The Nature of Agency Functioning
Governmental bureaucracies generally pursue more or less specific projects or goals. 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, is inclined to think more of tasks than of people. They aren’t interested in sales, efficiency, or profitability and the branches of government that should manage and oversee the administrative agencies are usually too busy or disinterested to monitor their activities effectively. 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 them. 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.
Government agencies can become a swamp of political opposition in “deep state” activities in Washington, D.C.
Imagine several thousand clever and educated 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 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. Sometimes agencies are so focused on the benefits of an operation that they ignore the concomitant costs thereof.
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, knows this world from the compliance side very well. He knows his colleagues are being regulated into high-cost oblivion. He sees them pull up and leave the United States and says we must do something about it if our workers are to retain their jobs and incomes. He sees the job of governmental regulation as a balance of keeping those regulations necessary to promote responsible corporate performance and of discarding regulations which add 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 clarifying 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.
