Part 2: The seven rules of bureaucracy

Rule #5: Maximize public-relations exposure by creating a cover story that appeals to the universal need to help people.

Government bureaucracy is honed on populist rhetoric. Bureaucrats have become skilled at using the “helping the people” angle when making speeches, and especially when dealing with the press. It is a variation of the “people angle” taught in media relations training programs as the best method to attract media attention and promotion. Almost any government program, no matter what its cost in money or personal liberties, can be sold through the media by claiming it is for (1) the children, (2) the environment, (3) the elderly, (4) the poor, (5) the homeless, (6) the national defense, (7) homeland security, or (8) the sick.

For example, CNN (2003) reported that George W. Bush claimed the Medicare Part D pharmaceutical supplement he signed into law was

the greatest advance in health care coverage for America’s seniors since the founding of Medicare. With this law, we’re giving older Americans better choices and more control over their health care, so they can receive the modern medical care they deserve. These reforms are the act of a vibrant and compassionate government.

He forgot to mention the actuarial fiscal liabilities of this law. From the 2009 Financial Report of the United States Government, the long-range unfunded cost projections of the Medicare Part D mandate is $7.2 trillion.

When bureaucrats of any ilk promote their new law or program as being “for the people,” it is important to first look behind the curtain. “Social justice” is the veneer used by bureaucrats to gain positive media exposure while pursuing the building of more bureaucracy. It is so pervasive that your child can even pursue a major in social justice at institutions of higher learning like the University of California, Santa Barbara. Sowell points out in his book The Quest for Cosmic Justicethat all justice is, by definition, social, and “social” is most often used in the populist sense of everyone but the wealthy. A cover story that seeks social justice or to right the wrongs of an unjust society is guaranteed media attention, yet very few in the media or the public are inclined to look beneath the veneer of social justice to examine the costs and the unintended consequences.

Rule #6: Create vested support groups by distributing concentrated benefits and/or entitlements to these special interests, while distributing the costs broadly to one’s political opponents.

The Community Reinvestment Act of 1977, signed into law by President Carter, established the federal government’s role in providing affordable housing to the needy. Over the 33 years it has been in existence, its force has grown the size and reach of the Federal Housing Administration, the Federal Deposit Insurance Corporation, the Federal Reserve, and the Departments of Justice and Housing & Urban Development. It has also given rise to the Federal National Mortgage Association (“Fannie Mae” and “Freddie Mac”). While the initial goal was to provide the less economically advantaged with an opportunity to purchase a home, no one bothered to look at the possible unintended consequences of helping people whose personal credit wouldn’t qualify them to buy a home.

As Sowell (2009, pp. 31–56) points out, “affordable” became the ability for people to buy the home they wanted in the area they wanted and the government’s role was to make it financially possible to purchase it. The Community Reinvestment Act ultimately led to the biggest financial crisis since the Great Depression, yet many of its proponents and even the media failed to see or understand the real problem or the long-term costs and market dislocation that would result.

Even more insidious are government laws that benefit for-profit corporations. These are the recipients of corporate welfare. The poster child of corporate welfare is Archer Daniels Midland (ADM), having received billions of tax dollars from more than 15 federal agencies over the past 50 years. As James Bovard (1995) and Chip Krakoff (2011) point out, to return the favor to the federal bureaucracy, ADM has also been funding reelection campaigns on both sides of the congressional aisle and for both Democratic and Republican presidential candidates. As a testament to ADM’s political ecumenicalism, it has been a long-time sponsor/advertiser of National Public Radio, which attracts a large portion of the left-liberal minded. The EPA is planning to issue an edict to allow 15 percent ethanol to be blended into gasoline, which will result in a 50 percent market gain for ADM’s ethanol-production facilities and a similar market gain in the sale of their dominant field-corn holdings used to make ethanol.

Chip Krakoff (2011) quotes ADM’s Dwayne Andreas as justifying his corporate welfare history:

There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country.

