Thursday, July 31, 2014

The Unresponsiveness of Political Bureaucracies

Efficiency requires habits. Habits make sleepy. Sleepiness lessens initiative, makes us forget our goals, and blurs our perception of the environment. We need habits, but habits entrap us. In organizations we need to know what to expect from others and what they expect from us. Thus, we find a greater need for habits, now called customs or, with a grand intellectual gesture, ‘culture’.
The zeal and fire to produce good results is tempered by the cool, humid blankets of caution and anxiety over preventing bad results. Within organizations we are apt to become turtles: the drive to defend ourselves usually wins over the drive to stick our necks out. When no one sticks his neck out, sticking our own neck out exposes others as do-nothings. Most people do not like such exposure, so our fellow-turtles discourage us. Such reactions and other human weaknesses produce the natural conspiracy of organizational sclerosis called bureaucracy.
The world is not as dark as all that. People also like to do things, to make others happy, to meet challenges, to learn new skills, to be proud of accomplishments, to take risks. Still, enough bureaucracy exists to make many people believe that organizational sclerosis is the normal human condition.
Organizations may have their evils, but organizations are necessary in modern societies. The number of organizations has increased greatly, and thus bureaucracy has increased. Any social policy, any political choice, passes through many political organizations before it is decided, and will then be executed by government organizations. This world we are talking about is the world of ‘political bureaucracies’. The characteristic dynamics of this world, well described by writers such as Graham Allison and Morton Halperin, give political bureaucracy a perniciously stable character. All of our social and political management is done largely by institutions that are themselves highly unmanageable. It is nice to know how and why these institutions are unmanageable, if only so that we can make the best of it. People who work in these institutions may be full of goodwill. Their work is, after all, a game of ‘Yes, Minister’. But goodwill is not enough.
Time and again, someone discovers that a particular institution has become counterproductive: churches discourage religion, hospitals discourage healing, the justice system produces injustice, schools discourage learning. The common response to such a discovery is to preach abolition of the institution: away with priests, with doctors, with lawyers or with teachers. Peter Drucker has offered the right answer to such preaching:

‘A growing number of critics, especially among the disenchanted liberals of yesterday, have come to the conclusion that service institutions are inherently unmanageable and incapable of performance. The most radical expression of this conclusion is the demand to deschool society, first voiced by the former priest Ivan Illich, and most clearly presented by the teacher and educational critic John Holt. Schools, Illich and Holt agree, cannot perform and cannot be made to perform. If only schools were abolished, children would learn. This is, of course, another ‘noble savage’ fantasy. Society was ‘deschooled’ not so long ago - not much more than a century ago. We have ample documents from this preschool era, e.g., the copious investigations into the life and development of children in early Victorian England, or in mid-nineteenth-century Germany. There is precious little support in these documents for the belief that children will become creative and learn by themselves if only they are not subjected to the mismanagement of the school. Schools at all levels do indeed need drastic changes. But what we need is not a ‘non-school’, but a properly functioning and properly managed learning institution.’

Still, most institutions are difficult to manage properly. Bureaucracy is the most common, most unassuming, almost amicable sphinx - that slips into a nightmarish, Kafkaesque world in which angels fear to tread.
To understand bureaucracy, we need to know ‘the first law of Parkinson: ‘Work expands so as to fill the time available for its completion’. That seems bad, but usually reality is worse. Work expands so as to transcend the time available until it produces a backlog of unfinished work that creates a balance between self-importance and self-pity. Always a backlog emerges, a backlog that proves the department or organization to be somewhat overworked and somewhat underequipped. Add to this the common knowledge that the quantity of our subordinates measures our importance, and we understand the tendency of every organization to grow.
The ambition to make a profit counteracts this tendency, but whenever the profit motive is less acute (because ownership is not very vocal, or money is made too easily), the law of Parkinson works. In government agencies the profit motive is lacking, so there this law works more readily. Even in the period of huge government deficits, the law of Parkinson became difficult to neutralize. Instead of bringing deficits down, most governments were satisfied to let them grow more slowly, or even to let them grow more slowly than expected.
As an organization grows, coordination and communication problems grow more quickly. A cynic with a mathematical bent once estimated that, reckoning with common bureaucracy, any organization reaches a critical mass around 800 people. Once it has reached this size it no longer needs an environment, but can fully absorb itself in its own workings.
As a management consultant I have seen many organizations in which an internal survey of problems did not include any item related to the outside world, such as clients or a public to be served. Worse, organizations tend to solve these internal problems by creating coordinators until those coordinators in their turn have to be coordinated. Or new committees are established without abolishing the old ones.
Today I heard about a government agency of 3500 people with an entirely operational task, that employed 700 external consultants. Another example, an agency of 3000 people, had 100-odd ‘organization development projects’ in progress, without any manager having the faintest idea what progress, if any, was being made, or even what was being done. Another agency that had an exclusive operational character and appeared permanently overburdened and understaffed had, after much resistance, its use of time analyzed. This organization spent less than 20% of its time in activities directly related to the mission of that organization. The biggest item, one that took 12% of all time spent, was that of personal care and hygiene. This organization’s employees must have been the best-groomed personnel in the Northern hemisphere, although no outsider could tell the difference. People who hold a vestige of decency and common sense feel - once again - like Alice in Wonderland.

