The Necessity of Government: Crafting a Clear Strategy for the Future

Robert Hacker
19 min readAug 7, 2023



“The history of human civilization reflects a progressive increase in the complexity of large scale behaviors…When the complexity of collective behaviors increases beyond that of an individual human being then hierarchical controls become ineffective. Hierarchically controlled systems must yield to networked systems.”[1] — Yaneer Bar-Yam

Years ago, I read the statement, “Governments have policy because they do not have strategies”. As I become increasingly concerned about the state of world affairs, the impending environmental apocalypse and the complete disfunction in Washington since the year 2000, this statement about the absence of strategy in government has been haunting me. The current situation is further exacerbated by the start of the 4th Industrial Revolution and an unprecedented change in technology and the related wealth creation model. The purpose of this article is to breakdown these problems and then hopefully to outline a strategy for the U.S.

First, let’s begin by defining public policy. Perhaps, we can start with “a system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives”.[2] “Policy provides rules for daily decision making across a wide range of situations.” According to the OECD, there are nine theories to explain change in policy.[3] Someone said that as academic theories on a subject proliferate, the real impact of the subject diminishes. Using that logic, we can begin to doubt the impact of government policy. Did you notice in the definition of policy there was little requirement for tangible results. At best, policy looks like “guardrails” perhaps for government bureaucrats. Except for Black Swan[4] events like Covid, someone might argue that the proper role for government is as guardrails. Such an approach leaves the individual free to experiment, innovate and translate their ideas into tangible outcomes that benefit society. Fine, but do we then need a federal budget of $6.2 trillion (Congressional Budget Office, 2023), estimated national debt of $32.3 trillion (2023) and an annual federal government interest expense approaching $1 trillion (June 2023) for guardrails. National debt (to cover budget deficits) as a % of GDP has increased from 56% in 2000 to 129% in 2022,[5] compared with 84% in the European Union (EU).[6] (Even if we had preserved the pre-Covid debt levels, the debt/GDP in 2019 was 110.3%.) What the near linear graph below demonstrates to me is that there are no economic benefits from economies of scale, Moore’s Law or network effects from government spending. As GDP increases one would expect for there to be a reduced need for government spending to produce the same GDP. Equally troubling, the International Monetary Fund (IMF) believes[7] that increasing government debt drives up interest rates, crowding out the private sector borrowers and reducing overall confidence in a government. For the IMF, in the long run government spending is not expansionary and such policy does not produce economically efficient results. As we look forward to a new strategy for the U.S., a primary concern should be to reduce government spending and borrowing.

Perhaps the debt is increasing because the government is funding social projects. Sorry, what the government calls “welfare” totaled only $1.2 trillion[8], or 19.4% of the budget compared to 39.9 % for the EU.[9] U.S. Federal spending on the environment is only $11. 2 billion[10] and the Department of Education has a budget of only $76.4 billion. The federal government is not really focused on social and environmental programs, despite oratory to the contrary. When we compare the statistics with the Washington oratory, we understand why the government prefers the ambiguity of policy with few tangible deliverables.

If the government had a strategy, what might that look like? Let’s define “strategy” to begin. The renowned Harvard Business School Professor Michael Porter said that a strategy must offer a unique product or service that creates value for a customer and is economically sustainable through competitive advantage.[11] With the benefit of an additional forty years of thinking and writing by many thoughtful people in academia and the private sector on economics, entrepreneurship, technology and social issues, today I might define strategy as the “optimum allocation of resources to create value for the chosen stakeholder(s)”.[12] Such an optimum allocation [of national resources] might be pursued by: (1) the clear identification of priorities, (2) recognition of the stakeholders in the system, (3) recognition of the chosen stakeholder to be best served, and (4) recognition of the increasing uncertainty (risk) from the effects of networking and advanced technologies. I would now like to turn to develop answers to the four questions posed above and thereby produce a go forward strategy for the U.S. [I am prepared to serve as President should public sentiment dictate I make such a sacrifice.]

1-Clear identification of priorities

In 1994 John Elkington coined the phrase “triple bottom line” as a message to corporates that they needed objectives beyond simply profit and should include people and the planet.[13] The triple bottom line became “profit, people and planet”. If I was a politician, I would probably state it “people, planet and profit”. But if I was a visionary President, like our last visionary President John Kennedy, I would state the priority — Planet, People and Profit — and that is what I think the priority should be for the U.S. for the foreseeable future of 50+ years. Why do I prioritize the “planet” or more specifically the “environment”? I ask you, what is the risk in that? Corporate consultants McKinsey identified five “megatrends” in 2017 — water, food, healthcare, energy and the environment. Each of these problems requires an environmentally sound strategy to be favorably resolved (unless we plan to evacuate to the moon) and McKinsey points out that these problems are all interconnected.[14] Plentiful business opportunities are presented in resolving these problems. The “Modernas” of the environment should be right around the corner. Why do you think materials science and engineering, nanotechnology and synthetic biology are so popular today as startups and corporate initiatives?

