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Guest Post: The Lifecycle Of Bureaucracy
By Charles Hugh Smith from Of Two Minds
The Lifecycle of Bureaucracy
Yesterday I discussed the doubling, tripling and quadrupling of the "big ticket" household expenses: property taxes, public college tuition and healthcare costs. ( Inflation Is Rampant in Tuition, Healthcare and Property Taxes).
Correspondent Andrew T. asked:
Why are those things going up so drastically in cost? Cui bono? (To whose benefit?)
The common thread I could immediately see after the first few sentences was the public sector employees and their unions who inhabit those entities.
Andrew writes from Canada, where healthcare is overtly a public/Central State service. But in the U.S., if you tote up Medicare and Medicaid, the Veterans Administration healthcare system (over $1 trillion per year for the three agencies) and all 2,300 pages of regulations on the so-called "private" healthcare system (profits are privatized, costs are socialized), then what you have is a defacto government-controlled healthcare system with all the fraud, fiefdoms, waste, duplication, and resistance to efficiency of a government bureaucracy.
Before we get to the lifecycle of bureaucracy, I want to be clear this is not a slam on people who dutifully work in bureaucracies. Bureaucracies arise to serve a social or political need (or perceived need) in an organized fashion, and systems of management, accounting, oversight and so on are required.
But just as bureaucracies arise, they also ossify, devote their energy to self-preservation and then implode.
We can see how this works in this chart of the University of California system's count of faculty and administrators. I suspect this phenomenon is universal in state-funded universities: bureaucratic staff that have nothing to do with the classroom, research or teaching grow to dominate the payroll and the budget.
Much of this is human nature: if the budget can be expanded to serve my department or agency, then it will be expanded. There are other organizational tropisms as well: ENA, for example: "everyone needs an assistant," including the current assistant.
When an economy is growing rapidly, then the waste, fraud, duplication, inefficiency and bloat go unnoticed because tax revenues and the budget are rising even faster than the bloat and inefficiency. The problem arises when tax revenues fall. Then the bureaucratic impulse to never-ending growth is stymied, and the various bureaucracies turn inward as they muster their forces to wage internecine warfare with other protected fiefdoms.
(That's straight from the Survival+ critique.)
Self-preservation become the paramount concern, and the original purpose of the bureaucracy is buried beneath the urgent priority of saving perquisites, benefits, staffing, and budgets.
When cuts are required, the actual service provided is slashed to maintain bureaucratic bloat. Thus the Administration of a university suffers simulacrum cuts (a "hiring freeze," etc.) while the teaching and graduate-student teaching assistant staff levels are slashed and burned.
"Tip of the spear" military forces and readiness are left twisting in the wind while the thousands of senior officers in the Pentagon and Services jostle for promotions. At the point of implosion, there are more captains, colonels and generals than actual war-fighters. (There are plenty of barbers, cooks, waiters and assistants, though, to serve the senior officers.)
Benefits for the survivors are left basically untouched while new hires are fired to preserve the budget for those with seniority.
At some point, the mission of the bureaucracy is completely lost, and the citizens' patience with institutional incompetence and self-aggrandizement finally runs out. Although it seems "impossible" in an era where the Federal Reserve just conjures up $1 trillion and the Federal governments sells $1.3 trillion in bonds every year to fund its ballooning deficit, bureaucracies can and will implode.
On a small scale, we are seeing this process in action as small-town police forces are disbanded. This process will eventually be seen in smaller cities merging with adjacent cities to cut costs.
I have prepared this visual representation of the bureaucratic lifecycle:
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More dreaming. Bureaucracy doesn't implode, it goes down swinging. Envision the StaPuff Marshmellow man in ghostbusters. We're all gonna get messed up.
Not one hat tip to von Mises? I'm sad.
Speaking of bureaucracy...
Policemen and firemen here in Southern California are still some of the highest paid in the nation.
Result? They are still the first ones on the block to get the brand new Ford F-350 crew cab on the block, and the first to get the $180,000 RV or the $80,000 wakeboard boat each year.
Total gravy train, with no end in sight.
I see it. ;-))
Sh*t, they should live it up. Their future employment prospects include: Security guard. Gang member. Hit man. Hired Muscle. Mad Max California, coming your way in the next 3 to 4 years.
Firemen will be private businesses, who set your house on fire, then demand extortion payments to put it out. Whoops, hope I didn't give any firefighters ideas!
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Gangs of New York. History repeats.
I just hope the public realizes which idiots were most responsible, when things do come crashing down. The public have a tremendous propensity to believe what they want to believe, and as a result easily have their anger directed towards scapegoats (China will be the scapegoat, not the CEOs who de-industrialized America, or the bankers, who devalued the currency)
The 'Public sector' is going to look very different in 20 years, IMO.
http://psychonews.site90.net
PsychoNews: Exposing the Oligarchy, one Psycho at a time.
In the US, the ideology that there is nothing wrong with being rich has long been ingrained. An idiocy as there is always something wrong/good in any condition.
