The Difference between Corporate and Governmental Bureaucracy
Because liberals/progressives/socialists believe that corporations create most of the evil in the world and that government is the source of salvation for humankind, one can expect that with the growth of government involvement in the economy, the government bureaucracy will generally be in growth mode. In a private sector economy, decentralization is effective because every firm and every consumer household will have its own economic plan. In socialism, the objective is to remove planning from the private sector and turn it over to a single, gigantic government plan designed and implemented by oversized agencies. In a true socialist economy, this is by definition what will be in process as long as socialists retain power.
Unfortunately, a study of bureaucracy must reveal to the objective mind and to human experience that overgrown human organizations unavoidably take on dangerous preferences, proclivities and powers. Such organizations work against the positive incentives of market systems, against the creativity of the private sector, against the productivity of the society’s workers, against the implementation of technical improvements, against the social harmony of diverse groups in the country, against the freedom and honesty of the press, and against human freedoms in general.
When confronted with complaints about the performance of bureaucratic agencies, socialists tend to assert that a little inefficiency is normal in the functioning of government agencies. They also inevitably aver that large business firms also have their own bureaucracies, so one should not fret about a little governmental red tape. But there is a world of difference between governmental and corporate bureaucracies. The latter are paid to perform tasks related to profit making. Inefficiencies of the corporate bureaucracy impinge on profits, which is the driving force of firms that must compete in the market place. The governmental bureaucracy is not interested in profits or efficiency, but merely in achieving the tasks suggested by organizational goals. They are interested in creating new ideas and methods to control the environment which they are involved in managing.
The Nature of Agency Functioning
Business bureaucracies have projects too, but all of them relate to making profits. Since profits are generated through sales, the business bureaucracy must think of its customers. If it fails to be productive and relevant, the business itself will fail and the organization will become extinct. The government bureaucracy, again, thinks of tasks, not people. They aren’t interested in sales, efficiency, or profitability and the branches of government that should manage and oversee them are too busy or disinterested to do so. The IRS, for example, thinks of the revenues derived from taxes. People who hold the money even become like the enemy, since the IRS has to take the funds from the people. The EPA has the project of protecting the environment; since people mess up the environment, an adversarial relationship quickly develops between the government bureaucracy and all us polluters in the private sector and citizenry.
Imagine several thousand clever minds thinking about environmental forces that they aspire to manage. They have never had experience with a real world and its problems, but instead wish merely to create new rules which the actors in the real world must follow. Such rules may be of benefit to the public, but may also be strictly for the benefit of the bureaucrats themselves. In any case, they will be implemented at a cost. It will cost the firm and its customers, not the bureaucrats, scarce resources to apply the rules. Firms will have to hire lawyers to help them understand and implement the bureaucratic regulations produced by the thousands of pages. Those regulations demand compliance with the force of law. Such regulations have the effect of driving up production costs, driving down profits, and sometimes rendering the firm unable to compete effectively. Combine this business regulatory syndrome with the socialistic preference for extensive government participation in normal life, which also is costly and persuades socialists to support high taxes. The regulation and the taxes make firms look abroad for a new home, so that they can stay viable in the international business arena. Firms will take their jobs and go elsewhere.
President Trump, formerly a businessman, knew this world from the compliance side very well. He knew his colleagues were being regulated into high-cost oblivion. He saw them pull up and leave the United States and said we must do something about it if our workers are to retain their jobs and incomes. He saw the job of governmental regulation as a balance of keeping those regulations necessary to promote responsible corporate performance and of discarding regulations which added far more to public costs than to benefits.
Bureaucracies Can Affect Both Socialistic and Market Economies
My book, Socialism, has a full chapter on the nature of bureaucracies. The study of bureaucracy should be a part of every citizen’s curriculum. I address the organizational costs and benefits of the government agencies and also document throughout the book the fact that once a bureaucracy is installed, it lobbies vigorously for continually expanding its share of governance and government control of the economy and of society generally. Once bureaucracies were installed in the centrally planned economies like the Soviet Union, economic reform became impossible. It became impossible to scale back the layers of government economic agencies and enhance the functioning of market-like activity to achieve the minimal efficiency necessary for the economy’s survival. The red tape and the government planning system
imposed ever greater inefficiencies until the economic system simply collapsed. President Trump and his successors will find that it will be an awful challenge to inhibit further growth of the government agencies in the United States.
The book Socialism, reviews the organizational characteristics of governmental agencies, showing the forces driving the continual expansion of bureaucracies and of their regulatory impact on the firms that produce the nation’s goods and services. Of course the government must perform functions which require organization, but the tendency of such organizations is to continue to grow even after the original problems requiring such organization no longer exist. The negative characteristics and tendencies of bureaucracies have been known for a couple centuries, but socialists ignore them because they have been indoctrinated to distrust private firms and they put their faith in government to accomplish every essential task. They do so only because they have not personally experienced life under the ultimate bureaucracies of socialist regimes.
