This was the title of a recent Wall Street Journal Op-Ed piece by Louis Gerstner, the former head of IBM. What really drew me in though, was the article's sub-title: "Across the board reductions will not improve efficiency". Since "across the board" budget cuts is one of the most common ways that both government and the private sector tend to try to control spending, I wanted to understand how such a widespread practice was so flawed when it came to increasing efficiency.
In his comments Mr. Gerstner urged the reader to "reinvent government" not to just trim costs. He claimed that:
"...across-the-board cuts are almost guaranteed to reduce morale, promote short-sighted choices, and encourage accounting gimmicks that send people looking for loopholes instead of creative solutions.”
These are strong words, with some pretty undesirable consequences attached. If he is right then most of our legislatures are probably going about things in the wrong way--since much of the budget process, especially this legislative season, is built around determining the percentage cuts state agencies need to absorb. It would mean we are taking actions, with the best of intentions, that are leading to ineffective solutions and creating a number of unfavorable consequences.
What do you think about his comments? Do across the board cuts encourage accounting gimmicks, and reduce creativity? Do they lead us to short-term, short-sighted solutions? Or is he wrong? And even more importantly is there a more effective way to close our budget gaps than "across the board cuts"? What is your experience with such cuts and what would you do differently if you could?
Leave us your comments and we'll post them for others to read and learn from.
If you want to read the article you can find it on-line at:
http://online.wsj.com/article/SB10001424052748704268104576108343274666656.html?mod=WSJ_Opinion_LEFTTopOpinion#articleTabs%3Dcomments
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