Raise your hand if you enjoy going to the DMV.
No? No takers?
That’s not a surprise.
In some small towns, making a trip to the local Department of Motor Vehicles office might not be too miserable. But the bigger the locale, the greater the headaches tend to be.
DMV workers – with some exceptions – act as if we’re a nuisance instead of the reason they have a paycheck. The lines are long. The instructions are confusing. The overall atmosphere is gloomy and even anxiety-inducing.
Worse yet, far too often, they can’t (or won’t) even help you. Not on time, anyway.
Almost every publication out there seems to have tried to tackle the topic of why the DMV is so hated. The New York Times. Business Insider. Buzz Feed. Online forums such as Reddit and Quora.
When Medium wrote about it in January 2020, it called the DMV “a special kind of hell,” before adding:
So why does the DMV suck so much? It boils down to one sad fact: They don’t have to not suck.
As it goes on to note, employees there can be “fired for policy violations” – rules and regulations, of which there are many – not for too many dissatisfied customers. That means they’re only incentivized to think of No. 1.
Themselves.
Not us.
Moreover, “there is no competition that forces [them] to level up their services.” You either go to the DMV or you don’t legally operate a vehicle. It’s as simple as that.
There’s no shortage of customers because there’s no other place the customer can turn. We’re trapped.
Worse yet, too much of that description is true of every other government department out there. There are enormous lists of rules and regulations, many of which don’t do any good for anybody… and no competitors are legally allowed to offer anything better.
That’s why Bill Ackman is so excited about the Department of Government Efficiency (“DOGE”) movement. As am I.
Bill Ackman Is All In
For those who don’t know, Bill Ackman is a multi-billionaire and founder and CEO of hedge-fund Pershing Square Capital Management. He knows the markets… both macro and microeconomics… and the politics that dictate so much of wealth creation opportunities.
Ackman, a long-time Democrat donor, switched allegiances this year by endorsing Trump instead. And he hasn’t lost his enthusiasm since, despite Trump’s numerous controversial cabinet picks.
You could even say his enthusiasm has only grown because of those picks.
He told Megyn Kelly last week that he thinks Trump’s DOGE appointments – Elon Musk and Vivek Ramaswamy – are brilliant. Moreover, according to him, he’s not alone.
I’m hearing from friends who control a lot of assets and invest in lots of operating companies that the management teams of their businesses are extremely optimistic. Even those that voted against Trump are excited about what’s going to happen with the economy. So I think we’re going to have a big economic boom.
Ackman sees DOGE as so much more than a cost-cutting effort, although that’s an important aspect of it. He expects it to free up thousands of employees for a newly invigorated private sector.
Yes, it means that scores of government workers lose their current jobs. But by all accounts, they’ll be properly compensated for that pain with a year or more of severance pay plus benefits. And by the time that runs out, Ackman expects a massive increase in job openings for them to take advantage of.
Much of which will be created by eliminating the regulations these federal employees used to oversee.
The Current Regulatory System All Adds Up To a Very Large Negative
“Everyone knows the government is the most ineffective bureaucracy in the world,” Ackman told Kelly. And I’d be hard-pressed to believe anyone who says they think differently.
But do we know why?
Part of the problem, Ramaswamy said in a recent interview with Tucker Carlson, is that people are paid to sit around and create regulations. So it should be no surprise that, as the government keeps growing, so do its citizens’ economic restrictions.
And, as with the DMV, the impact on consumers just doesn’t factor in.
The Small Business & Entrepreneurship (“SBE”) Council delved into that topic in March, citing a study from the Mercatus Center titled “The Cumulative Cost of Regulation.” In it:
… authors Bentley Coffey, Patrick McLaughlin, and Pietro Peretto looked at the effect of regulations on investment choices and therefore on innovation and economic growth. The authors found that, since 1980, the cumulative effects of regulation slowed the real economic growth rate in the U.S. by 0.8% percentage points per year. If regulation had been held at 1980s levels, the U.S. economy would have been $4 trillion, or 25% larger, than it was in 2012.
That study was from 2016. So think how much bigger that number must have grown since.
SBE Council also cited the 2023 edition of “Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State” by Clyde Wayne Crews Jr. One finding in there was that, “U.S. households pay $14,514 annually on average in a hidden regulatory tax.”
This makes sense considering how much extra time and money businesses have to spend complying with legal requirements. I spent much of my life as a commercial real estate developer, so believe me when I say that dealing with the mountains of regulations is one of the most daunting parts of any building project. I recall building a shopping center in Boone, North Carolina, over two decades ago. From start to finish, it took me two years to complete this project due to unnecessary red tape that cost me time and money (i.e., I had to put up a significant performance bond for landscaping).
And that touches on another important aspect of a more efficient bureaucracy – this country is in desperate need of an infrastructure overhaul. And that won’t happen anytime soon without major changes to the regulatory regime.
For instance, I’ll be traveling to Baltimore this week. Earlier this year, the Frances Scott Key Bridge – which spans the Baltimore Harbor and is a major thoroughfare – collapsed when a container ship struck one of its piers.
Preliminary estimates say it will cost $1.7 billion to rebuild and take about four years. And if the bridge is actually complete by then, it will be a small miracle. Infrastructure projects like this are notorious for running late and going over budget.
A dramatic example might be California’s proposed 463-mile high-speed railroad between San Francisco and Los Angeles. Originally slated for completion in 2020, the project has now been pushed back well into the 2030s. Estimated costs have jumped from $35 billion to $135 billion.
Meanwhile… China has already demonstrated it can complete major construction projects like overpasses in less than a week.
And believe me (I wrote The Trump Factor), President-elect Trump knows how to build a project “on time” and “on budget.”
If a Department of Government Efficiency can make even a small improvement on government efficiency, it would be well worth the effort. You’d better believe I’ll be researching how, where, and when to capitalize on such developments.
Regards,
Brad Thomas
Editor, Wide Moat Daily
MAILBAG
Are you on board with the DOGE movement? What other efforts do you think it will bring? Write us at [email protected].