Jennifer Pahlka believes America’s bureaucratic dysfunction is deeply rooted in outdated processes and misaligned incentives. As the founder of Code for America and co-founder of the United States Digital Service, she has witnessed firsthand how government struggles to adapt to the digital age, often trapped in rigid procedures and disconnected from the real-world impact of its policies. Disruption is clearly needed, she says—but can it be done in a way that avoids the chaos of DOGE?
Tyler and Jennifer discuss all this and more, including why Congress has become increasingly passive, how she’d go about reforming government programs, whether there should be less accountability in government, how AGI will change things, whether the US should have public-sector unions, what Singapore’s effectiveness reveals about the trade-offs of technocratic governance, how AI might fundamentally transform national sovereignty, what her experience in the gaming industry taught her about reimagining systems, which American states are the best-governed, the best fictional depictions of bureaucracy, how she’d improve New York City’s governance, her current work at the Niskanen Center, and more.
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Recorded March 4th, 2025.
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Thanks to an anonymous listener for sponsoring this transcript.
TYLER COWEN: Hello, everyone, and welcome back to Conversations with Tyler. Today, I am here live, in person, chatting with Jennifer Pahlka. Jennifer is founder and former CEO of Code for America. She worked in the Obama administration, and she founded the United States Digital Service. She has a background in computer gaming, media, and most importantly for our purposes, I’m a big fan of her 2023 book called Recoding America: Why Government Is Failing in the Digital Age and How We Can Do Better. Jennifer, welcome.
JENNIFER PAHLKA: So great to be here. Thank you.
COWEN: What is your model for why Congress has become so passive? And how important is solving that problem for reforming the bureaucracy?
PAHLKA: Oh, you did start with a hard one.
[laughter]
COWEN: They’re all hard ones.
PAHLKA: I’m new to Congress. I spent many years, really, in the executive branch agency, so I see Congress through the lens of people who are downstream of their actions. I’ve only recently come to any theories at all [laughs] about Congress. One observation I have is that they, I think, secretly will admit that they know that the laws that they pass don’t actually work. They don’t want to admit this. That is not something you’d want to run on.
But I think, increasingly, they’re aware that they are turning the steering wheel, but it’s not connected to the wheels of the car. They’re pressing the gas, but the car’s not going anywhere. It’s probably not the only reason Congress is powerless, but I think it has really contributed to the sense of, what are we even doing here? We’re supposed to be steering this country, and when we turn the dial, maybe not nothing is happening, but less than we thought or something different is happening. This law of unintended consequences is really kicking in.
COWEN: Do we have a way of getting Congress to be less passive?
PAHLKA: I’m hopeful that these various strands of disruption that are happening right now will push them in some direction. I think the challenge is to shape that direction. Certainly, you have something like the Loper Bright decision, which is going to disrupt a lot of the way they have done work. If you really want to write a law, have it passed, and then have it have the impact in the real world that you intended, you can’t really do what you used to do.
What that change will look like — it’s a very big question. I don’t have any simple answers, but I do think it’s a moment where you can say, “Look, we have been living in this essentially waterfall world.” The Waterfall process is, you do this thing and then it goes into this stepwise procedure and gets handed off to others. It’s really a one-way trip. It descends now through the hierarchy of the bureaucracy to get implemented.
That’s not how stuff that works well in our real lives works. It works in a much more iterative way in which you’re coming back to the intent, checking on how it’s going. It’s more of a quick feedback loop than this long waterfall that descends away from you and away from any control that you have over it. Some element of the change, if it ends up being positive, I think, will be away from a waterfall process into something that’s much more agile, iterative, and closing the feedback loop.
I do think that speaks to some of Congress’s anxiety. They are anxious because they feel like the bureaucracy doesn’t do what they told them to do. It’s not a surprise that they don’t because of the structures, but the change that we’re talking about, I think, is really profound. It’s moving from one paradigm that is very, very ingrained in how Congress operates, how the executive branch agencies operate, but also just how everybody thinks. It’s such a profound change, we are going to need a fair amount of disruption to make that change happen.
COWEN: Now, we’re talking in March 2025. To the extent Congress stays passive, that residual authority — where do you want to see that reallocated to? To the executive branch? To the courts? Because a lot of what you write is very critical about the courts. There’s too much of the judiciary, but this is March 2025. Where should that power go?
PAHLKA: Your question about Congress being passive in this moment, of course, I didn’t really answer. I’m talking more generally, I think, before the inauguration. But no, I would agree. We have put far too much into the judiciary. We are having them make decisions that I think executive branch agencies should make. One of the big problems with punting everything out into the courts is that those tight feedback loops require you to act quickly, and the courts do not act quickly.
That’s going to be a very big problem, I think, just generally for this whole era where everybody is counting on the courts to get their thing done, especially on the left where there’s a desire to stop Trump. Well, if the lawsuits can’t get through the system in any meaningful amount of time, the harm is already done, so that’s already an issue. But it’s an issue even, I think, in less dire times because you can’t operate iteratively if you’re just always waiting for a court decision or always waiting to be sued. I think that’s how we’ve grown up — if you work in the bureaucracy, you’re just always waiting to be sued.