Our last example of Teasley’s sixth rule of bureaucracy is Solyndra, one of three green-energy companies that received nearly $700 million in federal-government money and filed bankruptcy in the past two years. Solyndra is a photovoltaic-solar-energy-systems manufacturer in California. It has received huge loan guarantees ($535 million) through the American Recovery and Reinvestment Act (itself a huge and expensive federal program to fix the mistakes of the Community Reinvestment Act) and the Federal Financing Bank, as well as being the beneficiary of federal and state policies mandating the use of renewable energy sources (US Department of Energy’s ENERGY STAR Program and by the requirements of the California Title 24 Energy Standard, which prescribes cool roofs to be employed whenever low-slope commercial roofs are constructed or replaced).

The Wall Street Journal (2011) indicated that the company was also backed by the George Kaiser Family Foundation and, along with its founder, were big financial supporters of the Obama presidential campaign as a bona fide for his “green” stand. An additional $75 million loan was made to Solyndra, but the agreement with private investors, including Kaiser, placed them ahead of American taxpayers in case of default. Until the company announced its bankruptcy in August 2011, President Obama had hailed the company as “leading the way toward a brighter and more prosperous future” (Ibid). More than 20 trips were made by company officials, investors, and George Kaiser to the White House between March 2009 and April 2010, and despite reports from industry insiders about Solyndra’s financial health, administration officials dismissed these reports as “B.S.”

Rule #7: Demonize the truth tellers who have the temerity to say, “The emperor has no clothes.”

There were plenty of people sounding alarms as early as 2003 about the housing bubble and growing deficits that led directly to the devastating economic downturn that lingers today, not only in America but around the world. Most in Washington, including Fannie Mae, Freddie Mac, HUD, the Federal Reserve, Congressman Barney Frank (head of the House Financial Services Committee) and Senator Dodd (head of the Senate Banking Committee), all refused to pay attention to the growing signs of the housing-market collapse and its risk to the US economy, railing against any warnings that Fannie and Freddie were in financial trouble.

Stephen Labaton (2003) of the New York Times quoted Mr. Frank as saying, “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.”

In the House of Representatives on June 25, 2007, Congressman Frank stated,

We have, I think, an excessive degree of concern right now about home ownership and its role in the economy. Obviously speculation is never a good thing. But those who argue that housing prices are now at the point of a bubble seem to me to be missing a very important point. Unlike previous examples we have had where substantial excessive inflation of prices later caused some problems, we are talking here about an entity, home ownership, homes, where there is not the degree of leverage that we have seen elsewhere. This is not the dot com situation.… Homes that are occupied may see an ebb and flow in the price at a certain percentage level but you’re not going to see a collapse that you see when people talk about a bubble. So those of us on our committee in particular will continue to push toward home ownership.

In 2010 Mr. Frank implicated foreign central banks, particularly China, when attacking a letter written by Republican economists to the Federal Reserve for

joining a broad attack by the foreign central banks who insist that America somehow must subordinate our own legitimate economic needs to their currency requirements. What did disappoint me was to see conservative economists, high-ranking officials of previous Republican administrations, and Republican congressional leaders share the attack by these foreign banks not simply on the Federal Reserve’s proposal, but on the very notion that America has a right to give a primary focus to our own economic need for growth at this time. (McDonald, 2010)

Of course, both political parties demonize the truth tellers who speak out against costly and wasteful policies and their unintended consequences. During the invasion of Iraq, Vice President Dick Cheney, Donald Rumsfeld, and even President Bush frequently took critics to task, asserting that there was “incontrovertible” evidence that Saddam Hussein had weapons of mass destruction. CNN (2005) reported that President Bush said during a Veteran’s Day speech in Pennsylvania,

Some Democrats and anti-war critics are now claiming we manipulated the intelligence and misled the American people about why we went to war. They also know that intelligence agencies from around the world agreed with our assessment of Saddam Hussein. While it’s perfectly legitimate to criticize my decision or the conduct of the war, it is deeply irresponsible to rewrite the history of how that war began.

Rule 7a: Accuse the truth teller of one’s own defects, deficiencies, crimes, and misdemeanors.

