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Chapter Summary

Osborne, David, and Ted Gaebler. 1992. Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector. Reading, MA: Addison-Wesley.

Introduction: An American Perestroika

"Perestroika" is a recent enough addition to the American lexicon from the Russian language that it is not in dictionaries over ten years old. The direct translation from a Russian-English dictionary is "rebuilding, reconstruction, reorganization," adaptation, or changing ones views. This is precisely what Osborne and Gaebler argue is occurring to the American system of governance.

In the introduction to their book documenting this reconstruction, Osborne and Gaebler demonstrate structural reasons for the shift from bureaucratic government to entrepreneurial governance. They argue that the American bureaucracy, which was appropriate to the industrial era and times of economic and military crisis during which it was created, is not the best system of governance for the post-industrial information age. During the Great Depression and two World Wars, people wanted stability and security from government. Further, in response to political graft of the late 1800s and early 1900s, the nation wanted regulation of government to prevent corruption. The rigidly hierarchical bureaucracy which emerged provided this stability and control. While national tastes were somewhat uniform, and the emphasis was on stability rather then quality, this system worked reasonably well. By focusing on regulating the process, however, the bureaucracy lost sight of the results, and by making it difficult to steal public money, it became difficult also to manage public money.

Since the 1960s, the American public wants increased quality and choice of goods and services, and efficiency of producers. Slowing income growth has caused taxpayers to demand tax cuts and more services for their tax dollars. Quality and choice are not what bureaucratic systems are designed to provide, nor is efficiency possible in a system of complex rules and drawn-out decision-making. Due to redirected allocations of federal funds, by 1982 state and local governments had lost nearly 1/4 of the federal funds that they had received just four years earlier. That trend has continued. This abrupt change in revenue, coupled with continued citizen demand for services, and increasing expectations of quality, choice, and efficiency has led state and local governments to change the ways they provide services from the bureaucratic model to a more entrepreneurial one characterized by flexibility and creativity as well as a conscious effort to improve public sector incentive systems.

The authors emphasize two points: 1) that government cannot simply be "run like a business" because business and government serve fundamentally different purposes, both of them valuable and necessary; and 2) that the question is not how much government we have, but what kind of government.