whe.ther a romn111tee of Co11gress           tame the fa< t that CB. was \Hong. I
ra11 ruk for t h~ir lrnr/111 p data. do you as    think they did some things they
a journa/i,t ft'l'i that some other agnl<J        shouldn't ha\ e done. They were caught
sho11ld hold the />ress arco11ntnble?             at it. l ll'>pect nexc time-in fact I'm
                                                  told that Dr. 'itanton privately was very
   Mr .~ide1•. Well, I think when it be-
                                                  up:.et about his own crew- t hat there
comes a l'Ol1lroversy of t.hat n at ure, yes.
                                                  ''ill IJL· rnrrection . Basically those hea r-
J mean, the press ought to be held up             ings also ·hawed the thrust of that pro-
and looked at. Now I wou ld get into a            g1·am. That in its totality it was nol a
little argument abou t whether all of the         b;id acwum of this problem that we
bark.up data i.hould be pre ented. No,            have. We can't hide behind nnything
I'm against thal. First a lot of it is mi~       really and we houldn' t. \\'e should be
leading and a lot of ir is heresav. It'<;        .1ccoumable and if Comrress wanu; to
like a raw FBI report. :"m\ chose should         take a look or \OU want co or the \\Thite
ne\Cr be made public. Thev tell a funnv           lio11~e. fine l\lv feelin~ are that there i!>
stOT) in the \\'hue Hou e about Presi-           '>till enough ideal left down chere to sa}
dent Kennedy getting some FBI reports            that if the public debate is rnnducted
and being so horrified by what he read           ''·"el}' and with good '~ill we can all
tha t he didn't wam to see another one.          bendit.




214
                                   GAO's Metamorphosis


                       The General Accounting Office. in rci.µonse to Lhese
                     concerns. has long since abandoned iL~ traditional role of
                     watchdog of the Treasuq under which it audited trans-
                     acuom lot propriety and ruled on the legality of expendi-
                     turei.. Ln the la~t 25 )ears the Office has unclergonc a meta-
                     0101 phosis. \\'bile based in ~omc part on new statutory
                     directiom. this has been t:lft:ctuated main!\- b' expansion
                     and moclcrnil3tion within the Gener:d ,\trnuming Office
                     under the able leadership of the Comptroller~ Ceneral.
                        It hns been my privilege over recent year~ to chajr the
                     subcommittee of the House Committl'<' on .\ppropriations
                     which consider~ the ann u:i I budget 1 cq ucsts of the General
                     Acrnunting Office. I have been able to observe at dose hand
                     the results of the Office\ work and the hig-h cnliber. in-
                     teg1 itv. :incl deuication of its staff under the tfotinguished
                     leadership of Comptroller General Staats.


                                                    Congrc,smn n George \\/. Andrews

                                                    Junt•   to. 1!171




                                                                                       215

,1, 1-ur u. 1:   1
                                                Harlan Cleveland
                                                President
                                                University of Hawaii




      Dr. Harlan Cleveland is now in his third year as President of the 44,000-
student University of Hawaii. During the past 24 years, he has worked success-
fully at four careers: government administrator; editor and publisher, diplomat,
and educator.
   He was chosen in 1947 at the age of 29 to administer the United Nations aid
program in China where he supervised a staff of some 4,000 administrators and
participated in negotiations on distribution of postwar relief to both the Com-
munist and the Nationalist Chinese. As Assistant Director of the U.S. Mutual
Security Agency in 1952-53, he supervised the fourth yea1· of the Marshall Plan.
      In 1953, he left Washington to become Executive Editor and then Pub-
lishe1· of The Reporter magazine. In 1956, he was appointed Dean of the Max-
well Graduate School of Citizenship and Public Affairs at Syracuse University,
where he built a major overseas training program and was principal author of
the landmark book, The Overseas Americans.
      President Kennedy brought Dr. Cleveland back to Washington in 1961 as
Assistant Secretary of State for International Organization Affairs. In 1965,
President J ohnson OifJpointed Cleveland as U.S. Ambassador to the North At-
lantic Treaty Organization, serving until 1969.
      Born in New York City, Dr. Cleveland was graduated from Andover and
Princeton and was a Rhodes Scholar. He has been awarded 11 honorary degrees
and Princeton's Woodrow Wilson Award. He holds the United Stales Medal of
Freedom, and has been decorated by the governments of Italy and the R epublic
of China. H e served in 1970 to 1971 as President of the American Society of
Public Administration.
      He has authored or edited seven books and a new book, The Future Ex-
ecutive, will be published by Harper and Row soon.

216
GAO Audito rium
November 16, 1971




The Growing of Public Executives


The General Accounting Office has drawn increasingly on the universities,
both as a source of high quality professional staff and as a resource for
postentry training. Dr. Cleveland has deep insights and profound concern
for I.he future of the public service. Throughout his career he has made
outstanding corllributions to the cause for imp1·oved management in
Government, both as tz public official and as an educator. H is underlying
concern for better public management was a major reason for including
him in thi..s series of lectures. Dr. Cleveland observes that our scarcest
resource appea,rs to be men and women who have the incentive lo grow
beyond their specialized fields, who have some understanding of admin-
istrative processes, and who are challenged rather than repelled by
complexity. He emphasizes that we need to grow people who can care
with competence about "the situation-a.s-a-whole."



   My introduction to the General Ac-          my own taxi nps, and the Comptroller
counting Office came with the audit of         General can afford to move beyond de-
my first Federal travel voucher. In 1940       tailed ::iuditing to broader forms of man-
I joined the U.S. Department of Agri-          agement analysis and more sophisticated
culture (USDA) and was promptly sent           applications of the policy sciences.
on assignment to several States. Of course
                                                 As such the GAO is necessarily con-
I kept meticulous track of every penny,
                                               cerned with the growing of executive
determined chat my expense account
                                               leaders for ::i complex society, which is
would be a model of bureaucratic cau-
                                               my subject today.
tion. Two years lacer, I trembled as I
opened a letter from one of Elmer Staats'
                                                                    I
distinguished predecessors. I had failed-
there was a disallowance. My voyage had
                                                  For half a lifetime as a public execu-
ended with a taxi ride from Union Sta-
                                               tive, I have wrestled with complexity in
tion back to my USDA office. So good           public and private employ, in Europe
were those good old days that taxis in         and Asia as well as in the United States.
Zone I cost only 20 cents. I had gener-        That this experience must have pro-
ously rounded it out to a quarter. My          duced some useful ideas about executive
generosity was not a Federal obligation,       leadership will be this lecture's presump-
said the Comptroller General: the nickel       tion, in both senses of the word.
had been disallowed.
                                                 A career as an executive is not some-
  Both the GAO and I have come a               thing you plan for yourself. It's the series
long way since then. I can n ow afford         of accidental changes of job and shifts

                                                                                       217
 of -.cene11 on which you lool.. back later.    Lion. to make something different hap-
 weaving through the swry retroactively         pen.
 '>ome thread of logic t.hat was not vic;ible
 ac the time. If you try too carefully to                            II
 plan your I ife, the danger is that you
 will suc(eed-succeed in narrowing your         The Attraction of Responsibility
 option... closing off avenues of ad\enture
 that cannot now be imagined, perhaps               Pc:ople ''ho have not tasted executive
 heca 11se they are not yet tech nologic;i Ih   re.;ponsibility more readily imagine the
 pos ible. \\Then a swdcnt :ic;l..s me for      pa11h than the joys of sitting where the
career advice. I can only sugge-;c that he      hue k ~tops. \Vl1cn J worked as an f\ssist-
 or she npt for the moo;t exciting "next        am Secretary of Sta te in Washington,
step" without worrying where it will            \.isiLOrs to my office would often say, "I
 lead, and then work hard on the job in         tenainlv don't envy you," c>r "I wouldn't
hand, not pine for the one in the bush.         have your job for anything." or 'iOme-
 When your job no longer demands of             thing of the sort. The same thing hap·
you more than you have. go and do               pens with dis<0ncerting frequency to a
...omcthing else. \lway.., take by prefer-      university president. Perhaps it is part
t·n< c the job you don't kno" how to do.        of our ega Ii tarian ethic co bel iew that
 fr you build into VOllT life enou~h \.:ui-     thme in each organization who draw the
ety of experiente, vou will be traininR         mmt pa" and occupy the largest offices
 for leadeT\hip. in che role I call the         arc the lea'lt happy in I.heir work.
"public exeuHive." You will ha\'e plenty
of compam. Before long there will be.               The atrraction of responsibility is the
by my cld1nition and my reckoning. one           eme of relevance that comes from being
mil lion p11hlic executives in the llnited      where 1he action is. The excitement of
States alone.                                   working in big organ izations. especially
                                                b ig Govern men t agen cies, is curionsly
    So rn y remarks wil I be addressed to       hard to convey to young people w ho
 those who are. or wi~h to become. execu-       ha\c.'n't tried it. To give them a rough
 tive lender... in the realm or pu bl ir re-    idea. I have c;ometimes described 5 min-
'>pon ihilitv-whi< h include . not onlv         utes 011t 11f my years as a public executive
 those 'vho work in "I.he Government"           111 Wa..,hington. These 5 minutes are ad-
 but ;-il'o a great man) executhes in pri-      mittedly not typical of life in the Fed-
vate busines . nonprofit organizations.         eral bureaucracy, bm it i' fair co say
and the professions. Others can listen in       that ~omething almost as gripping hap-
 if they wi II, but it is the self-conscious    pened nhom once a month and 'IOme·
executives who most need 10 think ahouc         time' of Len er.
 I.heir role. became they seem to be: in-           1 he time was October 2:~. 1962. at
 heriting the earth-though not bemuse           4 : I 5 of ;1 Tuesday afternoon. I was in
they are meek. It is not a comfortable          my ~tale: Department office, watching a
 moment to inherit the earth. just when         television screen as Adlai . tevemon, the
the earth is re"enled as polluted. over·
 populated, and in mortal peril from
                                                l'·"·   Ambassador to the United Nations,
                                                reatl to the U .N. ecurity Council in
rnnn\ civi li1ing imervencion in nature.        :'\cw York a speech I had helped wricc.
 But it is jmc these cosmic dangers which       denouncing the pre ence in Cuba of
are causing people Lo turn to those men         <;ovit·t nuclear missiles. The telephone
and women who 'l'e their task in life as        rang, and Prellident Kenned} asked a
bringing people together in organiza-           q uec;tion.