Perhaps the more interesting question is why do I put the people ahead of the profit (the corporates)? As I tell my students, I am a “capitalist dog”, lifelong devoted to creating and growing companies and now teaching how to do that with the exponential technologies of the Fourth Industrial Revolution (4IR). Nobel Prize economist Herbert Simon provides the answer. Simon showed that we can at best optimize and never maximize results because we never have complete information. In optimizing, we select the information we consider and therefore we can prioritize for people and the environment in business decisions (as long as we maintain sufficient cash flow and shareholder support). Nobel economist Milton Friedman was wrong when he urged corporates to maximize shareholder returns. Simon showed that was impossible. Elkington and WEF should concur. They both use the term “balance” to reconcile the triple bottom line. We must balance the benefits for the people, profit and planet. Balancing might work if we want a policy, but a strategy demands we optimize and for that we should set priorities. In such a scenario, any organization would first establish their environmental priorities — tangible goals and objectives, then define their values for how to treat people and finally find a way to behave in an economically responsible way. We could probably even use advanced computational modeling to do scenario analysis if the priorities were this clear. Don’t laugh! Go read about agent-based modeling or multimodal AI.

Another philosophy that puts planet and people ahead of profit is the teachings of Nobel economist Elinor Ostrom. Ostrom believed that certain assets were subject to freeloading, where not all users of the asset paid their fair share. She called this situation the “tragedy of the commons”. For example, corporates make much of their need for better educated workers that can use the latest technology, but what specific contribution do the corporations make to cover the cost of education. Maybe a corporate tax should be imposed, specifically to fund public education or free university degrees. Or, maybe we need a tax based on the particulates a company injects into the air supply. Too complicated and expensive to calculate. Nonsense, another SEC-type organization would suffice. We could probably provide a model to do the calculation and determine the payment. To put planet and people ahead of corporates, it would just take initiative and legislation. Technology, industrialization and the corporates gave the U.S. one of the highest standards of living in the world, but we can no longer afford to pay the price. The funding for the necessary social changes must come from the corporates.[15][16]

2-Recognition of the stakeholders in the system

Stakeholders is a concept at the core of systems thinking, a discipline developed by MIT Professor Jay Forrester to understand complex problems. A system is a set of elements that are interconnected for a purpose or to produce an outcome. I think of systems thinking as defining the problem by drawing a permeable boundary, with everything inside the boundary an element in the system that creates the context. In 1972 Forrester’s systems thinking approach was applied to analyze the environment for the Club of Rome, which led to the original determination that 2050 was the critical deadline for climate remediation. In recent years, as the complexity and interconnectedness of problems have become more apparent, systems thinking has become the tool of choice to understand problems and develop more holistic solutions. The Stanford and IDEO, the original developers of design thinking, have recently advanced a new methodology called Integrative Design, that combines design thinking and systems thinking. I like this combination of human-centric design thinking with holistic systems thinking because I have always believed system thinking over emphasized stakeholder organizations at the expense of the people, patients, owners or citizens — the humans the system should be serving.

So, who in a system addressing a problem is a stakeholder? Stakeholders include any agency or organization in a system motivated to address and/or resolve a specific problem or affected by an issue. NGOs, foundations, regulators, universities, hospitals, financial institutions, religious organizations, technology providers, public trusts, manufacturers, suppliers, distributors, companies, consumer advocates and watch dogs might all be examples of stakeholders. Of course, another frequent stakeholder is the government and its agencies.

