Thursday, 10 July 2008

Too many chiefs, not enough Indians

Too many bureaucrats, too few people doing the work. That's what ANZ economist Cameron Bagrie says is the case in too many government departments.

While the government has embarked on a multi-billion dollar spending binge over the last decade, the numbers of front-line people -- police, teachers, health professionals -- the people governments boast they're putting into the front line -- has been growing, but nowhere as fast as the demand for them. And they haven't been growing anywhere near as fast as the back office bureaurats -- the number of these parasites has been growing at a rate of seven percent per year, which means that in ten years their number has doubled -- and it's not like there were too few of these bastards ten years ago!

As Ludwig von Mises observed, "Only to bureaucrats can the idea occur that establishing new offices, promulgating new decrees, and increasing the number of government employees alone can be described as positive and beneficial measures." These bastards haven't been helping the productive, they've been getting in our way.

It's worth reading Bagrie's news along with a copy of Phil Rennie's analysis of the government's multi-billion dollar spending binge, released last year, which demonstrates that government spending is now higher by every measure than it was under Muldoon, and has little if anything to show for it. Life expectancy, infant mortality, hospital outputs, literacy, violent crime, suicide, poverty and income inequality have all barely changed in ten years, despite a massive increase in so called 'social spending.'

Governments like to boast about how much of your money they're spending on 'education,' or 'health,' or 'law and order' -- and the more zeroes in those money amounts, the more they like it -- but they're demonstrably uninterested where all that money goes. Where it's gone has been on bureaucratic management that's more interested in building empires than building 'infrastructure.'

But that's just what bureaucrats do.

And remember --National have no intention of getting rid of these parasites.

UPDATE: No Minister rounds up the various follow-ups to the story from the likes of NBR, Bernard Hickey and elsewhere..

NB: "It is in the very nature of government management (bureaucracy) that it will be inefficient, and prone to corruption," says a recent article at the Mises Daily. It was Ludwig von Mises in his book Bureaucracy who drew the important distinction between between "bureaucratic management" and "profit management," and who explained why the former necessarily fails: "In public administration, there is no connection between revenue and expenditure … there is no market price for achievements." Says John Chapman:

[Mises] explained that neither incentives nor exploitation of useful information are optimal under bureaucratic management, and by definition there could be no rational calculation via profit and loss...
Conversely, after privatization, operations and cost efficiencies improve because once incentives are in place and aligned, and people are empowered and incited (by the lure of profit) to utilize "particular knowledge" of markets, methods, competitive conditions, et al., performance improves.

Much more important even than this loss of "efficiency" is Mises warning of "a byproduct of bureaucratic management": the gradual vanishing of the "critical sense."

When one sees ministers in charge of hospitals that kill, schools that spit out illiterates, and a police force unable to perform its most basic duties, but with no sense of shame at the manifest failure, what we're looking at is exactly what Mises warned about.

1 comment:

  1. Except in the Help Desk world. Then there are plenty of Indians.

    Brian Smaller


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