Why Government Hiring Is So Inefficient

Regardless of your political ideology, it's easy to agree that government should work well; that it should be able to hire talented officials, and build things in a timely, cost-effective manner. Of course, what that means in practice is open for debate, and different people will have different priorities. But at the moment, there are reasons to believe the public sector isn't operating optimally. Things move incredibly slow in many cases. Software systems are often old and extremely costly, and don't do a good job serving the public's needs. It can be extremely difficult to bring on the best workers, even setting aside questions about public sector salaries. Jennifer Pahlka is the author of Recoding America, and was the founder of Code for America. She has also served as the US Deputy Chief CTO and has seen how much of government operates up close. We talk to her about what she's seen, how waste happens, how government operations get bogged down by inertia, and why simply identifying things that are going wrong isn't enough to change them. She talks to us about Elon Musk's Department of Government Efficiency, and why a major jolt may be necessary to get better results. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

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• 1:25Speaker 02

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• 1:41Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 1:46Tracy Alloway?

  And I'm Tracy Alloway.

• 1:48Joe Weisenthal?

  Tracy, you remember that episode we did several weeks ago about waste and fraud and abuse in Medicare?

• 1:54Tracy Alloway?

  I do. It was full of interesting facts and figures, such as the US government spends 1% of the federal budget on dialysis.

• 2:03Joe Weisenthal?

  And the thing about that episode, so we were talking to BU Professor Jetson Leader Louise. You know, the thing about- That episode that's striking is if you look at government spending and probably a lot of all bureaucracies, even outside the government, but if you look at government spending or government waste or government fraud, etc., there are many things that everyone can point to and say, this is waste. This is bad. We should change this. But like, that's clearly just being able to like, identify some bad process or whether it's in how you, you know, how purchasing works or how hiring works or anything like, clearly that's not enough to fix it. Like identification almost seems like the easy part.

• 2:43Tracy Alloway?

  No, I think this is actually endemic in a lot of large organizations. Although I am certain there are specific things about the government process that are unique to them. But it feels like at large organizations, everyone kind of feels helpless, right? Like, everyone can say, we need to do this better, or this is ridiculous, or we should change this. But no one actually seems able to fix it.

• 3:07Joe Weisenthal?

  Yeah, I, anyway, yes, this is my, this is my perception as well. But we are in an era, you know, the vibes have changed. We're in an era where once again, and probably because inflation remains high, people see the obvious failures of what people call state capacity. You know, there was a lot of stuff built under the Biden administration. There was a lot of stuff allocated. People are frustrated by the speed of things. Whether you look at charging stations or rural broadband or the speed with which any project gets implemented. We're in a moment of frustration and people want to see two things. They want to see waste and spending decline in many cases.

• 3:50Joe Weisenthal?

  And they also want to see that the spending that we actually do allocate turns into results.

• 3:54Tracy Alloway?

  Good results.

• 3:55Joe Weisenthal?

  Right. We're in a period where setting aside what will happen, etc., like, there is this public impulse that we want to see results for things that we do.

• 4:04Tracy Alloway?

  Speaking of good results, can I just say the last time we spoke to this guest, who we are about to speak to again, we were complaining about how clunky the Treasury Direct website is and how you had to click little buttons to get in instead of just typing your password. And I think shortly after that, someone Sent me a screenshot and said that they had fixed it.

• 4:26Joe Weisenthal?

  Amazing.

• 4:27Tracy Alloway?

  So, you know, this podcast can lead to real results.

• 4:31Joe Weisenthal?

  Yeah, maybe, maybe that's the answer. We just need to do podcast episodes on various things that aren't working and then someone hears it and stuff like that. But yes, this is a, we are in an era for people demanding results. Anyway, you mentioned that last episode we did with this guest. She really is the perfect guest to talk about now in this era of Doge and the sort of impulse to see government root out waste and fraud and abuse and become more efficient. We are going to be speaking with Jennifer Palca. She is the author of the book Recoding America, currently serving as a senior fellow at the Niskanen Center. She was the founder and former director of the Code for America Initiative. She's been on the Defense Innovation Board. So has seen how government actually operates and spends

• 5:15Joe Weisenthal?

  and works and builds technology at a very granular level. Perfect guest to have back on. So Jennifer, thank you so much for coming back on Outlaws.

• 5:24Speaker 05

  Yeah, no, thanks for having me.

• 5:26Joe Weisenthal?

  You know, when, when it comes to government spending and waste, you know, I think there's sort of two, there are sort of two things that people, or I think it's sort of useful to divide the conversation into two things because there are major things that the government spends money on, like various entitlements or having a large military, et cetera, that some might consider wasteful per se, right? And then there is the other aspect, which is just like, within the realm of things that many people agree we need, is government getting the best bang for the buck within the sort of expectation that this is, you know, legitimate spending. And so some of these fights that in conversations that are going to be held under the new administration are going to be in the first category where

• 6:09Joe Weisenthal?

  it's like, big political questions about where we should be allocating our money. But from your perspective, even setting that aside, when you look at sort of the actual expenditure, like, do you see big dials that can be turned in terms of this can be done better?