Governments exist today at the national, state and community level. Governments have existed for over six thousand years, since the Sumerians first introduced the concept. A fundamental concept in a government is the hierarchy. Power flows from the ruler downward to more local authorities, with the ruler giving up just enough power and resources to maintain the loyalty of their subjects. While such a structure looks to be based in political and economic concepts, it is explained better by the availability of information and network theory. Those at the top of the network hierarchy have greater resources and therefore can more efficiently collect and analyze more information to preserve their power, wealth and decision-making authority. More specifically, in small, disorganized networks, large nodes (kings, dictators, national governments) appear. In large, organized networks (such as we have today), small nodes (the individuals) have sufficient information to succeed.[17] If we think about the U.S. in 1776, the country was small and disorganized (difficult networking) and a strong national government was adopted. If we look at the U.S. today, we have unprecedented connectivity and networking, information flows relatively freely, and large nodes have become obstacles. Why? Because we have come to expect real-time response first as consumers and increasingly as citizens. Hierarchy fosters large nodes and bureaucracy rarely improves timeliness. Another important point to remember is that as climate change causes an increasing number of natural disasters, the local level of government is increasingly expected to provide an adequate response from local resources. The federal government is in large part relegated to resupply resources. Covid response might be an example. Local government, smaller, onsite with local knowledge is today in many ways better able to serve the people.

If we think about the Blockchain and Bitcoin, these “technologies” are enabled by the widespread network of the internet, a focus on the individual rather than relying on a government and exist and function without any hierarchy or centralized corporate “choke point” or control. These modern technologies represent for me an alternative to a portion of the role of government in the 21st century. I think these technologies and others will permit us to redefine the stakeholders in any system. More simply, what role does the national, state and community government play in a particular system? Where do we achieve economies of scale in “government” services? Who can provide “critical” services in real-time? Redefining this role is an important part of redefining a national strategy for the U.S. Redefining the power of government is so important that I think we now need to focus on 4 Ps — Planet, People, Profit, and Power. We may very well need to redefine our definition of government in order for humanity to survive!

President Eisenhower warned us in his 1961 farewell address that the military-industrial complex had become “so large and so powerful that it can be seen to dominate the whole of American life.” Simply put, we have come far enough and that power block needs to be reduced in importance. It will not be easy. If not for the menace of China, I would argue for reduced defense spending and a redistribution of that funding to other problems. In good conscience, I cannot do that. If democracy is lost in the U.S., democracy would be lost to mankind … forever. The answer, therefore, must lie in a more efficient defense department, better inventory management of supplies and munitions and the more efficient development of more versatile assets to be deployed for warfare. We rarely talk about the management of defense spending, but the topic does not deserve to be considered sacred.

An alternative strategy to high defense spending would be to return China to the philosophy of Deng Xiaoping, the paramount leader from 1978–1989. He fostered socialism, economic growth and reduced military tensions with the U.S. Today the Chinese government struggles with slower economic growth, the current network interconnectedness, the role of central government and hierarchical organization. Deng’s successor has opted to roll back the liberal policies that fostered economic growth in China. The former liberal policies are perceived to threaten the central power of the communist government. Saber-rattling, nationalism and the recent crackdown on internal spying are the current strategy to distract the population from a slowing economy and social problems. As a policy, I would have advocated that China emulate Singapore and their benevolent dictatorship, which has remained in power for over 60 years, managed strong economic growth and achieved these results by providing much equal opportunity to a very multiracial population.

3- Recognition of the chosen stakeholder to be best served

As I mentioned earlier, we are at the beginning of the 4IR. History shows us that at the beginning of such transformative events not only technology, but social customs and culture go through transformative change. For example, in the 1960s at the beginning of the third industrial revolution (3IR), we had the expansion of women’s rights, an active civil rights movement and the antiwar movement (Vietnam). Today examples of transformative change are seen in DEI, LGBTQ and ESG (the corporate reporting standards for social impact).

I see these social trends as an indication that we must finally support the minorities, however we wish to define them, starting with Blacks and Hispanics. Blacks and Hispanics now represent 32.7% of the population[18] and are expected to reach 42% by 2050.[19] The National Science Foundation (NSF), for whom I have much respect, believes that the country needs to focus on the education of minorities, particularly in STEM, if we wish to remain competitive on a global scale.[20] According to the NSF, “Hispanic workers represented 15% of the total STEM workforce in 2021, … and Black workers were 9%.”[21] According to the NSF, the country cannot remain competitive with much larger countries such as India and China if the Black and Hispanic populations are not a larger percentage of the STEM workforce. Not exactly a moral argument, but nevertheless compelling to me. How do we make such a change to engage the Hispanic and Black populations?

First, the politicians (both Democrats and Republicans) need to stop fostering resentment and jealousy among the minority populations. If we look at history, Martin Luther King, Mandela and Gandhi all showed us that progressive social change is achieved by focusing on the desired positive social outcome and not the resentment and negativity of hatred and violence. I teach my students that you do not understand a social problem until you can state it positively. (Ludwig von Mises warned of the resentment issue as early as 1927 in his classic work Liberalism.)