A second dynamic is the ‘iron law of Michels’, a German sociologist from before World War I. When an elite segment of society enjoys privileges, excluded or exploited people protest. Workers, for instance, demand better working conditions and higher rewards, and organize themselves into trade unions and labor parties. Labor representatives in the trade unions and in politics then become part of the establishment and thus form a new elite by themselves. Even if this law is not as ironclad as Michels wants us to have it, and even when meanwhile some sensible results are produced, the tendency that he describes does exist. It inhibits effective corrective actions and adds to the unmanageability of our systems.

A third dynamic complicates and impairs the effectiveness of government bureaucracies. This dynamic is the growing political affiliation within bureaucratic networks. German sociologist Helmut Schelsky has pointed out that within bureaucratic networks there emerge people whom he calls ‘officials.’ These individuals stand for special interests (of their organizations or of a specific constituency - and always of themselves). They create personal networks to increase their own power behind the scenes, and their own status in the limelight. Usually these networks involve both private and public sectors. This activity creates ‘corporatism’, that modern hybrid between democracy, bureaucracy and oligarchy.

Fourth is the inherent traditionalism of bureaucracy. An analysis of the lack of innovation in police forces in the U.S. found the main reason to be that the only people who rose to the top were those who fit the existing organizational mode. In a bureaucratic organization those who fit the existing mode are the bureaucratic people who solve problems by bureaucratic rules and promote people after their own image.
Then there is the conservatism of past success. The best example can be found in armies during times of peace. The people at the top maintain ideas of warfare from the last war, or even worse, from the war before the last one. When people persist in outdated success formulas, someone who is less traditional, more practical, not hindered by preconceptions, may finish them off. Arnold Toynbee called this the ‘David and Goliath’ pattern. Almost every military innovation has been opposed for a long time by the sitting generals, and has broken through only when the previous generation retired or was set aside during a war because of glaring incompetence. Wars are escalating events. Violence calls for violence. Though less strongly than Von Clausewitz assumed, any war tends to lead to total war. Only in losing combat does war exhibit feedback. This, by the way, is exactly why bureaucratic and political organizations shirk true action - they do not wish to risk outright failure.

Apart from the ineffectiveness of bureaucracies that have to execute political decisions, political life itself exhibits feed-forward loops. Most of these loops are related to the role of expectations. Take inflation, which has many causes. One important factor in the worldwide inflation of the 70s was the Vietnam War. A nation may finance a war in three ways. It may loan to the hilt - which may lead to losing the war after winning it, as happened in Great Britain after 1945. A nation may increase taxes, or it may reduce other government expenses. The American government felt for none of this. They went for the classic fourth way - printing more money. Dollars are an international currency, and so the world became filled with devalued dollars. Other countries paid for the Vietnam War with their own dollar balances.
When the value of money lessens, prices rise. When this cycle persists for some time, people expect inflation to continue and this expectation may be a main reason that inflation does continue. If there is one thing that stimulates inflation, it is the expectation of inflation.