• 6:27Speaker 05

  Yeah, it's funny, you say like, people get concerned about the bang for the buck. I think people get really concerned when they're like, any amount of bucks is not getting a bang.

• 6:36Joe Weisenthal?

  Yeah, right.

• 6:37Speaker 05

  You know, we're, it's less, I understand the frustration and the, you know, the switch to a dialogue around government efficiency that Elon Musk is pushing, but I think we've gotten to that place because people are saying, you know, we're getting very little results. We would be tolerant of, you know, reasonably high spending if something were coming out of this. And, you know, you talk about the, the defense world, for instance, I mean, our spending keeps going up. And in theory, we're spending more so that we can be safer and have greater deterrence. And in reality, I think that that greater spending is actually keeping us from making the changes that we need to make such that the system is more

• 7:22Speaker 05

  effective and efficient. You know, people just still do these like big bang projects because they have the money for them. They have all the trappings around them that make them really slow, all the procedure, you know, instead of these, you know, fast, you know, procurements, like we need a ton of drones, for instance, instead of these, you know, big, heavy weapons platforms. But we're still putting a lot of money into these things that don't get us any results for 20 years. By the time, you know, we get the results, the thing isn't actually needed anymore. What we need is drones instead of ships. And, you know, I, I really think that the, the dialogue is changing for like, hey, where's the bang at all?

• 8:07Joe Weisenthal?

  Right.

• 8:07Tracy Alloway?

  Yeah, it feels like when organizations are sort of swimming in money and have large budgets, they don't actually have to think about how to best spend that money, right? And so I, well, I wanted to ask you more, your position on the Defense Innovation Board. One thing I've been wondering is, why does the Pentagon, to this point, always seem to fail its audits?

• 8:34Speaker 05

  Okay, there's so many reasons for that. One of them, I think, speaks to a core dysfunction that you see across government, which is, we do everything in this very, very bespoke way. So, it used to be over 5,000 different backend systems, including accounting systems just within the DOD. I don't think that number has gone down that much. How do you get so many different systems in, you know, it's obviously a huge institution, but like, you would think there would be a standard way to do accounting. But what happens is that Congress, you know, puts some new requirement for reporting on this particular program or this particular department, and they go, okay, well, we need

• 9:18Speaker 05

  really bespoke software to handle these, you know, sort of arcane and in the weeds kinds of requests from Congress or someone else. Some of them are like, real, Congress isn't backing off on them, and some of them are kind of imagined. But that's how we get this, like, very heavyweight requirements development process in government, where like, the job of a bunch of people for a long time is to go around to everybody and say, what are all the things that you're gonna need for this system to work? Well, if you do that, they come up with a bunch of things. That means you can't just buy an off-the-shelf, commercial accounting software the way that

• 10:01Speaker 05

  even a really big enterprise would. Because you've come up with all these, like, bespoke things that need to happen, some of them are real and some of them are invented. And one of the things we said on the Defense Innovation Board was, it's actually not about, like, doing better software to accommodate all those requirements, it's about getting rid of those requirements so that you can just buy commodity software. But that's just really hard, because it's sort of, you know, the power is flowing the wrong direction. You don't have people who do software going, telling Congress to remove this requirement. It's just like, you know, the stream needs to be reversed. So, one of the reasons is just that they literally have all these different systems.

• 10:43Speaker 05

  Systems that are supposed to feed into one big picture of what the Department of Defence is spending and, you know, what it's receiving, and it's just incredibly complicated. Now, there are other reasons as well, but I think that's one of the core dysfunctions that you see at play.

• 11:18Speaker 00

  What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 11:34Speaker 06

  We're seeing a lot of insocial players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service insocial clients.

• 11:42Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Rees-McRae's Rippel says.

• 11:50Speaker 07

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 12:09Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 12:49Joe Weisenthal?

  Let's back up for a second. So you wrote your book Recoding America. You have a great Substack right now called Eating Policy. And I want to get into some of, we'll get into some of the posts you wrote about fixing hiring practices and so forth. But I'm curious, like, did you have a moment in your life, like the sort of like founding trauma, or whatever, where you're like, oh, wow, this really, something that, you know, something that scandalized you such that you've now devoted your work to writing about and elucidating the issues that come up with things like government hiring and spending?