Secondly, as NSF urges, we need to focus on improving the available education for Black and Hispanic students at all levels, but particularly for preschoolers. National Institute of Health (NIH) Research shows that early childhood education plays a critical role in the success of the individual.[22] According to an NIH study, “education appears to be the most consistent, robust, and durable method yet to be identified for raising intelligence.”[23] While controversial for reasons I do not understand, “early childhood programs can produce large short-term benefits for children on intelligence quotient (IQ) and sizable long-term effects on school achievement, grade retention, placement in special education, and social adjustment.”[24] The research and message is clear to me. We need to devote more resources to early childhood education for Black and Hispanic students. I can see no risk in such a focus and would continue it through high school where the curriculum addresses more STEM subjects. One way to achieve this objective would be to increase charter schools located in nearby communities to bring more resources to Black and Hispanic children starting at age 3. Perhaps model the schools after those in Florida, where the results for charter schools and 4.2 million students have been very favorable.[25] Results nationally are finally following Florida to show that charter schools outperform public schools.[26] Setting aside my preference to reduce government at all levels, I like the idea of private companies providing services that compete with traditional state and local government monopolies such as K-12 public schooling.

The NSF concern about STEM education also brings up another point about education. The first technology paradigm of the 4IR is artificial intelligence, cloud computing and IOT (Internet of Things), a very real exponential lever of change in every aspect of our lives. This technology, built on networks collecting data in real-time and using the most powerful computational tools in human history, requires a totally different educational curriculum. Simply put, we need to teach science, math and engineering well enough (beginning in elementary school) so that people will be better able to pick the problems to solve using the AI. As Jeff Dean, Chief Scientist at Google said,

“AI is good at doing things that are complicated and repetitive, but it’s not as good at things that require common sense or creativity.”

This is the distinction that must be taught at the subject level to students for them to effectively use AI in any aspect of their lives. Value has always been created first by the problem selected. AI will handle the complicated, freeing us to address the complex problems — the environment, redefining government, social equality.

Recent nonsense from Senators Warren and Graham to establish a federal regulatory agency for AI is really nothing more than resentment of the billionaires profiting from the opportunity of new technology. We do need to address poverty in the U.S. The poverty rate for Blacks was 18.8% and 15.7% for Hispanics (Census 2020). Reverend Martin Luther King first proposed a better solution than resentment and regulation — guaranteed basic income. Perhaps we provide better job training, childcare and education and in return we pay a guaranteed basic income to those in need. We probably also need to rethink public housing in favor of more private home ownership in the minority communities. Home ownership builds generational wealth, which produces the capital for the next generation to pursue new opportunities in education and career.

As I said earlier, systems thinking begins by defining the boundary…of the problem. In simple terms, we need to decide the role of government as a stakeholder. Finland is consistently ranked as the best public education system in the world. In their system, the federal government has a role only as a funder and the only government standard is a national test to document graduation from high school. The six provinces in Finland have little say and local communities and cities define the educational system. I like this approach for the U.S. — local problems, local focus, local people. If someone could show the economies of scale from state involvement, then states could have a specific role.

One benefit of such a local approach is that it could be matched with a local industrial cluster strategy. HBS Professor Michael Porter said, “the enduring competitive advantages in a global economy lie increasingly in local things — knowledge, relationships, motivation — that distant rivals cannot match”.[27] The industrial cluster strategy is a fundamental tenet of a rare bipartisan federal-level agreement on legislative policy for U.S. economic development. The industrial cluster strategy advocates for a combination of local universities (research), trained labor and capital to develop a local opportunity and build a competitive tech-enabled economic development strategy. The matching of local education to local industrial clusters would be a variation on former Coca Cola CEO Roberto Goizueta’s popular advice, “think globally, act locally”. If the U.S. is to remain strong (and formidable) we need to address the issues of the minorities, provide them better education and build the fundamental tech-enabled economy of the 4IR at the local level.