The US public cannot go against a condition that is believed to bring no wrong so the only way out is to get after people whose condition is known to have some wrong in it.
The CEO's example is classical double bind: the CEO's decision is good to them but harm the best interest of some other US citizens. A conclusion that can be achieved as those other US citizens can not perceive anything in CEO as wrong. Therefore they have to turn to the Chinese.
They will also be some of the first to go down, In my experience they aren't to bright & all they have, has a note attached, My father in law is a retired FF has has not one GLD/SLV coin to his name.
Smiths sell call blown up this week.... Govt has always been this way and as termites on the country will bloat till there's no wood left. They will make sure there is always enough wood. I give up on the idea it can be fixed
....seems like we gots protected and served real good. Good thing Jerry's coming back to straighten this mess out.....snark
There was a rather inconsequential fire in the "hood" (Silver Spring, MD) about a year back - kitchen curtains caught on fire above the toaster. I believe I counted eight emergency vehicles - 2 medical rescue; four regular fire engines, AND 2 HOOK AND LADDER TRUCKS. You know...hook and ladders are used for those 30 story condo buildings. The house in question however was a single floor rancher. I figured that the foot print of the emergency vehicles was three times that of the house. We could throw in three police cars to boot.
Cutback in services in Montgomery County Maryland!?!?! The only people who would feel the pinch would be the firmen and police - so long as they didn't lay off more than 80% of the force.
Got an email from the County Exec about six months back. A special energy tax is coming my way. Why??? The County is a gigabuck in the red on a four gigabuck budget. Unblievable. A four gigabuck budget for a pissant county!!!!!! I should think that Montana's state budget isn't even a gigabuck - no offense intended to Montanans. I might go there and raise dental floss when the s*&t really hits the fan.
Not many people on the planet are qualified to run a budget that big, let along the elected officials and their chosen staff. Half goes to K-12.
Good 'ol Legget. The guy is a complete clown. And I speak from direct knowledge...
Yeah, but apparently none of this applies to the private sector because we all know there is no such thing as self-protecting, self-propagating, private sector bureaucracy because of all that vigorous, purifying competition out there.
Please.
The author's thesis does explain nicely why bureaucracy typically increases under RepubliKeynesian administrations. They come in, put in a lot of Keynesian Deficit Tax Cuts, talk a lot of nonsense and bluster and "cutting the size of government", and leave behind the best-connected, best-protected, best-lobbying bureaucracies. And since they don't give a damn how well or badly government actually performs, well you guess the result.
And Democrats aren't any different?
You think the author is a Republican?
You think corporations get their funding to fuel bureaucracy growth by gunpoint?
The tax man has yet to point a gun at me, tmosley.
They mostly just leave ballot boxes around.
You want to see taxes collected at gunpoint? Go to the Libertarian Paradise of Somalia.
Until then, why don't you go easy on the dramatics. You don't like paying taxes. Nobody does. Welcome to the world.
Well, you do pay then. Don't pay your taxes. The tax man will point a gun at you.
I have seen this idiotic thing that Somalia is some sort of libertarian paradise. Only someone who knows very little about liberty and libertarianism...or has a preference for collectivism could even remotely think that. There is no rule of basic law, no property rights, no voluntary association, no professional associations, no courts, no delineated rights. It is in fact an authoritarian state. It is the rule of the guy with the most guns. It is what 99% of history has been. Frankly, Somali's would be better off with a Roman or Mongolian dictatorship than they are now. That's not an argument against liberty.
Ideas of libertarianism or even no government do not have anything in common with Somalia or any other tin horn dictatorships.
Also, I don't think anyone argues taxes. It's just how much and more importantly what they are supporting. At a 100% tax rate you are officially "owned".
Libertarian does not equal anarchy. The Libertarians have the better definition of "public goods," the only kind that should be provided by government.
"Yeah, but apparently none of this applies to the private sector because we all know there is no such thing as self-protecting, self-propagating, private sector bureaucracy because of all that vigorous, purifying competition out there.
Please."
Of course corporate bureacracies in the private sector are "self-protecting" and "self propagating," but the means by which they self protect and self-propagate are quite different from those employed by public sector bureaucracies. Public sector bureaucracies propagate by allowing crises to get worse - that is how they extort budgets from the legislature. If a public sector bureaucracy ever solved the problem or crisis they would unemploy themselves. Thus you will never see the education crisis solved. Test results will get worse, deepening the crisis, and deepening the demand for educational "services."
In contrast, the only way for private sector bureaucracies to grow and prosper is to become more productive than competing private sector bureaucracies.