COWEN: Does that mean we need something like DOGE? I’ve lived near DC for about 40 years of my life. I haven’t seen anyone succeed with regulatory reforms. You can abolish an agency, but to really reform the process hasn’t worked. Maybe the best iteration we can get is to break a bunch of things now. That will be painful, people will hate it, but you have a chance in the next administration to put some of them back together again.
Maybe it’s just in a large country, there’s no other way to do it. We have separation of powers. The first two years of DOGE will seem terrible, but 8, 12, 16 years from now, we’ll be glad we did it. Is that possible?
PAHLKA: I don’t know what’s going to happen. I do think this is the disruption that we’re getting, whether it’s the disruption we wanted. The question of whether it could have been done in a more orderly manner is a tough one. I just feel sad that we didn’t try.
COWEN: Are you sure we didn’t try?
PAHLKA: I don’t think we really tried.
COWEN: The second Bush presidency, people talked about this, what we need to do. Al Gore — some of that was good, in fact, reinventing government. We’ve been trying all along, but this is what trying looks like.
PAHLKA: Yes. I think reinventing government happened at a time when we were just at the beginning of this digital revolution. It was trying with a very 20th-century mindset. Fine, did well within that context, but we don’t need that again.
We need 21st century change. We need true digital transformation. We need something that’s not stuck in the industrial ways of thinking. I don’t think we tried that. I think the efforts have just been too respectful of old ways of working and the institutions. There was really not an appetite, I think, for what I would call responsible disruptive change. Would it have worked?
COWEN: Is there such a thing?
PAHLKA: I don’t know. [laughs]
COWEN: Say you’re approaching USAID, where I think the best programs are great. A lot of it they shouldn’t be doing. On net, it passes a cost-benefit test, but the agency internally never seemed willing to actually get rid of the bad stuff, all the contracting arrangements which made American Congress people happy because it was dollars sent to America, but way inflated overhead and fixed costs. Why isn’t it better just to blow that up — some of it is great — and then rebuild the great parts?
PAHLKA: It’s so hard to say. [laughs] I’ve had the same thought. In fact, before inauguration, I wrote about the Department of Defense. It’s the same thing. There’s a clear recognition by the people in the institution, as you saw with USAID, that this is not okay, that this is not working. It’s just strange to be in an institution that large where so many people agree that it’s not working, from the bottom to the top, and yet nobody can make really substantive change.
You look at efforts like Unit X, this book out by Raj Shah and Chris Kirchhoff about their efforts to start the Defense Innovation Unit.
COWEN: He’s been a guest on the show. He was great.
PAHLKA: Yes, of course. Right. Unbelievable talent, unbelievable support from the secretary of defense, and, actually, then subsequent secretaries of defense, and good outcomes for sure, but is the Department of Defense fundamentally more agile than it was before? Not meaningfully so. So, we do have a real problem that isn’t even just that a lot of people are resisting change. I think most people want change, but somehow the system itself fights back against any individual who’s trying to change it.
I told a story about being at an event where the person next to me . . . It was one of these events where people are off the record. This person was a pretty senior official in the Air Force. I said that I thought we would have a safer country with a smaller defense budget. People looked at me and they’re like, “Ah, she’s a hippie or something. She just doesn’t care about our national defense.” I spent four years on the Defense Innovation Board, and I learned to care a lot about our defense and to be quite worried about it.
I felt a little awkward saying this next to this Air Force official because it sounds insulting. “I want to cut your budget.” He turned to me and, in front of everyone, he said, “You’re right except it needs to be 50 percent because when we’ve had 15 percent or 20 percent cuts, it doesn’t shock the system enough to actually change behavior.” Of course, you can have a cut like that that would be a shock to the system. A hot war would be a shock to the system, and we all know, we will see change when that happens.
I have, in a sense, been an advocate for this kind of shock to the system. I was alarmed when Vivek Ramaswamy — when he was going to be on DOGE — was saying we just get rid of half the bureaucrats based on the last number of their Social Security numbers. I was like, “Wow, what he’s saying and what I’m saying rhyme,” and yet, I feel like I come at it from fundamentally a desire for government to work.
Sometimes, it’s hard to see whether what’s going on right now is about government working better or just being smaller. I think it could be smaller and be better. That better is still really important to me. [laughs]
COWEN: You use the defense example. If we think about what has worked, it seems to me that outsourcing nonbureaucratic activity to, say, Palantir, Anduril has been very cost-effective, probably militarily effective. We’ll see. Also, Christopher Kirchhoff’s unit has worked pretty well. So, why don’t we do more of that? Just take government agencies and sidestep them.
Create a new NIH, call it something else, figure it will be good for 10 or 20 years, and then we’ll need to start all over again. In the meantime, we cut the budget of the current NIH, say, in half and create a new agency like a DARPA for health, which we have a version of already. Why not just keep on doing that? Create new things and destroy parts of old ones.
PAHLKA: That does happen. That’s what we call the bureaucratic rigidity cycle. We haven’t, I think, been disciplined enough about dismantling the old when we create the new. I experienced that myself helping start USDS, the United States Digital Service.
