The glitches accompanying the launch of President Obama’s Affordable Care Act have invited criticism of government bureaucracy. Bureaucracies indeed have lots of problems, maybe ineradicable, and by no means limited just to government bureaucracies.
The term “bureaucracy” refers to administration by a multi-tiered hierarchy of trained, nonpolitical professionals guided by written rules (thus minimizing discretion). Historically it referred to governmental administration, but nowadays the term is applied to the administration, in the characteristic bureaucratic form, of any institution.
Invariably, bureaucratized institutions are large and complex—too large and complex for face-to-face contact involving informal oral instructions to be a feasible alternative to the formal methods of communication and command that characterize bureaucracy. In very large organizations, such as the U.S. government, there are multiple bureaucracies, and likewise in large private firms and large public or private universities, hospital complexes, foundations, and so on. The driving force of bureaucratic structure is complexity of institutional mission, requiring governance by multiple specialists coordinated hierarchically by formal procedures.
An institution has a mission. But the people who compose it—the bureaucrats—have personal concerns: income, power, job security, promotion, easy working conditions. There are tradeoffs among these elements of a job; in particular, income is traded off against job security, easy working conditions, and other, often nonpecuniary, benefits.
The particular problem of American bureaucracy is the entanglement of government bureaucracies with legislatures in a setting of rivalrous bureaucracies. The recent fiasco of the website for the Affordable Care Act is an important example. This fiasco is an aspect of a much larger problem, which is the incompetence of federal government procurement of computer services. The efficient method of procurement would be to have an agency whose mission was to procure computer services for the government. Different agencies would submit their computer needs to the computer agency, which would evaluate the needs of the applicant agencies and the best (most economical, most suitable) means of meeting those needs. Agencies don’t want this because they don’t want to share their data with other agencies; information is power and they want to be able to exact a price for sharing their information; normally the prices takes the form of return information. Congress doesn’t want a common computer agency because it wants to be able to authorize computer procurement agency by agency, granting procurement to whichever computer provider has political clout with the particular congressional committee responsible for the agency.
Because of the salary levels that skilled computer engineers command, it is difficult for government agencies to hire and retain the most highly qualified computer experts. The logical solution would be outsourcing to computer service providers, and that was the solution chosen for the website of the Affordable Care Act. But when the bureaucrats lack high-level technical skills, it is difficult for them to select and supervise an outside provider of high-level technical services. The bureaucracy needs to be able, at the least, to retain a computer consultant who can steer the agency to a computer provider that will meet the agency’s needs and who can supervise the provider to make sure it delivers in timely fashion. But to find and negotiate with and supervise a consultant of the requisite skill and experience itself requires a high level of technical ability again rarely found in government agencies. The combination of modest income with job security and other benefits temds not to be attractive to the highest-quality workers in elite, highly compensated fields. Bureaucracy tends to work well only when it is performing relatively simple, highly familiar tasks, far removed from the entrepreneurial risk common in highly competitive fields.
A particular difficulty in federal bureaucracies is the extraordinary difficulty of actually firing surplus or underperforming employees. Apart from the procedural rights accorded to employees sought to be discharged, employees at risk will often seek to forge alliances with influential managers or even members of Congress, or congressional staff. As a result it’s usually too much of a bother actually to fire an underperforming or superfluous worker, and instead the agency will find him or her what is called a “parking place,” meaning a job in which the employee can do no harm, be out of the way.
It is not obvious what the solution is, especially since bureaucracy is both a necessity of and a plague upon large private as well as public institutions, including corporations. It is well known that in successful private corporations staff tends to build up until an economic downturn or other shock forces the corporation to cut staff in order to minimize costs. Until that happens staff tends to swell. Managers, their compensation geared to the span of their control, push their superiors to authorize an increase in staff, while the managers’ subordinates seek to make themselves indispensable by hoarding information and fostering personal relationships with colleagues, or sometimes with influential suppliers or customers of the corporation. For in private as in public institutions the possession of critical information is a personal asset of great value, typically hoarded by its possessor. And so it may be very difficult for even able administrators to obtain the information they need for optimal management. The bureaucracy yields up its private hoard of information only reluctantly. in exchange for autonomy, security, and privileges.
