Bureaucracy’s Fatal Flaw

In common parlance, liberty and freedom may be used interchangeably, but they are different things. There are many opinions about this. The definition of these two terms has been fluid over the years. Let me offer up my version. (Much of this post  draws upon George Will.)

A man enjoys liberty if he can perform some act without anyone questioning his right to do so. His liberties are the set of natural rights he enjoys by virtue of his existence. Some might say that these rights are God-given.

Freedom is a right conditioned by ability. A physically disabled person may have the right to walk down the street, but they are not free to do so.

Freedoms are natural rights constrained by rules. One may have the right to drive their car, but they are not free to drive on the wrong side of the road.

Here’s the New York Times illustrating the difference.

“But ‘freedom’ didn’t really come into its own until the New Deal period, when the defining American values were augmented to include the economic and social justice that permitted people free development as human beings. Of Roosevelt’s Four Freedoms – of speech, of religion, from want and from fear -  only the first two might have been expressed using ‘liberty’.”

Liberty is the starting point, the default state. It declares itself in being. Freedom is a function of liberty subject to constraints. Government in a sense is a continuous constrained optimization problem in which we seek (or should attempt to obtain) the greatest ability to exercise our liberties subject to restrictions necessary to be able to live free and happy..

This brings us to the fundamental driver for government, since we are talking about bureaucracy and the government is the largest consistent bureaucratic actor in a country like the United States.

In one view, liberty dominates. For example, there is the Declaration of Independence, the defining document of American life. The Constitution is but the implementation of the Declaration’s principles, the most fundamental of which relates to liberty.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, “

When it says that “all men are created equal, that they are endowed by their Creator with certain unalienable rights,” this is an elegant expression of the belief that there are certain rights that are God-given and a natural aspect of one’s human existence.

When it spells out some of these rights, it effectively confers on them a primary importance: “Life, Liberty, and the pursuit of Happiness.”

Men are entitled to live and enjoy their natural rights. In asserting the natural right to pursue Happiness, the Declaration suggests that it is the purpose of existence to seek out and maximize Happiness without defining what that means. Happiness will be different for every individual. It is a central liberty for an individual to figure out what Happiness means to them and to try different means of obtaining it.

The phrase ‘among these rights” means that there are, of course, other rights not spelled out in the Declaration. These natural rights exist without proclamation precisely because they are natural.

So, it follows that, from its inception, the United States was a country tolerant of diversity. Of course, it has disappointed in its fulfillment of that vision, most obviously with the stain of slavery. Yet it still chases the asymptote and we are closer than we have ever been. Today, people can exercise unimpeded the liberty of loving who they want, how they want, and wherever they want, for example. This was not always true. We have rolled back constraints on natural sexual rights.

The Declaration also says that Government is put into place “to secure these rights.”

I have the natural right to walk down the street at night, but that right is not secure in that I cannot exercise it if I fear for my life. One role of government is the provision of an umbrella of public safety to reduce crime. As a citizen, I am willing to sacrifice some of the  enjoyment of my natural rights if it translates to a greater ability to pursue Happiness, however I decide to do so. I don’t want the full elimination of crime because the cost of such an ideal would be too expensive in terms of the rights I would have to forego, such as the right to privacy or the right to safety of my physical person from unwarranted police violence. There is some acceptable equilibrium in which government imposes constraints on liberty to make them more accessible.

It’s not enough to reduce crime. The government also provides for national defense so that I can enjoy my natural rights without the threat of death or dispossession at the hands of foreign invaders or terrorists.

These are just two examples.

These are tradeoffs that the people make. If the tradeoffs become intolerable, if the infringement of my liberty overwhelms the benefits of the residual liberties government leaves for me to enjoy and there is no possible path back to an improved equilibrium, then the people can make change.

“That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

After all, the Declaration was an act of “throwing off.” It was a rejection of the yoke of British control in exchange for a new regime of self-determination.

Abuses and usurpations. The phrase hangs heavy.

Freedom (defined either as the freedom to do something or the freedom from some condition) requires ability.

Freedom today doesn’t even require an antecedent liberty. Some may assert a freedom from want, even is there is no natural right to a life of abundance.

Given the natural differences between individuals when it comes to temperament, industriousness, and skills, we would anticipate an unequal distribution of wealth and of income. However, the People may determine that this inequality demeans their Happiness by the spread of envy, the most despicable of sins. The People may be willing to diminish their natural right to enjoy the fruits of their labor by agreeing to a redistribution scheme as long as the redistribution does not go beyond a level that is tolerable, say because it reduces the overall level of wealth in promoting an equality of poverty that prioritizes distribution over a higher level of general prosperity..

Bureaucracy is the means by which government fulfills its promises. We can say that bureaucracy is a consequence of the ongoing optimization of freedoms, balancing the unencumbered exercise of natural rights against the dynamic practical reality of living together in a modern world. The problem is that bureaucracy is its own living entity, pursuing its own unstated right to expand like any other organism. If liberty is the natural consequence of human existence, then self-interest is the natural consequence of bureaucratic existence.

In the 1980s (if I recall correctly), there was an infamous theft from a bank in Canada. One of the tellers figured out a glitch in the computer system. Transactions produced fractions of a penny. Imagine the calculation of interest, for example. He re-programmed the system to shave the fractions of a penny from customer balances, diverting them to his personal account over years. He amassed millions of dollars before he was caught by happenstance.