21
   Seven days before, photographs taken           eral Latin American ambassadors wanted
by ;rn American U-2 plane had revealed            to get further instructions from their gov-
that Soviet missiles had been brought into        ernmen ts during an extended lunch hour.
Cuba, and were nearly ready for opera-            Thus it was that the OAS meeting was
tion.                                             only just reconvening over in the Pan
                                                  American Building when the U.N. Secu-
   ln urgent secret meetings, an elaborate
                                                  rity Council began its meeting and its
"scenario" was drafted for getting those
                                                  President, who wa~ ironically the Soviet
missiles out of there. A first tier of some
                                                  representati\e that month. called on Am-
two dozen officials was let i11 on the sec:reL,
                                                  bassador tevenson as the first speaker.
and set to work on strategy; a second tier
of staff including myself. wa!> t!ten                le was stiII crucial to our plan to present
brought in to Aesh out the "scenario"             our naval blockade as the product of
with action papers. Adopting the princi-          hemispheric out-rage. The State Depart-
p le that nonviolen ce should be tried be-        ment's Lai in American ch ief. Assistant
fore either born bing the missile sites or        Secretary Ed Martin . was helping Secre-
invading Cuba, President Kennedy and              tary Rusk at the OAS meeting, so I
his advisers decided to try diplomacy and         arrnnged for him to phone me just as soon
defensive military action first. Thus on          as the OAS had taken its vote.
Monday evening the 22d. the President                The Stevemon speech was being car-
revealed the missiles in a >iation-wide           ried on national television; my then dep-
television speech, calling for a "na,·a l          uty Jo ·eph J. isco wa~ in New York to
quarantine" of Cuba by the whole West-            help, and we could see him on television.
ern Hemisphere, and action by the U.N.
                                                  sitting- rif{ht behind the U.N. Ambassa-
Security Council to persuade Nikita               dor. tevcnson was reading his speech,
Khrushche\', the head of the Soviet               and I was following the script on my de!>k
Government, to remove the missiles                as he spoke. Fifteen minutes from the end
forthwith. While the President was speak-         of the tex l, 1 sti 11 ht1d no word from the
ing, we delivered formal calls for an             OAS meeting. Then about 4:40 p.m., Ed
emergency meeting of the Organization              Martin called From the Pan American
of American States (OA ) in \Vashington           Building to say that all but Uruguay had
on Tuesday morning, and an emergency              :tgreed. and the Secretary authorized us
meeting of the Security Council in New            to insert chi!> news in the Stevenson
York al 4:00 p.m. that afternoon. The             speech.
idea was to get our Latin American allies
to join in sponsoring the blockade (U.S.             I called Sis,-o Olll or the Security Coun-
naval vessels were already speeding to            dl meeting. co a little room with a tele-
their positions), and then announce the           phone which Lhe ll.S. delegation was
action as a collective security measure           occupying for just such an emergency. On
when we lodged our formal complaint               our \V:lshington television screen we
in the Security Council a few hours later.        cou ld see J oe Sisco tapped on the shoul-
                                                  der, and hurry off the screen to take my
   Over the weekend Tom Wilson in my              call. I dictated a paragraph to insert in
office and Arthur Schlesinger from the            the . tevenson text. and suggested at
Wltite House had finished work on Adlai           what point to insert it. Still ·watching the
Stevenson's opening speech to the Secu-
                                                  ~creen, I saw Sisco come back into view
riL y Council. I stayed in \\'ashington to
                                                  and lay a whi1e sheet of paper on the 1-os-
backstop the U.N. part of the scenario.
                                                  trum.
We had assumed the OAS action could be
completed during the morning, but sev-              The   .\mba~i.ador,   however, was in full

                                                                                            219
rhetorical flight. Holding his manuscript        make something different happen. They
off the desk with both hands, he did not         live in motion, working in the midst of
appear to notice the precious addition to        events they help create. The name of
his speech. I watched with a sinking feel-       their game is complexity, and the count-
ing as he swept on past the point at which       ers in the game are decisions.
I had suggested it should be inserted.
Only a min ute or two of text remained;             The social fallout of science requires an
there might not be enough time left for          enormous range of new decisions to be
another call to New York.                        made by somebody from day to day.
                                                 Some of them are directly the result of
   At this point, the phone rang and my          scientific invention and technological in-
secretary Tess Beach. normally calm and          novation; other new-type decisions are
collected, rnshed in to report "The Presi-       the consequence of the human congestion
dent is on the phone-I mean person-              that science makes possible.
ally! .. I reached for the phone, still watch-
ing my corner of the Cuba missile sce-              My grandfather did not regard himself
nario come loose in New York. " I've just        as responsible for racial oppression, or
heard about the OA acrion," the Presi-           international relations, or the plight of
dent said, speaking even more rapidly            the cities, or other gaps in the "moral sci-
than usual. "ls there some way we can get        ence .. of his day. He did not need to have
it into Stevenson's speech hefore he fin-        an opinion on legalized abortion, let
ishes?"                                          alone on whether scientists ought to reach
                                                 into people's molecules to induce muta-
   For a giddy inseam wondered what I            tions in their genes. Grandfather read
would have said if we had not thought to         Jules Verne and doubtless assumed that
cover that base. "\Ve've done an insert on       man wou Id one day reach the moon, but
that, Mr. President, and it's just been          (though he was a lawyer and a politician)
placed in front of him,'' I said. "But           he did not trouble himself about the law
frankly, I'm not sure be saw it, because-"       of oucer space and celestial bodies. Nor
At that moment, Stevenson reached for            did he worry about the testing and con-
the little rectangle of white paper. took it     trol of nuclear weapons, or think about
in at a glance, and cleared his throat. Be-      insurance against nuclear accidents. He
fore I could say anything more, President        did not even have second thoughts about
Kennedy, who was naturally watching the          spraying his garden with pest-killers;
same television show in his White House          their use was neither widespread nor effi-
office, cut in. "Oh, I see. He's picking it      cient.
up and reading it now. Thanks very
much, Harlan."                                      But we are quite suddenly in the pres-
                                                 ence of machines and drugs and proce-
  The Cuba missile crisis was not yec
                                                 dures that can change the balance of
over. But mine was.
                                                 nature, ruin the human environment, ac-
                •   •   •     •   41
                                                 tivate or tranquilize a teenager, alter
                                                 human personality, raise or lower intelli-
                        III                      gence, enhance or impair memory and
                                                 learning, make births more various or
Impact of Technological Change                   uniform, and extend the very frontiers of
on Decisionmaking                                death. Machines are taking over most of
                                                 the work that ''unskilled workers" used to
  Executives are men and women who               do; new weaponry has altered the arith-
bring people together in organizations to        metic of war and the strategies of peace;

220
new means of transport and communica-          The deci ion to fire is no longer, in such a
tion make individuals more independent          ystem. the Commander-in-Chiefs; that
and cultures and societies more interde-       decision has been predelegated, with in-
pendent. Before the scientific revolution      structions, to the computer. The Presi-
in fanning and medicine, there was not         dent's responsibility is exercised. if at all,
effectively a '"world food problem" or a       much earlier in the process. by trying to
··world health problem," there was merely      make sure the experts who programmed
an unavoidable prevalence of starvation        the computer knew what they were doing.
and disease. Now that something can be         .\nd how does he make sure of that?
done about these ancient afflictions, deci-
sions have to be made by somebody to do
or not to do that something.
                                                                    IV
   The effect of technological change on       New Kinds of Organization and
the character of human decisions is illus-     Management Needs
trated with almost too much drama in the
rapid mutation in air and missile defense.       The extraordinary growth in the num-
It was hard enough to get used to the idea -   ber and public importance of decisions to
that our personal safety might depend on       be made will require new kinds of organi-
a small group of voung men watching for        zations. managed in new ways by new
enemy invasion at an outpost of the Dis-       kinds of people.
tant Early Warning Line. A new tech-
nologies shortened the warning rimes.             As long as most of mankind's social
responsibility for being right the first       tasks could be accomplished inside hier-
time was more and more diffused to the         arch ica 1 pyram ids, it was convenient
far corners of the earth , where a sleepy GI   enough to cal I such structure "organiza-
could cost us precious minutes. or an          tions... But mo1·e and more important so-
overzealous one cost us the future itself.     cia l tasks in an industrialized society can
Newer technologies were then devised to        only be accomplished by linking together
reserve to the President the kinds of deci-    a congeries of organizations, each contrib-
sions that used to be made by subordinate      uting its part to some larger purpose
commander~ecisions about the move-             which is presumed to be shared by them
ment of troops or the firing of long-range     all. The future-oriented word for "organi-
weapons-even if there were only a few          zation"' is .. ystem."
moments to decide and the President
                                                  If an organization is the relations
were on the golf cour e or at a dinner
                                               among its members, an organization sys-
party. Bm the more computerized the
                                               tem is "a bundle of relation .. " The tech-
technology becomes and 1he shorter the
                                               nical use of the now popular term "sys-
timespan for the last-minute application
                                               tem" includes complexities which man
of human judgment. the more fanciful
                                               cannot manage (the solar system), or man
becomes the notion that the President is
                                               is just beginning to understand (the ner-
still in tactical charge.
                                               vous system), or are created by man for
  In an antiballistjc missile system, for      his own use (a language, a school system , a
example, experts have to program into          weapons system). 1 will use the word sys-
computers the possible characteristics of      tem to mean a bundle of relations which
incoming missiles, so the machine can          is ( 1) aimed at a subjective human pur-
identify, track, and fire at them before       pose and (2) so large and complicated that
they get to their targets, a matter of min-    all the connections among its parts can-
utes after they appear over the horizon.       not be known by any one person even if

                                                                                         221
that person is in some mystical sense said            ular for a time. But we have already had
to be '·in charge." 1                                  too many examples of detailed and sys-
                                                      tematic plans to go in the '•trong direc-
    For the past half century or so. much of
                                                      tion. The McNamara Pentagon laid down
 what we have called progress has resulted
                                                      men and equipment in Vietnam more
 from using sysLems concepts to analyze
                                                      efficiently than this had ever been done
 problems and organize to solve them. The
                                                      before in military history-but it turned
swdy of organisms and organizations as
                                                      out that, on reflection, we did not want
 systems has provided a tool for break-
                                                      them to be there. Quantitative methods
 throughs in a wide variety of fields. With
                                                      for measuring pacification of the Viet-
 the he! p of computers, we have discov-
                                                      nam countryside turned out to be public-
ered more effective ways to organize our
                                                      relations gimmicks at best and instru-
thinking about everything from weather
                                                      ments of self-delusion at worst. The
forecasting and conflict theory to airplane
                                                      e ffort to systemize success or failure in
reservations and getting the paychecks
                                                      the Vietnam war-in the absence of that
out on time. We can illumine complex
                                                      old dependable analytical tool, the map
systems: structural linguistics. informa-
                                                      with drawn battle lines---led to a high
tion theory, cybcrnetics, and information
                                                      dependence on counting dead bodies:
feedback systems; input-output analysis
                                                      killing thus became the self-justifying
and linear programming (mathematical
                                                      .;subjective hum.in purpose" of the mili-
methods for allocating resources). system-
                                                      tary system for that time and place, and
atic theories of economic growth . econo-
                                                      our wider political aims. not to mention
metrics, cost-benefit analysis, and PPBS
                                                      our humanity and our moral purposes,
(Planning-Programming-Budgeting Sys-
                                                      were sidetracked as unsystematic because
tems): game theory, statistical decision
                                                      immeasurable.
theory. survey research (including atti-
tude polling), operations research, and                  Whether plans can be quantified, and
technology assessment. With computer                  progress in pursuing them measured, de-
simulation, we can forecast economic                  pends of course on the subjective human
processes, estimate environmental im-                 purpose which each "bundle of relations"
pacts, study social events as the interplay           is supposed to accomplish. In some forms
of many conditions, construct decision                of scientific inquiry and some large engi-
models, and apply mathematical proba-                 neering systems-building a new factory,
bility to possible social and political               developing a nuclear sub. getting a man
futures.                                              on the moon-the main components and
   The practicing executive can have only             outcomes can be rather accurately speci-
a general idea of the potential and the               fied, counted, tested. evaluated, and if
limitations of such efforts to think more             necessary replicated. But in dealing with
systematically about where we are going               the assessment of the future results of sci-
and how to get there. But he is justified             ence and technology, for which more and
in guessing that systematic study and                 more public executives find themselves
rigorous planning are blunt tools at best.            responsible, the quantifiable parts of the
Detailed planning ahead was highly pop-               analysis often turn out to be the less im-
                                                      portant parts. That is why detailed plan-
  l There arc hundreds of ways to use. and define.    ning-ahead is no longer so much in vogue.
Lhe word ··system ," Herc 1 a111 using Lhe ~ummary    The future executive will need a new
definition of 1\na1ol Rapaport in 1he International
Encyclopedia of the Social Sciences. refined by
                                                      definition o( planning: improvisation on
John P. Craven in :t new book on Ocean Engineer·      a general sense of direction. The irreduci-
ing SysU111J (The M.I.T. Press, 1971 ).               ble functions of the executive are to de-

