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Nov. 27, 2019

Bloated Bureaucracies: More Than Just Expensive. (EP.184)

Bloated Bureaucracies: More Than Just Expensive. (EP.184)
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Bloated bureaucracies are growing in size and impact, and vitally important to all of us. But as important as this subject is, it is never called out by name. 

That is the subject of today’s 10-minute episode.


So, Will, how do bloated bureaucracies affect me? Why should I care?

First, they are obviously expensive. If you are paying more people than necessary to create a desired result, that’s waste, that’s bloat, and that’s expensive. Let’s say that we, you and I, owned, say, a plumbing supply business, and needed to make a profit to meet our personal financial responsibilities and to maintain a growing company that served its employees, customers and the community. We would need to concentrate on having the majority of our personnel focused in the areas key to our business. For example, salespeople would be key for obvious reasons, as would those who deal with our vendors. They keep prices down, maintain timely deliveries and establish strong bonds so that if supplies become short, we get the product our customers need. The accounting and facilities functions, while needed, are not as important, and should get less time, energy and money.

Pause for a definition: I am not concerned with private companies that may have larger than needed bureaucracies. Competition will sort them out without my help. It is the direct government bureaucracies, e.g., the DMV and Medicare, and the indirect ones, e.g., government-granted monopolies like utilities, and quasi monopolies, e.g., pre K-12 education, that need watching and changing.

Private businesses have the profit incentive and competition to keep them in check. What’s to keep government bureaucracies in check? Answer. Nothing. Worse, there is often an incentive to grow the employee population for reasons entirely disassociated from the stated results the organization is on record as seeking. There is no better–or more dangerous–example than public unions. Negotiations work when they are arm’s length discussions between two parties which, while both desiring to preserve the relationship, have different and competing interests. The intelligent ones seek only win-win results. For example, when a business negotiates with a supplier, the business wants the lowest prices at the best terms, while the supplier will negotiate for higher prices, and terms that make their business easier to manage. Their interests in key areas like price and terms diverge sharply. If they can find a win for both sides, perhaps higher prices than the buyer wanted, but guaranteed delivery terms, a guarantee that the supplier might have initially resisted, they will have created a win-win, advantaging both enterprises. 

When public unions negotiate with the very politicians that control their contracts, including pensions, there are no divergent interests; one hand washes the other. The unions, notably but not exclusively teachers unions, present their demands to the very politicians they fund and vote for. The obligated–and grateful–politicians accede to their demands with little in the way of a counter. Yes, that is also a win-win. The public unions and the politicians both win, but the taxpayers lose–every time. And win-win-lose is unacceptable. Or should be. BTW, some believe that public unions should be banned. I am not in that camp, or at least I am not where private competition could be provided to keep things in line. In pre K-12, in order to deliver the best education with the most efficient use of taxpayer funds, the clear solution is to provide liberal access to equally funded traditional public schools, charter schools and private schools via vouchers. With that in place, if the public schools wanted to continue their cozy relationships with the politicians who control their contacts, I’d be all for it. I would be delighted to allow competition to sort all of that out.

But Will, don’t teachers need to be paid more? Certainly you cannot be against that–are you? I absolutely agree that teachers need to be paid more. But the money is already there. The number of teachers in pre K-12 is expanding slightly faster than the number of students: that’s a good thing. The number of administrators is exploding. That’s not good. The same is true in higher education. Not long ago, when you walked through the offices in the halls of academia, you would see a large proportion of professors, with a small administrative staff. Today, not only are there more administrative staff in the traditional departments, but the number of departments, headed by people with lofty titles, is multiplying. And each new lofty title needs a growing staff. We saw how the one-hand washes-the-other negotiations lead to lavish public union contracts, most visibly in the pension area. What is happening in higher education? Once again there is no real, limiting negotiation. With students, or their parents, able to sign for virtually unlimited loans to fund college, those very colleges know that this abundant access to cash allows them to charge just about whatever they want. And they do. And more and more, the loan signers who committed to repayment in full in order to get their money, are walking away. Defaulting. And certain leading politicians are telling them not to worry about default; taxpayers will step in and fulfill their promises to repay. And the colleges? They do not care who pays or does not pay; they already have their money.

The key but undiscussed problem here is that the student has gone from being just that–a student with clear performance and behavior standards that need to be met–to being the customer. And the colleges and universities are catering to them as customers. 

Bloated bureaucracies appear on the ballot as well. We have all seen–or at least heard of–ballot measures where government wants more money for things like roads, education, or police and fire. The message is clear: vote for this new tax, or you hate kids and want to endanger cops and firefighters. My message back to them is also clear: why did you not fund these clear priorities first? Answer. If they had funded these first priorities first, they would have had to come to the voters, asking for more money for things like expanding bureaucratic staff, more buildings and more benefits, including increasing pensions that are already unaffordable in even the more successful private businesses. That approach would be laughed off by the voters. So, government funds lesser priorities first, saving the top priorities like infrastructure, the kids, and law enforcement and fire for the additional tax ballot propositions.

These were two examples of the negative consequences of bloated bureaucracies. You may have more, and if so, will you be kind enough to share them?

Am I being cynical here? Far from it. I am more than hopeful. Why else would I be pouring my time, money and energy into Revolution 2.0™, my contribution toward a hopeful future?


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Will Luden, coming to you from 7,200’ in Colorado Springs.