This article is adapted from DiLorenzo’s lecture at the Our Enemy, the Bureaucracy Mises Circle in Phoenix on Saturday, April 26.
Economists have been studying and writing about government bureaucracy for quite a long time. Ludwig von Mises became the first “modern” economist to write a book on the subject with his 1944 Bureaucracy. The public choice school of economics, founded by James Buchanan and Gordon Tullock, among others, has produced a huge literature on the economics of bureaucracy, much of which is complementary to Mises’s pathbreaking work.
This literature has produced many easy-to-understand insights about the essence of governmental bureaucratic behavior. For one thing, it is vastly different from decision-making in the marketplace. In the market people voluntarily “vote” with their dollars to express their preferences. There is a market feedback mechanism whereby if one pleases his customers he prospers, if one displeases his customers he fails. In government, by contrast, we are basically told: You need this, this, this, this, and this, and if you do not pay for it, we will make you live like a dog in a cage for several years. That’s called being sentenced to prison for tax evasion. There is nothing voluntary about it.
As for the evaluation of government “services,” there never is any real evaluation based on the behavior of citizens; government bureaucrats and politicians tell us how wonderful their “services” are and then demonize us publicly if we dissent. Government today is so gargantuan that no human mind could possibly comprehend a smidgen of 1% of what government actually does. Consequently, most citizens are “rationally ignorant” of all but a few things their government is involved in.
Government bureaucracies use tax dollars to employ a large army of “intellectuals” and court historians to praise bigger and bigger government while castigating the free market and the civil society as “failures.” Anthony Fauci alone reportedly dispensed some $7 billion annually in research grants so that he could publicly boast, “I am science.” And that is just a single bureaucrat!
A government bureaucrat’s status and pay depend crucially on how many subordinates he or she has, which gives every ambitious bureaucrat an incentive to hire far more people than necessary to achieve any conceivable task. The first question posed to any bureaucrat seeking a higher-level job is, “How many people work under you?” Thus, bureaucratic bloat is rule no. 1 for every rule-following bureaucrat.
Speaking of rules, they are another hallmark of government bureaucracy. Since there are not profits (or losses) in an accounting sense in government, “success” as a bureaucratic “manager” is measured not by the bottom line but by how closely bureaucrats follow the rules dictated by their higher-ups. Breaking the rules can stymie or ruin a bureaucrat’s chances of promotion, so rules are rarely challenged or changed, oftentimes not for years or decades, no matter how foolish or dangerous they are. This is another stark difference from the marketplace, where stupid rules that harm the bottom line must be jettisoned—or else.
Another law of bureaucracy is that in government, failure is success. If welfare spending fails to reduce poverty, the welfare bureaucracy is given an even bigger budget. The reason bureaucrats give for their failures is always that the taxpayers are too selfish and stingy. When increased school spending correlates with declining test scores, the school bureaucracy gets more taxpayer dollars, not less—just the opposite of what happens in competitive markets. And on it goes.
Governments at all levels play the “Washington Monument syndrome” game. In 1969 when the National Park Service failed to get its budgetary wish list from Congress, the head of the Park Service closed down the Washington Monument, the most popular tourist attraction in Washington, DC. People from every state complained to their congressional representatives that their vacations to DC were ruined, forcing Congress to submit to the Park Service’s budget request. Since then, governments at all levels play the same game— always threatening to eliminate school buses, police departments, ambulances, garbage collection—whatever can succeed in bringing the voters or appropriation committee members to their senses and increasing taxes and spending.
Murray Rothbard greatly admired the writings of John C. Calhoun, especially his classic Disquisition on Government. In that 1851 book Calhoun articulated what is known as libertarian class theory. It’s not the Marxist class theory of conflict between the capitalist and worker classes. The real conflict in any democracy, said Calhoun, was between taxpayers and “tax consumers,” the former paying more in taxes than they receive in government benefits, whereas the latter receive more in government benefits than they pay in taxes. At the top of the list of tax consumers are government bureaucrats. Then there are all the beneficiaries of the welfare-warfare state administered by the welfare and military bureaucracies, followed by hundreds of other governmental programs.
Calhoun predicted that when it came to enforcing constitutional limitations on government, the tax consumers would easily overwhelm the taxpayers with an avalanche of arguments as to why governmental powers should be more or less unlimited. That is why he favored a system where people organized in political communities at the state and local levels have some kind of nullification or veto power over what they perceive as unconstitutional spending. A written constitution would never be sufficient, Calhoun argued, and history proved him right a long time ago.