It’s creating something new, but it still — and I think, even up until inauguration day — just had far less power than the existing infrastructures, CIOs of agencies, the procurement frameworks. That stuff has a life of its own and a power of its own. If you are creating these skunk works to disrupt the old stuff, it has to actually disrupt the old stuff. You can’t just add. If you’re just adding new layers on the face —
COWEN: Yes, so start with the cuts. What’s something right now you’d be willing to cut half of it? Not knowing what will be added. No package deals. You’ve just got to hope and pray for the best.
PAHLKA: What would I cut if I — ?
COWEN: Something you’d cut half of. Some agency, some program. Not farm subsidies, everyone would agree, but something that would hurt a bit.
PAHLKA: I guess I’m on record as saying that the defense department should have a shock to the system. I don’t know if it’s 50 percent, but it does need to be freed from the constraints that it seems not to be able to shake.
COWEN: And the rest of government, other than defense?
PAHLKA: Would I cut it 50 percent?
COWEN: Yes, and hope to grow new limbs for the lobster, so to speak.
PAHLKA: I guess I could imagine cutting something quite deep, but I would do it far more discriminately than what’s happening right now.
COWEN: What would be your first target? The discrimination is you’re in charge. We all listen to you. You’re dictator of the bureaucracy. Other than DOD, you can cut something by 50 percent, and we’re all going to do it.
PAHLKA: My metaphor is basically that we are imbalanced between brake and gas. In any given agency right now, you could talk to someone who’s trying to create something new, stand up a new . . .
I’ll talk about the Direct File team for instance. They were building something that was better, that works for people. They did it cheaper. They did it faster than how things normally go. I’ll call them, the go energy. Around them, you have 10 times as much infrastructure, people, rules that are stopping them. That’s the stop energy. I don’t believe we should have no stop energy. I just think that the balance between those two things is way, way off.
If you’re going to come in and change and what you want is government to be more effective, go faster, build stuff, and I mean build things in government like direct file, but I also mean enable the building of housing and energy infrastructure and transportation that we desperately need in this country. You’ve got to go identify, where is that stop energy? And how do you reduce or remove that so that you can enable the go energy and the people whose job it is to get the thing done? You have to go do that analysis, or you’re just getting rid of the go energy first.
COWEN: A lot is the New Deal — it happened very quickly. There wasn’t always much analysis behind it. It’s like, “Let’s set up a bunch of things.” A lot of them did not run well at the beginning. I don’t mean that as a criticism. It’s just inevitable, like who’s on the staff? If we’re going to recreate government, doesn’t it have to be at least as chaotic?
PAHLKA: Well, it is chaotic. [laughs]
COWEN: There’s something very orderly about the current bureaucracy. If we want to improve the SEC, HHS, whatever other agencies, don’t we just need a flat-out chaotic approach because they were created, in a sense, with chaos and no one asked too many questions?
PAHLKA: I am somebody who would agree that you’re going to have to be far more tolerant of mistakes than we have been. I think a lot of people that I worked with agreed with that. A lot of them are now in reaction to something that is just far more chaotic than it seems to need to be, and again, where the cuts are happening in the wrong places sometimes.
COWEN: But that’s part of chaos. You rebuild later on, and to me, it doesn’t feel that chaotic at all by global historical standards.
PAHLKA: Sure.
COWEN: We’re in a remarkably orderly time, even with you-know-who as president.
PAHLKA: No, that’s fair. I think the other thing that we should be thinking about . . . Everyone is very concerned — I think understandably so — about, for instance, some of the younger and less experienced members of the DOGE team getting access to systems. I think we should not measure government by the degree to which it can fail, but more by how quickly it can recover, and we haven’t seen that yet. We haven’t actually yet seen Social Security checks stopping going out, for instance. That very well could happen. What we should be looking for is, can it recover quickly if that happens and under what circumstances.
One thing I worry about is, there are people with specialized knowledge that will be very hard to pull back in those times. I think we’ve always had too much of a focus on get it perfect the first time rather than be tolerant of failures, but reduce the scope of those failures. That’s what the whole lean startup movement was about. When I came here in 2013 to help start USDS, we were talking about lean startup methodologies, and those really are fail fast, fail quickly, but fail on a very small scale so you’re not hurting a lot of people.
Then by the time you’ve rolled it out to millions and millions of people, you’ve worked out those bugs. But the way government does it, they try to serve everybody on the first day. They haven’t actually tested these things, and they’re trying to do things at scale without having those little failures early on to make a robust, resilient, and scalable system.
In some ways, I’m worried in this moment, when we’re talking about all this chaos and people reacting to the chaos of all these cuts and people getting access to systems, that they’re losing that view we had in 2013, 2014, which is, let’s actually be tolerant of failure. Let’s, in fact, intentionally do things that will help us learn what those failures are, and we’re just going to have a better government then. But if we just go into full reaction mode, we’re going to lose all of that.
COWEN: If someone says, when it comes to regulatory reform, accountability is not the solution, it’s the problem, do you agree?
PAHLKA: Accountability is not the solution, it’s the problem?
COWEN: You put in accountability, everything has to be measured, everything has to have a process. It’s judicial review. Should we have less accountability in government?