One wag said, “Gall was divided into three parts and politicians have all three of them.” We habitually find government bureaucrats, particularly politicians, trying to turn the tables of their accusers in misdeeds. Glen Johnson (2008), Associate Press writer, quoted Congressman Barney Frank, who attended a foreclosure symposium in Boston and challenged the critics of Fannie Mae, implying racism as the motive for the criticism:

They get to take things out on poor people. Let’s be honest: The fact that some of the poor people are black doesn’t hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people.

Former representative Charles Rangel was ultimately accused of 13 ethics infractions by the House of Representatives. Washington Post reporters Leoning & Kane (2010) reported that, after a news conference Mr. Rangel held about the ethics violations, he responded about the possibility of being removed as chairman of the House Ways and Means Committee:

“I don’t see what purpose that would serve, I don’t think reporters should be in the position to remove chairmen, not even temporarily, especially when the reporting is false.” When asked specifically about nearly $80,000 his son had received from his campaign to design a website, he replied, “The reporter should really crawl from under his rock and apologize to my son, a veteran, my friend, my son and a great American,” Mr. Rangel said. “It’s one of the crummiest deviations from the truth that I’ve seen in these recent stories.”

The Road Less Traveled from Here

After presenting Teasley’s rules of bureaucracy, asking where Americans can go from here is not a rhetorical question. Given an economy that is not responding to Keynesian stimulus, proffered by an authoritarian administration and a market-corrupting federal bureaucracy, there are several solutions that we believe will make a difference and take the wind out of the sails of bureaucracy. We offer a series of antidotes to the scourge of bureaucracy.

  1. “Bureaucrat” should not be thought of as a career path. History has proven that “career bureaucrats” do much more harm than good and we must characterize such people as pariahs and scallywags, not saviors of this country. The Democratic and Republican parties will push back from this antidote in their faux political fight for power.[1] Knowing how to get things done in state capitols and in Washington is only an asset to law-making junkies and directly reflects the dark underbelly of the bureaucratic beast.
  2. If Congress comes up with a new “war against,” we should fight it, no matter what the war is against. The federal government’s track record is abysmal and the equivalent of a taxpayer boat — a hole in the water that you sink your money in.
  3. Send all newly elected officials to the state capitol or Washington with the specific goal toreduce legislation. America’s bureaucracies have forgotten that resources are scarce, and most legislation builds bigger government and demands more tax dollars. Federal bureaucracy has grown at an alarming rate under Republican president George Bush and as much in just three years under Democratic president Barack Obama. While legislators keep an informal scorecard with how many pieces of legislation bear their names, does America need Sarbanes-Oxley or Dodd-Frank legislation? While it may inflate bureaucrats’ self-worth and hubris, America must reduce the number of existing laws and agencies significantly
  4. Sowell (1999) has long advocated that we use an economic analysis to examine our legislative initiativesbefore they become law. To stem the tide of fiscal irresponsibility leading to unsustainable government size and debt, no bill should pass from committee to a full chamber vote without first being carefully analyzed by the Government Accountability Office using a four-step rubric, the results of which must be presented to the American people before the vote. First, an analysis of what we can do about a problem, including its importance to the economic competitiveness of our country, and how much it will cost. Second, an analysis of what we should do collectively as a nation and what should be left up to individual initiative. Personal health and education are splendid examples. Third, a careful analysis must be undertaken of who will be helped and who will be hurt by any new legislation. As Bastiat warned us more that 150 years ago, political bureaucrats ignore who will be hurt by a new law. Fourth, a careful, econometric analysis must be made of the possible long-term unintended consequences of proposed legislation. Had our legislators done this, instead of trying to seize the political moment and the headlines, much of the federal legislation of the last two decades would never have been passed.Addressing real problems while reducing government bureaucracies and entitlements will give the United States a new resourcefulness that can go a long way toward making the United States a decidedly freer market, and it will reestablish our exceptionalism in a way that other first-world countries have been unable to do with their stifling bureaucracies and statist programs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: