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A thought experiment about managing budgets as a looking glass into political complexity.

As a corporate executive and management consultant for over two decades with many fortune 100, international non-profits, and governmental organizations, I’ve had the opportunity to manage multi-million dollar budgets, recruit and manage large staffs and consult other executives who manage budgets in the hundreds of millions, even billions.

I’ve worked closely with CEOs, chairpersons of the board and other senior officials, both in the private and public sector.

Those career experiences afforded me a lot of insight into how politics plays out in the real world. They provided microcosms from which to ponder how decisions are made in large systems and the complexity of the decision-making process itself. The problems inherent with managing large budgets is something that most people do not contemplate and you might find it useful in understanding complex political phenomena.

In the private sector, we are using the money of the stock holders. In the public sector, citizens are the theoretical stock holders. You are responsible to them.

The thought experiment – you are the sole administrator of the budget of an entire nation.

Assume, for fun, that you are a true altruist. You have no selfish desire for power or greed. You simply want to make smart and effective allocation decisions, hire ethical and competent people and use that money in the interests and benefit of the population as a whole. After all, that was what you were hired to do. I know that it is probably unrealistic to assume that you would be the perfect altruist, but that allows us to avoid the problem of the character of the senior decision maker of that budget and to focus on all of the complexity in carrying out the task of managing a national budget.

Now, imagine all of the different interests that would compete for those funds in the domains of defense, education, agriculture, energy, science and technology, environment, social services, infrastructure, criminal justice, etc., etc.

Step 1.  You are hired and receive the authority to distribute and manage the entire enchilada.

Day one begins with a procession of interests paraded in front of you, all making their case for why their projects deserve funding and to compete for all that money. You need to make very hard decisions based on a finite pool of resources. Not everything can be done and not all projects can be funded.

Imagine the actual self interest, greed and possible corruption that is going to materialize, despite your best intentions and given the massive amounts of money and responsibility that must be doled out. If there are not adequate policies, checks and balances and appropriate sanctions and policing over this budget, it will surely not be put to the most effective use and some portion of it will be siphoned off by incompetence, inefficiencies, simple greed, collusion and outright corruption.

How would you go about staffing? How would you divvy up the available pool of funds? Which projects would you choose to fund and how much would you allocate to each project? Do you think that in making hard decisions, valuable projects might go either unfunded or under-funded, while other less important projects might be over-funded?

Thinking in the context of managing budgets can be helpful in developing a better appreciation for the complexity of large scale systems and decision-making at the highest of levels and can be useful in coming to recognize just how hard it is to get these things right.

And, alas, then there are humans, with all of their cognitive biases, selfish desires and differing degrees of competence, ethics and interests.

Good luck! Does it sound more complex when seen through this lens?

Original post: 16 December 2016, Science, Critical Thinking and Skepticism.

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