Election 2012: Forget Bailouts, We Need a Shakeout

Changing the mindset of a bureaucracy

     

The markets rallied Monday (although they fell slightly on Tuesday) on news that global leaders favor additional stimulus. The hope is that additional spending will induce growth and put the world back on track.Don’t hold your breath.Big government robs the economy of wealth, strips it of initiative and further undermines our recovery.

So why, then, do our leaders continue to throw good money after bad?

Try this on for size.

In 1958, a man named Cyril Northcote Parkinson published a series of essays in book form called Parkinson’s Law: The Pursuit of Progress. In it, he postulated a mathematical equation that describes how bureaucracies expand over time and why.

I don’t know if he had a wicked sense of humor or a dramatic flair for irony but the equation at the core of his argument relied on something he termed the “coefficient of inefficiency.”

The coefficient of inefficiency says the size of a committee or government decision-making body is determined by the point at which it becomes completely inefficient or irrelevant. Or both –  hence the name.

Parkinson determined that the minimal effective size for a decision-making body is about five people, and the optimal size is somewhere between three and 20.

Last time I checked, we had 548 people inside the beltway – 535 voting members of Congress, nine Supreme Court justices, one president, one vice president, one treasurer and one Fed chairman – who are responsible for making decisions on behalf of 330 million citizens.

Combine that with nearly 2.8 million total Federal employees (excluding our military) and we’re waaaaay beyond anything even remotely resembling workable decision making.

Now here’s the thing. Parkinson also observed that bureaucracies grew by about 5%-7% a year, “irrespective of any variation in the amount of work (if any) to be done.”

In other words, the larger bureaucracies become, the more ineffective they get even if additional people are hired to do work that doesn’t exist.

And to think, all this time I thought our government ran on the Peter Principle!

Parkinson attributed this to two things:

  1.  Election 2012: Forget Bailouts, We Need a Shakeout“work expands so as to fill the time allotted for its completion.” In other words, if you leave everything to the last minute, it will only take a minute to get done. Perhaps this is why my youngest son never picks up his room until mom’s coming upstairs to take a look or why the budget ceiling isn’t ever negotiated except under deadline.
  2. Government agencies (and their staffers) want to multiply subordinates — not rivals. This is because many government employees associate their own individual importance to the number of subordinates.

So actually doing anything that’s productive…like…oh…I don’t know…fixing the deficit, reducing spending, definitively regulating Wall Street, and helping people who truly need help becomes an exercise in futility.

Now here’s where this gets really interesting, at least to me.

 
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