The mechanics of a
bureaucracy in ‘action’ can be best illustrated with a number of examples; and
where else to commence proceedings than with the Tax Office. The
collection of tax is full of paradoxes. On the one hand a Tax Office does
not have business customers to worry about, they can create as large a
bureaucratic empire as desired, reinforced by the law (and on occasions working
beyond the legal system) they can impose long winded bureaucratic routines, in
conjunction with draconian, threatening, and harassing collecting tactics to
strictly enforce tax collection. However, what isn’t always obvious that
all this can be self defeating in the prime task of efficiently collecting tax.
If a country’s tax collecting regime is too strict, time consuming, or simply
too high - the earning business or individual ultimately relocates out of the
regime with net result of nil tax collected. A successful business
generally minimises bureaucracy, this can be the difference between the winners
and losers. If a bureaucratic tax regime imposes too much time wasting
‘red tape’ onto the businesses it wishes to collect from, this imposed
inefficiency results in less or even nil tax collected. It is an ironic
and recurring feature of burgeoning bureaucracies that they can lose sight of
their original aim, and act in a manner that generates the polar opposite of
their advertised purpose.
The United Kingdom’s Her Majesty’s Revenue and Customs (HMRC)
department is a prime example of an out of control bureaucracy . By way of
example: the UK’s HMRC
requests information from new businesses registered as a limited company with a
three month deadline. The company is then harassed and threatened with
various fines, in the period preceding the target date. Most private
companies on chasing up clients, say for overdue bills, are normally very
conciliatory on the first hastener. Not HMRC they
issue threats two months before expiry of their own deadline! The United
Kingdom tax system is currently so complicated that you can get numerous
calculations, deadline requirements, and varying answers to straightforward
enquiries depending on whom and what section of the Tax Office is approached.
It is also known that if HMRC wrongly assesses tax in the taxpayers favour and
issues a small rebate, on discovery it will treat the taxpayer as a backdated
debtor, and in conjunction with its poorly design computer system, bully and
harass the taxpayer with threats of legal action and bailiffs, again a month
prior to the publicised date a debt is due.
Local government can also exhibit an immense amount of bureaucracy, albeit
generally not on the sheer scale and audacity of main government. Examples
are numerous, here’s one as a sampler. Located in the area of Ryde St John’s on the Isle of
Wight is a recently introduced elaborate and costly traffic light scheme.
This has resulted in:- a waste of electricity, an eyesore, conversion of a
smooth traffic flow to constant queuing blocking side roads, a timing system
resulting in setting drivers to perpetually drive through red lights, an
illogical ‘no-man’s land’ where cars can be trapped on a light change into an
illegal parking position, and a hazardous environment for pedestrians to cross.
This illustrates one of the problems with a bureaucracy, once it makes and
implements a bad decision; it is next to impossible to make the bureaucracy
change its mind. It must be said to be fair, that the Isle of Wight
council is considered one of the more efficient councils - there are some truly
horror stories from ‘loony’ councils in the United Kingdom that would fill a
book of monumental proportions.
However it does appear a truism that the larger the bureaucracy the more
inherently inefficiently it becomes. The true nightmare evolves when a
number of countries combined to form a joint bureaucracy of colossal
proportions. In Europe they have done just that, with the ever growing
European Commission (EC) trashing all sense of a fair democracy to apparently
head towards the ultimate super state. The USSR tried this and the rest is
history. There really is far too much material to consider in this
article, but inefficiency and European Commission are true soul mates.
Even the EC’s own auditors have refused to sign the accounts for years!
One can only really fight a bureaucracy with two weapons. These are fear
of adverse of publicity and the threat of legal action. To achieve this,
an individual needs to be meticulous in documentation, complete with as much
supporting evidence as possible. If there is a dispute, often the best
strategy is to covertly operate within the bureaucracy’s (legitimate rules) and
expose a breach by the organisation or individual working within the
bureaucracy. Nobody likes bad publicity, and even the most soulless
bureaucratic organisation does not relish being front page of a national tabloid
People can wonder what purpose a bureaucracy serves. If they are
inherently inefficient, what is the point? The answer is remarkably
simple, and it is perhaps easiest to think of bureaucracy as akin to a living
organism. There can be no wider motive, than to simply exist, grow, and
multiply. Within a bureaucracy an individual or section may release that
the same functions can be achieved with, say 25% of the existing staff.
