Sunday, August 22, 2010

Tale of Three Bureaucracies

Herewith, I provide the first-hand experiences of calling three different organizations for customer service. Two of them are large private-sector companies operating, allegedly, in a competitive, free market environment that forces them to be both efficient and effective. The other is a large governmental bureaucracy that one expects, if one believes everything one hears, to be riddled with the inefficiency characteristic of the public sector.

Tale #1 -- DSL with Verizon

This happened quite a few years ago. I was up-grading from my interminably slow dial-up Internet connection. I called Verizon, provider of DSL service. I don't recall the process of signing up to be anything other than routine. However, the service never worked. I called customer service several times and talked with technicians at great length (having been patient enough to be "on hold" at even greater length). Although I didn't keep time, I'm certain that I spent, in the aggregate, over a period of several days, close to two hours talking with technicians. Finally, as exasperation crowded out patience, I decided just to cancel the service. After the usual litany of "dial 1 for this, dial 3 for that," etc. I was lucky enough to get a live person on the line, who tried to talk me out of canceling. "According to my records," she said, "you haven't yet talked with the highest level of technical support available." I replied, not very tactfully if I recall, that having already spent many hours on the phone, if they hadn't yet connected me with their most skilled technicians, I had no desire to talk to them now, and the service was duly canceled. [Note: my cable Internet service usually works fairly well.]

Tale #2 -- Cable TV with Time Warner

This happened a few months ago. After several years of successful service with this company, suddenly the cable started going out on a regular basis for no apparent reason. Naturally my first step was to call customer service. To make a long and frustrating story short, after several visits from technicians, sometimes with temporary success that lasted anywhere from a few minutes to a few hours after they left, I gave up and returned my cable box to the nearest Time Warner office. The lady behind the counter kindly accepted it and canceled my cable TV service without asking me why I was doing it. [Note: Direct TV is working just fine.]

Tale #3 -- Social Security Administration

This happened a few months ago also. Because (confession time!) I was nearing the age when certain things needed to happen, I called the government (you know, Ronald Reagan's "I'm here to help you" guys) to ask a few questions. I got a voice recording explaining to me that I could hold, and the estimated hold time was 8 minutes. Or I could leave my name and telephone number and someone would call me back. I chose the latter, hung up, and pursued other tasks. Sure enough, about 8 minutes later, my phone rang, and a nice lady with the Social Security Administration talked with me about 5 minutes, answering all my questions. [Note: according to a recent LA Times article, this government agency spends about 0.9% of its resources on administration, with the remainder going to actual program benefits. Compare this to the approximately 20% of total revenue that insurance companies claim they need for administration and profit, crying bloody murder if anyone suggests that they be required to spend more than 80% of their premiums on actual benefits for policyholders. Could it be that we might actually get 19.1% better insurance coverage if we allowed the government to run the program? I don't know; you tell me.]

Thanks for reading!


  1. Regarding the SSA administration costs, what you want to compare it to are the administrative costs of running an annuity, not things like car insurance (the SSA doesn't investigate people's car crashes).

    Also, SSA has a big advantage in their administration costs, the most expensive cost, collections, is not on their books. It's done by the IRS at no charge to the Social Security Administration.

    As to the phone/cable companies, they're awful, as you'd expect when nobody is allowed to compete with them.

  2. Also, your switching to a competitor for TV service is what should happen in a market economy. You had a sucky company, and now you have one which doesn't suck. Time Warner is indeed paying for having bad customer service.

  3. I really enjoyed this post, Ron! Thanks for a fun read that definitely has some thought provoking points. I would also add the private health care companies as another monstrosity of bureaucracy from my own experience, and they indeed do not pay for having bad customer service. In fact, they seem to have only gained much support through the "health care reform." Though it appears that one must never mention a public option as a competitor to these companies. That view can only apply to all other services such as TV and phones apparently. Anyway, a lot here that could be further explored. Hope to see a follow-up post on this sometime!

  4. I just want to agree with you about the efficiency of federal programs as compared to private mega-institutions. I have been more frustrated in dealing with "customer service" at private big companies than with the many federal or state social programs I have needed through the years.
    I have faced ineptitude in both spheres but it is crystal clear how little the big corporations care about you at all- just their bottom line, whereas the public agencies can be bulky and inefficient but it always feels like beaurocracy rather than apathy.
    Hooray for Social Security and Medi-care. The elderly are the only portion of the population that isn't declining into poverty at the present- all because of social security!