The Just In Time Government

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Just in time delivery is a system that improves efficiency by only producing items that are to be sold in the short term. It wasn’t really possible until the advent of faster delivery like UPS and Fed Ex. Once all the parts of the supply chain were capable of keeping up with different levels of consumer demand, JIT became more feasible. Say you run a clothing store that sells 5 shirts per day. It’s inefficient to stock 10 shirts. It’s better to stock 5 shirts, then take delivery of 5 more shirts each day. It reduces inventory and makes sales more efficient. It works for some things, but not for others. JIT works well in situations where demand can be forecast accurately. Manufacturing and delivery ramps up during holidays and ramps down during the rest of the year. You make more chocolate around Halloween than you do around the Fourth of July. You make more barbeque tools around the Fourth of July than you do around Halloween.

JIT can’t be applied to everything, though. A mall parking lot seems like an enormous waste of space in July. There are hundreds of parking spaces that go unused day after day. The mall maintains a large parking lot because they will need that capacity during holiday periods. If you go there looking to create efficiencies in July, you might be tempted to cut the number of parking spaces. That would be short sighted, because you would be woefully under capacity in December.

Recently, there has been a trend to try to apply private sector efficiencies to government programs. Like JIT itself, it works better in some situations than it does in others. Achieving efficiencies in supply can be good when demand for services and products can be forecast. Just like the mall parking lot, looking for efficiencies in situations that don’t lend themselves to easy prediction can cause problems. A good example is regulatory agencies. When businesses are working well, there doesn’t seem to be a need to regulate or inspect them. Why use government resources to confirm that there are no problems? The difficulty is the same one that happens when you look at the mall parking lot in the summer. Even though it seems like a waste, the excess capacity becomes necessary at some point. People seeking to improve government efficiency looked at the regulatory situation in the Texas fertilizer industry and thought that reducing the inspection capacity was a prudent solution. This led to fewer inspectors and made it possible for unsafe, insecure, situations like the West Fertilizer manufacturing plant to continue until there was an accident.  The West fertilizer Plant had not been inspected by OSHA for almost 30 years.

For a business, the sudden popularity of a new shirt fashion means that demand exceeds the production and delivery chain, leading to lost revenue. Governments exist, in large part, to deal with unforeseen circumstances. That reduces the instances where Just In Time efficiencies can be applied.  Politicians see a surplus and do not see it as an opportunity to bank against a future need.  Instead, they see it as an opportunity to further trim government, to make it more “efficient”.   That doesn’t mean that we need unlimited government, but we do need to empower government to do its regulatory duty.  Government is the way that we collectively face the unknown and unforeseeable.  We need to have a government that is capable of responding to new events and circumstances.   Letting government grow too large can lead to intrusive and unnecessary regulation.  Letting government wither away by trimming it in the name of “efficiency” isn’t the answer, either.  Creating the right balance of capabilities and efficiencies is more complicated than a soundbite or slogan.  Saying that all government is bad is no better than saying that government can solve all problems.