222
fine the .sub1ect1ve human purpo es, and         re pow.ibilit} for making. or at least an-
then make 'me that hi' (or her) pan of           nounrm~-,  the decision.
the S\ tem keeps fllC)\ ing toward them.
                                                     Became organization will l>e more
    It •.., orJ.,rani1aucm .sy.,tems. combined   hcmwntal. the way they are governed is
"'ith sv'temati<. \t icntifk inquin. that        Iikelv to he more collefl'fal. comcmual.
lta\.e bruu~ht manlund co che presc:nc           and tomultati\e. The bigger the p1oh-
 heights of prngrec;:.-rnm-frustration. If we    lcms to be tackled, the more real power
are to take hold of our future, we are go-       is d1ff mcd and the larger the number or
ing to requ11t' m ore c·omprehen:.i\.e .sy.s-    per'>on~ who can exercise it-iC they wo1 k
tems, nm simpler one:.. As one example,          a1 it. T his uc11<l is visible in tota litanan
ro111pute1 i1ecl busine"' S)''>tem~ and law      .h wel I as democratic societies. "Coller-
e nforremern procedures ha,·e already            t ivc: leadership" and committee wo1 k arc
 raised large questions about their effen        nm conc lusive evidence of democra tic
on 1he individual's 1 ighc of privacy: the       feeling-;. 1 he\ are imperatho or bi~1e s
syscem lh;H rreace., the new procedures          and wmplexi ty.
must therefore include the analy is and
protcc uon of the ri~hts of indidduab .• \         Thl   d~ee     to which the world\ work
"system" 1h:tt invented the imernal rom-         1s :ircompJi,hed horizontally will still
bu uon en£tine and put it m an .iucomo-          ,,trv. to be ~ure. according to what is
bi le.· wa., oil\ iousl y not com prehens1' e    aclmini'itered. The spectrum of exec uthe
enough· we know to our <;01row (in some          ;inion will still range from organintions
citie" we lneralh weep in the smo~) that         '"hl·re at lea! t .some commands go down a
the sysrcm planning should ha\e in-              hie1aahical line, to chose in which nearly
cluded an .isse.,smcm of the ~econcl and         everything- is done by horizontal negotia-
thi1 d order comequence of mas5-produc-          tion among -;pecialists and execmives. A
ing l hat new tech nology. Whether we can         l\la1 inc platoon , together with fami ly
do brttt•r with nuclear energy, weather          busim:sses and local trade unions. may
modific.,nicin, laser beams. genetic engi-       'till ht found near one end of the comin-
neering. and the rest wi ll depend large ly      1111111: hospitals, research labs. and aca-
on the' i'>ion , the ethical perceptions. and    demi' facultie~ mav 1emain the limiting
the adm1mst1athc \kills or our fu111re           cases of horizontal proces~. Bm Le on
public e\.Cn1ti\'es.                              "Jo. I Im the future executive 1s thic;: ar-
                                                 celeratin~ itrowth in che i1c and rom-
                                                 plt·\.itv of 01~;mi1.auon S)"itemc; ~c.>ems de,.
                     \I                          1 ined to move the whole spectrum away
                                                 r10111 the more form:ll, hieranhical, or-
Organizations W ill Be                           dergi\'ing ""Y of doing b11smes and to-
More Horizontal                                  ward chc more informal. fluid '''ork\.\,1ys a
                                                 bargaining. brokerage, addce, and con-
   In sum: The organi1ations Lhac get            , ent.
things done will no longer be hierarchica l
p)ramids wi th most of che real control at           Bigne.)~ and complexity are also blur-
the lOp. T hey wi 11 be systems-interlaced       ri ng the tntditiona l line between "pub-
webs of ten-;ion in which control is loose.      lic" and "private." The managers of
power diffused, and cemers o[ decision           " pri,,1te" enterprise. profit or nonprofit,
plural. "DecisionmakirnC will become an          will move farther coward the concept
mc-rea ingly mn tcace process of multilat-       cl1<1t they are responsible ro people-in-
eral 1Jruke1 age hoch inside ;md ouMde           ~ene1 al. and thereby bring the govern-
the organization whi<h thinks it has the         ment more into their affairs. At the ame

                                                                                            223
lime the government will farm out to the        reason to feel sorry for themselves. But
" private sector" a growing proportion of       they will also apprehend that the func-
the public busine . No large organiza-          tion of the executive is to make the diffi-
tion, whatever its formal ownership. will       cult choice · others are reluctant co make.
be able Lo escape its public responsibility.    And in any society. those who choose the
                                                most ha\e the mo treason to feel free.
   They will be manned, these new-scyle
public-private horizontal systems, by a
                                                                    VI
new breed of men and (increasingly)
women. I calJ them the public executives,
                                                The Multiplying Requirement
people who wi11 manage public re pon-
sibi lities wbeLher in "public" or ··pri-       for Leaders
vate" organizations. They will climb lad-          We are accustomed to thinking of lead-
ders of specialized achievement into
                                                ers as f cw among many. Bue the history
positiom that require them to "get it aJI
                                                o[ hierarchical governance is a poor guide
together." Their administrative style will
                                                to the age of consultation and consensus
have to be adjusted to an environment           which has already begun.
which is ill-described by drawing square
and c.acic diagram on cwo-d.imensional             \fodem civilization has long since
charts: it feels more like a continuous         abandoned the principle that a commu-
chemical t eaction in a liquefied solution.     nity hould be governed and styles hould
The public executives will enjoy com-           be ~c by the merely rich and highly born.
plexity--or look for some less demanding        Yee there persists today, in most of the
line of work.                                   world , a pyramid-shaped social structure
                                                in which a relatively few men and
   If what is \\Tong with modem society is      women-mostly men, which is one of I.he
the weakness of " moral science," as tech-      problems-are in general charge. The
nologist Ben Franklin predicted, then           revolutions of the eighteenth and nine-
public executives will carry the main re-       teent11 centuries, and the anticolonial
sponsibility for mixing values with tech-       movement of the twentieth, typically ca t
nology. In a society built more and more        out -;mall groups of bosses in favor of
on lateral relationships. it is already time    oche1 small groups of bosses. ruling with
to revise Paul Applcby's famous defini-         no greater consent of the governed. Those
tion of "policy" which applied so well co a     who talked most about devolving power
hierarchical culture. For Appleby. policy       to the people seemed most anxious co con-
was the decision chat are made at your          centrate power in the hands of the few.
level and higher. But for public executive
of the future, policy will be mostly your          But somewhere along the way in the
own sense of direction. modified by             modernized, industrialized, "developed"
negotiation with your peers, clients, and       nations and especially in the United
critics.                                        Stace of America, rule by the few became
                                                technologically obsolete. The more inter-
   It is too easy Lo describe the future ex-    related arc the parts of an economy, a
ecuti ves as "change-agencs"--accelerating      polity, and a culture, the more people it
change is their destiny, and, like it or not,   takes co run things. Each year it takes a
t hey will be its agents. It will not be a      greater proportion of leaders to partici-
comfortable role. Picking their way             pate in socially significant decisions-
through the jungle of complexity and            because each year there are so many new
making up their own policy as they go           kind of decisions to be made, and so
along. public executives will ha'e every        man} more concerned groups that feel

224
they have a right to be cut in on the deci-    em Seaboard. For a generation it has
sionmaking. Even in the totalitarian soci-     been conventionally wise to predict that
ctits. the notion or effective "dictator-      more complex technologies would make
ship" is breaking down. The dynamics of        for more centralization oE leadership. My
development loosen the up-and-down             thesis is to the contrary: complexity of
controls, and spread Lhe responsibility for    organization systems is diffusing the op-
initiative and follow-through to hun-          portunity to lead and multiplying the
dreds. then thousands. then tens of thou-      re11uirement for leaders.
sands of "cadres.··
                                                  The paradox of our not-so-manifest des-
   In the mid-1950's I tried to count          tiny is here. Though we need more and
America's "opinion leaders.'' because I        more leaders. there is no career ladder
was publisher of a magazine I thought          called "leadership." The control panels
they ought to read. (Other publications        where expertness is married to purpose
later adopted parallel appeals to " the        must be manned by an aristocracy of
influentials," "the men who get ahead."        specialized achievement. Yet our scarcest
and the like.) My 1955 estimate was            resource appears to be men and women
555,000; a similar analysis of "opinion        who have the incentive to grow beyond
leaders" might yield as many as J ,000,000     their specialized fields, who have some
in the decade of the seventies. The con-       understanding of the administrative proc-
cept of "opinion leaders" is broader than      ess. who are challenged rather than re-
public executives, since the former also       pelled by complexity.
includes teachers, artists, doctors. law-
yers, judges, legislators, and other profes-      On the one hand science has made pos-
sional people as well. But the public          sible continuous change at an accelerat-
executives-policymakers in public, phil-       ing rate, accompanied by growing inter-
anthropic, voluntary, and large-scale " pri-   dependence of social decisions, growing
vate" enterprise-were about seven out of       hugeness of organization systems, and
I 0 of the "opinion leaders" in the earlier    growing diffusion of power within and
estimate. They might thus be 700,000 out       among them. The major obstacle to the
of 200,000,000 Americans in 1971. Before       next stage in America's success story is
long the public executives will number a       obviously our inabi lity co "get it all to-
million in the United States alone.            gether.'' Getting it all together requires a
                                               rapidly expanding ration of executive
   What no Greek political theorist imag-      leaders. and an even larger number of
ined or people's revolutionary accom-          people able to understand the policy
plished-a devolution of real power to          issues. relate them LO each other, and
hundreds of thousands of people-is com-        serve as opinion leaders ontside their
ing to pass as the social consequence of       own fields of expertise.
modern science and technology. We have
our aristocracy. but it is increasingly an        Yet it has been the practice of modem
aristocracy of achievement. By common          civilization to place such stress on the
consent we no longer entrust the setting       division of labor as to siphon off into rela-
of styles to any one class, any one race.      tively narrow specialties nearly all of the
any one priesthood or courthouse gang-         first-rate talent. A young man or woman
or even to the White House staff. The          building a career can envision the excite-
destiny decisions we face are so terribly      ment of the laboratory or the construc-
important they cannot be left to the ex-       tion job, the hospital or the department
perts, the wealthy, the products of the        store, the scholar's study or the teacher's
Ivy League, or the residents of the East-      classroom. Close attention to the situation

                                                                                        225
as a whole is set aside by most college stu·           " Citi1enship" ounds too much Like
dents h) the end of their sophomore year.           crlucation for patriotism. Indeed. the
if indeed thev did not tart concentrating           e;n}\ cm respondence between Mr. Max-
on nursing or electronics or auto mechan·           well and vracuse University suggests that
ics or ,tecounling before that. E"en if a           indoctt ination in patriotism wa -.ome-
young man or woman aspires to a "~en·               th mg like what he had in mind for \\hat
erali~t" 1ole as politician or public e:..ecu-      bt•came the .Maxwell School.
ti' c. he m she can readily percei\ e that
                                                            ' Public affairs" is the best of the lot-
the ladders to leadership are the special-
                                                    b111 it means all things to all schools, and
ties and professions. Ten years later one
                                                    it .~
                                                       respertability quotient is not high in
can hardly blame them if they h ave come
                                                    the rclc\'ant academic deparrmem~.
to prefer the shelte1 of expertise to the
risky role of leadership. It is easier to be           , o 1 am almost persuaded that our
an expetL, '~i t h the obligation merely co         'd1ool should not carry a title denoting
be righc. then co he a leader wi th the obli-       the suhjen-matter wi th which it deals. Jf
gatio n to fuse a dc>1en forms of rigid             ic did, we would have to call it the Gradu-
renituclc inro rele,ant action.                     ate chuol of che ituation as a Whole,
                                                    and no political legislature or eleemo }'·
                      VII                           nary foundation would finance o rele-
                                                    \'ant an enterprise as that.
Schooling of Public Executives                         Ma\bc.: \\e should, instead. use a name
                                                    thnt denotes our target-say, a Graduate
   Do we know enough about how to
                                                     c:hool fo r Public Executives.
grnw people who can care with c:ompe·
tente about the situation as a "hole?                   The content of schooling for exennhe
Suppose we here this morning were asked             learlc1 ship has to be tailored to the bud-
to fm-m a school f01 this purpose? Would            ding- public executives themselves-not
we know where to scan?                              in t he 111ai.s but individually-to help
                                                    them analyze what they lack, a nd expose
   0111 !rouble is that we don 't e"en !..now       tht.>m LO \\ hatever that i!>. 'We wou Id, l
what to <''1 II the project. The worru ochers       Liunl.. . w:rnt co concentr::ue on people in
use to ~tand f01 situation-as-a-\\·holc edu-
                                                    midcarel'r, who ha,·e already ad11c\'ed
cation-' public administration," · pub-
                                                    something in a specialty but are gra ... itat·
!ic a ffa i1 '·.. " pol icy ,cicnce," " deveJop-
                                                    11111; toward general executi,·e leader~hip.
menc," C\en "cichenship"~am· such a
                                                    \\'e would want to im·ohe both public
freight of connotatiom.
                                                    ofhnals and pri\ate executives who h;ne
   " .\dminiscration" is Hill li,·in!?; \\;th its   la1gc public responsibilities (" hcthcr
earlier mistre s, the management special-           their firm or foundation admits it 0 1 not).
ist.
                                                       ~fy guess is that we will find some ~'P'
   " Poliq 'cience" is still trying co re·          that .ire sufficient!) common co all emerg-
cme1 from its dalliance with mathemat-              ing public executives to pro\'ide the basis
ical ri~or-\\hich came close to rigor               fo1 a core <urri<'u lum.
mortis.                                                 One obvious lac k wil l be breadth,
  "Den~lopment " has come to be fo·                     The public executive i dealing, not
cused on the problems of poor countries             with sciences but with science: not so
in e:..ottc concinencs. e'en though om              muc h wlCh hardware as '\ith software. not
own continental soriet\ isde,elo ping too,           o muth with technology as with ilS
and faster.                                         a<; essmem.