• 13:24Speaker 05

  Yeah, that's a funny question. I, I think what happened was, I started looking at this whole issue of government technology back right after Obama was elected. Because we were working on this idea of Web 2.0, if anyone remembers that, and what would Gov. dot O look like? And some colleagues and I were sort of going to DC and talking to people about how software got done in government. And I remember this story, this is not the traumatic part, but I remember the story from this guy who'd come from Silicon Valley, and he was working with the Department of Labor. And he was like, let me explain to you how we do stuff here. It's like, you have to get soldiers from New York to DC,

• 14:05Speaker 05

  and you go out and like, source the iron, and like, you know, have engineers spec out the, the requirements for the engines, because you're going to build an entire railway, instead of just buying the soldiers some train tickets. And I thought, that can't be right. That's crazy. But as I got into it, actually, that really is how this works often. There's just not this sense of like, it's just how to use what's out there because of this obsession with, you know, doing everything from the ground up. But before I worked in tech, my first job out of college, I worked in child welfare agency. And I saw how badly the operations

• 14:46Speaker 05

  were there. And you really see up close what's at stake, these kids' lives. And I thought, oh, my God, if we're doing software for the Department of Labor this bad. This is also affecting things like child welfare. And we really ought to be putting like the best our country has to offer on the biggest problems. And it's kind of the opposite. And that's really what made me, you know, want to start Code for America.

• 15:18Tracy Alloway?

  Say more about the process of building everything from the ground up. Because I remember the last time we spoke to you, one of the crazy numbers in that conversation was the amount of requirements for a specific software project. What is the exact process? Like, walk us through the, I guess, the life cycle of putting out a government, you know, we can talk software in particular because you have a lot of experience with that, a government software project. Where does it start? What are the various like hoops that people have to jump through? And then where does it end up?

• 15:53Speaker 05

  Yeah, um, maybe I'll talk about the unemployment insurance system in California, which I worked on very briefly as the co-chair of the strike team in that first year of the pandemic, when everyone was waiting for their checks. And it was, it was really a disaster. When we came in, because there was this huge backlog of claims, in fact, just coincidentally, the team at the Employment Development Department had just finally gotten to the point where they were going to put a bid for a sort of a modernization, they would say, an upgrade. They call it business system modernization, you know, out to vendors.

• 16:34Speaker 05

  And I don't remember the exact number of requirements in it, but it was in the thousands. And they had been working on that for 11 years.

• 16:44Tracy Alloway?

  Wow.

• 16:45Speaker 05

  So they started the requirements gathering 11 years ago, and they were just putting it out to bid. And I think we became extremely unpopular by telling the governor's office, you really should not bid that out. It is, even if it were one year old, it's now totally outdated because now we understand the problems that need to be solved much better than you did a year ago, but certainly better. than you did 11 years ago. And and they did actually stop that and sort of revise it. But like, why are there those thousands of requirements that take? I don't think that I should be clear. I don't think the requirements gathering was 11 years. It was a big chunk of that 11 years.

• 17:30Speaker 05

  Then you have sort of putting together the RFP and all getting it, you know, getting it approved through the legislature, et cetera. So, you know, why does it get so big? Well, I think UI unemployment insurance is a good example of this. So unemployment insurance started in the 1935 Social Security Act. So we are, well, now it's 2025. So now we are 90 years of accumulation of policy and process and regulatory cruft, essentially. So think about like, like stuff, you know, requirements and rules and guidance from both executive legislative and judicial branches

• 18:15Speaker 05

  just sort of falling like garbage onto something like unemployment insurance for 90 years. Like a rule of thumb is we always add, we never subtract. And this is a fault of our legislatures primarily, not the people who run the unemployment insurance system. They kind of feel like they can't do anything about this accumulation. What they do then is try to accommodate all of these changes over time while never actually fixing the underlying system. So like, one of the metaphors someone else used for me is like layers of paint just get put on. Well, you know, especially if you've lived in like an apartment in New York that's been painted like 90,000 times. Eventually it cracks.

• 19:00Speaker 05

  That's sort of what's happening. Or my other metaphor was just like archaeological layers. But they only ever appropriate money to just like make the fixes not to go back and say, how would we actually design this system if we were designing it today? Not just from a technological perspective, but how would we go back and say, oh, that? You know, requirement from the 40s, you know, that's been overwritten by these other things. Why is there still code in the system? Yeah. That's, you know, that's dealing with that requirement from the 40s. And why is there still, you know, memos pointing to that confusing people about what the current state of the rules are? But like, really what we need to do is do a full kind of regulatory simplification,

• 19:45Speaker 05

  policy and process simplification alongside our modernizations. And we just don't do that.

• 19:51Tracy Alloway?

  Do, um, do government officials who are designing these projects, how much, do they ever work in tandem with vendors? Like, will they go out and say, hey, we're thinking about upgrading this system? What do you think we should do? Or does it always start with the requirement process and then that just gets sent out?