Despite the problems of bureaucracy that I have been sketching, it must be on balance an efficient means of administration or it wouldn’t be so pervasive in both the public and the private sectors. This is a depressing reflection, because bureaucracy is a function of complexity, its pathologies are amplified by complexity—and complexity is growing throughout our governmental and commercial institutions.
The large number of government programs that have failed to carry out their duties and the dim view many Americans have towards Washington may be starting to take its toll on those who think big government is the answer. The Democratic Party has long been thought of as the party of "big government" filled with believers that government can solve and is the answer to curing many of our woes. Sadly cost and reality are quickly beginning to show the flaws in this theory, government is far better at providing access of citizens and good at passing popular laws, but the private sector tends to be more efficient and better at controlling costs. More on this subject in the post below.
http://brucewilds.blogspot.com/2013/11/flaws-in-big-government-concept.html
Posted by: B Wilds | 01/13/2014 at 06:37 AM
"Bureaucracy and or Efficiency"... Hmm... I've always believed, "That for every problem, there is a solution - of sorts". Democracy and Bureaucracy are two oganizational approaches to a "Problem Set". Yet, they are not the most efficient approaches. If it's Efficiency you're looking for, your best bet is a Dictatorship. Some are good, some are bad, take your pick...
Posted by: Neilehat | 01/14/2014 at 09:18 AM
What measure of efficiency is being proposed? For a private, for-profit enterprise, we could look at profit per investment dollar, the ratio of revenue to expenses, etc. For a government or non-profit, the presumed goal is wealth redistribution, so we could look at what percentage of money in actually gets given to someone else vs. how much gets spent on administration.
In IT, we use "bureaucracy" as a pejorative. My favorite working definition is "data that is not tied to a decision." I pay cash at the dentist; he does not need to know my SS#, or where I work, in order to service my teeth. This waste of time and productivity is repeated billions of times over, every day, because the cost of exercising intelligence is considered higher than the cost of inflicting a uniform process on everyone, even if it is wasteful. Part of the cost of this intelligence lies in its scarcity. It is easier to train someone in a repetitive task than to turn a dubious intellect loose on your customers.
Small organizations run on talent; large organizations run on structure. One of my friends was a chemist for a conglomerate. Over the course of several weeks, they received rail cars of raw material which tested as contaminated. He told his boss; the stuff kept coming in bad. So one day, he picked up the phone and called his counterpart at the supplier directly. In 20 minutes they had figured out the problem, saving both companies millions - and he promptly got fired for violating the chain of command. (Then a few months later the whole facility blew sky high, killing several of his former co-workers.)
The government in particular has an obligation to rain on all alike, and so thinking is discouraged because it might be perceived as unfairness. We on the outside find government frustrating to deal with because it is often obvious that just a small dose of intelligence would solve a problem, and there is none allowed.
Rules are a substitute for intelligence. When you are confronted with a problem, you can think creatively about how to solve it, or you can follow a rule, without thinking. Rules generally embody some measure of intelligence, but they inevitably fail to incorporate sufficient thinking to address the full breadth of problems that can potentially arise. We are admonished not to reinvent the wheel, but in fact the wheel has been reinvented, thousands of times, because new problems constantly require new and better wheels. Rules unchallenged become calcified into idols. Every so often, it is crucial for one of the intelligent among us to step up and remind us, e.g., that the Sabbath was made for man.
Posted by: Terry Bennett | 01/14/2014 at 07:26 PM
Well, Terry and all after the efficiency of this site ate two of my posts I should keep it short in order to limit the potential waste.
Anyway, the topic of efficiency does get sooo messy! For example one government function is that of imprisoning those who may be a threat to society, need to be punished for anti-social activities, or? perhaps rehabilitated, or "all of the above".
We can (fairly) easily measure keeping costs of warehousing our 2 million plus prisoners and even sub some of the task out to private parties who may even get the daily rate down a bit. But is THAT true efficiency?
It would seem that first we'd zoom out and see if we can figure out (or? learn from others?) why we incarcerate our fellow citizenry at rates five or more times that of the more civilized nations and even beat out Russia.