226
    He is c:ontetned, 11ol with deLailccl          he 11egoc1a1es with hi.s peeri.. And this
planninl{ ahead-whH.h i usuall) waste-             rncan\ th.11 ii he doesn't knO\\' 111 what
ful and 111islea<l111~ aitp'a~-bul with a          cli1ectiu11 the public interest require~ him
mon· rlcmandm~ challenge: imp10\ 1sa-              to pmh his fraction of the publit husrne",
tio11 on .t ~encral semc of direninn, \\hi< h      nohodv t·l'ie does either.
is the re.11-wot lei definilion of plannin~
                                                       l 111-; in Ill! n means chat the pub! ic e'c<.-
   I le 1~ preoc (llpied not with spedal           utiH· is his m1;n expert on \alues. \nd
knowlt'clge hut with general understand-           1/1111 i~ whv new (hools for Public Execu-
ing. no1 wtth simplifiration but with              li\C\ will ha\e 10 <.oncern themsc. h·es
"rompliCic ation ."                                deeply\\ ith where we are going and why.
                                                   not just wi th how to get chere cost·
   Doesn 't this go beyond education about         efTenivcly-with how to produce efficient
suujeus. and shade over into education             m,111age1.s who dn11'/ get draw n by logic.
frn aui1udes?                                      cp1antitt1tive antilysis, and computeiized
   l\Iaybe it doesn't matter in what he i'I        rN1 inal. inco illogical . unsystematic, and
educated, but how he i-. educated.. \ lm°'t        11 rt'trie\,1hle error., like the war in Viet·
any subjett matter will do, ii it is suf11-        11an1.
cientl\' rnmplicated. as an example of
real-world rnmplexit\ The important                                      \ 'III
thing is that the executive come away
from ht'> pre\·ious education and expert·          More Gifted Generalists Needed
enc:e with some ;utiwdes, -;ome ways of
th ink in~ chat .m:, I belie,e, indispensable          In the 'ipat{' of comment in 195i, after
to effectt\'e general managemenc                   Lhe first putnik set off an agonized
                                                   1c.1ppnrn:tl ol Ame1 itan education. a rare
      T he nocion tha t crise are normal,          a11cl scmible voice was r ai eel by a com-
  tcni.ions are promising. and complexity          miuee of< iLi1.ens under the chaimrnnship
  i:> fu n.                                        of .J ohn Ga1dner. T he Gardner Commis-
    The underscanding that paranoia                <;1011 rnggested a •mb,ticute tor Lhe Le;iring

  and sel1-pi1y .ire reserved for non·             ol hair and the:: rending of garmencs which
  exec: uti' es.                                   had he< ome, and 'till are codav. ~o prev-
                                                   al<•nt among seer~. prophets. and edura-
    The comic ti on 1hat lhere must be
                                                   LU• '>"'well as in other specialized fields.
  'omc mo1e 11puealouLcome than would
  result from ummari1ing- the gloom and                The ( ••udne1 report did not complain
  relunanct:' ol all his ex pen ad\ isers.         aho11t llH.: <ipetific honage' in m.1Lherna
     ,\sen~   ur
               re..pon•dbili~ tor the siwa.        ll< 1.1m, .,, ienusc , technolo~ists, and peo-
  tion as a whole.                                 ple who 'peak exottc l::tng11ag-es. \\hich
                                                   ~hmtagei. had just heen declared by act o[
   ln a society built more and more on             Congrc:.s to ue the main trouble with
hori101Hal l elationship:-., ic i.s already lime    \meric<1n educarion. The Gardner report
to re\ ise Paul Appleby' famous defini             did not won; at all about our ahilily to
tion n l policy wh ich worked so well in a         p1 odun.: spec ia Iis ts at wi 11, bm rather saw
hierarchical culture where recommend«·             in the 'upply of gifted general i\ts the
tions \.\enc 11 p :rnd mders <.atne down. For      pi ime bottleneck in our manpower plan-
Appleby, you will remember. policy wa.s            ning. "The trend toward ~peoaliza·
the decisiom that arc made at vom k\el             Lion," d1i~ report said. "has created
and higher. But for the modern puulit              :imon~ other things an extraordinary
executhe, polity is most!\ the dec.isio11'         demand for gifted generalists. men with
enough actual and technical competence         tics tackle this problem now. One is that
to deal with the specialists, and enough       the basic organizational break is vertical.
breadth to play more versatile roles,          Academic departments are built around
whether it be managers, teachers, inter-       specialized methodologies. But there
preters, or critics." Such individuals will    isn't any real-world problem that can be
be drawn increasingly from the ranks of        fitted inco an academic department.
those who e education and experience             fter being dean of a graduate school in
have included both depth and breadth,          the ocial sciences and then finding my-
who have specialized but have not allow-        cl r at a desk in the tate Department, J
ed them elves co become imprisoned in          used to amuse my elf by asking myself,
their speciality.                             "Where would these various problems
                                               that are drifting across my desk fit in if
   "There is a premium," the report went
                                              I were to try to fit them into the Max-
on, "on men and women with a talent for
                                              well School?" I found that the real-world
innovation, for individuals who can move
                                              problems in the tate Department did
beyond the limits of prescm fashion. In a
                                              not fit into neatly structured academic
lime of breathtaking technological and
                                              disciplines, but rather each one required
social changes there is a need for people
                                              an interdisciplinary approach for its solu-
who understand t.he process and the
                                              tion. There is a re istance co this in the
nature of change and who are able to
                                              tightly hierarchical departments so that
cope with it. i;vc should educate our
                                              it takes a very special effort to cut across
young people to meet an unknown need
                                              these vertical cylinders where all the
rather than prepare them for needs al-
                                              primary loyalties are related to a disci-
ready identified."
                                              pline, rather than to an analysis of cross-
   Fourteen years of dust ha\le collected     disdplinary problems.
on that repon, but the lvisdom of that
                                                 The other problem is that, for lhe
passage survives intact. Even more than
                                              kind of Lhing that I am talking about,
in 1957, the bottleneck is the situation as
                                               the insrructional staff really has to have
a whole, and the crucial gap in society's
                                              a certain amount of experience with
manpower planning is the education of
                                              real-world problems. It isn't enough to
situation-as-a·whole guys-and gals. And
that is why those of you who are willing      train a youngster in the use of several
to escape from your specia1tie and train      methodologies without his really having
to be general managers are so precious a      a dear idea of how you could put them
national asseL                                together in organizational terms. It is
                                              obviously very difficult for people to en-
               Discussion                     vision that, if they haven't tried it them-
                                              selves. o I think that indicates that
   You have beeri discussing ways in          there has co be a lot more commuting
which universities or schools of public       between the academic world and the
education can produce the generalist          world of government and large enter-
type of individual needed for today's         pri'ie of o cher kinds than there is now.
public service. Within the constraints of     'Ve are much better at this than most
the present organizational structure or       coumries, but there still is only a hand-
resources available, what are the univer-     ful of people in any given university who
sities doing, or what can they do, to pro-    are able to relate to these kinds of things
duce the kind of individuals required?        - the bringing of people together in or-
  Dr. Cleveland: There are two main           ganizations co make something happen
kinds of constraincs in the way univer i-     on one hand and the analytical ways of

228
thinking about individual pieces ol prob-       themselves are. maybe, the problem. Not
lems, the academic methodologie , on            that che)·'re not the right kinds of insti·
the other. Thal's why 1 Lhink you have          tulions and that we'd better build some
to have special organi1.ations within uni-      bcuer ones, but that the very existence
versities. I thin k that it isn'r natural for   of organization i somehow a bad thing.
a university to organize to solve the kind      That wa one of the striking character-
of problem that I talked abom in the            i tics of the many revolutions on a num·
lecture. There are very Fe" univtrsitie~        ber of campuses in the late l 960's. By
that even regard this as a major thing          and large the leaders of the Smdencs for
to do at the present time. That, of             a Democratic Society (SD ) were aller-
course, is why the prime bottleneck in          gic to organization, which is another way
our manpower planning is that we are            of ~ying that they were allergic to power
conscio usly producing every categ01-y of       -not only allergic to other people's
people that we need except the people           wielding power but also allergic to
to put it all together, and that doesn't        power itself, which is why SOS fizzled
make sense.                                     0 11t so relatively rapidly. The leaders
                                                would get into a room to decide what
   What are some of the negative impres-        was happening. but somehow it was not
sions that college students havf" about         decided, for no one claimed to be chair-
the public service? And what is the             man of the meeting. Nor was any real
p1iblic servfre doing that contributes to       staff work done as a consequence of the
thesf' negative impressions, in )'OUT opin-     meeting. because that would be your
ion?                                            giving power LO yourself and that was
                                                what you were against. But a revolution-
  Dr. Cleveland: First of all you' ve got
                                                ary who doesn't believe in power prob-
to break down the term "college Slll·
                                                ably isn't going to get very much power.
dents" because there are all kinds of peo·
                                                because he has to be organized for iL
pie. There is a widespread feel ing chat
                                                That is an extTeme example. I think, of
is produced by affluence. Some students
                                                what some-of what many-students
can say to themselves at age 20, " I know
                                                feel: that somehow bigness and com·
that f am going to make a decent living
                                                plexi ty are bad things.
for the r est of my life, so what am I go-
ing Lo do, really?" Now most gener.t-              And then overlaid on that you have
tions, all generations perhaps up LO now,       the reaction to a combination of the
in all societies have found much of Lheir       Vietnam War and the absence of tech-
:idvenLure in struggling to make a living.      nology assessment. in earlier genera-
But if working to make a living isn'L all       tions, on big governmental decisions.
that i m ere ·ting. if a large ponion or the    That is to say that the fan Lhal the Gov-
whole coll ege generation faces the prob-       ernment is elected by the people and
lem tha t only rich men·s childrett U'ied
                                                supposedly is serving the public interest
to face, Lhen you have a problem of mo-
                                                doesn'L prevent it from doing, on a very
tivation co begin wiLh. which acts not
                                                large scale, some very foolish things and
only against government but also aga inst
                                                this foolishness is thought by many stu·
almost all existing forms of work.
                                                dents to be inherent in the nature of
  Secondly, overlaid on that you have           Government. 1 Lhink chat all ot chose
the growing feeling-that bigness and            considerations are really more important
complexity are omehow bad things. that          than the thin gs that we used to worry
they are the exceptions LO some rule of         about, in terms 0£ the image of the Go\'-
pastoral simplicity and that institutions       et nment worker and that kind of thing.