• 20:11Speaker 05

  No, they do often work with vendors. The problem is that the sort of way the vendor game is played, and I'd say this is changing to some degree, is like the vendors benefit from all that complexity. So the vendors never say, hey, why don't you go to your, your legislature and ask for like, you know, can, can we get, can we, you know, collaborate in a project where we sort of rationalize all of this policy craft? And then we can make you a system that it's going to be, you know, a lot more elegant, a lot more stable, a lot more scalable, right? Scalability is really, really degraded by this complexity. Cause like it's, they're huge projects.

• 20:49Speaker 05

  I mean, I think even after we asked California to boot out the old business system modernization and start again, they still went out with something that I believe was almost $2 billion. It might've been $1 billion, so forgive me if I'm getting it wrong, but that's still in the same range of like, that's a lot of money to like, quote unquote, like do some upgrades on a system? Because they're, they really don't, don't have that relationship between the executive and legislative branch, and also let's throw in the judicial to say what this needs is a real reboot. I mean, yeah, unemployment insurance is not that complicated in its basics, right?

• 21:31Speaker 05

  We're giving people a certain amount of money for a certain amount of time under certain conditions. But it's gotten wildly complicated in and that like the vendors don't seem to most of the vendors aren't really incented to be part of that conversation about the simplification because then the projects are going to be smaller.

• 21:54Joe Weisenthal?

  Let's talk about government hiring and your experience and you've written some sort of wild stuff on your Substack just about how hard it is to get a talented person in the door and this is even setting aside the fact that government pay scales aren't the same as private sector pay scales etc. There's no like you know equity upside for a talented engineer just working through the government HR process. What do you see?

• 22:21Speaker 05

  The biggest problem with hiring to me and there's there are many isn't the pay though I know that should be fixed and a lot of people do talk about that. It's that we don't actually assess candidates for their skills. So if you leave apart the like political appointees and the people who get appointed or things like delay or schedule C where you're using an exception and just talk about like the regular open to the public competitive process 90% of those use only self-assessments of the person's own skill and they tell you what level they are and resume screen. So how it goes is as a hiring manager you're

• 23:05Speaker 05

  like completely cut out of the process. The HR person is in control and you say okay I need this job. There's all this sort of back and forth about what the job is. The job descriptions aren't often up to date. Maybe there isn't a job description or a classification for the kind of person you need, especially if it's technical. Leaving all that aside, you finally post a position and let's say 500 resumes come in. Well, your HR person has to give you a cert, a list of people that they deem qualified and the way they get from 500 to say 10 on the cert is first they look for everybody who has cut and pasted from the job description into the Resume and cover letter.

• 23:49Speaker 05

  Oh, by the way, that person had to have known to do a government resume, which is usually like seven pages long, as opposed to a private sector resume, which would be shorter. That's all another story. So anyone who has exact matches between the language in the job description and their resume can go through to the next step. Of those, the people who rate themselves as a master on all levels are then can go through to the next step. And from there, they apply veterans preference. Now, I, I, I am a fan of giving veterans preference, but when you have down selected out all the people who didn't want to cut and paste or didn't want to basically lie and just say that they were a master

• 24:31Speaker 05

  on every competency, you're the, the, the, the good veterans probably haven't ended up on that cert. And so as a hiring manager, you're given a cert of people who just, you know, knew how to play the game, but don't necessarily have the skills. And half of the time, the hiring manager just rejects the cert. So like an example of um, how this works with that, you know, looking for exact matches was this guy that we found when we were working on the Defense Innovation Board, who had literally won the Hack the Pentagon contest. Like the top security researchers in the country came together. And this one guy, he happened to be 19 years old. Wow. Won that thing. He's like incredibly talented.

• 25:16Speaker 05

  And the people there recognized this is the kind of guy that we need in the Pentagon, making our systems more secure. So they tried to hire him. But his resume like just details, you know, all the programming languages and frameworks that he knows how to use. Cause that's what you would, you know, you would talk about your experience with specific frameworks and languages if you were applying for a private sector job. And the, you know, HR people look at that and they go, we have no idea what that means. That doesn't match at all our language. And he gets kicked out, literally, you know, in the first, the first down select. But it doesn't stop there. Like, the people at the Pentagon continue to try to get this guy hired.

• 25:59Speaker 05

  And pretty high level people kept intervening as they tried again and again to get Jack Cable hired. And it took months for him to like finally get through the process. In, in, in between, one of the HR people told him, why don't you go work for Best Buy selling TVs for a year? Cause then you'll be qualified.

• 26:21Tracy Alloway?

  That is nuts. So just to be clear, because he said on his CV, specific programming languages, like I can use like Babel and I'm an expert in, I don't know, NPM or whatever. The HR manager didn't recognize it and they're like, this is not what we're looking for?

