That’s nature: trial and error

Many seem surprised with the problematic launch of the Obamacare website and not only those with a political ax to grind. I’ve even heard Obamacare friendlies ask, How could government get this so wrong after hiring experts, spending so much money and having so much time to prepare?

I’m not surprised. It fits well with how I think the world works. Most things fail. Some things work. We don’t know beforehand which will fail and which will work.

I’m not surprised the Obamacare launch failed. Most new things do.

It doesn’t matter that it was government or not, since we live in a trial-and-error universe. Government and free markets are subject to failing more often than succeeding.

Few people see this trial-and-error process. We see success stories and forget the failures. We forget Starbucks wasn’t always big and had its fits and starts and still does. Apple, too. Every company did. And for every success story, there are numerous failed attempts of competitors that we forget about.

The one thing that is a little more rare about the Obamacare trial is that it is on such a grand scale. Again, that’s not unique to government. Plenty of companies have had big roll-outs of products or business plans they were certain would work, only to fail. JC Penney, anyone?

The error, though, that some don’t seem to learn from is that we should avoid doing new things on such grand scales because most things fail.

Start small, test it and grow it through the crucible of trial-and-error.

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4 thoughts on “That’s nature: trial and error

  1. I disagree. I do believe that the fact that this is a government venture played an integral role in its failure. If this had been a private venture, failure would necessarily imply a financial cost to the ventures proponents. So, private companies have a greater incentive to get things right. On the other hand, when a government venture fails, the proponents, having no skin in the game – remember Nassim Taleb’s discussion on EconTalk? – don’t bear the economic cost of the failure. As politicians, they just chalk it up to “not enough money” (and then demand more funds) or “extremists” on the other side of the aisle….or they are long gone before the full disastrous effects of their programs are realized. And then they go on with their next – let’s throw some crap up on the wall and see what sticks – program.

    It also matters in another sense. In the above paragraph, I noted how it mattered in a causative sense, but it also matters in the sense of who gets hurt. In a private venture, “outsiders” are not forced to pay the price for failure. That price is borne by the owners of the venture. When JCP suffered because of their new policies, I didn’t feel it and if you weren’t a JCP employee or stockholder, it’s likely you didn’t feel it either. With a government venture, taxpayers are forced to pay for the government’s mistakes. Please read that again with emphasis on taxpayers = the 50% of our population who actually pay income tax. That’s a big reason why government is increasingly able to get away with ill-conceived programs such as Obamacare – too many of our voters have no skin in the game. As such, most people have no incentive to learn from these mistakes – they don’t recognize any direct harm from the mistakes.

    • I do agree that the feedbacks in government are the opposite of the private market b/c of exactly what you mention, nobody has skin in the game. If you had skin in the game, you eventually have to give up on a failure b/c you can’t afford to keep it going. But, with taxpayer money you can just keep saying “we have to get this right, we need more money.”

      That’s why markets handle trial-and-error much better than government and the very reason I think we should favor markets in almost everything over government.

      But, it still doesn’t surprise me the website failed right off the bat. I’ve seen that happen whether someone has skin in the game or not, but again, the key difference here is that we rarely see something brand new on a such a grand scale.

  2. It doesn’t surprise me that it failed either. Although I believe it has more to do with the fact that it is a government venture that with the size and scope of the venture.

    Ever hear of Pro Flowers? They provide online floral services. My understanding is that they typically handle over 80,000 orders per day and over 1,000,000 for Mother’s Day. I’ve used them frequently for my daughters’ birthdays, Valentine’s Day, etc. and have never had an order messed up and have never had any delays in placing my order. They can’t afford to provide a bad online experience because there is no mandate that I buy flowers and there are other options if I do want to buy flowers. Contrast this with ObamaCare or any good or service where lining up at a government run or sponsored “window” is your only option. We’ve all experienced the far too typical government employee attitude of “We’re the government so we can treat you like dirt because you have no other option.”

    Obama has not only failed to deliver the system that he promised would be as simple as shopping on Amazon, he lied about being ready and he has excused the problems as a few “glitches”. But it’s far more serious than a few minor glitches. Now, the Obama administration says that the system will be fixed by the end of November. Think about it. They’ve had 3 ½ years to implement their system. If they really only need 4 more weeks, why didn’t they put in a little overtime during the past 180 weeks – it would have amounted to less than 1 hour extra per week?!?! Does anyone really believe that if Obama and his co-conspiators COULD have made it work, they would have refrained from doing so in order to save 1 hour per week? Having dealt with insurance coding and the various incongruous systems as well as the level of incompetence of employees (many of whom are hired because of federal quotas for government contracts and are incapable of connecting the dots), I am certain that this problem will (a) cost far more than any estimates the government is willing to admit, and (b) still not be fixed and will result in far more errors and leaking of confidential information than under previous systems.

    • Hi Mike – 1-800 Flowers was not an instant success. According to the wikipedia on it, the first company to use it was dissolved. It grew through the crucible of trial-and-error. And, I have heard several complaints over the years that what was delivered wasn’t what was ordered.

      I agree that the ‘government system’ aspect of Obamacare has played a part in the roll-out fail. But, I think the mistake is the same that I see many big company executives make: They underestimate how much trial-and-error it takes to get something like that off the ground. Not matter how much time you have, you will not be able to replicate the ‘market test’ until it hits the market.

      Government can make that mistake b/c they can shield themselves from results with the “we had the best of intentions” while they reach further into our pockets to try and “make it right”.

      Big company executives eventually pay their dues if they don’t learn that lesson, unless they are incredibly lucky. But, what makes them take the risk in the first place is similar to Obamacare. They want to go out swinging. They are willing to risk a company on a hail mary so they can have a chance of having their name attached to it.

      The next question is, why?

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