DOGE And 0.7 To The nth Power

Written by: Eugene Steuerle

No, the title is not a typo. In math-speak, 0.7ⁿ simply means “70 percent multiplied by itself ‘n’ times.” For instance, 0.7⁴ equals 0.7 x 0.7 x 0.7 x 0.7 or 24 percent.

As the Department of Government Efficiency (DOGE) tries to find ways to increase government efficiency, it needs to understand the theory of 0.7ⁿ and how the increased centralization of Executive Branch decision-making in the White House over recent decades has already weakened the president’s power to achieve efficient government for the public.

If my wife or I have a new idea for doing something differently than we have in the past, we’re likely to discover that our partner often agrees, but only part of the time. We get along well, so a 70 percent agreement might not be a bad batting average for a reasonable idea. With just one extra layer of approval needed, that means there’s a 0.7¹ or 70 percent chance that we will follow through on any of our reasonable ideas. Alternatively, suppose an adult child in our family comes up with a good suggestion for us but needs approval from a sibling and both of us. The odds of eventual success drop to 0.7³ or 35 percent. That’s still not too bad. Households are small and often efficient at making decisions compared to many larger organizations.

On the other hand, suppose one person in any size organization has ultimate authority, comes up with an idea of what should be done, and checks with or listens to no one on its feasibility and practicality. Suppose a reasonable idea would get agreement from someone else 70 percent of the time and a bad idea 30 percent of the time. Since there are no layers of review or approval, the chance of it being approved, regardless of merit, equals 100 percent. That is, 0.3⁰ and 0.7⁰ equals 1. (Sorry, the former math major in me still takes over once in a while.)

This theory applies to the federal government, which employs millions of civil servants and military personnel. Most people in government face significant challenges in getting anything done if it must pass through various layers of command for final approval. At one point, I advanced to the fourth level below the president as a deputy assistant secretary of the Treasury; even then, I had limited capacity to share what I believed was useful information through the Treasury and the White House to the President.

The 0.7ⁿ theory partly explains why bureaucracies tend to be inefficient. It also clarifies why many talented individuals leave large organizations to start their own businesses or retire, where they need only their own approval for decisions. Similarly, the theory offers insights into potential ways to enhance efficiency within government and other large organizations.

Efficient organizations find ways to bypass the 0.7ⁿ problem. Delegation becomes a key method. Take, for example, the World War II landings at Normandy Beach; the delegation of authority from generals to platoon sergeants and privates was vital to victory. In government, millions of employees are responsible for making billions of decisions each year. Regardless of how knowledgeable the president or the head of a department may be, most government operations cannot succeed without significant delegation of authority.

Delegation, however, involves accepting a specific type of error—actions that lead to mistakes. By statistical analogy, we can refer to this as a Type 1 error. On the other hand, there is a competing and often more widespread Type 2 error: failing to take actions that could ultimately benefit the organization or society. Type 2 errors are common in bureaucracies because Type 1 errors are often punished. Type 2 errors, on the other hand, frequently go unnoticed and unpunished since it’s impossible to calculate fully the consequences of something that didn’t happen.

Modern presidencies have increasingly sought to centralize decision-making within the White House. The focus has shifted from managing policy or administration to managing information. As Chris Hayes has noted, attention, more than money, has become the currency through which modern politicians achieve success.

The White House aims to control the attention given to its narrative, where symbolism and story often outweigh substance. It seeks to avoid highlighting successes for which it can claim little credit and failures for which it might face blame, whether justly or unjustly. Additionally, it wants to stop departments and agencies from issuing reports that could support reforms leading to discontent among those who might be negatively affected, such as an Agriculture Department report on the inefficiencies of arbitrarily subsidizing certain farm products.

At the end of the Reagan presidency, I once tried to release a Treasury report on the inefficient design of health insurance subsidies, but the White House put the kibosh on the work on which the staff had spent thousands of taxpayer dollars. Once the Executive Branch's primary objective becomes the president's political success, it finds no reward in releasing reports on failures it’s not ready to tackle.

What does all this mean for DOGE? If it truly wants to achieve a more efficient government, it needs to engage those in the many departments and agencies who best identify the inefficiencies in the programs Congress has set up for them to manage. Skilled consultants know that success often comes from uncovering valuable insights within an organization that might otherwise be overlooked.

Threatening employees exacerbates the 0.7ⁿ problem and Type 2 errors, as many government workers may perceive being inconspicuous and less efficient as their best survival strategy. DOGE will face significant Type 2 errors itself if it neglects Congressional responsibility for policies that impose unreasonable administrative requirements and when centralizing decision-making in the White House also undermines the efficiency gains that can be achieved through delegation.

Related: Wealth Creation vs. Consumption: The Economic Forces Shaping Society