PAHLKA: In a certain sense, I would agree with that. I don’t think in an absolute sense. I think the way that we structure accountability is very flawed. I think we are holding public servants essentially accountable to metrics that are not proxies for real outcomes that people care about. When you have a very high focus on accountability that is really about fidelity to procedure and process instead of to the actual outcome, that’s not accountability.
COWEN: Outcomes are heterogeneous, they’re tricky, they’re long term. When you ask people to measure, you end up with a lot more emphasis on process than you want. So, maybe accountability is the problem. To say accountability for outcomes — that’s just going to morph into accountability for process. That’s what I observe, even in private companies. Big, successful, profitable private companies that we’re all familiar with — they have the same problem, as I’m sure you know.
PAHLKA: That they’re held accountable to the —
COWEN: There’s far too much process, bureaucracy, delays. They’re slow. Look at construction productivity in the United States. It’s terrible. It’s declined.
PAHLKA: Yes, I would agree with that.
COWEN: And that’s the private sector.
PAHLKA: Yes. I think one of the issues though is that there is more accountability to process in government than in the private sector, I believe.
COWEN: More in government.
PAHLKA: More in government.
COWEN: Yes, sure.
PAHLKA: Because in the private sector, if you don’t get the outcomes, you are unlikely to succeed financially.
COWEN: There’s a profit — clear goal. In government, it’s not the same kind of outcome. It collapses more into process.
PAHLKA: Yes, it collapses more into process, absolutely. I think also you have — what is it — Goodhart’s Law that says once a measure becomes a target, it ceases to be useful, and you see that everywhere in government. I think that’s part of what I mean about the new public management and the reinventing government in the ’90s was highly reliant on “Let’s set a goal and follow that goal.”
There can be real value in that. I’m not discrediting it entirely, but you do have that erosion of the value of those targets as people try to meet the target without actually meeting the outcome that was intended. I think that a more digital transformation approach that is instead able to change over time more quickly and say, “Wait, this target is no longer helping us get where we wanted to go. We’ve got to iterate on that. Let’s change it.” That can really, I think, get us out of that industrial era of thinking.
COWEN: How should we prepare government for AGI coming?
PAHLKA: That is such a good question.
[laughter]
COWEN: I think I’m going to ask everyone this question for the next two years. Does it just mean firing a lot of people?
PAHLKA: I don’t know. Take social services for example. We have a lot of people in government doing pretty low-value work. It’s essentially paperwork. All of our social safety net is paperwork. It’s lots and lots of different kinds of paperwork at lots of different levels. People who fundamentally just want to help another human being just do paperwork and IT systems and compliance.
What a social safety net is supposed to be about is, actually, fundamentally helping someone get through a tough time, and that requires humans, I think. To the degree that it can, rather than just displace people — though it probably will displace workers — move people to higher-value work that helps people more, that is what we should be trying to craft it to do.
COWEN: So, we should shift humans more into what kind of jobs?
PAHLKA: Imagine you’re an eligibility worker for SNAP, and imagine you got to actually talk to your clients and listen to them.
COWEN: But the AGI can do that at scale, right? And it will make better judgements than the human.
PAHLKA: I understand that. I’m trying to get my head around AGI as opposed to the chat bot that I think doesn’t actually fulfill that at the moment.
COWEN: Not yet. Soon, especially when government trains it on the data government has.
PAHLKA: Yes. Maybe there won’t be any difference to somebody to know that it’s AGI versus a human. Right now, I think people want to know it’s a human.
COWEN: Well, people want a lot of things. I would like personal chauffeur service.
PAHLKA: [laughs]
COWEN: But if you’re getting money, and an AGI hears your case, and it’s more fair than the human — if it’s indeed more fair — people should just have to deal with that. I agree they won’t like it.
PAHLKA: AGI may be able to do this as well. I’m not talking about just adjudicating the case. I’m talking about saying things that I think our current chat bots wouldn’t say, which is displaying empathy —
COWEN: Oh, they’re great at empathy. It’s hard to get them to be pissed off at you.
[laughter]
PAHLKA: — referring them to other services. I get that we could go in that direction, too, but I still think that there’s higher-value work that people can do. I think AGI being closer than we thought it was, say, even last week — yes, it’s disrupting my thinking on this, too. But I also think that there is work that government doesn’t do today at all. If we can do a lot of these things . . . we’re not going to magically print money and have more safety net dollars for people, but what we care about, really, is addressing the needs.
There’s going to be, I think, a long time where it’s going to take us to figure out what are those needs that could be addressed by AGI. How do we actually get that technology to address those needs accurately? Test, again, with limited risk, et cetera, not just roll stuff out willy-nilly. Then I think we get to, what were we not doing that we can do?
COWEN: Should we have public-sector unions? Because they’re going to fight AGI, right? Should we consider just getting rid of all public-sector unions? They oppose reform. They don’t really like accountability in the proper method. Their goal, in part, is to protect jobs.
PAHLKA: I don’t know if we should or could. In the current reality, I do see that they are often, I think, advocating for policies that are actually not in the interests of their members.
COWEN: Sure.
