Every year, as the fiscal period starts to wind down, a peculiar ritual occurs across the vast reaches of the American bureaucracy. 2-year old computers in good working order are ripped out and replaced with brand new ones. Copious amounts of office supplies are re-ordered, and millions of dollars are spent on low-importance items, simply to make sure that the department’s entire budget is spent.
Why? Because if the entire budget isn’t spent, the oversight branches will see extra money sitting around and cut next year’s budget appropriately.
It’s an axiom that the government is horribly inefficient and wasteful when it comes to spending taxpayer dollars. But few realize that this is because of the nature of bureaucracy itself.
It’s fairly easy to understand how private companies consistently improve their efficiency. For one, private organizations are very focused on the “bottom line,” the net income, or profit, made by the organization. Furthermore, any private organization that operates inefficiently will inevitably face a competitor with more efficient production techniques or business practices who is able to sell the same product for less money.
But government bureaucracy doesn’t have these same clear motives. For one, bureaus, dedicated to providing some public service, do not desire to make a profit. Their money is delegated to them by some overseeing entity. It is not obtained by selling goods or services. Furthermore, because bureaus are often the sole supplier of a particular service, there is often no clear standard from which to evaluate their performance.
As a result, those who determine the bureau’s budget often have to go off of information supplied by the bureau itself. As one might expect, such information is biased. The bureau has a desire to increase its own budget as much as possible (because who, in their right mind, is going to ask for less money from year to year?). Though the folks at the top overseeing the bureau may sense that something is amiss, they don’t have a clear way of refuting the bureau’s claims.
Furthermore, when it comes to bureaucratic efficiency, the bureau enjoys all of the benefits of being the only supplier in their field. As a result, they have no competition forcing them to ensure that their practices are as efficient as possible. The end result is a bureaucracy which has no incentive to improve its procedures, will lobby for as much money as possible, and has no objective means of measuring its success.
It’s for reasons like this that various communities have found that contracting with private organizations to provide public services leads to lower prices. Private organizations are forced to bid against each other for a particular job, requiring companies to deal with the project as efficiently as possible, so as to secure a solid profit.
Usually, someone's appeal to government intervention is based in a desire to make some service available to all. It's a laudable desire. But very rarely do they consider the cost. When it comes to instituting a wide and expansive bureaucracy, the end result may very well be significantly worse than the start.
By Nick Barden.