However, whoever dares to propose such a suggestion, may well find themselves in
the 75% redundant! Furthermore in the real human world people tend to look
after themselves and their colleagues. If their wider circle of family and
friends can be accommodated with employment within the organisation so much the
Another factor not to be overlooked is the type of people attracted to working
for a bureaucracy. The risk taking, entrepreneurs are not likely to be
attracted to such a position. Indeed for the Richard Branstons and Alan
Sugars of this world, a pure bureaucracy would be highly counterproductive to
achieving a successful business. Wasteful routines mean wasted resources,
which equals loss of profit. It is no coincidence that the very worst and
most inefficient bureaucracies are found in taxpayers funded government
It is therefore no surprise that government agencies are the ones that tend to
implement political correct policies with gusto. Companies that want to be
productive and show a meaningful profit generally pay lip service to political
correct ideology. Yet again the recurring theme of a bureaucracy resulting
in the direct opposite of what is supposed to be achieved can be highlighted by
political correct organisations. By simple way of illustration in the
interests of eradicating alleged discrimination (notwithstanding successful
companies are primarily interested in profits) on the sole grounds of sex,
orientation, and ethnic group is to issue quotas and standard manipulation to
discriminate on the sole grounds of sex, orientation, and ethnic group!
For any bureaucracy there is a wealth of material here, for needless regulation,
creation of meaningless non-productive jobs, and to generally justify needless
and expensive expansion.
Government bureaucracies, whether centrally or locally governed invariably fail
to live up to expectations. This is simply because unlike successful free
market enterprises that has the consistent marker and incentive of ‘profit’;
markers in a government are often intangibles or politically determined, the
incentive to the bureaucracy is survival and expansion. Indeed government
bureaucracies can have a perverse financial incentive to fail and be
inefficient, as this can result in an increased budget to solve the further
problems. Yes, bureaucracies do exist in the private market, but
ultimately market forces will favour the more efficient (and hence profitable)
company over the one that is more bureaucratic.
Government bureaucracies invariably fail to live up to their promises because
they are not market institutions. As such, there is no possible way of
ascertaining how efficiently the bureaucracy is run since there are no
profit-and-loss statements in the government sector, only ‘budgets’ and often
All government bureaucracies have powerful incentives to grow, regardless of
whether or not such growth actually serves the public. To survive the bureaucrat
must inherently be an empire builder, because that is how he advances in his
career. The route to promotion in managing a bigger and better-paying
bureaucracy is to prove that one can ‘manage’ a large number of people.
Returning to the European Union,
this really ticks all the dismal boxes of an inefficient and ever growing
bureaucracy. Five years ago the Eurozone currency crisis kicked off with
Greece getting into deep trouble. The currency Euro, really cannot ever
work, unless the European Countries who belong to this dubious club work like a
country with common tax, benefits, and fiscal policy regimes. As it stands
it makes no sense that Germany shares the same rate of exchange than the
Southern Mediterranean countries such as Greece and Italy. The EU seems to
be looming towards disaster, still retains a huge debt problem, growth has been
stifled, and possible deflation is looming. Democracy is conspicuous by
its absence, and the EU has failed to have its own accounts passed in 19 years.
The bureaucratic nature of the EU will not see that its own structure and
decisions is the source of these problems - and similar to the former USSR will
reach a point in the future where it will collapse - the ultimate fate of ever
enlarging inefficient bureaucracies.
To quote Ludwig Von Mises from his classic 1949 book ‘Human Action - A Treatise
on Economics’:- ‘Whenever the operation of a system is not directed by the
profit motive, it must be directed by bureaucratic rules.’ This cast iron
law of bureaucracy means that in the final analysis, no government bureaucracy
could ultimately be operated in an efficient manner.