How to stop corruption and gain efficiency in Government
Introducing Self-Regulating Feedback Loops
Let me start with a question: What keeps a simple gas heater from becoming a deadly hazard?
The answer is a thermocouple. There are 2 metals in the thermocouple that bend at different temperatures. Solder them to each other and you get a thermocouple. If the thermocouple cools, it bends one way, if it heats it bends the other way. You set it so it has to be warm to bend enough to turn on the gas, when it cools it bends the other way and shuts off the flow of gas. This small device without any built in intelligence, automatically detects when the flame goes out and immediately shuts off the gas so you don’t have gas leaking with the chance of an explosion. It doesn’t require oversight, audits, or an emergency response. It just works. Why? Because the system is designed by us to correct itself. It’s a self-regulating feedback loop—a mechanism that responds automatically to ensure safety.
We do that in almost all your electronics. As an engineer, I’ve designed this into most of my own designs. As the heat in your device goes up, there’s a fuse made of similar metals to that in the HVAC that bends and disconnects when it gets too hot, and your phone turns itself off and you can’t turn it on till it cools down and fuse pops back in place. Same as your laptop. As a user you don’t need to know about how it works or even think about it. It’s pre-designed into the fabric of the HVAC system. It’s self-regulating.
Now, let me ask you another question
How do you get two kids to fairly share a single candy bar without adult intervention and more importantly without whining and complaining? Well it’s easy, you set the law - one child gets to cut the bar, while other gets the first choice. The feedback loop here is simple: The cutter knows they’ll get the smaller piece if they’re unfair. It’s a system built on both positive and negative feedback, incentivizing fairness without anyone stepping in. It’s self-regulating. Both have something to lose that offsets them having something to gain.
Applying Self-Regulating Feedback Loops to Government
So here’s what I want you to think about: Why don’t we write our laws the same way? Every time we pass a law that allocates money, or funds a project, or governs a department, why don’t we embed self-regulating feedback loops into the system? We could write it right into the law. Why should we rely solely on external oversight, audits, or government investigators who have nothing to lose if they mess up, when we could design laws and systems that correct themselves, just like the thermocouple or the candy bar split?
If we write laws so every party has something to gain and all involved parties have something to lose if they violate the contract or underperform we’ve just built a self-regulating feedback loop into the law. And we don’t need to hire thousands of inspectors who could be bribed themselves.
Now to be clear, I’m not here to give you the final solution but to ask you to start thinking in this new paradigm. Legislators, every time you write a law, what if you ask yourself: How could we design an automatic self-regulating feedback loop an SRFL into the law, to ensure accountability, transparency, and efficiency?
Let me throw out a few rough ideas just to get you thinking.
1. First to Report Corruption get to keep the money.
Corruption thrives when everyone involved benefits from keeping quiet. But what if we flipped that dynamic? What if we created a system where the first to report fraud, waste, or corruption received a significant reward? Let’s start with bribes.
Imagine a politician accepts a $50,000 bribe from a contractor. If the politician reports the bribe first, they keep the $50,000, and the contractor loses the contract, is fined an additional $50,000 and goes to jail. The politician doesn’t lose their job, and the public thinks they did this to root out the evildoers. But the politician is forced to correct their behavior and future contractors will be loath to bribe them.
But if the contractor reports the bribe first, they keep their contract and earn 200% of the bribe amount back—$100,000. Meanwhile, the politician goes to jail for five years.
This works well in cases where an official is forcing a citizen to pay to play, but even when both parties benefit, this self-regulating feedback loop forces both parties to weigh the cost of silence against the benefits of coming forward. Both have dirt on the other. The result? If there’s any dissatisfaction on either side, corruption is exposed quickly, and the public wins. Everyone is motivated to reveal the corruption. Just like the two kids with the candy bar, it’s in balance. But it doesn’t have to be just the briber and bribee, if anyone else like a janitor or a disgruntled junior partner can prove the corruption happened then they get 200% of the bribe amount and both the contractor and the politician go to jail for 5 years. It’s a built in feedback loop. Everyone is incentivized to report and the punishments are so severe that there’s no gaming the system. Note too, the bigger the bribe the bigger the reward, the bigger the incentive. Someone is skimming $10M off a $100M government contract? Report it and you could make $20M.
This same idea works for even bribing inspectors, police officers, permit grantors or any government official. You’ve incentivized everyone on both sides to report any bribe. Remember, “it’s first to report,” so you better be on your toes and report it right away. Everyone now suspects everyone else. It’s just ensuring there is no honor amongst thieves.
Of course, the report needs to be accompanied with hard evidence, and in todays’ age of video cameras and electronic communications that’s easy.
2. Government vs. Private Competition
How could feedback loops work here? Well, every government department should know this: If you fail, a private company will take over your job.