There are many other examples of the feed-forward loop of expectations, and not all are bad. When we become somewhat richer every year, we expect to grow richer the next year as well, so we spend more, buy more on credit. Demand for goods and services increases, companies invest more and hire more people, and everything looks sunny. People invest because they have faith in the future. Many other reasons may exist for such optimism, but optimism is also an attitude, pure and simple.
Greater investment creates an even more favorable investment climate. Here, too, is a positive spiral. Why have Singapore and Taiwan for so long remained on top of the list of growing countries? Among other things, because these countries grew. Workers in Singapore and Taiwan may earn less than workers in the United States, for example, but they compare earnings now with earnings last year and expect that next year they will earn still more. This expectation feeds forward in their commitment to working harder, producing more, investing more. Faith in the future becomes a potent driving force toward an attractive future.
Our time has seen ‘the revolution of rising expectations’, something with which not only the rich West, but all developing countries have been blessed. Drucker again:

‘Affluence, for instance, everybody ‘knew’ (and many still believe) would greatly reduce the demand for economic performance. Once we knew how to produce material goods, the demand on the economic function in society would surely lessen. Instead we are confronted with a rising tide of human expectations. When President Kennedy coined this phrase in the early sixties, he had in mind the explosive growth of demands for economic rewards and satisfactions on the part of the poor, the underdeveloped countries of the world. But affluence has released a similar rising tide of human expectations among the remaining poor of the developed countries, whether American Negro or Sicilian peasant. And the affluent themselves are escalating their demands for economic performance faster than their own capacity to perform. The educated young people, contrary to the headlines in the popular press, show little sign of diminished demand for the traditional economic goods and services. They show, in addition, an insatiable appetite for new services and new satisfactions - for education, for health care, for housing, or for leisure. Equally new, and perhaps even more costly, is the demand for a clean environment. It too was a luxury until now. That the masses of yesterday, in city slum or sharecropper’s shanty, enjoyed clean air, clean streets, safe water, and wholesome unadulterated food is nostalgic delusion.’

