Understanding the Government Con Game

Email Print
FacebookTwitterShare

Recently by John Tamny: Bernanke Meets His Inept Match in BillDudley

     

"Work expands so as to fill the time available for its completion." ~ C. Northcote Parkinson, Parkinson’s Law, p. 2

Last fall’s national elections showed that voters are increasingly wise to the basic truth that governments can only spend what’s been taken from them first. From that there’s developed a growing consensus inside the electorate that Washington must mend its profligate ways. Advertisement

As a result, politicians on both sides of the aisle, at least for now, are paying lip service to the idea of reining in Leviathan. What’s unfortunate about their spending rhetoric is the seemingly bipartisan view within the political class that since spending cuts will be "painful," they will require politicians to make a lot of "difficult" decisions. This line of thinking is very much overdone.

Parkinson’s Law makes plain that there’s little relationship between the size of bureaucracies and actual work accomplished. What this tells us immediately is that whatever the good or bad of government services, they could be delivered with a great deal less in the way of people.

Aside from the application of C. Northcote Parkinson‘s theories to government spending, the Founding Fathers clearly intended that the Constitution should restrain the size and scope of government. A simple application of constitutional limits to government activities could easily achieve what Parkinson’s theories may not.

One spending solution that classical economic theory says might be the worst of all of them would be some form of "balanced budget amendment." This should be avoided at all costs because it would legitimize excessive levels of spending that reduce the growth of the private economy.

Instead, the answer to the fiscal problems of the U.S. government is decidedly not tax increases or a balanced budget; rather it’s reduced spending across the board. Anything else ensures a continuance of our large and overbearing federal government.

Parkinson’s Law. While analyzing British naval history, author and scholar C. Northcote Parkinson revealed as false the widely held view embraced by politicians and taxpayers that the need for more civil servants will reveal itself through a growing volume of work completed. The truth is something quite different.

As Parkinson observed, "the number of the officials and the quantity of the work are not related to each other at all." In his case, Parkinson witnessed the non-relationship up close through studies of the Royal Navy’s bureaucracy.

While the Royal Navy could in 1914 claim 146,000 officers and men served by 3,249 dockyard officials and clerks, plus 57,000 dockyard workmen, by 1928 there were only 100,000 officers and men, yet the number of dockyard officials and clerks had risen to 4,558. This, despite the fact that the number of British warships had declined from 62 to 20.

Parkinson went on to point that over the same period, the number of Admiralty officials had risen from 2,000 to 3,569. The British Navy had shrunk by 1/3rd in terms of men, and 2/3rds in terms of ships, thus forcing Parkinson to conclude that the growth in the number of workers for the Royal Navy "was unrelated to any possible increase in their work."

Parkinson went on to lay out what he deemed two "motive forces" for the increase of bureaucracy alongside reduced work output. As he put it, "An official wants to multiply subordinates, not rivals," and secondly, "Officials make work for each other." If an official feels overworked, whether true or not, there’s little incentive to hire someone of similar stature, nor is there incentive to hire just one subordinate. Indeed, if the senior official were simply to hire one subordinate, doing so would effectively make the hire similar in stature to the individual who hired him.

The greater incentive is to hire two subordinates, separate the work assigned to each, and in doing so, make both hires less worthy of becoming rivals of the senior official. Then, if either of the subordinates becomes overworked, the same incentives apply on the way to many employees doing the work previously handled by just one person.

Applied to the myriad bureaucracies which dot the Washington, D.C. landscape, it then becomes apparent why our government costs more and more while achieving less and less. Government is not only intrusive today, but also very expensive thanks to bureaucratic incentives not driven by the profit motive to grow.

The Law of Triviality. Worse for taxpayers, Parkinson also asserts a Law of Triviality, according to which "the time spent on any item of the agenda will be in inverse proportion to the sum involved." It implies that the political act of reducing expenditures is the most difficult of them all.

Applying this insight to politicians, they will sweat the small things they understand (this today is animated by abudant rhetoric about "earmarks", but very little talk of reducing the big-ticket programs that actually matter), while spending little time on the large items. Parkinson explained this through the prism of a multi-million dollar expenditure for an atomic reactor that is voted on without much thought, versus a great deal of discussion concerning smaller, easier to understand line items such as annual spending on coffee for the government’s employees.

Bureaucracies can grow with great speed because all the incentives of employees not policed by investors tilt towards growth. The process is enabled by a political class that can’t possibly understand the activities of so many workers, some of whom live in their districts. The result is then unsurprising, as politicians vote for large expenditures with little regard to their merit.

To fix this, it is illogical for Congress and the President to go to the effort of understanding just what each federal department does on the way to surgical cuts. Better it would be to acknowledge Parkinson’s point that there’s very little correlation between employees and work output. Congress should skip surgical spending cuts in favor of across-the-board reductions that would hit every Washington function equally.

Read the rest of the article

Email Print
FacebookTwitterShare