With those imprisoned in our nation having about a 50% literacy rate, despite claims or the reality of K-12 education having its own inefficiencies, is there more than can be done in the first 18 years to create a higher percentage of better citizens and productive adults that we won't have to lock up for years or decades?
IF, especially the young, and particularly males who we now know from brain scans and studies, lack common sense and judgement until well into their 20's runs afoul of the law, are we doing our best to nudge him/her back on track? Or, are we wasting time and resources with harsh prison sentences in an overzealous quest for vengeance and punishment?
What about rehab? Are we measuring our success or failure? By warehousing prisoners at the lowest daily rate in cramped public facilities or those of the private prison industry are we wasting an opp to create a person who can function and be productive in our society?
Soo, no matter how we streamline our enforcement, courts and prison bureaucracies it would seem the greatest efficiency would be that of striving to get our prison population down nearer that of the more civilized nations. On the other hand, IF the problem of America is "bad blood" and having five times the percentage of incorrigible criminals, letting them out too soon could cost us even more in from the damages wrought in our society.
But then there is the toxic combo of politics, bureaucracy and the prison-industrial complex that often provides lucrative economic opportunities and jobs for many whose goals are hardly aligned with those seeking efficiency and far better outcomes.
Posted by: Jack | 01/15/2014 at 12:56 AM
Terry, Having worked in the Oil, Gas, Petro, Chem Industry dealing with extremely Hazardous/Toxic Materials there is much more going on behind the scenes than your example shows regarding the termination of your friend the "Chemist" and quality control. I can tell you from experience, that an aggresive Individualism and taking actions on ones own intiative is akin to being a "loose cannon" with all it's potential hazards. As for the "Root Cause" of that Plant Explosion, are you completely sure that it was due to your friends termination, potentially contaminated feedstock (a lot of these plants are large bombs just waiting to go off - it's not a question of "if" but "when") and not some other root cause. Beware of using examples that are clearly "Colored" and missing important and pertinet details...
Posted by: Neilehat | 01/15/2014 at 08:08 AM
Neilehat,
I didn't mean to imply that my friend had anything to do with the explosion. I just thought it was a fitting irony that what seemed at the time like a turn of bad luck ended up revealing itself to be a turn of good luck. His superiors obviously agree with you, that the bureaucracy must be preserved, and individual brains must be suppressed, no matter how talented they are. That's their choice - they outranked him. That was my point, that large organizations run on structure, not talent. There have been attempts to let talent shine through via various management schemes at some companies, e.g., Volvo's one-time practice of assigning a team to build one car at a time, but as a rule once organizations reach a certain size they cease to be able to scale up individual talent. If anybody ever figures out how to do it, there's a pot of gold waiting.
Posted by: Terry Bennett | 01/15/2014 at 08:09 PM
Terry, Once again, Beware. That "contamination" in the feedstock may very well have been a "proprietary secret ingredient" (only known by those with a "need to know") in the feedstock recipe or a secret secondary byproduct or additve necessary for safe further processing (they're called Desensitizers, Catalysts, etc.). Without which the entire reaction string can go critical with catastrophic results. That is why some organizations cannot allow individuals to behave in a "willy-nilly" fashion on their own authority. Either in the production facility or R&D Lab...
Posted by: Neilehat | 01/16/2014 at 08:27 AM
Neilehat,
The contaminant, if I must digress, was water. I find your re-imagining of my narrative implausible. I do not think a company would pay a chemist to test for contamination and jettison several tons of material, several times, just to hide from him the fact that in the course of his assigned duties he has detected a secret ingredient above his pay grade. They fired him because he made a phone call.
I continue to assert that the anecdote stands for my premise, that large companies value structure over talent, to the point that structure must be enforced even when it is obviously inefficient, even when it affirmatively penalizes efficiency - bringing us back to the topic of bureaucracy and away from the non sequitur of the vagaries of the chemical industry. I take it you are a proponent of the belief that structure is indeed important enough in large organizations to warrant such a vigilant defense, and over the years I've talked to a few CEO's who agree with you. It's a mindset, and no doubt there is some validity in it - many large corporations make money. Whether they would make more or less money by allowing talent to override structure is an experiment waiting to be performed.
Posted by: Terry Bennett | 01/17/2014 at 05:29 AM