George Friedman is a strategist on international affairs. He is the founder and chairman of Geopolitical Futures and the former founder and chairman of Stratfor. His latest book, The Storm Before the Calm, presents a well-written framework for thinking about the cycles of American civilization as well as some predictions for the future.
In discussing the regular periodicity of the American experiment, he presents a set of arguments regarding the contemporary state of American bureaucracy. What he says is consistent with some of the themes we have discussed here in Closest Point of Approach. It’s a provocative way of framing some of the issues.
We’ll focus on what he labels as an “institutional crisis.” The quotes here come from the book.
“The problem of the federal government is not its indebtedness or its size. That can be shown by the fact that none of the long-standing prophecies have been fulfilled. The problem is rather that the dramatically increasing level of federal involvement in society has outstripped its institutional capabilities. This is the reason that the national debt has not had the consequence that many were predicting since the 1980s. The problem with the federal government is not financial. It is institutional.
“The institutional crisis is rooted in two things. First, the governing class, and the technocrats, accumulate power and wealth, and they begin to shape the institutions to protect their interests. The second problem is that the expertise that won World War II and built the postwar world is now encountering its own problem of inefficiency – diffusion.
“Diffusion is the distribution of authority among several departments or agencies. At a lower level, it is the diffusion and fragmentation of knowledge among individual experts. Knowledge of what is happening is diffused rather than integrated. Diffusion ties in with the problem of expertise. Expertise is needed. But experts are experts in different things, and when entities are constructed with specific expertise, barriers are built between entities that are sometimes dealing with the same issue. Instead of creating a single perspective on a problem, experts have perspectives on different parts of a problem, and the entity they represent has parallel responsibilities for fragments of an issue. This creates diffusion with the federal government and frequently contradictory directions for entities .. This is not unique to the federal government. It happens in all, particularly, large organizations. Expertise has this inherent defect. But in the federal government, the problem is the size of the defect.
“The other problem is entanglement, multiple federal agencies engaged in managing parts of the same problem. One form of entanglement is that of the various agencies, which battle each other for funding and turf … There are so many entities within entities that it is impossible to count them all.
“The entanglement of various agencies with each other is compounded by a massive entanglement with society. The barrier having been broken, there are few areas of private life in which the federal government is not in some way involved … And there is hardly any area where only a single agency is involved. The entanglement between agencies becomes the defining characteristic of the federal system.
“As society became more complex in its own right, and the federal imperative to try to manage this growing complexity tries to keep pace, management becomes more complex, regulations are created that are less comprehensible, and authority is less clearly defined.”
Friedman identifies three problems with contemporary administration: elite promotion of their own self-interests, dilution of expertise and authority across agencies, and the complexity of myriad competitive relationships among regulatory entities and also the connections between administrative organizations and private actors.
It's not difficult to think of examples of each of these things.
For elite promotion of their own self-interests, we can point to the repeated attempts by the current President to rule by executive fiat for the forgiveness of student loans. This is a direct transfer of claims on the federal purse to members of the elite at the expense of those who did not elect to attend university or those who did but still managed to pay off their expenses independently. The persistence with which the President renews his efforts to funnel billions of dollars to those with student debt despite repeated defeats at all levels of the judicial system underscores the intensity of this phenomenon.
For diffusion of authority and expertise, the recent Pandemic provides a guide. The frantic nature of the global emergency propelled healthcare experts to the forefront, with the government’s objective appearing to be the minimization of the number of overall deaths attributable to the Covid virus. The lead physician within the White House was the director of the National Institute of Allergy and Infectious Diseases. It makes sense that his focus was on this deadly infectious disease. Policy appears to have discounted or ignored the expertise of people in the Education department, the Treasury, the Federal Reserve, and Health and Human Services, to name a few. There was no single government-wide perspective that integrated multiple dimensions of the problem such as the impact of policy on overall death rates (as people neglected general health care such as cancer screenings) or the developmental damage lockdowns would impose upon children, both emotionally and academically. There was a resigned acceptance of the economic pain lockdowns would cause, without thinking things through. Nobody considered how to optimize the overall well-being of the country measured in every sense across a broad time horizon.
It was a miracle that Operation Warp Speed carved out vaccine development from the federal bureaucracy in a tacit acknowledgement of institutional weakness.
What we needed was leadership that could integrate in-house expertise across multiple dimensions of a complicated problem. What we got was deference to the most available authority on a single topic who himself lacked any awareness of other aspects to consider, or so it would seem. Our response to the Pandemic was stunted. It was like bringing a knife to a three-dimensional 21st century warzone. It will take decades to understand its full harm, but the Pandemic response was arguably the biggest failure of government in history.
If we were rational, we would have a full-blown national commission to investigate what we got right and what we got wrong in our Pandemic response to improve our preparation for the next crisis. When the Space Shuttle Challenger exploded, we appointed serious people to the Rogers Commission to understand what happened. People like Richard Feynman showed up and did the work to cut to the heart of the matter. There is a reason we haven’t done so this time. See the point labeled “elite promotion of their own self-interests” above.
The federalism of the US system actually provided an opportunity to test different approaches. States that rejected the federal government’s direction and went their own way did well. Florida stood out for its superior performance based on the leadership of Governor Ron DeSantis. His contemporaneous statements made clear that he was sticking his neck out to take a more holistic view. He was savaged for it by … the elite who may have feared that any success in Florida would embarrass them. He turned out to have bet well.
As for entanglement, it may be the case that Friedman doesn’t go far enough in his indictment. Not only do we have federal agencies competing with each other to regulate and control much of modern life, but they also compete with other levels of domestic government at the State, county, and local levels. The State of California is the binding constraint in some parts of environmental regulation by virtue of its size and the more demanding nature of its regulatory posture, for example. If you do business in both places, what do you do when the State of Texas seeks to punish you for following one policy with which the State of New York demands compliance?
The regulation of technology has spawned a growing gap between Europe and the United States. For example, the EU essentially wants Meta (Facebook) to offer its service for free while foregoing the collection of any data on its citizens. The EU’s Digital Markets Act enforcers objected to Facebook offering two options to its customers: pay for a subscription (with no data collection), or use Facebook for free while agreeing to let Facebook to continue collecting data. Apparently, the EU feels that Facebook has no right to earn revenue. They’re prepared to take billions of dollars of Facebook revenue as penalty, emphasis on the word take. Nobody in the US is saying anything close. If anything, the US encourages innovation.
When you combine the public revulsion to the institutional failure of the Pandemic reaction with its perception of the official response to the Global Financial Crisis (you get a bailout and you get a bailout!), the hoi polloi have lost their faith not just in institutions, but in the experts who populate them.
This is the institutional crisis.
The post-war ideology of the supremacy of expertise may be coming to an end. With it, we can anticipate deregulatory initiatives.