But you wouldn't know that, because you obviously have never worked in the private sector.
i work for a city and have most of my life and they are mostly lost . this article was spot on because i have seen it and lived it not long ago i worked for the biggest city in the state , they are lost they are nuts the management is always fighting the union and the union is going off on nutty stuff . they had us sitting in class atleast once a month learning how to cook on a barbecue grilled or prepare food for ourselves lol,got less training on who to run water plant than silly things.i had to leave didn't want to be converted into one of them good thing about working for municipalities is you can get ahead quickly since there is no incentive to get ahead lolthe typical waste i see now in the small city i work at presently is that they start a pet project like a motorhome park(to NOWHERE) and spend 100,000 on it then rent it out for several 100 dollars a year not counting our upkeep cost of several 1,000 ayear ,luckily some one stole the copper wire from it and the well so they stopped dumping money down that hole and started a new project involving 100,000s of dollars on another project that they now sell hot dogas and burgers at . Now multiply that by however many cities and towns are in the USA and you get the picture but like the article says they dont have the parts and tools for us to do our work or even keeping it running . only works in a rising economy,,,, :(
Bureaucracies, like many systems, exhibit the behavior of life forms. They grow, they encroach, they reproduce, they respond to external threats and stimulii. They will viciously defend themselves when cornered or threatened. That is one reason why we as human beings should be so wary of creating new bureaucracies: it is so difficult to kill them once they are brought to life.
Anyway, these observations are nothing new. Everything you'll ever need to know about bureaucracies, and systems in general, is summed-up in "Systemantics: The Underground Text of Systems Lore" by John Gall [sic].
I believe I still have a copy of his first book. Still can't believe his observations are discounted, even with supporting evidence continuously manifested.
“Bureaucracy is undoubtedly the weapon and sign of a despotic government, inasmuch as it gives whatever government it serves, despotic power.” Lord Acton....
And the good man went on to say "Power corrupts, absolutely power corrupts absolutely."
Today we have heard outrage by pols/bankers over Wikileaks, the SEC has decided that they do not need an office to receive whistle blower tips, TSA can do what they damn well want to us when we try to travel, ECB is going to print fiat paper in concert with the Fed, gold neared $1,400 and received hammer blows via tons of fiat paper, and Prosser/Plusser told us that all is well and we should go buy some Xmas gifts....because if need be the Fed will come with QE to infinity.
Nothing to see here, move along.
All taxes are paid under the threat of force. Otherwise, noone would pay.
Any one have an example of this in real life?
Real life example of what? People refusing to paying their taxes and men with guns coming to cart them off to prison?
Name a real bureaucracy, show how the steps shown above occured.
you could lurk around New York City-but don't try to buy any salt or cigarettes. - Ned
NASA has invented a new missile. It's called the civil servant - it doesn't work and it can't be fired.
I don't want to depress anyone but no Republican or Democrat administration will cut the bureaucracy. I watched Boehner after the Republican election victories and knew we (those who advocate minimal or at least fiscally responsible gov't) had lost already. He announced going back to 2008 budget levels. That's a nice sentiment but even Boehner doesn't understand the shark they are riding.
The reason both parties will be unsuccessful is first, virtually no Dems want to do anything but grow gov't and more importantly the Republicans will not quit asking the gov't to do "stuff". As long as the missions you give gov't remain the bureaucracy will remain and grow. That's the nature of the beast. They all grow, amass power, never work on efficiency (there's no competition, no profit motive and no necessity to make happy customers) and with union help will purposely hire useless people and give raises if they can. To truly CUT government you must eliminate the missions...whole agencies.
The dept's of Education, Energy, EPA, EO, subdepartments, etc. could be permanently cut and savings accrued. That will NOT happen. Only Libertarians would do it and there are not enough in the Republican party. The press, the Dems, unions and the numerous constituencies that suckle that particular gov't teat will all ally to provide a serious beat down to anyone that tries. Barney Frank got reelected for God's sake! He is ground zero for the Fannie-Freddie mortgage meltdown! The concentrated interests (special interests) will always defeat the diffuse interest (general public).
I like this article but I challenge anyone to name any agency outside the military that has ever taken permanent cuts. It does happen more at the state and local levels because of more rigorous budget rules, but bureaus still prevail over time.
The only way this changes is with a peaceful political revolution (i.e. elect libertarian type politicians) or if the system continues to evolve till it destroys itself. We will be impoverished and live in an autocratic society before that happens. Even the Soviets couldn't make it work with gulags and guns. It won't work here, either. However, we are going to try it.
Lacks a bit of depth. Still a point.
How many times in the West is sold the idea that corruption hinders progress?
How many rules put on foreign countries so to help them to grow, to be an economic success?
The reality is as reported: corruption can be drowned into an enrichment process.
The trouble is that when a corrupted guy in the West leaves the scene with 200 $M loot, it is a drop in the sea of enrichment. When a guy does the same in a third world, he leaves the scene with one third of his nation's GDP.
Crisis, crisis... They show the reality of things. Corruption has always been present in the Western world and quite big. The constant demand on other countries to end their corruption was of course a diversion demand from this issue and its real consequences.
Great graphic (classic!) and nicely corroborated by the UC data. The point he is making is entirely valid, but I would like to know more about, and see some examples of,the implosion process at the end--a thing to be devoutly wished for.