                                                                                       229
   I think Lhal that imagery is perhaps a      experiences wouJd be to induce frustra-
fourth faetor: namely. an inability to vis-    tion in the student. To induce in the
uaJize Lhe interest and excitment of           sLUdent the sense of "How can I possibly
working in a large organization and a          grapple with this problem unless I know
tendency. on the pan of people who have        more about quantitative analysis than I
never tried il. Lo feel tbal it must be n      do now?" or "How could I be persuasive
terribly oppre-;sive experience to work in     in getting omething done that I now
a large organization. This is not the gen-     percci ve real I y needs to be done, if I
eral feeling but there is this very strong     really can hardly put an English sentence
feeling among students. I don't have il        together decently? So I'd better take the
pat fonnula for what you do about              Engli\h Composition course, and I'd bet-
changing this collection o( attitudes, but     ter get some more math because other-
1 think that there are two or three ways       wise I'm not going to be of any use to
that you ran get at it. One way is to let      myself or to anybody else in a world full
the student live for a few more years and      of problems t hat need solutions."
to go work somewhere. and that helps.
                                                  In other words I think the most im-
Another is to contrive as a pan of the
                                               portant thing to do in the freshmen ye::ir
educational experience more real-world.
                                               is to develop the motivation for going
or at least ~ynthetically real-world, ex-
                                               through these often necessarily dull
perience such as internship arrange-
                                               methodology courses. But instead, we
ments, and projects that grapple with
                                               st.tn with the methodology course~ hav-
problems outside or off the campu .
                                               ing predominant populations of students
   I've been campaigning for a ne1,• kind      who don't have any idea of why you
of freshmen year in college. As it is now.     would need those methodologies for any-
the student's anival might generate a          thing. just as many students study French
conversation like this: "\Veil. what are       or Spanish with no idea of ever using it
you interested in?" ''"Well. I'm I 7 or l 8.   and with no motivation to get anyw h ere
I don't know what I'm intere ·ted in.          in it. I think the more you can mix the
History, m;iybe-because that was fun in        c11mpus with the world omside the bet-
high school-or math, or something."            ter it's going to be from the point of
"Well you'd better )?;Ct vour distribution     view of enabling studencs to visualize
requirements out of the way then . You         the kind-, of problems that the Govern-
mig'ht take French I , Math I. English I.      ment grapples with and bow interesting
and so on." I'd just as soon a student not     and important they are. Using internship
take any merhodology courses :it all in        arrangements very freely and at a very
his freshmen year. l'd rather sC'e him         much more junior level than we have
come in and make-try ""-ith some others        traditionally done is, 1 think, a very im-
to make-two or three collective attacks        ponant pan of that picture.
on some problem. \Ve have enough prob-
lems in the world. so we could organize           Faculties of today's 1Lniversities have
a freshmen year that's just full of prob-      m11ch expertise lo offer. Whal ran the
lems. And students rould opt for which         fJPOf)/e i11 public service now do to en-
problems 1hcy're going to solve, anything      courage more movement, both pl'rma-
from world peace to "should we build a         nent nnd temporary, by thesP experts
sewage disposill plilnt on Sand Island?"       irilo f)ufJ/ic service, f1artic11/arly at the
which happens to be one of the great           State and local levels, as we move to a
local issut::!> in Honolulu this week.         more duet1trali:ed form of government?
  Now the purpose of these fresh men             Dr. Cleveland: \Veil, your que tion

230
really answers itself. Wt: ought to 111ax-       want lo /Jc a jmrl of their solution and
imize the amount of interchange both             are ruogniud a.s having the ability, in-
ways, too. Also more of you ought to be          terest, and motivation. Of course for thf'
teaching pan of the time, partly because         vrganiwtiori to find these people we have
it would be terribly good for you. Teach-        lo be able to rtrliculate somehow who
ing is terribly hard work. Facing a group        and w hal these executives are. Do you
of students, especially the modern skep-         have any comment 011 w hat is ref/.l/y the
tical students, is extremely good personal       rlichotmny in the syj/em-the gap which
discipline in a situati on where you are         somehow we are trying lo fill?
not protected, as you are in most other
                                                     Dr. C lev<'ln.nd: I'm nor sure how to
kinds of life, from the question "Does
                                                 solve that problem in the General Ac-
the King really have any clothes on?" So
                                                 counting Office, because it's something
there is exchange both ways.
                                                 close to insolvable even in the university,
   But l think that the problem is to con-       or maybe especially in the university.
trive experiences. The tendency is for           The Stale Legislature of Hawaii bas
the professor of economics to get his real-      rather belatedly fallen in love with
world experiences by going into an eco-          PPBS. and so we have been developing
nomic research house of some sort.               a really new university management sys-
That's not the point. I'd rather see him         tem which may have some usefulness
go and try to run something with some            elsewhere by the time we finally get
real executive responsibility and see how        through. It tackles PPBS in a different
economics has to be mixed with a lot of          way from the way Charlie Hitch tackled
other di!iciplines in order to make any-         it in California. Everybody's now sort of
thing happen, rather than see him sim-           disenchanted with PPBS in the Califor-
ply move into the government. still as a         nia system. And I think it does depend
kind of disembodied adviser to some-             crucially on trying to set clown. in a way
body w ho is responsible for action. The         that requires an awfu I lot of work a nd
nature of the exchange. 1 think. i.s im-         rethinking, the objectives of an ongoing
portant. For the executives in the gov-          organization. But what we found was
ernment, maybe we should do the                  that the kinds of objectives that were
opposite. Maybe they shou ld concentrate         generally used in universities around the
on single metbodologies--concentrate on          country, which we have studied, were
depths, since they're dealing in breadths.       sort of blue-sky objectives. They say that
But gee the fellows in the universities          this is ~where we'd like to be 5 years from
who are concentrating on depths tO rub           now, or whatever. But if you add up
their noses in how to get it all together        everybody's blue-sky objectives. they ob-
in a real situation.                             viously add up to much more than any-
                                                 body's going to finance or going to be
   You will find here in the General Ac-         able to staff, and so somehow the ob-
counting Office what w e vtiguely call           jectives-the concept of the objectives-
pe·r formance evaluation (l!Xec11 live .1 der-    have to be built into the organization ,
tior1). We start with a basis and wrestle        not just as footnotes. but built right into
with it. Some of the reasons are n ot only        it: the constraints o n the one hand and
lo find out where we are today. and en-
                                                 the special opportunities on the other.
able us lo forecast where w<' will b e 5
years from now but the kinds of prob-              You could all produce the objecti ves
lems we will be faced with. Another parl         of higher education in 5 minutes, in gen-
of the equation is to identify individuals       eral terms on a blue-sky basis. But then
who can rela.le lo these problems, who           you have to decide for a university sit-

                                                                                        231
 ting out in the middle of the Pacific        whether the difference was the result of
 Ocean what the special opportunities are     h~  growing up for 4 yea.rs or of some-
 that really affect the priorities. Now       thing chat you did, something that was
 that's one piece of the problem. The         the result of your input. That's an enor-
other piece of the problem, that I find       mously difficult field. I guess my conclu-
most baffling, is the measurement. Not        sion is that maybe you can get halfway
 becau e it isn't possible to measure a lot   to what a really rigorous analyst would
of things. The Depamnenc of Budget            be satisfied with in the way of a sophis-
and Finance of the tate of Hawaii hired       ticated statement of objeClives--with the
a consultant who produced a whole list        comrraints and special opponunities
of measuring rods in one afternoon, and       built in-and some quantitative meal>-
it was promulgated all over as sort of the    ures of performance against tho e objec-
word of law from the Governor's office.       tives; that the other half of the problem
For us it had such things in it as " How      requires an act of faith on the part of
many suicides have there been among           everybody involved ; and that probably,
your alumni, 5 years and 10 years out of      on the whole, education is a good thing.
school?" Now that has the great advan-            The fact that you can only get half-
tage of being quamitathe, but it doesn't      way, I gue.\ , doe n't bother me as much
tel 1 you '' hether it was good or bad that   as it should. because in universities, at
                                                      0
they committed suicide. To develop the         least, \\C ve been getting away with mur-
measures that don't get lured into over-      der by taking it almost 100 percent on
quantificacion, I find, is most difficult.    faith Expansion of higher education has
                                               been done mostly with a kind of general
  Then we have a problem that you
                                              idea that it is useful without being ter-
must have in a different way, since you       ribly well related even to the manpower
are supervising, coordinating, and watch-     market being served, let alone to some
dogging the whole Government and you          sophistic:Hed sense of the requ irements
don't have an output of widgets of your       of a person for his growth and individual
own, except paper maybe, but chat's a         fufillment. We can get half of the way
limited sort of output. Our output.is the     with a more systematic approach. J think
~tudent.   o we talk about measuring          that we ought to be quite satisfied to
when he comes in and measuring when           take the othe1 half on faith and maybe
he goes out and rrving to figure out          even the Comptroller General's Office
whether there is any difference and           ought to be "-1lisfied too.




232
        Expanding Responsibilities and
                 Operations


   The Congress, recognmng the need for independem
•U~sment       and over;ight of the complex affairs or the ex-
ecutive branch, established lhe C ~O in the legislative
branch of the Federal Go\'ernment in 192!. ~ lhe affairs
of Co,crnment have muJuplied in complexll} and ~i7e, the
n.-:.poru.ibilitie:. and authority original!} vested in the GAO
have been expanded b} lhe Congre~. The early GAO
image of green-visored accountants ha~ long \ince disap-
peared Its staff or dedicated men and women i'i comprised
or professional accountants. lawver'i. and graduate~ of such
other disciplines as economics, engineering, marketing. and
finance.
   The Office, under the able leadership of Comptroller
r.cneral Elmer B. Staats, has sl.l'essed effectiveness in the use
of che taxp;iyer's dollar in the many massi\'e Federal pro·
gram\. •••
    The record over t.he past five dccadei. has been one which
 the men and women of the General Accounting Offire can
 be jmtifiabl) proud and a period in which a great degree
of \ati\faction can be taken in havine: provided a valuable
'tervicc lo thC Congress, the taxp3\Cr, .111d the people of tbe
country. I congraculate the GAO on it<; golden annivcr;ary.


                                Senator Charles McC. Mathias, Jr.
                                Congu:uinn11l Rrrnrd
                                Junt' 10, 1!171




                                                                    233
                                                  Leonard P. Spacek
                                                 Senior Partner
                                                 Arthur Andersen & Co.




       Leonard P. Spacek has devoted his enti1·e career to the accounting profes-
swn.
    In 1928 he joined the staff of Arthur Andrrsen & Co., Certified Public
Accountants, and became a partner in 19·10. H e was Managing Partner from
1947 to 1963, C/Jairma.11 from 1963 to 1970, and Senior Partner from 1970 lo
present.
     Mr. Spaceli attended Coe College where he earned a Doct or of Laws De-
gree. H e was granted an H onomry Doctor of Humane Lellcrl Degree by the
National College of Education.
    For a number of yr:ors M r. Spacek specialized in utility regulator)' prob-
lems and has testified in numerous rate-litigation cases before commissions a.nd
courts throughout the United States.
     Mr. Spacek is a membn of the American Institute of Certified Publir
Accountants and was one of the original members of its Acroun/ing Principle.~
B oard frorn 1960-65. He is nlso a member of the 11/in.ois Society of Ce1·tified
P11blic Accountants, the American Accounting Association, and the National
Association of Accountants.
      Among the more than 30 public service groups in which Mr. Spaceh is
act.ive are the Advisory Board of the Brookings Institution, the Jnd11slry Ad-
vi.rnry Coim.ci/ of the Department of Defense, and th e National Alliance of
Businessmen. H e is a T rustee or Di1·ector of Northwestern Univrrsit)', Coe
College, the J ohn Crernr Library, and the Muse11m of Science and Tndustry
of Chicago.



