Thursday, July 29, 2004
An addendum to the Russian victories
It has occurred to me that I forgot to mention one curious thing in my last night’s post (see right below). The headline number in Russia’s Gosnarkokontrol report on its victories in the war on drugs was the gross weight (44 tons) of seized illegal drugs. I wonder whether the work of the narkokontrollers in Russia is evaluated mostly according to this indicator. Don’t reject this conjecture as being completely ludicrous. The activities of most enterprises in the centrally planned economies, including the former Soviet one, were evaluated by similar indicators (see, for example, Grossman, G., “Notes for a Theory of the Command Economy,” Soviet Studies, 15: 101-123 or, for somewhat easier read, Miller, J., "The Big Nail and Other Stories: Product Quality Control in the Soviet Union," ACES Bulletin, 26,1:43-57, 1984, and Powell, R., "Plan Execution and the Workability of Soviet Planning," Journal of Comparative Economics, 1,1:51-76, 1977). Of course, this way to evaluate performance leads to all kinds of distortions. If you evaluate the performance of nail-making factory by the gross weight of its output, it would produce few but very heavy nails. If you evaluate the anti-drug agency’s performance by the gross weight of seized drugs, it has incentives to concentrate on discovering plantations of marijuana and counting the raw weight of the seized plants. BTW, this method of evaluating the performance of government entities is popular not because the government planners are stupid (although this possibility cannot be usually excluded either) but because evaluating the performance of non-market enterprises of all kinds is a very difficult task. Simply put, in the absence of the market-generated information, there are no good indicators to judge the performance of entities such as police departments, academic departments within a university or even an entire state university, the military (particularly in peacetime) and so on.