When drastic disruptions bring new political leaders, policymakers respond with major changes. We’re living in such a time, even if it’s not clear how much a pandemic, rampant inflation, international strife, and other events of the last half-decade contributed to the returning president’s government shake-up.

Properly executed, changes like those President Donald Trump’s team seeks are the political counterpart of Joseph Schumpeter’s “creative destruction” — the famous idea outlining how innovation and progress must sometimes come at the expense of older ways of doing things. But in other cases, what may at first look creative can be just plain destruction.

Making the proper assessment won’t be easy.

Creative destruction in the private sector, as Schumpeter might see it, is R.E. Olds inventing the moving assembly line for producing Oldsmobiles and Henry Ford installing the technique in a huge Michigan manufacturing plant. A new, transparent process redefines how cars are designed and assembled. Costs fall, prices plummet and the automobile reaches the middle classes, invigorating American life.

Still, it’s easy to notice the drawbacks first. Hundreds of small — one car at a time — carmakers bite the dust, as do a host of carriage makers and blacksmiths. Uncertainty plagues the industry as investors and workers figure out what the new world will look like. Most people are left better off, but some are seriously harmed, especially at the outset.

We Americans, having experienced the benefits of innovation, mostly accept this. Most people agree that members of a free-market community can try their hand at moving from idea to enterprise, provided they are willing to bear the costs.

After all, these innovators have risked their resources, and in the end, success will be judged relatively impartially and fairly by the consumer. Emotion and opinion matter less than whether paying for a Model T makes someone better or worse off. Olds and Ford learn what truly works and what doesn’t.

This is where the comparison between private and political creative destruction hits a serious bump in the road.

Though their political futures are at stake, Trump and his colleagues are not betting their own money on their efforts to improve government efficiency. In such situations, there is a tendency for creative destruction to go too far and become, very simply, destruction. They will have to walk this line carefully.

So far, thousands of probationary government workers and IRS, USDA, and Centers for Disease Control employees have been fired. USAID has come crashing down and the offices of the Consumer Financial Protection Bureau are closed, though lawsuits are pending.

There is talk of consolidating the banking oversight functions of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and the Federal Reserve Board into a U.S. Treasury function. Many more major government operations are waiting to be assessed.

All of this offers the prospect of improved efficiency, reduced red tape and lower-cost government — things sorely needed and long overdue. However, in each case where employment is cut, there is some amount of government service that ceases. Eventually, somewhere, the value of lost services will be larger than the cost savings.

How will the administration know when the bad outweighs good?

Unfortunately, they will not be cautioned, restrained or encouraged by having the right “skin in the game.” It’s not a perfect tool, but financial risk (and reward) is the best method we have to guide a cost-cutting enterprise. This tool is limited to the private sector; it won’t increase the chances of federal creative-destruction success.

Thus far, Trump’s efficiency seekers seem to have chosen an elephant-in-the-china-shop approach. Perhaps they have made analytical, prior assessments of what, at the margin, should be saved or tossed. But they are figuratively stomping through and shutting down some operations.

This could well be because time is short and political opposition is building. There is little time for fine-tuning. But failure to separate wheat from chaff risks creative destruction crossing the line into a simpler case of destruction.

It seems assured that, for a time at least, we’re going to end up with a lower-cost government. That should be excellent news. However, it’s not yet assured that we’ll be better off for it.

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Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of Clemson University’s College of Business & Behavioral Science, and former executive director of the Federal Trade Commission.

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