234
States. Furthermore, "Effective Govern-       government to oppress one or more seg-
ment Management" must be accepted,            ments of our people as well as to provide
supported, and demanded by the pro-           justice to all. Good accounting like good
ductive forces of this nation as a prereq-    government knows no bias. If this prem-
uisite to their efforts to produce the        ise for accounting were not preserved,
wealth and the requirements to sustain        the dtizens injured would suffer the loss
life. Otherwise, the nation itself will not   of some of their freedom by mismanage-
long exist as we know it.                     ment by government institutions and
                                              corporations just as surely as if guns or
   Therefore, the breadth and applica-        bombs were used by one group against
tion of good accounting is infinite in a      another. Since we are fortunate enough
country like ours. I say a "country like      to have bad forefathers that preserved
ours" because we have a democracy dedi-       freedom for us, we as individual account-
cated to balancing "freedom" and the          ants are an important link in the preser-
"fruits of that freedom" to all of its peo-   vation of the rights to assets and their
ple. Notwithstanding all of the com-          use and the assessment of liabilities
plaints which this freedom permits and        among our citizens through the quality
encourages, this nation stands alone in       of our work.
opposing oppression of all descriptions.
Our risk, as a nation, lies in our taking        The citizens of this country are en-
freedom so much for granted tbat we           titled to receive the honest facts on cost
think it will always be there if we leave     and revenues, irrespective of the class of
it for a moment to indulge in some sup-       taxpayer they may be, irrespective of
pressive digressions.                         whether they are labor or management,
                                              irrespective of whether they are con-
   I have been exposed to accounting in       sumer or investor, irrespective of
at least one country which is not dedi-       whether they are employed or unem-
cated to the freedom of its people. I was     ployed, or retired, irrespective of
impressed by the high quality of account-     whether they are government or public
ing in that country, and it too is used to    contractors, irrespective of whether they
establish " Effective Government Man-         are representing government or are
agement." However, the accounting and         plain citizens, ad infinitum. Proper ac-
management which rests upon it is used        counting knows no classification of its
to deny freedom to its people. As a con-      facts according to who receives them. If
sequence. since freedom does not exist.       it were otherwise, accounting would be
the fruits of freedom are not available       completely destructive of its purposes
for distribution to that nation's citizens.   and would produce a fundamental viola-
The citizens of that nation suffer the ab-    tion of basic r elationships as among U.S.
sence of freedom and, therefore, absence      citizens.
of the plant that bears the fruit that will
sustain wholesome life.
                                              Mechanics of Accounting Need
  Thus, let us not forget that "Quality       Major Restructuring
Accounting" is like an explosive. It can
be used inwardly to destroy and out-             We sometimes get mesmerized with
wardly to preserve freedom for the            the procedures by which accounting is
public. 1n our nation, the same dual use      performed and thus lose sight of its sub-
of accounting can be used to injure one       stance or bury its communicative value.
segment of our citizens at the expense        Mechanical processes of accounting are
of another segment. It can be used by         fun to the nonaccountant, and often we

236
GAO Auditorium
July 15. 1971




Utilizing What Is New In Accounting


Tlir role of the acrou11ta11t m both pnvatr and p11b/1r lt'rtors Ira~
ex/Jf•rienced-rmd r<mtin111•s 10 expcrienre-almn11 1•xplos1r1c• rhrmge.
As t1 top admi11i.11rr1tor tn lhe publir arrounting {idrl mu/ a.1 rz /r1•1•-thinkcr
on tlte .1 tatr of tlu• nam111t111g art, 1\11'. Spacek hu.1 .1 prrwl 111111!i{trat11m1
to disrn.ss the rnrrc•rtt tltrw t of the flccounting prof1·1.1wn in //te rontext
of modern nrga111:nt10n and man"gernrnt. He 11011·1 1/wt 1·fl1•ctivr
Gov1·rnrnent ma11agrmen/ must be accepted . .wpportt•d. and rlrmandt'd
by tht' prnd11rtiv1• forre.1 uf our ?\'nt1on tu a prel't''flll.litr to then r•fforf5
to produre the Wt'a/t h and the 1rquiremrn/\ lo .1111/am life H e aho
pm11t.1 out that the /Jrrndth and applicnllon of gonrl nrrounl/flf!, 11 infinite
in a countr')' like our1, who.it' rif1U'tlJ arr entitled to rcreivr tht· honest
facts on costJ and revcnw•1. and that proprr acco1mtrng 1lumld 1101
1 ftwify farts arrm rlmg to who rereivn them.




Introduction                                             lllcm" anchored to the experience of
                                                         p<tst growth on the one hand and the
    To yo ung pcopll' a fifty-year :111n iver·           frt'cdom to experience new a nd murc
sary celebration proba b ly so1111ds like                clyn,1mic gi-owth in the fut u re on tl1"
co1111nemort1Ling a great historical C\cnt.              other h,ind.
Tu a pen.nn l i kc me, it i~ a 50-yea r
young annivt'NH\ . \ty business career                       F11nherrnore, iL ~hould be 'lated at
<"O\C..'I"\ 4li of thme \-t:ah, and 1 am frankly
                                                         the 011het thai at no time in Llu.s pa~t r;o
surprised that <.. \0 is only ~O yt·ar~ old.             Yl'•''' h.1\e we bt:cn fac:.ed with Lhe ~cat
I gue t'\'Cll I Look 1LS n.btence and ib                 .1nnunting problems we fare now-
~nice fur gran tecl. Tht· ( itizen., oE the
                                                         ' a11,ecl h} inflation. This is brand new
                                                         in the life ol (,:\Q and its 50 \t>an) of
l ' nned "t•lle h<l\e been t:Xtremely fonu·
                                                         <.''<t,tence But I mu t hold my commerw.
na te co h:n l" en joyed the excel lent man-
                                                         on 1h1' suhjen !or later in thb prc~c·nta·
a~ement that G .\O ha~ had. The theme
                                                         ti on.
ol this Olt"ellng is, therefore, most appro-
priate in light o( p.1st good management
foresight. 1 feel fortunate to be among                  Quality Accounting Serves an Ignoble
tlio~e asked to appear before yo u ht'·
                                                         as Well as Noble Purpose
cause "Accounting Pro(l·dures and Re-
porting" 1s literally tlw guts prerequisite                 \ Vh1 le l know most all of you a re par·
 to " Improving \ lanagement for ~Jore                   tic ularly interested in ··covernmem,"
Effective C overnment." Funhermorc.                      the theme of chis meeting, "Effective
 improved managemem is the rnnnecting                    \fanag<.·mem." is applica_l) le to every
link between a " y ·ccm" or "fatabli~h-                  pha~e of life that exists in thl'      nited

                                                                                                 235
confuse up-to-date mechanics with qual-        plification of computer communication
ity of the product. The computer has           for effective management is n ot the sub-
made this diversionary tract even more         ject for my discussion with you today. I
attractive than when handwork was nec-         wo uld rather e mphasize the improve-
essary. With computer speed we can             ment of r aw data upon which the com-
build m ore useless accounting castles         puters feed. U ntil tha t is done. the com-
than we cou ld ever imagine wilh hand-         puters c:annot produce and management
work or mechanical machi nes.                  canno t have reliable data that is prereq-
                                               uisi te to effective management.
  As a consequ ence, at times the com-
puter has created a Berlin wall between
the needs of management to use its ef-         Internal and External Reporting Must
fectiveness and the facts needed to im-        Be Coordinated from a Single
prove management decisionmaking. W e           Accounting System
must kee p in mind that decisionmaking
by readers is the end use of a ll account-        The difference between internal and
ing products.                                  external accounting is like the difference
                                               between underclothing and top clothing.
    One solution is for ma nageme nt to dic-   T hey supplement and support each
tate and approve the facts it needs for        other and one canno t be eliminated from
effecti ve operatio nal decisionmaking,        the o ther without destroying the effec-
and for technicians to determine the           tiveness of both. In articles, speeches,
mechanics of programming and building          and textbooks, we often confuse readers
o f computer systems to su pply those facts.   by placing undue emphasis on on e or
Too often we le t the computer mechan-         a nother of these levels of reporting as
ics dictate which facts are provided t o
                                               being more important than the o ther.
m anagement witho ut requiring the man-        Neither is more important than the
agement to state and assume the respon·        o ther. If the internal reporting among a
sibility of the architectural design of the    train crew were n o t reliable and accu-
information needed to move the most
                                               rate. the engineer could not use the
effective decisions. If the architectural      train externally. Both are needed for ef-
design an d responsibility therefore is        fecti ve management of the train. Our
supplied b y management, it becomes the        accounting systems function the sam e
accountant's and auditor's responsibility      way.
to fill i n the specifications.
                                                 Over the past 40 of the 50 years about
   The communication of a quality (i.e.,       which we are speaking, we have ad-
reliability) accounting product from the       vanced a new con cept for internal re-
computer to management h as n o t im-          porting, which is completely disengaged
proved in the same degree as have the          from externa! reporting but constitutes
mechanics of codifying. sorting, and tab-      the only reliable basis by which external
u lating. New acco unting procedures re-       repor t ing can exist. T his con cept is (1)
quire that this effectiveness be reversed.     to formu la te internal reporting around
In this area of procedures, we certainly       the concepts of management dictated by
are not utilizing effectively what is new      the personal habits and talents of the
in accounting and. therefore, the oppor-       particular man ager in charge and (2) to
tunities for increasing the utilization of     base internal accounting on concepts o f
the computer in accounting a t a lesser        cost accounting wh ich represent as accu-
cost are legion. However, the need for         rately as possible true "economic costs"
im provement of form and grea ter sim-         at each level of ma nagement supervision .

                                                                                       237
  I want to spend a little lime on these      odic audit of Lhe efficiency of manage-
two steps of internal reporting before        ment information reported is equally as
moving on lO exlernal reporting.              important as auditing the cost figures
                                              themsel\les. Very seldom, however, does
                                              the audicor-accountant go to manage-
Use of Modern Personalized                    ment and audit the sufficiency and
Management Internal                           timing of the receipt of the right infor-
Reporting Systems                             mation. Thus, deficiencies in the infor-
                                              mation may be crippling or preventing
    Success in th e use of modern personal-   the manager, without his know ledge,
 ized intema 1 reporting systems under        from making the best management de-
 Step l has been achieved in some in-         cisions of which he is capable.
stances through the use of "Responsibil-
                                                  Modern personalized management re-
 ity Accounting.. and "Functional Ac-
                                              porting syscems have probably been most
counting... The use of the adjective
                                              widespread among electric and gas utili-
"personalized" is Lo emphasize the com-
                                              tie:.. ln this industry external reporting
 munication root of a proper syscem. The
                                              was required by law co be uniform
system must aru.wer questions for the
                                              for imercompany comparison purposes.
manager which he per onally believes
                                              While that '>traicjacket all but prohibited
 must be answered ro maximize the utili-
                                              per,onal ized management internal re-
zation of his talent as a manager. The
                                              porting, the same srrai tjacket activated
 lauel on d1e sy tern is o( no consequence:
                                              design of a system thal enabl ed managc-
responsibil icy accounting. f unccional ac-
                                              mem LO get what it needed from ics inter-
counting, or any other name. Internal
                                              nal syslem withom impairing uniform
a('rou nting systems are Loo oflen de-
                                              external reports in the process. T h us,
signed to solidify procedures around
                                              both internal and external levels of effer-
some precedent or stereotyped form of
                                              tive management were preserved insolar
communication of costs thnt do not tell
                                              as reporting was concerned.
the particular manager wha t he needs in
order to be effeetivc. uch a system act          The staffs of the Federal and . tate
;is a Berlin wall to the manager bemuse       commissions readily aw the advantages
he can't gel through it or can't thange it.   and approved Lhc U!>C of personalized
                                              managemenl reporting systems lo enable
   The system is oflcn a bookkeeper· con -
                                              thee regulated utilities to reduce rnst of
cept of ''hat management should have
                                              operation and thereby benefit the public.
and he ::mumes the internal reporting
                                              At the "ame time. the internal systems
system should be the same for all man-
                                              developed provided analytinil detail
agers, regardless of their individual abil-
                                              which facilitated the preparation of ex-
ities and methods of thinking.
                                              ternal report· in accordance with Uni-
   Breaking down this wall is one of the      form Systems o( Accounts applying to all
most important steps in uti lizing what is    such utility companies. Consequently,
new in internal reporting. Therefore,         electric and gas regulated rnmpanies had
modern personalized management inter·         the trnditiona l straitjacket of external re-
nnl reporting must be audited period-         porting removed internall y and were
ically to ~:valuate irs communication         able to design effective internal manage·
value to man:lgemem. Adjustments              mem accounting systems. Yet most com-
should be made where needed. just as          mercial and industrial company person-
we would adjust cost figures to proper        nel still be! ieve that their companies
amounts as a result of an auclil. A peri-     must live with external reporting resrric-