PAHLKA: Something’s gone wrong there that needs to go right if we’re going to continue to have them. For me, one example of that is, they’re so protective of underperformers. Underperformers are a very small part of the civil service. I’m critical of the civil service in the sense that we just talked about, where there’re too many people whose jobs is to stop things, but that doesn’t mean that person is an underperformer. They can be doing a fantastic job at what they were told to do, which is, don’t let anything happen, or make sure you’re using these guardrails to the maximum extent, for instance.
But there are actual underperformers, too. While there’re not that many of them, they really drive the rest of the public service crazy. It’s crazy to me that the unions don’t say, “Actually, for the good of most public servants, let’s make it easier to remove these underperforming employees.”
COWEN: There’s some asymmetric information embedded in the problem. The people who are losing their jobs — they scream loudly. The other people don’t have to pay the cost of that, and so they’re willing to let the union be protectionist. Isn’t that more or less intrinsic?
PAHLKA: I think the other people are paying the cost.
COWEN: Very indirectly, right? Asymmetric information. Those costs are very widely distributed. Whereas, if you’re losing your job for being an underperformer, you’re screaming.
PAHLKA: Yes, that’s right. The unions — if they were performing properly to actually advance the needs and interests of all of their members — would take a different stance, I believe.
COWEN: But any institution, you can say that. “Well, if the people were doing their job properly . . .” But you need to design the institutions for the fact that they’ll pursue their own self-interest. We’re in a university. There’s university administration. Some things they do well, not well, but it’s never an answer to a problem to say they should do their job properly.
PAHLKA: That’s fair. I don’t know enough about unions to know how they would work if they were working properly. Philip Howard’s made a bunch of points about this that I’ve warmed to over the years.
There is a different set of circumstances for public-sector unions than those in the private sector. I think that’s part of the problem, that it’s been directly translated into the public sector. Philip Howard’s much more articulate on this than I am, but I would, maybe slightly counter to Philip, say that there is a higher need to protect civil servants from firing for a certain set of reasons.
We do want an independent civil service that can say, “Actually, the science says X.” Now, an administration may choose not to follow that science, but you want to retain that person and their, say, scientific expertise or their bureaucratic expertise, and not create a situation in which the entire civil service gets wiped out every time you get a new administration. That seems to be where we’re headed. I don’t necessarily see public-sector unions succeeding in protecting against that, but to the extent that they exist to do that, I do value that. I do think we need independence.
COWEN: If we think about the United Kingdom — the country, their government — it seems quite stuck. Do you have an interpretation of how that’s happened? They haven’t had productivity growth since the great financial crisis. They have a big fiscal problem. It’s hard to see signs of progress. The government appears paralyzed. They’ve had many different prime ministers. What are they doing wrong?
PAHLKA: I don’t know. It’s not really my topic. I actually get a lot of inspiration from the UK because they started the Government Digital Service there, which was the inspiration for USDS. In fact, a lot of the work they did for Code for America. Also, just picked up on their principles and their values, but I don’t think that has been a salve for stagnation economically. This is a little bit out of my territory, but when I look at what’s written about the problems in the UK, I see a lot of that here in the US as well.
COWEN: Take Singapore. I’ve been to Singapore many times. It’s arguably the best functioning government in the world. When you look at Singapore, does that in any way give you pause? You just think, “We should be more like Singapore.” Or you see what has been required to make Singapore work, and it puts you off a bit.
I’m not talking about how democratic is it or not. I know that’s one set of issues, but just the talent drain from the private sector. There’s a certain conformity in Singapore. Some of that comes from size. But when you have the super cooperative, well-disciplined civil service, that does come with some costs. How well have they really done when you consider all possible factors?
PAHLKA: Look, I think there are obvious benefits to the system that they’ve set up, the value that they’ve placed on civil servants, the technocratic extreme competence that they display. You could also say the same thing for Estonia. There’s always this desire to say the US should be like X or Y or Z. The reality is, yes, you have a different culture. Would we be as orderly about it? No, we have a different culture.
I think another thing people don’t recognize when they’re trying to make comparisons between the way we run our government and any other country is that we have policy complexity and legacy that just goes back further than they do. We didn’t clean up [laughs] for 250 years. We’ve added and very rarely subtracted. If you look at a country like Estonia, their problem is not our problem. They have a relatively greenfield environment in which to create the digital infrastructure, but also to implement in a policy framework.
You look at something like unemployment insurance, and it doesn’t really work here. It still doesn’t work. We threw our hands up and screamed during the pandemic and said we would fix it, and we have not fixed it at all. It’s going to be a disaster if we have another spike in unemployment insurance claims.
Part of that is because it goes back to the 1935 Social Security Act. You have 90-something years now of just adding, adding, adding, adding. You’ve got literally thousands of pages of active regulations that make something that should be a very simple program, like I get some portion of my salary under some circumstances for some number of weeks. It just shouldn’t be that hard, but because we have let the policy accumulate and accrete over decades . . .
The challenge isn’t digitization. You can digitize something. The challenge is creating a system that is resilient and scalable with that much policy craft. I think both Estonia and Singapore have the advantage of just having less legacy that —
COWEN: And they’re small, right?
