Wall Street has always been divided between producers and overhead. The same is true in every for-profit profession and business. When “overhead” overwhelms production, profits collapse and the business fails. Technology has allowed for-profit and not-for-profit businesses to reduce overhead staff, thereby increasing the ratio of producers to staff.
That is not true in government where profit is not necessary for viability. Government does not manufacture goods or produce services to sell. The purpose of government is to secure and protect the rights of its citizens – to protect the people against loss of life, liberty and the unlawful seizure of property. Obviously, government’s role has become far more complex, which is one reason bureaucracies have grown, but it does not explain why they have become bloated.
Over the past eighty years government’s role in the economy has become increasingly intrusive. When state and local governments are included, total government spending exceeds 41% of GDP. A hundred years ago, that number was 7%. At that time, state and local spending exceeded that of the federal government. Today, the latter has the lion’s share.
As insidious as burgeoning bureaucracies (and related to it) is cronyism, which exists between government, big business, favored industries and public sector unions. Banks too big to fail are protected against failure, giving them a cost advantage versus their smaller, regional competitors. Industries are favored because of long term relationships or because products and services coincide with an Administration’s agenda. Unions are interested in expanding their reach. Big bureaucracies are in their wheelhouse. With private sector unions in decline, the public sector represents their only growth opportunity. Taxpayers, small businesses and fans of small government stand on the outside and ogle the party to which they were not invited.
Wall Street has always been divided between producers and overhead. The same is true in every for-profit profession and business. When “overhead” overwhelms production, profits collapse and the business fails. Technology has allowed for-profit and not-for-profit businesses to reduce overhead staff, thereby increasing the ratio of producers to staff.
That is not true in government where profit is not necessary for viability. Government does not manufacture goods or produce services to sell. The purpose of government is to secure and protect the rights of its citizens – to protect the people against loss of life, liberty and the unlawful seizure of property. Obviously, government’s role has become far more complex, which is one reason bureaucracies have grown, but it does not explain why they have become bloated.
Over the past eighty years government’s role in the economy has become increasingly intrusive. When state and local governments are included, total government spending exceeds 41% of GDP. A hundred years ago, that number was 7%. At that time, state and local spending exceeded that of the federal government. Today, the latter has the lion’s share.
As insidious as burgeoning bureaucracies (and related to it) is cronyism, which exists between government, big business, favored industries and public sector unions. Banks too big to fail are protected against failure, giving them a cost advantage versus their smaller, regional competitors. Industries are favored because of long term relationships or because products and services coincide with an Administration’s agenda. Unions are interested in expanding their reach. Big bureaucracies are in their wheelhouse. With private sector unions in decline, the public sector represents their only growth opportunity. Taxpayers, small businesses and fans of small government stand on the outside and ogle the party to which they were not invited.