238
tions when lhcy are developing internal          one of the most important points that can
systems. le is not so.                           be made in any accountant's report. H ow-
   Commercial and industrial companies.          ever, once responsibility for data identifi-
                                                 c.:a tion is placed on management, effective
except for service com panies an<l sim ilar
                                                 management usually el iminates a bulk of
organ izations, have n ot utilized personal-
                                                 tri via and trash in interna l reports. This
ized management internal reporting sys-
                                                 in turn eliminates substantial costs in-
 tems as they shou Id have to achieve
                                                 rn rred a ll the way from the field to the
effective management. Neilher have gov-
ernmental agencies. An extension of in-
                                                 cop office in gathering raw data that is to
                                                 a great extent useless.
ternal reporting syslems in these areas
shou ld greatly improve management and             As a uditors and examiners we give far
result in reduced operating costs that wi ll     too little attention to the job of requiring
 benefit the public and our economy.             management to assume responsibility to
                                                 determine the information it needs. As
   R oom must continue to exist for per-
                                                 management changes, the new manage-
sonalized internal reporting systems in
                                                 ment sho uld be req uin:d to restate the
defense and other industries that will be
                                                 comm unication reporting system it needs
subject to the Uniform Cost Accounting
                                                 to m eet its particular way of manage-
Standards (UCAS), if they are properly·
                                                 ment. This does not mean tha t the audi-
promulgated by the Board created for
                                                 tor, examiner, or accountant should
that purpose. The real bite of UCAS ap-
                                                 abdicate his responsibility to assist man-
plies to the definition of "cost" as used for
                                                 agem ent in developing an internal report-
internal reporting on which I will rom-
                                                 ing system and evaluating the cost of pro-
ment later.
                                                 ducing it. He must continue to build the
     Thus, on the question of getting great-     specifications for the p rocedures to meet
er ma nagement effectiveness from person-        th e architectural design of management
a I ized internal reporting systems much is      decisionmak ing information as dictated
yet to be done in all walks of I ife, corpora-   by management. He must continue to be
tions. all levels of government, hospitals       atrounta b le for evaluating the internal
and welfare activities. We in the account-       control of the system.
ing field all too often confine too m uch of
                                                    The cost of production of an internal
our attention to verifying recorded costs
                                                 reporting system must always be meas-
without first placing on management the
                                                 ured against its worth for decisionmak-
crucial decisions or concurrence o f what
                                                 ing a nd internal c:ontrol. The system
information is needed for its effective
                                                 should make dear where the costs of
management. vVe. as auditors or examin-
                                                 accounting o utweigh the benefits to be
ers, cannot assume that we are qualified
                                                 achieved a nd where sampling will serve
managers and thereby take responsibil ity
                                                 the c;ame purpose of complete tabulation ,
that the information provided is adequate
                                                 ere. Th is procedure in styling a person-
co manage effectively. At best such sys-
                                                 alized reporting system is so new that it
tems are poor substitutes for those which
                                                 is seldom used-and yet so old that few
management itse lf would design.
                                                 people recognize that it was the system
  If management admits it doesn't know           that existed when one-mt1 n managements
what information it needs for decision-          were common. Management often does
making, that fact is probably more               not know that personalized decisionmak-
conclusive Lhan any other fact tha t m an-       ing data can and should be available:
agement is not capable of effecth•e man -        therefore, the accountam must take the
agement. Disclosure or this adm ission is        responsibility for pressing management

                                                                                         239
to appraise this approach and should not            One of lhe best illustrations of this
wait for management to dem:md it or              double re~ponsibility is the assignment of
critici1e acrnunting for its failure to          the Comptrolle1 General to be Chamnan
communicate data co management.                  ol the Cost Accounting tandard.s Board,
                                                 \\hic:h has the major responsibility for
   Per onalfaed management internal re-
                                                    nifonn Co:-.t Accounting tandards.
porting y terns are lil..e being 6ued with
                                                 The 1.1.andards must be set up so that they
a new suil that must be tailored to 6t-
                                                 can be fitctd with the personalized man-
thac fitting may be perfect nO\\, but it
                                                 agement internal repoTLing desired and
may not l~t forever. Conditions of all
                                                 necessa1 y by each indjv]dual contractor.
descriptions change. Like the need for a
                                                 The standards must also be designed to
new suit Lo fiL the changed conditions, so
                                                 delineate c learly and unifonnly Lhe true
we need new and revised internal report-
                                                 economic cost of production and cost di-
ing systems Lo reper onalize che system
                                                 visionaliLation so that third-party review
for a continuing management that oper-
                                                 of management' prudence and effective-
ates under changing conditions and
                                                 ness is pe><; ible. At the same time this cost
different requirements for effective deci-
                                                 divisionali1.ation must provide for the ap-
sionmakm~. How often this review is
                                                 plication of pricing policies established
needed varies from company co company,
                                                 by third parties. In this ca e. the govern-
but a re' iew every 3 to 5 years is gener-
                                                 ment.
ally advisable to prune useless data and
gather new data.                                    If l CA are successful in meeting all
                                                 four objecti,es, they will place on man-
   Ho\\ do the'>e responsibilities. tie into
                                                 agement of both con tractor and govern-
government staff and my work as a mem-
                                                 ment the clear opportunity to discharge
ber of the external accounting profession?
                                                 thei1 1esponsibility for effectiveness: if
I would say our responsibi Ii ties are just
                                                 not, we ra n expect more Lockheeds and
about the same. The government staff as
                                                 Penn Centrals in the future. UCAS will
it works with other agencies and other
                                                 not eliminate management problems, or
institutional or corporate problems is
                                                 ineffecliveness. They will not enable such
more guided by a "questioning" po cure
                                                 problem to ··surface" early enough so
on behalf of the public than i.-; true for the
                                                 that effecll\e management of both gov-
oucside public accountant. However. the
                                                 ernment and contractor can take action
imensiry of questioning should be much
                                                 on them.
the same. Too often the outside public
accountant ecms to ha\'e a blind spot
with re pecc to his own management abil-         Use of Economic Costs in
ities. As a result he confuses a substitution    Internal Reporting System
of hi ideas on management information
for his responsibility to place on manage-          Concern at all levels of proprietary
ment the responsibility for factual data         ownership for I.he quality of management
needed for effective decisionmaking. As          whethe1 in government. corporaLions, in-
government taff. you are often placed in         stitutions, ctt., has led to questioning the
the po it ion of writing laws or regulations     internal reporting of practically every
about management r esponsibilities and           entity. This interest in "knowing" is con-
reponing requirements, prior to manage-          sistent wilh a proprietary right to know.
ment's participation in a project. Thus,         The day of owner-management in corpo-
you muse exerci ea greater degree of care        rate affairs in the United States is about
in placing revi ion responsibilities on          over. except in the very small entitic .and
managemem.                                        ecrecv from public proprietary interest

240
in government is on ly warranted al Lhe              Internal reports cannot include all costs
most sensitive level. Management in all          in an ecunomic sense as I will later discuss
other walks of life in this country is h ired    in relation 10 external reports; therefore.
help.                                            accu rate d escriptions arc important for
                                                 not only what they state positively but
   Each segment ot the public is 'ery
                                                 a !so for what they do not say. A £unda-
"nosy" as to the resu Its of operatiom for
                                                 men ta l standard in the design of internal
every e ntity in our ernn omic system. This
                                                 reports is to limit re\'enues. income, ex-
is only possible in a free country. so that
                                                 penses, and other (."OSLS of a di vision to
we have a basic consistency between
                                                 those supervised by the manager of that
these two conditions; i.e .. the demand to
                                                 particular d ivision. Other economic costs
know and the right Lo know. Thus. inLer-
                                                 of that activity may be supervised by and
nal accounting reports of all entities arc
                                                 be the responsibility of ocher higher eche-
now constantl y perused by and oil liehalr
                                                 lon managers. These costs shou ld be
of the proprietary public.
                                                 included in the latter's reports. In this
   \\Then most internal reports were con-        way each tier of internal reporting in-
ceived and designed, ma nagcmenr did             cludes o nl y revenues and costs for which
not expect them to be used by proprietary        the particular managers of tha t tier are
interests not versed in the loose vemaru-        responsible. The final report of the chief
lar used in such reporting systems. As a         executive to the public would include an
consequence, in interna l reporting used,        accounting for his tier costs and all prior
s uch terms as "cost of so and so" or "profit    ~ u pcrYised tiers. The sum sho uld be total
of division X" or sim ilar ostensibly con-       "economic cost." Therefore, the new ex-
clusive or unmodified nomenclatures are          posure of internal accounting reports re-
completely untrue. Such terms wou ld             qu ires new accounting systems that are
more properly be "certain incurred costs"        more accurate in defining the particular
or " revenues o r sa les net of certain costs"   revenues and particular costs being re-
but certainly not "cost" or ''profit" in any     ported u pon.
tota l or defined way. Such loose reports
                                                     It has been an old habit to use hack-
and loose terms are as abo ut as "rommu-.
                                                 neyed words and phrases in internal
nicative" of reliable data as that fill-in
                                                 reporting. a lmost slang. Only by long
figure of speech phrase "you know" that
                                                 association with such reports does one
punctuates all oral com munication today.
                                                 develop the ability to interpret them.
Ro th are meanin g less and carry no values
                                                 \\' hen used by strangers, such as the pub-
of communication. In internal reports,
                                                 lic and government staff who are not con-
however, we have great responsibility for
                                                 stantly Iiving with them. they are obsolete
making terms we use meaningf11l so that
                                                 anci can be dangerously misleading. For
they m ean what they say to o u r boss the
                                                 instance, the use of the term "profit"
"nosy" public. A refi nement o f terms so
                                                 when one is referring to pretax profit is a
that our reports are m ore communica tive
                                                 complete misnomer. yet it is commonly
will greatly improve o ur acrou nting sys-
                                                 used under the "you know" concept of
tems as well as their usefulness to all of
                                                 communication .
 us. l am positive that such a disciplining
wi ll double the thinking power put into            These reports are particularly wasteful
such reports by accountants. More impor-         in leading pu b lic readers down a wrong
tant, the usefulness of reports thus pre-        path and to a wrong conclusion. For in-
 pared. eith er th rough elimination of un-      stance. I recently had reason to hear a
 necessary data or through increased             report that the Defense Department had
accuracy. will be doubled.                       a very large supply of ice chains on hand