• 26:38Speaker 05

  That's exactly right. And they explained to the Defense Innovation Board, they pulled up the language in the job description, which was like, uh, you know, X years of experience doing, very generic language about like the completion of IT tech, you know, projects or something, which is like, doesn't mean anything. And they were like, we don't see this. Huh. And that was justification.

• 27:01Tracy Alloway?

  This might be a cultural question, but why does HR not listen to the expertise of these specific hiring managers?

• 27:09Speaker 05

  Okay, that is a fantastic question. And I've actually done some research on, like legally, is that required? And I'll give you the answer i- i- in a second, but I think the, the real answer is that they're extremely risk averse. And one of the principles that they're supposed to hold is, uh, uphold is a principle of fairness. And I like fairness. I think that's great, but the way that it gets applied is that essentially saying, we have all these very, very specific rules designed to keep bias out of this process.

• 27:49Speaker 05

  And we are experts in those processes and those rules. And so only we can ensure that this process occurs without the introduction of bias and/or, you know, you know, some perceived or real, you know, deviation from the rules. And so what they they call them subject matter experts. Like, in other words, if you're hiring for a programmer, like, you would kind of want a programmer to evaluate that person. But programmers are not allowed to evaluate the person, again, in 90% of these cases, because they might introduce bias. And it's a it's a perfect example for me of like, if you read the merit system principles

• 28:32Speaker 05

  that came out of the Civil Service Reform Act of 1978, thank you, President Carter, that was, you know, an important thing that he did, they sound really great. And they talk about, you know, hiring on the basis of merit and fairness is in there as well. And if you read them, you would say, these are fantastic. Federal hiring is great, no problem. But what happens is as they get operationalized, they go through what I call the cascade of rigidity, where each step down from sort of a law or policy into like the way HR managers actually work on a daily basis just gets incredibly rigid. And the rigidity means that you get kind of the opposite outcome of what the law intended.

• 29:16Speaker 05

  The law intended merit, we're really not hiring on the basis of merit because it's gotten so rigid as it's been operationalized. And I asked one of our researchers to go look into this, like, is it in the law? Is it in the regulations? Is it in the guidance? Like, who wrote in that HR managers control this process and hiring managers don't have a say? And it turns out it just sort of appears in this thing called the Delegated Examiners' Operations Handbook, which means somebody wrote this operational handbook and said, you know, this is HR manager's job, like, you know. And so that's what people do, but like the law never said that and neither does the regulation.

• 30:01Joe Weisenthal?

  You know, I just, you know, okay, so 500 people apply for a job, you get 10, the hiring manager sees 10 names, they sort of might have a feeling that these can't be the best of the 500. Can you say, look, just give me the 500, let me scan through, click on some of them, because a good hiring manager probably has some intuitions about what a good candidate might look like, like, will they let you see that 500 person list?

• 30:25Speaker 05

  Well, I maintain that there is nothing legally that keeps them from doing that, but on a practical basis, no, they're not allowed to.

• 30:34Tracy Alloway?

  So you touched on this earlier, but part of the reasons all these requirements have been codified is for reasons of fairness and the US presumably doesn't want to go back to a system of patronage or nepotism or people hiring their friends and stuff like that. What would be, I guess, the suggested guardrails for stopping the government from doing that? Or maybe balancing, you know, the two things, fairness and hiring based on merit?

• 31:04Speaker 05

  It's a complicated question because of what I described earlier, which is if you don't solve the problem of everything getting more rigid as it gets operationalized, even, you know, acts of Congress to change, you know, civil service rules at the highest level, kind of, you know, don't have the intended effect. But we are still always going to be trying to balance those things. I maintain that essentially the merits and principles defined in that 1978 CSRA are great. What we just need to do is sort of like pull the, you know, pull the edifice back to the studs, like it's a massive remodel,

• 31:46Speaker 05

  but not like an upending of the foundation. The foundation is solid. And so we need to go have a full look up and down the stack. Where did we go wrong in that cascade of rigidity? There's probably, there are tweaks that need to happen at the statute level. So I think like OPM and Congress do need to get involved, but a lot of it is just how has this been operationalized? Now, you probably know that there is this sort of nuclear bomb that is being threatened.

• 32:15Tracy Alloway?

  Oh, Schedule F. I was going to ask about that.

• 32:17Speaker 05

  Yeah. Schedule F basically says if you can

• 32:24Speaker 05

  demonstrate that this person in the who has civil service protections today has sort of any adjacency to policy, you can reclassify them as a political appointee and then they lose all their civil service protections. And of course, Trump rolled that up like in the last month or something of his first term and has been very clear that he wants to bring it back in the beginning of of this coming term. And, you know, in in in my metaphor, that is actually pulling up the foundation because that is saying we're going to hire fire on the basis of loyalty essentially to an administration instead of on the basis of merit.