Murray Rothbard and the “Civil Service” Scam
In his 1995 essay “Bureaucracy and the Civil Service in the United States,” Murray Rothbard wrote that “no system has been more savagely derided by . . . Establishment do-gooders than . . . ‘the spoils system.’” He referred to the old system whereby when a newly elected president was from a different party than the incumbent, most or all of the incumbent’s political appointees would be fired and replaced by people from the new president’s party. This “spoils system” prevailed until the early 1880s when it was replaced by legislation that created the civil service system, where the best and brightest supposedly enter the government bureaucracy after taking entrance exams and are then given de facto lifetime tenure.
Rothbard—“Mr. Libertarian,” as Forbes magazine once dubbed him—also wrote that “no measure of government has been more destructive of liberty and minimal government than civil service reform.” Think about that one. The man who wrote a monumental history of the founding era, a history of money and banking in the United States, and hundreds of other articles, books, and monographs about the economics, politics, and philosophy of statism said that civil service reform was more destructive of liberty than anything else government in America has ever done.
So-called civil service reform created a never-ending expansion of the government bureaucracy, Rothbard explained, along with hundreds of thousands of rules, regulations, and central planning dictates, which are bureaucracy’s lifeblood. Here’s how that happened: Assume there are say, 10,000 federal bureaucrats. A different party ascends to the White House and can no longer fire the bureaucracy and hire its own supporters. To counter the influence of the existing bureaucracy, it will want to hire more than 10,000 of its own bureaucrats, more than doubling the size of the bureaucracy. Then the next time that party is deposed, the opposition party will do the same, perhaps tripling or quadrupling the size of the bureaucracy from the original 10,000. And on and on, ad infinitum.
As dubious as the spoils system might sound, it was actually in keeping with the original American idea of officeholders and bureaucrats “serving” in government for a few years and then returning to civil society to live under the laws and rules that they promulgated while in government. Civil service “reform” essentially created lifetime tenure for bureaucrats, for it became almost impossible to fire them. The head of a government agency who wants to get rid of an employee will surely be sued by a government employees’ union that will make his life miserable for months or years of internal litigation. It is far easier to bribe the unwanted employee with a promotion and pay raise in a different agency at a different location, which is what is done quite frequently.
Gone are the good ole days such as when President Andrew Jackson, one of Rothbard’s more highly regarded political figures, condemned the idea of a property right in a government job and fired 41% of the entire federal bureaucracy. Or when President John Tyler one-upped Jackson and fired 50% of the bureaucracy. This is but one reason why in his 2009 book Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty Ivan Eland rated Tyler as the best president in all of American history according to his criteria of how good a job presidents did in protecting rights to life, liberty, and property.
The Yankee Problem
Rothbard wrote of how the civil service reformers of the late nineteenth century were almost exclusively from New England and New York, were relatively highly educated, and were “shaped by the cultural and religious values of their neo- Puritan Yankee culture.” They wanted “good men” in government jobs, with the “good men” being themselves, wrote Rothbard. These were men who believed in “the inherent right of their sort to rule” over lesser citizens and believed in democracy, but only if guided by people like themselves.
Rothbard’s reference to the Yankee culture of the civil service reformers is almost identical to Clyde Wilson’s description of this particular cult in his 2016 book The Yankee Problem: An American Dilemma: “By Yankee I do not mean everybody from north of the Potomac and Ohio. Lots of them have always been good folks. . . . I am using the term historically to designate that peculiar group of people descended from New Englanders, who can easily be recognized by their arrogance, hypocrisy, greed, lack of congeniality, and penchant for ordering other people around. . . . Hillary Rodham Clinton . . . is a museum-quality specimen of a Yankee—self righteous, ruthless, and selfaggrandizing. . . . The Yankee temperament, it should be noted, makes a neat fit with the Stalinism that was brought into the Deep North by later immigrants.” These are the people who believe that they should instruct you on virtually every aspect of your life with their bureaucratic edicts, demands, threats, and punishments.
The political crusade for civil service reform began in the early 1870s during the Grant administration. When President James Garfield was assassinated in 1881 the Republican Party used his death to make political hay, just as they had done with Lincoln’s assassination. The “civil service reformers” among them falsely blamed the assassination on “a disappointed officeseeker” who was refused a government job. Rothbard commented on this by saying, “The idea that murder by an office-seeker can only be combated by abolishing offices to be sought, [a.k.a. civil service reform] is even sillier than the comparable argument that the way to eliminate assault or murder is to outlaw guns.”
The big lie about the Garfield assassination worked. President Chester Arthur signed the Pendleton Act on January 16, 1883, as a desperate act to cement in place Republican bureaucrats who would oppose the popular Grover Cleveland, who was elected president in 1884. Thus the deep state was created.
The end result of this, Rothbard wrote, was that “the ideals of ‘merit’ and a technocratic elite” were employed in the service of “big government, protectionism, inflationary bank credit, and imperialism and foreign war.” All achieved by our enemies, the bureaucracy.