PAHLKA: And they’re small, and they don’t have federalism.
COWEN: Sure. Let me give you a weird hypothesis. Tell me what you think of it. If someone argued the US has the highest state capacity in the whole world because the number one feature of state capacity is that you can convince enough of your citizens to fight for your country and die for it, the US does pretty well for that. But to do well on that, your country, in some ways, has to be nutty, a bit militaristic, or maybe you need gun culture or diverse regions.
A lot of the military comes from the south, which is a more conservative part of the country, and so on, and that a lot of the other problems we have actually stem from our high state capacity because we’ve decided to emphasize talking people into fighting for their country, being willing to die for it. Maybe Israel is pretty good at that, too. That’s just another way of diagnosing the problem, that we’re doing way better than we think. We prefer to be big and really strong and militarized, and the rest is collateral damage, but we live with it.
PAHLKA: I’m not sure I agree with the definition of state capacity. I could see that being part of it, but I’d also not accept the notion that because we can convince people to go in the military — though we’re having terrible recruitment problems in the military. We’re doing poorly on that —
COWEN: But compared to other countries, we’re way ahead of just about anyone.
PAHLKA: Sure, but that is not translating into an ability to deter our adversaries. We lose our war games with China. [laughs]
COWEN: We protect more of the world than maybe any country ever has before, I would say.
PAHLKA: Well, we did. [laughs]
COWEN: Well, it’s somewhat less now.
PAHLKA: Somewhat less now.
COWEN: It’s still at an all-time world historical peak. US soldiers are incredible fighters. You could have them in Afghanistan, Iraq. Maybe very complex missions, connection to life back home is highly unclear, and they fight incredibly well. Maybe that’s at least half of state capacity that matters, and we’re masters of it.
PAHLKA: I think you’re getting at one thing which I agree with — that the separation between the parts of our country that are involved in the military and the rest of the country is pretty damaging. I think that’s a big problem. I’d also, I think, somewhat agree with something behind that question, which is that when we have too much of something, we get bad at it in a certain way. When I talk about capacity of the state to do anything — and my background spans from food stamps to military readiness; people often go to resources — that capacity is money, essentially, and people.
I think very often it’s, in fact, the situations where there is less money and fewer people where you get services delivered better. I’ll give you an example of that. When we started working on food stamps in, I think it was 2012 in California, California had the second lowest participation rate in supplemental nutrition assistance in the country. The only state with a lower rate was Wyoming. Maine, on the other hand, was, I can’t remember, somewhere in the top five or ten. Maine spent orders of magnitude less on the systems to enroll people.
We had tons of money. You think about California being tech-forward. It’s where Silicon Valley is. You would think that the online enrollment system would be great, but no. Because we could put a ton of money into it, we way overspec’d it, gathered way too many requirements, gave it to expensive vendors, and we ended up with an enrollment system that had 212 questions. Just put everything into this.
It took far longer to fill out that form on a computer than you could spend on a computer at the library, which is where a lot of people fill out food stamps applications. When the computer time’s out after 30 minutes, you haven’t finished your application. There’re a lot of these little friction-y ways that we kept people out of the system, which starts to account for that really low enrollment rate. It wasn’t lack of resources. It was too many resources.
COWEN: As you know, government does not typically have its own AI, not in the United States. As AI becomes more important, will that lead to a de facto mass privatization through procurement? The government will contract out services to the major AI companies. That will be done privately. Procurement will become far more important. The government itself — it won’t quite vanish, but it will be fundamentally different than what we’ve all grown up with. Is that just going to happen?
PAHLKA: I think that there is a world in which you get a government with enough technical competence to procure AI and manage AI well. The problem with our procurement today is that we buy software the way we buy pencils and cars. We’ve bought a thing. AI isn’t like that, and actually, software isn’t like that.
This is a lesson we should have learned in the Internet era, and now we need to learn even better in this AI era, is that you can’t spend five years developing requirements and sending it out for bid, and then having it come back, and then say, “Okay, I bought this thing.” You need the internal competence to do that process far better, far faster, and then to actually own and run that software. It has to be yours. I think we could do that.
There are rumors that DOGE is actually pro-insourcing more tech talent in government. I know you’re not hearing about that now. It may just be a rumor, and it may not be true, so don’t quote me on this. I certainly think that folks in Musk’s world came in and looked at government, and said, “How do you even operate with so little technical competence in-house? That’s crazy.” And it is crazy. They’re right about that.
We’ll either end up, I think, even further privatizing not just the software, but the whole operations as the software and the operations are increasingly melded — again, this is not new — or we’ll be forced finally to gain the internal competence that we have always needed and start to do this a little bit better.
COWEN: Let’s say you’re the nation of Peru, and AI becomes more important. You run a lot of your education system through American AI, a lot of your military, your cybersecurity, processing of social services. At the end of all that, after, I don’t know, 15 years, are you even a sovereign nation still? Are we seeing this fundamental shift in what a government is? If the US government does something, at least it’s US AI. Other than the US and China, it’s far from clear how many countries will have their own AI. What’s going to become of Peru?