                                                                                          241
in Vietnam. Since it is nawral to question       are given public distribution. All mis-
how much ice one might reasonably ex-            leading reports to the public are divisive
pect to find in Vietnam, the existence of        of public trust and therefore damaging to
these chains in inventory seemed self-           all of us. regardless of the phase of the pro-
evident indication that ineffective man-         f ession in which we practice. This result
agement existed. However. the report             is probably not inten tional but certainly
was incomplete, misleading. and waste-          arises From lack of attention.
ful, since the chains were used to provide           Some in our profession disagree that
traction on mud roads. If the report had         reports should reflect coses that econom-
cal led these items "mud chains" instead        ically tell the "whole truth" to the pro-
of ice chains, the conclusion as to effec-      prietary owners of alJ government and all
tiveness of communication to manage-            business representing the public. Their
ment for action decisions would have            counter argument is often that the public
been quite different.                           would loudly protest many of the things
   Likewise. in practically all instances,      a minoriry of us think are desirable. How-
internal reports should refer to "super-        ever. to provide the public with incom-
vised cost" subdivisions of the particular      plete reports in order to secure their
deparanenc or division and not lead a           approval is lying. and reports constructed
reader to conclude such cost is to ta I cost    for such purposes fail to maximize the
of that activity. I believe this point is       ways in which accounting can be used
particularly applicable to all levels of        for more effective government. The pub-
government, and I know it applies to all        1ic must assume the burden of under-
levels of corporate activity. We provide       standing proper and accurate explana-
reports on "cost" as though such costs         tions of true costs and accept the
were total "economic costs," when they         consequences of such factual reports in
are not.                                       the action it takes. We as accountants and
   I recall reporting on the accounts of       you as the government staff are guilty of
Bonneville Power Authority many years          bias when our reports do not clearly state
ago and qualifying the final results appli-    carefully worded descri ptions of what
cable to that division of government since     costs are or are not.
no taxes had been charged. The final re-            I hope that progressive accountants
sults should have been properly labeled        would eliminate incomplete phrases and
as being before allocation of government       titles that convey half-truths. The use of
services and carrying costs of government      a few more words often enables me to
investment. A similar condition applies        tell the whole truth. All of us in account-
to practically every department of gov-        ing arc guilty of intentionally misleading
ernment when "costs" reported to the           the public on this score. 1 will cover this
public are not complete economic cosrs.        point in more detai l later, but we must
Reports on Vietnam costs should say "in-       emphasize the use of terms and explana-
cremental costs" so as to distinguish          tions that at least have an opportunity to
clearly between total economic costs and       convey the truth on facts to the public,
those which are on-going irre pective of       the collective and ultimate owner of all
Vietnam, if the reports are to show these      resources on which we report.
facts for effective government manage-            Misleading reports too often provide
ment.                                          those who wish to criticize reported re-
   Simi lar deficiencies in internal reports   su 1ts with half-truths or whole untruths
of corporations lead to misinterpretations     that can be damaging. \Ve must eliminate
and may be misleading when such reports        such reports. An attorney in his role of

242
an advocate will use various approaches         be undersiood before it can be a ppraised.
to u y to get the wimesi. to weaken or          The crnnomic:~ under which the Uniled
da mage his rnse. regardless of the lacts. if     tare produces its wealth has c:ompletcl)'
he can. \Ve in accou nting cannu1 indulge       <hanged in the last 20 years. Al the he-
in the same :>port. \Ve must have a more        ~inning we were a n independem u nit i n
sincere re pon e to ··effecti\ e m.mage-        world production. T oday we ha\•e lo.st a
ment'' by the public. so chat that public       great share of that independen ce and we
can impose mo1e "effective m a nagement"        a t e almost a dependent unit. \\'e have
on go\'emme nt!-, corporations. and legis-      been so accustomed to thinkin g we have
la tors.                                        ..made it'" that we won't even tell each
                                                other that we have practically "lost it" in
    No purpose is served in not making a
                                                internationa l com petition.
full accounting of the facts to the public
even though at t he m om ent knowledge o f          Some 15 years ago we began a serious
a ll lhe facts may be distastefu l Lo that      discussion o f these so-ca lled ··generally
public. Thi is the newer look of accou nt-      accepted accounting principles,'' by the
ing 1 epons. Nei ther the gO\ ernment a nd      arco11ming profession. The very existence
its representatives nor corpoiations or         of a standard of "genernl acce ptance"' for
other institutions should be pe1·m iued co      acco unting principles was and always has
slam interna l accounting reports on the        been con fusing, so that the application of
effectiveness of managemenc. To do so is        SU( h principles has been nebulous and
to ign ite a time bomb that will explode at     difficult Lo explain to each segment of the
a later date. Experience has shown this to      public. With che econ omic- status of o ur
be more damaging than if the anual facts        countr in a tailspin we cann ot afford not
were known on a timely basis when cor-          LC> ha,·e the rea l facts. The greate t gap in
rective action, if any, cou ld have been        understandin g in the U nited States today
ca ken. This princi pie is true even if         is no t among the race ·, among the you th.
timely internal reports prevent elenion         01 in environment. It is in our loss of
of presidents. rnators. con gressmen. 01        econom ic m uscle. To te II tha t story re-
awards to rnrpora tiom. citie , or lates. I     quires accounting based o n true eco11om-
well know how naive this viewpoint is in        ics. The absence of jobs for you th today is
cerms of total acrnmplishment, but with-        not a.ttribmable to the downwrn of busi-
out "the accounting profession" Hriving         nes~ but to the export of jobs tha r e~o·
Lo reach it. n o forward progres:. wil l be     nomic:illy rnuld not survi\'e here. Who is
made.                                           1 ~l ling the yo11ng people these economic
                                                Lrnths so that they put their minds to
   This concludes my commen ts on per-
                                                prcs!>11re the rig-ht w urvival? 1 he pol ici-
sonalizing and designing internal reporLS
                                                cian 1 a nO\·ice in this field and runs
and on t he 11:ie of economic costs in inter-
                                                heltc1 -sl...elter destroying the coun try he
nal reports. 13oth of the:.e aspects sho11ld
                                                has pledged lo protecL a nd hel p.
e ncourage new uses of internal accoLt nt-
ing reports for more effecti\'e manage-            Since the dictionary sta tes that a prin-
m ent.                                          dplc is a "rundamental truth." it is natu-
                                                ra l that inte,·ested public segmen ts wou ld
Cost Accounting Principles                      expect a principle of accounting to have a
                                                crisp and apparen t certainty in its mean-
Vs. Generally Accepted
                                                ing. Recon ciling that definition with the
Accounting Principles
                                                double talk and d o uble interpreuuion by
  Generally accepted acrounting princi-         profe~sional accountants when applied to
ples have a new look today tha t needs LO       reports to the public was bound to bt ing

                                                                                          243
a reaction of criticism of the profession      that face it internationally. All coses com-
from char public as well as from tho e         prising true ··economic costs" must be
within the profession who can't reconcile      ddined. even though the definitions may
truth a shown by our reports with cruth        conflict with generally accepted account-
in face.                                       ing principles which were not designed to
                                               accumulate the •·economic cost" of pro-
    Most of the criticisms and comments
                                               duction.
 were leveled at accounting principles as
 affecting corporations, but they apply to         Accounting principles which recognize
 mutual institutions and to government         true "economic cosl.l>" c;o chat all seg-
accounting ru well. Since public capital       ments of the public will be justly treated
 invested in rnrporations generates most       j., a new and emerging concept and is not
o( the wealth needed by the public, the        fully understood even by the accounting
defects of corporation accounting auto-        profession. At present it is gros ly incom-
matically called for improved manage-          plete. The development of this emerging
ment and management demands more               concept occurred by stages as our eco-
effecch c accounting. The criticisms of        nom ic existence changed o\·er the last 20
accounting principles and the defective        vean from the nation being the source of
principles that existed colored the effec-     most production to merely a "me too"
tiveness of management of every com-           pa1 tkipant nation in international pro-
pany to Fedtnl agencies. These defect~         duc tion.
must all be faced by the Cost Ac\ouncing
Standards Board when it determines the            The 1 ecitacions of shortcomings of ac-
Unifom1 Cost Accounting Standards that         counting principles 15 years ago were
are now in proce5s of determination. If        shrugged off by the accouming profes-
the precedem·e of "generally accepted          sion. then scoffed at, and then defended
accounting principles" is to be blindly fol-   in die name of experimentation. Aexibil-
lowed by the Board, the standards wbich        ity, management's right to set its own
emerge will cause grave injustices LO vari-    principles and the avoidance of strait-
ous segments of the public. It will result     jacket rules. These reactions were made
in free1ing into regulation the obsoles-       by government and corporate managers
cence o! past practices that have denied       alike, buL all are red herrings to the real
the public che economic trulh that it mu\t     is ue of refining our communicacion o
ha,·e to adjust itself o that it can sun;ve    tlaat true costs and revenues are conveved
in our international economy that is 50        to the public. True costs as I refer to them
new to the world we now live in. To do         mean full "economic coses."
otherwi~ would be surefire economic
                                                  I am sorry co say that the members of
oblivion to our nation. Therefore. the
                                               the accouming profession were in the
benefits of milizing what is new in ac·
                                               forefront of resisting a confrontation with
counting can be completely nullified by
                                               inadequate reponing as a result of unde-
not pruning out what is old, obsolete, and
                                               fined accounting principles. The reports
decadent in accounting.
                                               of the presidents of our prolessional soci-
  T he Cose Accounting Standards Board         ety make interesting retrospective read-
must justify the reasoning behind every        ing today. It is even more interesting to
principle of cost accounting it adopts.        read the viewpoints of some corporate,
Only in this way can the objectives of the     academic, and government personnel in
congressional act of telling the facts be      retrospect and compare those "iews to
achieved. anrl onl} in this way can the        some of the present expressions from the
United States be told the economic facts       same sources. Some of them would lead

244
one LO bel1eH! Lhat production or good!.        is abhorred by managemenLS, account·
ancl set vice i11 the naLion should be pre-     :mb, and federal agencies alike. The only
'iumed to be 'linful-as though produc-          wa to change the accounting within Fed-
tion of wealth could be di pensed with          er a I agencies under uch condi ti om U.
without crouomic damage to the very             through political changes o{ the penon-
voice chat advocated 'iUCh economic teck-       nel inw>lwd
les. ne s.
                                                   The Le'>t of ability to change irrespec·
    uch retrospective analysis, however. is     tive of prior reports is probably the best
not productive except as a method of            tC<;t of independent thinking. or forth·
learning how lO approach con ection of a        righc responsibility, to the public seg-
defit'ient arcouming product. \Ve need w        ments affecLed. If one opposes embracing
see wh<l l raused deficiencies and why          su bstamively improved facts he lacks the
such deficiencies became so deeply en-          necessan• qualifications to u-;e "new ac-
trenched in our year-to-year reporting.         counting" to impro'e managemem. A
even though the results communic<ned to         more truthful position is best illustrated
a reader made him believe untruths.             by the faces behind a story attributed lo
   Some find ll difficult to understand wh\      \braham Lincoln. In the morning he
the accounting profession can constanlly        argued a legal case from his offhand reac-
update and refine "auditing standard~ ..        tions lo the issues and won Lhe case; LhaL
but cannot do the same for "account.ing         afternoon he had another case in\olving
pnnc1ple ~tandards. The answer i im-            the same point before the same judge.
ple. Auditing slandards have a terminal         When a kcd to reconcile his Hewpoim
life without any retrospective effect when      wilh that of the morning, he said he had
changed. Ead1 year 'tands alone. On the         thoug'ht he was right then, bm in his
other hand, accounting principles have a        ar1ernoon case he dug further into the
lifespan equal lo lhat of the assets or lia-    facts aml on tha t basis he knew he was
bilities m :orded by application of such        right in his second viewpoint.
principles of accounting. The roots of            I can 11lustrale this much more effec-
today's affounting principles run deep          livcly by another situation Lhat has
into past history when conditiom were al-       spanned a period of 75 years. 25 more
most c;omradiuory with today's con·             than the GAO anniH:rsary period '\o
ditions. Yet accounting principles of 50        auenuon has been given to it as yel. e\cn
or 7 5 yea1 s .igo are made the basis of        though Lite pu bli<. is today uffering the
today's reports when the' are unrelated         hurden. of "ineffecti\e management" of
to toda\ · economic . Thu . accouming-
                                                the Railroad Re1i;ulatory Com.mi.sston. the
prmci pies carry mer from one ...·ear to        r,1ilroad managements, the Treasury De-
another for many, many yt:ars, ot ten over-     partment, and the Congress of the United
lapping se\cral human litespans. .\ny           "tat es.
change in the definicion of accounting
principles affens the ca1ried-O\e1 assets         The ind UStTy is that or I ai Iroads. prol>-
and liabilit ies which have been reported       ahl y the oh.lest and largest industry in
upon by both management accouncams              this nation. or the world. The roots go
and go,ernment. Each of lhese aucho1 i-         back to the day of \\-illiam Jennings
ties reacts the same i 11 resisLing change if   Bryan nrg11inf{ rn behalf of the public
"change' means change in what was