• 33:06Speaker 05

  And we do really have problems with not being able to fire underperformers. There are very small percentage of people who really should have been removed and it's super hard to remove them. I can tell you a couple of stories about that, but like, and we should fix that. We should fix that and not take away the protections for folks who stand up and say, hey, you need to know this. Oh, wait, I disagree with you. So suddenly you're fired. Like, like, rebuild the thing from its strong foundation. Don't, don't pull the foundation out of the soil.

• 33:54Speaker 01

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• 35:44Joe Weisenthal?

  By the way, I'm looking at the delegated examining operations handbook.

• 35:48Speaker 05

  Oh, I'm sorry.

• 35:50Joe Weisenthal?

  No, it's all right. How long is it? 318 pages, many flow charts, many subsections, many appendices. You know, I'm sure, look, this is serious stuff. I'm sure that there needs to be a real document, but it is, there's a lot to it. This gets though to something that I think is maybe part of the core question here. And we sort of teased at it in the introduction. It's easy enough to identify these issues and say, look, this is absurd. And I imagine that if a lot of, a lot of people experiencing this would agree. And probably over the years in government, many people have come to the same conclusion that you have about the absurdity of some of these, some of these workflows and so forth. In one of your pieces recently, something that you implied

• 36:35Joe Weisenthal?

  is that maybe the answer is. Not just more identification of the problems or sort of good intention, but maybe someone who's kind of a bully or someone who doesn't necessarily think the rules apply and perhaps someone like, you know, Elon Musk, for example, someone with that, someone with that character, gravitas might be a word that people use, energy, I don't know. Talk to us more because again, it doesn't seem like just identifying these problems are enough.

• 37:09Speaker 05

  Well, I think evidently it hasn't been because we haven't done that much. The Chance to Compete Act is a, you know, a good move in the right direction. It's passed both houses and is, I presume will be signed by President Biden before he leaves office. And it does a lot actually about the assessment problem that we just discussed, but it doesn't, it probably doesn't do enough in my view. And again, you'll have the problem of actually implementing it, which the new head of OPM is, is going to find out is, is pretty hard to implement when you have an HR workforce that risk averse and that sort of process obsessed. So yeah, I, I, I'm in that weird position as a Democrat and someone who very

• 37:50Speaker 05

  much cares about the rule of law and values the institution of government and wants to see it succeed in part because we have all these challenges that we, government is the only institution that can really meet them, in my view, at least meet them in a way that is consistent with the democratic principles of our society. And yet we have neglected that kind of change or we've just been not bold enough in trying to change the system as it exists today. I think it's part of culture of both the left and the right to fight a lot about like, I'll call the what of government, like what bills are we passing?

• 38:31Speaker 05

  You know, the Chips and Science Act and the Inflation Reduction Act and the Biden Department of Infrastructure Law, those are all the what. And like, they were really good, I think, in a lot of ways, but we neglected the how. And the how is all these things like the functioning of government and hiring. And again, both parties do that. And because we've neglected the how, it's gotten really, really

• 38:58Speaker 05

  Sclerotic, I guess, is a word and ineffective, as you talked about at the start of this. And so that democratic approach generally of let's be very thoughtful and let's listen to all the voices and make sure we're making very measured decisions here, which is like the world I'd like to live in. That sounds great. And I'd like to think of myself as a thoughtful and measured person. But that kind of approach tends to like tends basically to add more process and more procedure when we already have a lot and try to make sure that everybody is happy. And the result of that has been that we're not achieving our

• 39:42Speaker 05

  policy goals. And so I'm in that uncomfortable space of saying, I don't really agree with a lot of the policy goals of the incoming administration, but I have to acknowledge that a sort of extremely disruptive approach might be needed for us to just get out of the rut that we're in of always, you know, always adding and never subtracting and hope that the cycles of, you know, change in power mean that, you know, if the party that I prefer ever gets back into power, some cleanup would have happened and then they can sort

• 40:24Speaker 05

  of rebuild in that thoughtful, considered way that Democrats tend to do, you know, rebuild something that's quite healthy and not, you know, you know, out of sort of this cleanup, but recognizing that this period of disruption could be quite bad in many ways and yet maybe needed.

• 40:47Tracy Alloway?

  I mean, there have been some virtually process-free suggestions for firing workers made by Musk and Vivek Ramaswamy. I think Ramaswamy wanted to, didn't he want to like fire all employees with like odd-numbered social security numbers or something?