This is how bureaucracy grows in the beginning. It chips away at individual rights on the margin, banking the incremental power for itself. Until one day it has reached a tipping point of scale and permanence, at which point the bureaucracy becomes more assertive in extending its reach. Legislative control and judicial supervision attenuate, with the presumption of the public good in the actions of agencies, raising the burden of proof for those who feel their rights have been trammeled without cause.

See, for example, the unanimous ruling from the US Supreme Court in Hackett v. EPA. Here is an overview of the 2023 ruling.

“Chantell and Michael Sackett purchased a residential lot near a lake in Idaho and used gravel and sand to fill the lot and get it ready for home construction. The Environmental Protection Agency (EPA) ordered the Sacketts to remove the fill and return the lot to its natural state, arguing that the lot contained wetlands subject to EPA regulation under the Clean Water Act (CWA). The Sacketts sued in 2008 and argued that the EPA lacked jurisdiction over their property. The dispute worked its way through the federal courts for the fourteen years following that initial lawsuit.^”

A couple bought a lot of land and started construction of a home. The lot did not abut a lake or river or other traditional definition of waterway, something necessary for the EPA to rule as they did.

The Supreme Court ruled in favor of the couple.

“The U.S. Supreme Court ruled unanimously that the EPA’s wetlands regulatory jurisdiction is limited to wetlands with a continuous surface connection to waters of the United States. The court reversed and remanded the decision of the United States Court of Appeals for the Ninth Circuit.”

This is part of a nascent trend in which the Supreme Court appears to be rolling back previous deference to federal agencies in rulemaking and enforcement. Often Congress passes laws, only to cede to the agencies the development of the consequent rules and policies.

For some agencies, human freedom means, in practice,  you are at liberty to have any flavor of ice cream you want, as long as it is vanilla. You have the right to say whatever you want unless an agency says you don’t because they label it misinformation. You have the right to build a successful business with millions of happy customers until an agency deems you to have hurt the consumers who use you as a matter of routine. You have the right to build a home on your property unless the EPA sees a puddle and deems it a marsh or a lake.

At some point, the constrained optimization problem flips from being the maximization of Happiness subject to reasonable restrictions to being the maximization of bureaucratic power with no practical limitation. Implicit in this bureaucratic imperative to grow is the assumption, or so it would seem, that a mechanical approach in which experts in the administrative state can engineer outcomes is not only possible, but preferable. This stands in contrast to the view that an economy and a polity together make for a complex, adaptive system and that laws and public intervention are best when they create the conditions under which individuals can thrive in their pursuit of Happiness.

Which view sounds more like the Declaration of Independence?

If we think about the historical timeframe in which bureaucracy came onto its own, we can see its coincidence with the Enlightenment and the Industrial Revolution, periods of unprecedented gains in science and technology. This faith in the ability of brilliant minds to control outcomes is a natural cousin to the optimism and accomplishments of that moment in history. Belief in the ability to engineer and control social outcomes is buried deep in the DNA of bureaucracy.

The problem is that no human expert possesses sufficient information or adequate judgment to direct the whole complex system to obtain an intended outcome. At best, we have experts who possess deep knowledge in one aspect, even as society is defined by multiple, uncountable dimensions characterized by obscure interconnections and ever-growing complexity.

A public health expert would tell you what policies to put in place if his job was to minimize the death count in the next year from a temporary plague. He would not have anything meaningful to say about minimizing excess deaths over the consequent period unless you asked him. He could not consider the impact on the economy or on children’s future earnings trajectories due to the impact of his recommendations on their educational path. It would not occur to him to account for the implications of his monomaniacal focus on the future implications for political and civil relations. He lacks the knowledge and the judgment for a systemic approach. It would be like asking a bus driver to engineer the movement of fish in the ocean. He can tell you how to get from the Upper West Side to Columbus Circle, though. The fish are going to do what they want.

Once the administrative state has tipped the balance of power in its self-interested favor, legislative governance becomes difficult to assert. It’s not impossible, but it would be an extraordinary leader who had the moral courage and the political capital to reject expert opinion in favor of her own judgment in time of crisis. In times of regular order, it is too easy to be complacent in reliance upon the machinery of the administrative state. In the ideal, political leaders make decisions with systemic effect considering multiple expert perspectives, not just a handful. Politicians are accountable. Bureaucracy is indifferent.

The key belief driving bureaucratic encroachment is the repudiation as fantastic of the notion that in a complex, adaptive system, the choices of individual agents can result in emergent outcomes that meet policy goals with greater and more immediate success than the tinkering of great experts with the gears of state.

This is what Hayek called the Fatal Conceit (quoted in George Will’s The Conservative Sensibility:

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naïve mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions, and that a division of authority will actually extend the possibility of overall order.”

Some argue that history is scientifically predetermined to move along a particular arc, but experience teaches us otherwise. Surprises and chaos, amplified by the intensified complexity of modern life, make nothing inevitable. If we accept that premise, then unbridled, explosive growth of bureaucracy is not the manifestation of progress, but a counterproductive infringement of natural rights. There is some need for bureaucracy, but it needs to be moderated to avoid both unintended consequences.