PAHLKA: I can’t answer that question, [laughs] but it’s an excellent question. I think you may see countries realize this and take more drastic steps to maintain their sovereignty, which I don’t know how they’re going to do it.
COWEN: I think it’s just stay backward, right? They could just not use AI, and probably some will make that decision.
PAHLKA: I think some will.
COWEN: But that’s a huge cost. Then there’re countries like France, where maybe they can have their own AI. They haven’t succeeded so far, but they could at least make a run at it. Would you tell France, “Make sure you develop your own AI so you’re controlling your own government”?
PAHLKA: Question back to you. Is there some way in which the market fixes this because there’s a market for AI that doesn’t implicate that there’s Serenity?
COWEN: I worry that the economies of scale are in conflict with a number of nations in the world today. We’re going to see a very radical shaking out that will go fully unadvertised, but at the end of it all, geopolitics will be very different. I don’t know that France can build an AI good enough, actually. They had Mistral. They still do. It’s not making money. People want to buy it. Macron says we’re going to basically prop it up, but you can’t just prop it up. It has to be good enough to work and be competitive. I don’t know.
PAHLKA: Won’t there be companies that have enough AI expertise that they’re able to cater to the needs of a sovereign nation and say, “I’ll do this for you in the way that fits your needs”?
COWEN: It could be France contracts with Anthropic, and Anthropic, in a sense, runs the French government, and maybe we trust Anthropic. I’m not necessarily opposed to that by any means, but again, it’s a very different world.
PAHLKA: It is a very different world, and it is very hard to game this out.
COWEN: America and China, for sure, will have their own AIs, and maybe those countries just become much more powerful. Then you’ve got to decide, whose network are you in anyway?
PAHLKA: Yes. This is all coming at us very, very fast. I think the point’s been made that this is the first time that such a transformational technology hasn’t fundamentally come out of US government resources. This is not one that you can ultimately trace back to DARPA or DOD. At least then, even if it was privatized, and so much of the value came out of the commercialization of DOD or DARPA investments. Since that’s not the case this time, they don’t really even understand it.
I think even before you get to the questions about other sovereign nations, we have the question of the relationship between the companies and the US government —
COWEN: Of course.
PAHLKA: — and how we’re going to sort that out.
COWEN: Not to mention federalism, right?
PAHLKA: Not to mention federalism.
COWEN: We have plenty of governments in this country.
What’s your favorite novel about bureaucracy?
PAHLKA: [laughs] A novel about bureaucracy?
COWEN: A novel. I would say a number of Kafka novels. Maybe that’s too negative for you.
PAHLKA: Can I use a TV show?
COWEN: You can use a TV show.
PAHLKA: There’re so many. Just for a positive vision, I’ve got to call it Parks and Rec. [laughs]
COWEN: Parks and Rec. What does Parks and Rec show you? I’ve never seen the show.
PAHLKA: You’ve never seen the show?
COWEN: Yes.
PAHLKA: It just indulges in that banality of things like public meetings that are dominated by the loudest voice and how ultimately humor and just communities get through it. It’s a very funny show. It often highlights just how mind-numbing bureaucracy can be, but also how people end up making it beautiful and funny.
COWEN: The Kurosawa movie, Ikiru, is very good if you haven’t seen it. I talked Ezra into watching it.
PAHLKA: Isn’t that the one that’s been remade in the UK recently?
COWEN: I’m not sure. Maybe.
PAHLKA: Oh, I’m going to forget the name of this movie [Living], but it is excellent. I believe this is the British version of that, about a civil servant near the end of his life —
COWEN: Yes, exactly. That’s it.
PAHLKA: — and the playground.
COWEN: Correct. It’s coming back. I’ve heard about this.
PAHLKA: I’ve seen the British version, and I should have named that. It’s an excellent, excellent movie.
COWEN: That would be my favorite movie about bureaucracy.
COWEN: Do you still do gaming?
PAHLKA: No.
COWEN: How do you think about not doing gaming, this previous part of your life? I don’t play chess anymore, and I feel I can’t, I shouldn’t, I won’t.
PAHLKA: Gaming takes up a lot of time. It’s hard to be a casual gamer. My gaming now is, I do The New York Times games every day: Wordle and New York Times crossword.
COWEN: So, you are still a gamer.
PAHLKA: Yes. Since you’re referring to me working in the video game industry, running the Game Developers Conference for many years of my life. You can’t play Doom for five minutes on the bus. Many, many hours have gone into many PlayStation games and Xbox games in an earlier part of my life, and it’s just not part of my life anymore.
COWEN: What do you think you learned from that being such a big part of your life?
PAHLKA: That’s a good question. I went from working in essentially little bureaucracies — my first job out of college, I worked in a child welfare agency, and then at a healthcare think tank. Then I went away for a year and came back, and I got this job in tech. It was amazing to me how creative game developers are. They have this completely unconstrained ability to just imagine entirely different worlds, and of course, the economies of those worlds and build the systems that simulate all sorts of aspects of our lives.