• 41:06Speaker 05

  He did, and I will say that, A, that's just really dumb idea because the people in government who are the biggest advocate for change, who could be Vivek and Elon's, you know, greatest allies in making the kind of changes that they, or at least reasonable changes, would probably get fired, leaving you with the ones that should have gotten fired. But I will also say that he said that on the campaign trail, and he's since given interviews that, and I'm not trying to defend him, but he's since given interviews that demonstrate quite a bit more understanding of the right ways to do this. He's acknowledged,

• 41:48Speaker 05

  for instance, that, you know, it's Congress who's in charge of laws and regulations and they can't just ride roughshod over that, that there's probably better ways to deal with the workforce. But he is certainly coming from this place of just completely crazy ideas that at least maybe move the Overton window, but should not actually be operationalized.

• 42:10Tracy Alloway?

  Can you give an example of, I understand we haven't done any big reforms to the hiring process, but I imagine there have been some attempts previously to improve it at the margins. Are there any successful demonstrations of changes here?

• 42:25Speaker 05

  Under the first Trump administration, a team at the United States Digital Service started something with the absolutely awful name of SMEQUA, which stands for Subject Matter Expert Qualifying Assessments. I know, but it just doesn't sound...

• 42:41Joe Weisenthal?

  Hey, at least it's not DoJ, right? Like, at least it sounds serious. Anyway, keep going. Yeah, keep going.

• 42:47Speaker 05

  The funny thing is, it sounds very government.

• 42:49Joe Weisenthal?

  Yeah, it does sound government, which I'm okay with.

• 42:51Speaker 05

  But essentially, this team looked at that problem of 90% of hires happening without a reasonable assessment of the candidate's skills and said, you know, "We don't need to do this. The law and policy absolutely allow for real assessments," and put together a process that hiring managers and HR, their HR partners could use. To, for instance, assess programmers by actual other programmers. But because it's working within existing, not only law and policy, but the culture of the Office of Personnel Management, it's still a pretty heavyweight process. But the people I know who've used it to hire people love it.

• 43:35Speaker 05

  They get great candidates through it. And it hasn't scaled, in part because I don't think it was a huge priority of the Biden administration, and in part because it's still just a lot of work to get all the people who can review these programmers' resumes, for instance, to take time out of their jobs to do this in a very prescribed, controlled way. Like, you can't just take someone's time and say, hey, look at this guy's resume. Do you think he's good?

• 44:06Joe Weisenthal?

  What happens when you try to fire someone in the government? You know, we did that episode several weeks ago about Medicare fraud and the importance of having good data scientists to look at. And let's say there's a data scientist who isn't good, or isn't finding any, whatever it is, what happens when you try to fire them?

• 44:24Speaker 05

  So, most of the time, on a practical basis, what happens is they say, that HR will tell you, it's going to be impossible to fire this person. Don't give them a bad rating, because if you give them a bad rating, we won't be able to transfer them. So, let's work on finding a transfer so they can be someone else's problem. Not great. I heard from a friend recently at an agency who got a complaint. One of the employees on his team complained about the team leader who reports to him. She filed a formal complaint because that manager hadn't given her an outstanding or exceptional rating. Now, this person had been absent a ton of the year.

• 45:08Speaker 05

  Her skills were way outdated. And the HR team said, well, the best thing to do is to assign her some work that she can do, or very specific work that you don't think she'll be able to achieve. But, you know... You can't push back on this. We we would lose and you know, so we're just going to sort of manage the situation. And oh, by the way, your manager is is potentially in trouble here because of this this threat of a lawsuit. So it's like completely upside down. And what they will do is try to get that person to be moved on to be someone else's problem. It's really important to to to note that there is nothing that says you can't fire people in government.

• 45:52Speaker 05

  And there is some number, I'm forgetting it, that do get fired every year. So it's it's not impossible. The law doesn't prevent it by any means. It's more that there are many, many pathways for employees to protest, you know, not just being fired, but like being given anything other than the top rating. And because they have all those pathways to protest, the they can sort of run the clock out on all of those sucking up all of the time of the managers and the HR people and the lawyers in a way that just nobody, you know, everyone's like, it's not worth it. Like, we can't get our work done if we're going to also try to manage this person out. And so they give up.

• 46:38Tracy Alloway?

  Hmm. It feels like there's also an incentive problem where if you're a manager dealing with a bad employee, you know, even if you manage to give them to another team, there's no guarantee that you're going to get the headcount to replace them. And of course, you have to start the hiring process all over again, and you don't know who you're going to get. And I feel like in politics especially, or government bureaucracy, where there's a lot of presumably internal infighting and, you know, office politics, that there's a lot of empire building as well, right? Like, people do not want to see their teams reduced and their budgets reduced.