4- Recognition of the increasing uncertainty (risk) from the effects of networking and advanced technologies

The Allen Institute for Artificial Intelligence (AI2) joins me in admiring the contributions of Herbert Simon. Some describe Simon as the inventor of artificial intelligence, and while that may be an overstatement, his career was devoted to early advances in the field. As AI2 researchers point out in a recent article:

Herbert Simon’s reflection that “…a wealth of information creates a poverty of attention” aptly describes the limited attention of researchers in the modern scientific ecosystem. Even within narrow areas of interest, there is a vast space of potential directions to explore, while the keyhole of cognition admits only a tiny fraction of the broad landscape of information and deliberates over small slices of possibility.”[28]

Simply stated, people and even scientific researchers have a limited ability to use the vast and rapidly increasing information available. This availability is compounded by the interconnectedness of a worldwide network that looks to be ever expanding. Today the scope of data pushes the frontiers of biology, chemistry, physics, engineering and medicine and now we further complicate by using synthetic data in these fields. This challenge is particularly relevant for government bureaucrats and decision-makers. How does the government official stay current in their field, select technology and infrastructure to support their responsibilities and ultimately propose recommendations that optimize for available information. Alvin Toffler in Future Shock (1970) saw the future challenge for the bureaucrat in the hierarchy:

“The increasingly unstable environment demands more and more non-programmed decisions down below; the need for instant feedback blurs the distinction between line and staff; and hierarchy totters. Planners are too remote, too ignorant of local conditions, too slow in responding to change.” (406)

Faced with the unprecedented challenge and threat from the Russian Sputnik, in 1958 President Eisenhower created NASA. It was formed by consolidating several federal agencies. NASA supported national defense objectives, but it also provided the first new means for space exploration since the telescope. Today geospatial data is redefining our understanding and management of many environmental, political and social issues. I digress.

Perhaps the federal government needs a central agency to manage the federal bureaucracy’s development of an integrated AI, cloud, IOT management infrastructure where state-of-the-art technology could be shared across the federal government to improve the use of information — a “digital transformation” strategy for government. A new NASA. We could pay for the new agency by eliminating many of the regulator jobs across the federal government that can be replaced by the proposed infrastructure and AI. Defense and national security agencies could have their own separate, integrated infrastructure, but since 9/11 I think they have been trying to do that. Given politician risk aversion, I suspect we will not opt for a new federal information infrastructure and instead will blame the next Black Swan on events we were not able to predict or plan for. We as citizens should not be so tolerant!!


Again Toffler. “Today as never before we need a multiplicity of visions, dreams and prophecies — images of potential tomorrows. … Today we suffer from a lack of utopian ideas around which to organize competing images of possible futures.” (421) Instead, Washington fosters hatred, social resentment and fear of technology.

The strategy going forward is clear:

1. Define the national priorities to focus on Planet, People, Profit in that order. Redefine the role of the federal government (Power) to achieve this mission and over time shift a reduced scope of government to the local level.

2. Recognize the need to redefine national education policy to focus on STEM education beginning in elementary school.

3. This redefinition of education should be the initial effort to uplift the underrepresented minorities so that they participate fully in the 4IR and achieve an equal share of the economic, social and cultural benefits. Additional efforts to foster home ownership for underrepresented minorities are required. Guaranteed basic income, in return for skills training, should be offered to introduce a greater percentage of minorities to better paying jobs.

4. Establish a new national agency similar to NASA to ensure that the government has the full benefits of AI, cloud computing and IOT to improve decision-making and forecasting [and maintain national security]. Pay for it by intentionally reducing staff and responsibilities at federal regulatory agencies.

“In order to sustain credibility of governance and long-term economic stability, we believe that Digital Policy is needed in addition to monetary and fiscal policies, to assure the quality, security, and credible use of data in the future” –Citi GPS: HOLISTIC DIGITAL POLICY.

The opinions expressed herein are my own and do not reflect the views of any organization with whom I am affiliated.





[4] Black Swans are very low probability, extreme consequence events. The term was popularized by Nassim Taleb.







[11] Porter, M.E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press

[12] The writings by Professor Richard L. Daft on topics such as organization, design and resource allocation may provide additional background.

[13] Elkington, J. (1994). Towards the sustainable corporation: Win-win business strategies for sustainable development. California Management Review, 36(2), 90–100

[14] McKinsey Global Institute. (2017). Resource Revolution: Meeting the world’s energy, materials, food, and water needs.



[17] West, Geoffrey. Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies. New York: Penguin Press, 2017.





[22] Barnett, W. S. (1995). Long-term effects of early childhood programs on cognitive and social development and school success. The Future of Children, 5(3), 25–50.


[24] Barnett, W. S. (1995). Long-term effects of early childhood programs on cognitive and social development and school success. The Future of Children, 5(3), 25–50.







Robert Hacker

Director StartUP FIU-commercializing research. Entrepreneurship Professor FIU, Ex IAP Instructor MIT. Ex CFO One Laptop per Child. Built billion dollar company