Is Government the Cause of the Sludge Problem, or the Solution?

There is no sludgier place in America than Washington, D.C. But could that be changing? And where do Elon Musk and DOGE fit in?

It is a natural temptation to think that your problems are worse than other people’s problems. Also to think that the problems of our generation are worse than those of previous generations’. But as it was written way back in Ecclesiastes: “There is nothing new under the sun.”

And so it is with sludge, the costly and annoying busywork that we’ve been covering on Freakonomics Radio for the past two weeks. For many years, sludge went by another name, a prettier name: “red tape.” Do you know the story of how red tape got its name? It apparently dates back to 16th century Spain, and King Charles V, who had his most important legal documents bound in red ribbon — eye-catching and expensive ribbon, befitting a king — versus the plain ribbon used for less-important documents. This tradition spread through Europe, and to America, and as governments and legal institutions expanded, there was ever more need to go back into the archives to find these important, foundational documents. This meant that lawyers and clerks had to constantly untie and retie those red ribbons, later called red tape.

A little while back, we asked our listeners to send in their personal sludge stories — you can hear one in this week's episode. It’s probably not surprising that many of the stories we received had to do with government sludge. As with Charles V’s red tape, government is extremely good at generating sludge and less good at getting rid of it. This week on the show, we talk to one person who knows, perhaps better than anyone else, where it comes from: Jennifer Pahlka, who is something of a professional public-sector sludge fighter. She was brought in by the state of California at the start of the Covid-19 pandemic, when the website where Californians apply for unemployment benefits was overwhelmed by new applicants.

Unemployment insurance dates back to 1935. We add requirements and process and procedure and law and regulation every year. It comes from the federal government, it comes from the state, it comes from the executive branch, the judicial branch and the legislative branch. It’s all additive, and it’s never subtractive. We think we want elected leaders who are going to write bills — we think that’s their job. I think their job is to create the conditions under which government agencies can succeed.

When you think about government sludge these days, you may well think of Elon Musk, the world’s wealthiest man and one of its most unusual. He has been deputized by Donald Trump to drain the D.C. swamp, to take a chainsaw to bureaucracy — pick your metaphor, there are plenty to go around. Musk runs a new entity called DOGE, the Department of Government Efficiency, which took over and renamed an existing entity called the U.S. Digital Service — which was founded by Jennifer Pahlka a little over 10 years ago, under President Obama. So what does she think about the current Republican administration’s approach, under Elon Musk and DOGE? We spoke with her several weeks ago, as DOGE was just getting started.

I do think we could, in some places, run the government on fewer people. But I also am a big advocate for more internal competencies of certain sorts. We need people in-house who actually understand how government works, who understand our own systems. We have a really incorrect balance between what I call “stop energy” and “go energy.” You’ll have this really small group of people doing what I call delivery, and then a whole lot of people saying, “Here are all the things that have to be done for the contract, for the security, for all these things.” One government delivery person said to me once, “We were six people trying to deliver the product. We had easily 60 people telling us what we couldn’t do.” I think we need fewer people who are slowing things down and more people whose job it is to get the job done.

For some final thoughts on sludge elimination, I wanted to go back to Richard Thaler. He’s the University of Chicago economist who co-wrote the book Nudge and who helped popularize the word “sludge” as we’ve used it over these past couple episodes. It may seem by now that the war against sludge is unwinnable. But Richard Thaler has one piece of good news: Humankind has been fighting and winning sludge battles for a long time.

Imagine you go to one of these old markets that still exist in various places around the world, where you have to negotiate for those luscious-looking fruits. So, that’s complicated enough, that the price is not clear. But imagine if the measuring — if it wasn’t 12 ounces or 50 grams, but it was "about this much," and it costs "about that much." That would just make life hard. I remember looking at the history of this, and certainly the Romans were devising uniform ways of measuring stuff. And then currency solved a big problem, because before currency, we had to do barter. So, societies have developed all kinds of sludge-reduction methods. We do all kinds of stuff to make it easier to communicate and to make transactions.

There is a moral to that story: We reduced sludge before, and we can do it again. Will we?

You can hear this week’s episode of Freakonomics Radio, “Sludge, Part 2: Is Government the Problem, or the Solution?”, on Apple Podcasts, Spotify, or wherever you listen to podcasts. A full transcript is available on our website.

Also on the Freakonomics Radio Network this week

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He has been a lawyer, an instructor at the F.B.I. Academy, the owner of a frozen-yogurt chain, and a winner of the TV show Survivor. Steve Levitt talks to Kwon about his debilitating childhood anxieties, his compulsion to choose the hardest path in life, and how Kwon used game theory to stage a reality-TV victory.
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The Economics of Everyday Things: Ski Areas

When you hit the slopes, you might not be thinking about water rights, controlled avalanches, and liability insurance — but someone has to. Zachary Crockett shreds the pow.
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