• 47:16Speaker 05

  That is 100% true. And I think it's an interesting dynamic right now with this sort of threat of, you know, mass firings going on, that that instinct of

• 47:28Speaker 05

  I am more important the more people report in to me is is sort of rearing its head in a way that that I wish it weren't because I think public sector employees have a lot to be proud of in terms of the results they can produce for the American people. And that ought to be their metric of of pride and status, not how many people report to them. And again, I'm not a big fan of this like, let's, you know, make every civil servant afraid to come in every day. That kind of rhetoric is is very sad to me. But I think it's it's also true that that the civil service should, you know, measure its value a little differently than it often does today. And I'm not saying it's everyone.

• 48:11Speaker 05

  But but that instinct of of empire building isn't as healthy as as we would like.

• 48:15Joe Weisenthal?

  Jennifer Pahlka, thank you so much for coming back on Odd Lots. Maybe we'll we should have you back like in a year. We could do you can sort of give your assessment on what you've seen so far. We could, you know, sort of do regular.

• 48:29Tracy Alloway?

  Doge updates?

• 48:30Joe Weisenthal?

  Yeah, regular Doge report cards and updates.

• 48:32Speaker 05

  I love that. That'd be great. We'll see if Doge is even around then.

• 48:37Joe Weisenthal?

  Yeah, right. We'll see if it even exists or if they all get bored. All right. Thank you so much. That was fantastic.

• 48:55Joe Weisenthal?

  That was really good, Tracy. Just reading and hearing some of those stories like about hiring. Oh, my God.

• 49:00Tracy Alloway?

  The stories are amazing. You kind of just want to bang your head against the wall.

• 49:05Joe Weisenthal?

  Well, like also, it makes me wonder like if it would be, I don't know anything about applying for a government job, but if you just sort of know the hacks, right? If you just sort of know what a government resume is supposed to look like and the importance of copying and pasting keywords and getting past that initial round, that seems like that's good alpha for listeners. If you're ever applying for a government job, some good advice there from Jennifer.

• 49:28Tracy Alloway?

  Yeah, the best government officials, the most effective government officials are the ones who know how to copy and paste.

• 49:33Joe Weisenthal?

  It's depressing, isn't it?

• 49:34Tracy Alloway?

  It is. Oh, gosh, there was one thing I actually forgot to ask Jen, but You know, you brought up that like 300 page

• 49:40Joe Weisenthal?

  Yeah.

• 49:40Tracy Alloway?

  document and it struck me that people, I doubt anyone is reading that from cover to cover. Right?

• 49:47Joe Weisenthal?

  Probably not.

• 49:47Tracy Alloway?

  And so if you were looking to streamline some of those processes, again, I know identifying the problem isn't the biggest issue here. It's actually trying to fix it and act on it. But it seems like you could use AI to go through a lot of those rules, right?

• 50:02Joe Weisenthal?

  You gotta wonder, yeah.

• 50:03Tracy Alloway?

  Yeah. And say, can you make this flow chart that goes on for five pages, reduce it down to, I don't know, half a page?

• 50:10Joe Weisenthal?

  The other thing I would just say is that a lot of the sort of, I would say pathologies of the government are, in my experience, pathologies of large organizations, period.

• 50:20Tracy Alloway?

  Right.

• 50:21Joe Weisenthal?

  And I think you find people, you know, there are frustrations you have as a customer to large companies. There are frustrations you have as an employee of large companies. These things exist the way sort of certain institutions within an organization perpetuate themselves by holding on to power, by sort of a strict adherence, a handful of people that really know the rules.

• 50:41Tracy Alloway?

  People that know the system, people that build the systems that no one else can understand.

• 50:45Joe Weisenthal?

  And they're just really hard to root out. And so they're hard in any organization. And obviously, you know, private sector entities sometimes benefit because someone says, look, we really need to cut this area or whatever, in a way that often hasn't happened in the government. But these are really tough problems in organizations. And I think anyone who probably is in business school and goes into any Fortune 500 company would probably be faced with sort of similar challenges in reforming any organization.

• 51:15Tracy Alloway?

  Absolutely. And I will say, this is obviously a highly politically charged

• 51:19Joe Weisenthal?

  Yeah.

• 51:19Tracy Alloway?

  issue, but you know, I think everyone on both sides of the aisle can agree that they want an effective government, right?

• 51:27Joe Weisenthal?

  Right.

• 51:27Tracy Alloway?

  You want a government that is doing good and productive things and not wasting people's money because at a minimum, that feeds into a perception problem. And so this is a really interesting topic. I think we'll do more on it.

• 51:42Joe Weisenthal?

  Absolutely.

• 51:43Tracy Alloway?

  Okay. Shall we leave it there?

• 51:44Joe Weisenthal?

  Let's leave it there.

• 51:45Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 51:51Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Jennifer Pelka. She's at Pelka dot and definitely go check out her Substack and her book. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashil Bennett at Dashbot, and Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 52:19Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we dive deep into various bureaucracies, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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