Bureaucracy Corrupts as Well

I've written recently about how the welfare state encourages corruption. It turns out that other manifestations of the bureaucratic state also manifest corruption. Recent disturbing stories about government school faculty and administration in Atlanta cheating in an effort to reach minimal standardized performance thresholds. At least 178 teachers, principles, and administrators in four schools my be guilty of "both helping students on the state's standardized test, the Criterion-Reference Competency Test, and correcting incorrect answers after students had turned the tests in."

Many blame evaluation criteria established by "No Child Left Behind." A recent report cites cheating that has taken place in New York City, Boston, Worcester, Massachusetts, Florida, and Pennsylvania. It turns out that corporate CEOs are not the only class of people in which deceit may be found. It is not only Wall Street fat cats who seek to take advantage of their position of state privilege to better their economic status. 

There have been an abundance of ideas suggested for how to improve "No Child Left Behind." The one never mentioned, however is to get rid of it along with government education. In terms of management, government enterprises must be ran bureaucratically. Such management is necessarily management by rule and policy. It asks for assessment tools such as those embodied by "No Child Left Behind." As Mises pointed out in his seminal work Bureaucracy:

Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. His discretion to act according to his own best conviction is seriously restricted by them.

Without profit and loss to act as an organizational guide, there is a reduced incentive for efficiency. Speaking of state bureaucratic management, Mises writes:

Public administration, the handling of the government apparatus of coercion and compulsion, must necessarily be formalistic and bureaucratic. No reform can remove the bureaucratic features of the government’s bureaus. It is useless to blame them for their slowness and slackness. It is vain to lament over the fact that the assiduity, carefulness, and painstaking work of the average bureau clerk are, as a rule, below those of the average worker in private business. (There are, after all, many civil servants whose enthusiastic fervor amounts to unselfish sacrifice.) In the absence of an unquestionable yardstick of success and failure it is almost impossible for the vast majority of men to find that incentive to utmost exertion that the money calculus of profit-seeking business easily provides. It is of no use to criticize the bureaucrat’s pedantic observance of rigid rules and regulations. Such rules are indispensable if public administration is not to slip out of the hands of the top executives and degenerate into the supremacy of subordinate clerks. These rules are, moreover, the only means of making the law supreme in the conduct of public affairs and of protecting the citizen against despotic arbitrariness.

In an environment in which monitoring shirking is difficult and costly, there a tremendous incentive for cheating found in the schools discussed above.

Corporate Welfare Corrupts Too

II have posted a number of times on the corrupting influence of the welfare state. Lest one should think that I merely have a vendetta against the poor, I am just as eager to condemn corporate welfare also. As John Stossell has noted,

In America today, the biggest recipients of handouts are not poor people. They're corporations.

While oil comampanies continue to receive $4 billion a year in subsidies, Stossell notes that other energy sectors are getting into the act. The Obama administration desires to direct billions in additional subsidies toward the construction of wind farms half owned by General Electric, the CEO of which happens to be "super-close" to President Obama.

The TARP program, to take another example, has rightly been characterized as "welfare for bankers." Not suprisingly, where there is money and power involved, there is corruption. One senator who voted for TARP put in a call for one of the banks in his constituency to get the TARP money.

You can tell a Congressman from a statesman by whether they are willing to eliminate income subsidies altogether or only for those people who they do not like. As the facebook statement by MoveOn shown above indicates, while those on the left rail against corporate welfare, they are eager to provide money taken from other people to be spent on government education, state bureaucracy, subsidized contraception and abortion, and rebroadcasts of British entertainment masquerading as educational television.  At the same time, way too often those on the right champion the elimination of food stamp programs, while helping their friends in "big business.". In fact, all government welfare schemes regardless of who is getting the loot are coercive wealth transfers from the productive to the politically favored. As such they violate the Christian ethic of private property and, therefore, are to be condemned. The entire welfare state, not in part but the whole, should be eliminated.

Bovard on How Welfare Breeds Corruption

Over at Just Watch the Game, John Steigerwald points to an excellent article by James Bovard in the Wall Street Journal. In "The Food Stamp Crime Wave," Bovard documents how abusing government income transfer programs is now easier than ever. Things are so bad that "Millionaires are now legally entitled to collect food stamps as long as they have little or no monthly income." This is one more example of how welfare breeds corruption.

Bovard cites cases in Wisconsin, Washington, Iowa, Michigan, and New York, indicating that this is not merely a problem limited to one locale or region. The main reason for the latest corruption, besides the mere existence of the welfare state itself, is that "thirty-five states have abolished asset tests for most food-stamp recipients." Therefore very wealthy people are able to qualify for food stamps as long as they are able to legally report very low incomes. Bovard reports:

The food-stamp poster boy of 2011 is 59-year-old Leroy Fick. After Mr. Fick won a $2 million lottery jackpot, the Michigan Department of Human Services ruled he could continue receiving food stamps. The Detroit News explained: "If Fick had chosen to accept monthly payments of his jackpot, the winnings would be considered income, according to the DHS. But by choosing to accept a lump sum payment, the winnings were considered 'assets' and aren't counted in determining food stamp eligibility."

Such regulatory changes along with increasingly lax monitoring and enforcement has resulted in a massive increase in the number of people on the dole. As Bovard reports, "the number of food-stamp recipients has soared to 44 million from 26 million in 2007, and costs have more than doubled to $77 billion from $33 billion."  This is one more piece of evidence that welfare transfer payments reduces the opportunity cost of not working and that they, therefore, encourage idleness. Idleness other productive people pay for. Nice work if you can get it.