Then I moved from that into this Web 2.0 era, and then went back into government. I think what I kept with me is that you can imagine fundamentally different things. This is an imagination that is so powerful. The quote I chose for the book Recoding America is a David Graeber quote: “The ultimate hidden truth of the world is that it is something that we make and could just as easily make differently.” I think I got that from the designers of Ultima Online.
My first husband was on the game Spore. It was a Will Wright game. You can have a whole different world, and once you realize that, all these constraints in our daily lives — you realize they’re manufactured. I think we have a little bit of that right now.
This is going to sound extremely boring compared to what I just said, but since we’ve been touching on federalism a little bit — you talk about the federal civil service and people are like, “It’s a thing. It can’t change. It hasn’t changed since 1978 really, little changes here and there.”
But we don’t just have the federal civil service. We have 50 civil services in states that are wildly different. Some states have at-will employment. We can’t imagine that in the federal civil service, and I’m not advocating for that, but I am advocating for us getting out of the trap of “this is the only way it can be” when clearly, even in our own country, there are 50 different models that we could pull from.
COWEN: Which do you think is our best-run state?
PAHLKA: I really can’t answer that, but I am very interested in Pennsylvania under Shapiro. Great paper by Don Moynihan recently about the work that they’ve done to just speed up things, like permits. Maybe it’s boring stuff, but it matters to people.
COWEN: Their schools aren’t that great. Their roads are fine, but he can’t have changed that much. The state as a whole doesn’t seem to me exceptionally well governed. Maybe in the middle somewhere.
PAHLKA: I’m more talking about where I see interesting change happening that others could follow. Colorado as well — I think what Polis is doing is really interesting.
COWEN: That seems to me a well-run state overall.
PAHLKA: Yes.
COWEN: Utah.
PAHLKA: Yes. I don’t know enough about Utah to say that with great certainty, but yes, I think I could see some of that. There are states that I think have either tackled that procedural accretion or just not let as much procedure accrete in the first place that are going to have an easier time. California, sadly, is not one of those, where I used to live. Tell me what you think of Virginia since we’re in the state of Virginia, and I live here now.
COWEN: It used to be one of the top few. It’s declined somewhat, but still well above average. It has genuine two-party competition, which I think is a good thing.
PAHLKA: Yes.
COWEN: It has this cash cow, the Pentagon, which creates jobs and revenue, yet no one in state government can touch it. You can’t grab from it. You can’t take corruption from it. It’s not like Alaska oil revenue. That’s a huge permanent plus that is fully protected. That’s a great natural endowment. Again, it’s one of the best states to live in, I would say.
PAHLKA: I chose well.
COWEN: Yes. Where did you grow up?
PAHLKA: I was born in a naval base in Maryland, but very quickly moved to Austin, Texas, and then moved to New York when I was in 4th grade. I grew up in New York City.
COWEN: New York City.
PAHLKA: New York City.
COWEN: How well run is New York City today, in your opinion?
PAHLKA: It’s certainly cleaner and safer than it was in the ’80s when I was growing up.
COWEN: Is that because it’s run better or just because it’s richer?
PAHLKA: Probably just because it’s richer. To be honest, it was smelly [laughs], and I got mugged a couple times, but I don’t regret growing up under those circumstances. I think it made me who I am. I have a fond affection for New York in the ’80s, even though it was a mess.
COWEN: I was there often in the ’80s. It was a great time.
PAHLKA: I went to a public school. I went to Bronx High School of Science.
COWEN: I grew up in New Jersey right across the river.
They call you into New York City. “We’ll do whatever you tell us.” What do you tell them to do?
PAHLKA: I have a great answer for this because we just wrote a paper. If you want your government to be able to achieve its goals — and I think New York’s got some good goals that they’re not achieving — you need to be able to hire the right people and fire the wrong ones, so you’ve got to look at that civil service system. New York in particular has a very bad way of hiring. They still are stuck in these artifacts from the Moses era, where you do these civil service exams, and they only happen at certain times of the year. All this stuff that just makes hiring really, really hard. You’ve got to fix that.
Second, reduce procedural bloat. That’s sort of my favorite one these days. These go together. The procedural bloat is what creates that ineffective hiring system. The third thing is you have to invest in digital infrastructure. Lots to say about that.
Then the fourth thing is that you have to close that feedback loop between policy and implementation. What that would look like in New York City — I guess it’s the same that it would look like a lot of different places — is that your relationship between law- and policymakers and those that implement those laws has to change. You’ve got to stop firing and forgetting as you make policy, and figure out how to build the affordances for that ongoing iterative feedback.
COWEN: To close, tell us about your work with Niskanen.
PAHLKA: I am loving working with Niskanen. They were the only think tank that had anything on state capacity when I was finishing my book. I hope I’m helping build a team there that can do much more to articulate how any government, especially in the US, at any level, can increase its ability to achieve its policy goals. We have a wonderful team there led by Ben Bain.
We’re getting a lot of interest from people that never used to pay attention to things like technical infrastructure in the agencies, even from health staffers and members of Congress. I’m very hopeful that we’ll start to make a real impact, not just in Congress, but working with states and cities around the country to tackle these four pillars I just talked about.
COWEN: Jennifer Pahlka, thank you very much.
PAHLKA: Thank you. This was a lot of fun.