Managing the privileged

From The Devil is in the Details by Tyler Cowen summarizing key findings of a research paper.

1. Using biometric technology — thumbprints — to monitor absenteeism induces staff attendance for public health workers to rise by almost 15 percent.

[snip]

4. Following the implementation of monitoring, the doctors showed the least improvement in attendance of all the workers, in fact virtually no improvement. The entire positive effect came from nurses, lab technicians, and lower level staff.

5. The government was reluctant to continue the monitoring because it feared staff attrition and staff discord, especially from the doctors. There is growing private sector demand for doctors, and many doctors are considering leaving these clinics for superior pay elsewhere, and perhaps also superior location. Therefore the doctors are given, de facto, a very lenient absence and lateness policy, in lieu of a pay hike.

6. It is already the case that many of these doctors moonlight on the side, or have separate private practices, and that spending more time at the public clinic is not their major priority.

This is based in India but I wonder if the Just So story outlined in points 5 and 6 is the full explanation? There might be an alternative explanation which would suggest this situation might be more universal than it initially comes across as.

I am sure the researchers are reporting reasonably accurately about the circumstances and that 5 and 6 are relatively true. However, that dynamic of intra-enterprise threatening and bullying for perks and advantages is by no means unknown.

Effective organizations call the bluff of those threatening that they will leave if their self-developed perks are rolled-back. Sometimes the enterprise is wrong, the internal exploiters do leave and the enterprise does then have to pay a real market salary in order to staff appropriately and then has to adjust prices to price appropriately. It is known as supply and demand and the invisible hand of the market place. If you don't allow it to function, you misallocate resources and end up with too low productivity and an underperforming economy.

If the enterprise does call the bluff of the internal exploiters and they then conform, their story that they are underpaid is revealed as false. The frauds are revealed as simply rent seekers exploiting the moral cowardice of the leaders of the enterprise.

You can't know, however, what the truth might be if you do not have the moral courage to hold the enterprise accountable to its own principles.

Take this out of India for a comparable example. In 1981 the air traffic controllers of the PATCO union wished to renegotiate their contract for more preferential conditions. In order to coerce the government into negotiations, PATCO broke the law by going on strike, believing that their threat to public safety would force the government to concede to their terms (similar to Indian doctors threatening to leave if they weren't allowed their own practices on the side.)

Reagan called their bluff and fired all the strikers and decertified PATCO.

It is the same dynamic. A group seeks to maximize their benefits and leadership has to know whether those demands are in line with the market and has to have the courage to validate that assumption. Without that courage, corruption and inefficiency grows.

When I read item 4, my first thought was the line from G.K. Chesterton and I do wonder to what degree the Indian situation isn't simply a class issue.

The poor object to being governed badly, while the rich object to being governed at all.