The decolonized countries, after getting rid of the whites, planned to achieve these goals themselves. Many such countries, especially those in Africa, have instead moved backward, and this fact has fueled a ‘revolution of rising frustrations.’ This pattern applies also, but less strongly, to Arabian countries. It explains part of the Islamic revival. Among the Believers by V.S. Naipaul supports this view.
Social disappointment provides a breeding ground for fascism and anarchism. Judging from the last decades, any possible mass violence will, at least in the West, probably be less fascist and more anarchistic than any violence that emerged last time. Developing countries might be more prone to fascism, however, most likely with overtones of religious and sometimes racist fanaticism.
The revolution of rising expectations existed from the end of World War II until the first petroleum crisis. The rise of unfulfilled expectations created a revolution of rising frustrations from about 1965 until 1985. Such a pattern formed a dialectic response, as Marxists (and Hegelians) would say, but not a feedback. This frustration continues to accept the same myth that the state exists to solve our problems. With the permissiveness that followed prosperity, this myth resulted during the last twenty years in growing protests and civil disobedience.
Expectations tend to feed forward when real satisfaction is lacking. An expectation of more money next year appears fine, but before we know it we spend more money, always a little too much. We never feel content, because we quickly become accustomed to what we have, while our expectations remain ahead of reality. Every satisfaction that we become accustomed to enjoying we take for granted, and then we want more. Spoiled children lack this kind of feedback.
Still, this type of expectation is based on experience, and may hold when conditions and trends remain the same. Stable experiences of growing prosperity or grinding poverty both exhibit feed-forward. Prosperity makes for a positive spiral and poverty for a negative spiral, from the point of personal capital and personal efforts.
Unrealistic expectations do not exhibit feed-forward, but they hinder feedback. Such expectations may be overoptimistic or overpessimistic. They may also be infantile, neurotic or hysterical. Optimistic infantile expectations are based on wishes. ‘Wishful thinking’ is the common expression. Pessimistic infantile thinking is based on fears. ‘Fearful thinking’ would be the opposite of wishful thinking.
Infantile expectations tend to be optimistic, but these expectations lack common sense and are unrelated to actual conditions. By contrast, neurotic expectations provide an escape from personal frustration or personal failure, by assuming that everything will be fine or that everything is bad anyway. Neurotic expectations tend to be pessimistic to mask personal failure or impotence. Hysterical expectations may also be overly optimistic or overly pessimistic. But such expectations are based on an inflated ego, as if we ourselves are responsible for the great or the terrible things that happen.
Much advertising appeals to the wishful thinker in us. Politics, especially populist politics, appeal to wishful thinking, but even more to fearful thinking. Imagine the horrible things that will happen if you vote for the wrong party! Hysterical expectations are, if not the soul, then at least the specter of stock markets. Such expectations are also common in successful companies that explain success in growth markets as being of their own making, just as surfers congratulate themselves with the fine surf they are making. Real entrepreneurs exist too, but only in the real world.
All make-believe and unrealistic expectations impair feedback, because such expectations make people look for feelings instead of facts. When facts that stare us in the face are no longer explained away, but are simply ignored, we approach a state of hallucination. A common trick of stage hypnotists is to make their subjects see what is not there (positive hallucination), or making them not see what is there (negative hallucination). When this happens in politics, we have the full-blown folly that Barbara Tuchman explored.
Both marketing and politics revolve around expectation engineering and commitment engineering. Commercial people are the wizards, and politicians the sorcerers. Among the sorcerers are black magicians, conjuring up visions of envy, contempt, fear, hate. Many sorcerers and would-be sorcerers eventually discover that they have conjured up more than they can handle. They are soon caught or swept away by the forces they themselves unleashed. One common variety of this magic is campaign promises turned sour.
Politics in a populist society stirs up public expectations. Creating public self-confidence and faith in the future is white magic, and mobilizing hate and fear is black magic. The usual electoral promises sound more as if the candidate is playing Father Christmas - offering infantile magic. Stirring up expectations is a boy’s job, but fulfilling expectations is a man’s job - though also girls stir up expectations that only women may fulfill. The CouĂ© prescription for society as a whole is something that we have not found thus far, though Ronald Reagan did his best.
Optimism and pessimism, even if unfounded, create true feed-forward. All expectations of the future tend to be self-reinforcing: optimism stimulates action and so produces more good news, while pessimism represses action and so produces more bad news. The financial world is especially full of interconnections, all abundantly looping. Many such interconnections involve expectations.
Economists debate whether the money supply should increase or decrease, or whether a wage revision would be wise. These factors play a part, but many other factors are less tangible ones, at least for economists. Many causes of economic ascent and decline lie outside the scope of classic economics. Therefore, economic policies often deal only with symptoms.
Since expectation engineering is really sorcery, banks and insurance companies are, as are political organizations, more akin to churches than to proper business enterprises. Bankers, like public relations people, politicians and parsons, dress and behave so as to exude trust, though for different constituencies. How car makers dress and behave is less important, as long as they produce attractive cars for attractive prices - although they have to dress up when meeting with bankers and congressmen.

Many people mistakenly believe that in the past the world was a better place. Today appears more difficult than yesterday, because satisfaction from improvement has been swallowed up by dissatisfaction from increased expectations. Although we are better off than we were yesterday, we enjoy it less. Many problems in society that once we accepted as facts we now see as glaring failures. When government does twice as much, we can feel twice as discontented. The expectation that government is there to solve all our problems has taken the joy out of the welfare state.
We are right in the idea, with us since the Enlightenment, that society can be improved, but we tend to expect too much. We cannot solve every problem through government intervention, and it is questionable if we should try. Many things, particularly in a democracy, a government can influence only marginally. Social democrats tend to forget this, and ask the government to change what people think and do.
You pay your doctor to do something about your ailments, to check and advise you, and to write out prescriptions. Some people remain ill because they continue smoking, drinking, using drugs, or exposing themselves to contamination. It is not the job of a doctor to change people’s ways. The doctor’s job is to inform and advise, period. No one is out there to see to our proper attitudes - no doctor, no state, no wise councils.
Regulations, measures, and officials cannot solve all social ills. They may even make them worse. No government can eliminate the drug problem. Some governments may either worsen or reduce the problem, but in the end the War on Drugs is sterile muscle-flexing.
‘Repair legislation’, laws that are passed to compensate for the lack of effects, and for the undesired side effects and ill effects of previous laws, comprise about 80% of all new laws in Great Britain and the U.S., according to Wildavsky. If ever you need an example of feed-forward, repair legislation is it. Overexpecting citizens, overpromising politicians, and underdelivering bureaucrats conspire to produce an orgy of regulation in modern countries.

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