Sunday, October 25, 2009

Comment on The Belmont Club

Quis custodiet ipsos custodes?
- Juvenal

England's "Green and pleasant land" was going to be "a land fit for heroes."

The problem with bureaucracy is that as an organization grows it must devote an increasing proportion of its energy to regulating itself. The dysfunctional burrow in and know that they are less likely to be held accountable in a large organization than if they were personally responsible. The most dysfunctional find the safest place to be is in setting and administering the rules for everyone else so they gravitate to the Human Resources department and control the organization through a network of Equal Opportunity, speech codes, and benefits programs. If the organization did impose controls so draconian as to ensure efficiency over the workers, if Brazil's Mr. Kurtzmann was able to keep staring at his teeming mobs, the process would be executed but then there would be no capacity for the Manager to focus on the purpose of the procedures. Think of the agency as being like a great ship that needs both motive power and direction. Managers can provide the former through the staff or the later but not both.

In a Democratic Republic with a free market the people choose representatives, who receive constant feed back and information about the conditions they are supervising, who provide direction and the power to get things done for the good of all is provided by individual labor motivated by Smith's Invisible Hand. In a Totalitarian Collective direction is provided by a self replicating authority that is increasingly ignorant of what social conditions really are. If Stalin only knew. Activity, like in the Red Army, substitutes for achievement of a focused goal.

This problem becomes most extreme in a government setting because there is no market information providing corrective data that a manager could use. The only inputs into the system that are considered are very belated political consequences of failure and ambiguous reports of the scope of the problem that are normally used to justify the expansion of an agency that was expected to reduce a condition that has instead expanded under the bureaus watch.

The problem does exist in private agencies. General Motors, US Steel, Railway Express, the Pennsylvania Railroad, all failed because they could not prove nimble enough to adapt to changing conditions.

Hopefully evolving technology will increasingly empower the ability of people acting as independent entrepreneurs to provide services so that managers will be able to focus on the Why? question and not be distracted by personnel administration. The expansion of government is a rear guard effort by those who thrived under the bureaucratic model to choke off the threat of an alternative and more promising economy.

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