Here’s how it may work. When a government agency works on a project, they have to issue an online budget and a schedule of the milestones. Now every private company and individual can gain by monitoring their performance. If the private company identifies inefficiencies or failures, a portion of the agency’s budget is redirected to the private person or company.
For instance, when the floods happened in New Orleans, it took years for any reconstruction to start because nobody could get permits to build. The city had 100’s of excuses. In this case, the law would require that the manager of the department has to give a schedule with 2 weeks. E.g.: We will issue 100% of the permits requested in 2 weeks with up to 900 permits in 90 days. If the department head tried to waffle and say it would take 2 years, immediately a private party who could do the same permitting process (yes it’s done all the time) could object and negotiate for better efficiency and get the project away from the city.
If city does not meet the goal, the Department head gets demoted, and his salary is lowered. Thus, he or she would naturally incentivize those working for him by letting them know that various division managers would be fired if they did not perform to meet this public goal.[1] Ah you say, they could then rubber stamp all the permits and pass all even if they were bad. Not so fast, the standard for a permit does not change, and any citizen who sees a permit that should not have been granted, gets a reward for pointing it out and the city department permitter gets demoted. So despite what his boss says, he’s not going to do it. Another feedback loop with rewards to anyone who proves it with solid evidence when they make the claim. Get the idea?
If any of this happens three times, the department is shut down, and all future work is opened to private bids. The department head is demoted to a non-managerial post or fired, ensuring accountability vs. just shuffling him over to another senior position. This feedback loop forces government agencies to compete on performance, just like in the private sector.
3. SRFL in Government to Private Contracting
When private companies bid on government contracts, the losing bidders don’t walk away empty-handed. Instead, they become unpaid monitors of the deliverables of the winning contractor. Why? Because they get to gain if the winning contactor messes up.
If the primary contractor fails to deliver—whether by missing milestones or delivering substandard work—the monitoring companies take over the project. The original contractor forfeits payment for that phase. And oh by the way, payment is only made after completion.[2]
This system ensures that someone is always incentivized to watch, creating a built-in safeguard against poor performance.
Added to the above, if a private company exceeds the budget by even $1 or delays delivery by even 1 day, the company, all their senior management and officers as individuals, are banned from getting government contracts for 3 years. Their “friends” in government can’t help them, and they can’t just start a new company because we know who those individuals are. Any fraud will be punished by 1 year in prison.
Furthermore, all milestones and deliverables must be displayed publicly and anyone (and we do mean anyone) who shows that they were missed (to avoid their cronies in the government from given them a pass) will get 5% of the bid as a reward and the company will lose the contract. We’ve basically incentivized everyone on the internet to be an inspector and whistleblower. If you are an employee of the company you have a lot to win by showing that your company messed up.
4. Tying Budgets to Performance
Why should any department receive the same budget every year regardless of results?
You’ve heard the old: use it and get more next year, don’t use it and you lose it.
This is horrible policy!
Instead, tie a portion of every department’s budget to measurable outcomes. Departments that meet or exceed their goals receive additional funds, but with those funds come bigger goals. Those that fail, face budget cuts and the department head is demoted and loses say 10% of their salary. No more automatic increases.
This should be written into the law that created that department. And to ensure they are not padding things, all those bids are opened to a private company to bid for the same services. Yes, many private companies can fully replace government entities. In some towns, the entire town services are performed by competing private companies.
5. Tying Congressional pay to Performance
Why should congress not “enjoy” feedback loops? How about a feedback loop for congress? If there is a deficit one year by even 1 dollar, their pay drops by 33%, if there is an increase in inflation above 3%, their pay drops by the increase. If there is a budget surplus that is then given back to the American people as tax refunds, they get a pay raise by the percentage that everyone got back (just for that year). We’ve just incentivized congress to be fiscally minded.
Conclusion
Every law our legislators make, may be an opportunity to create a self-regulating feedback system. These are just rough ideas, a legislator worth their salt, can refine it and ex-government employees will know what is actually needed. The question isn’t whether we can fix corruption, waste, or inefficiency—it’s whether we’re willing to design systems that fix themselves.
So, I urge you: Start thinking in feedback loops. Every time you write a law, ask yourself: How can we make this law like the thermocouple in a gas heater or the candy bar split between two kids?
Because when we design and build systems that monitor themselves and protect users/citizens we create a government that is efficient, transparent, and truly accountable to the people it serves. This is how we honor the legacy of those who built this nation on the principle of government of the people, by the people, and for the people.
[1] Note this is not talking about inspections. Inspections need to be done to ensure buildings are safe. But in my opinion it should be done only by private companies who put up a bond, who would then be sued if they rubber stamped an inspection and something bad happened within say 10 years. Oh we should not this already exists.
[2] Ah but you say, private contractors don’t have the money to pay for a contract up front. Yes, so they need to secure a private loan to do that where they are liable for the loan. And they can feed the cost of that loan into the proposal.