The Case FOR Bureaucracy

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People tend to think there is a large amount of waste in government in part because of the loose way this term is used. For instance, some conservative critics of government count as waste those programs they simply don’t like – such as the Legal Services Corporation, the National Endowment for the Arts, Americorp, and subsidies for public television. But to use the term “waste” in this way makes it entirely a political judgment and renders it essentially meaningless. Normally the term “government waste” refers to the inefficient use of funds because of overstaffing, poor productivity, etc. But conservatives are not opposed to the National Endowment for the Arts because that agency is inefficient; they oppose it on ideological grounds. They wouldn’t support the NEA no matter how “lean and mean” it was. It is a misleading, then, to use the term “waste” in this way.

Another problem is that critics of bureaucracy often lump together “fraud” and “abuse” with “waste” to come up with high figures for government losses. But does it really make sense to blame government when doctors defraud the Medicare program, criminals scam the food stamp system, or private contractors cheat the Pentagon? We usually don’t consider it the fault of business that they lose over $15 billion a year to employee theft and $10 billion to shoplifting. Most people blame the thieves for these losses and few consider these thefts to be an indication of something inherently wrong with capitalism. Similarly, it is unfair to consider the problems of fraud and abuse of government programs to be a product of inherently “wasteful” bureaucracies. Naturally, government should do everything it can to reduce these losses, but we should not be blaming the victim.

Myth No. 2: Business is Always Better than Bureaucracy

Another of the more persistent myths about bureaucracy is that “business is better” – that businesses are always more efficient than government efforts. Since government bureaucracies don’t have to produce a profit and they are not subject to market competition, it is argued, they have much less incentive to be cost-efficient in their management and delivery of services. The assumed superiority of business has become so commonsensical that it is hardly ever questioned at all. This notion has also become an important argument for conservatives in their effort to reduce government and to privatize many of its functions. But are public agencies always less efficient than businesses? A careful look at this issue casts doubt on this common belief.

There have been many empirical studies examining the efficiency of government bureaucracies versus business in a variety of areas, including refuse collection, electrical utilities, public transportation, water supply systems, and hospital administration. The findings have been mixed. Some studies of electric utilities have found that publicly owned ones were more efficient and charged lower prices than privately owned utilities. Several other studies found the opposite, and yet others found no significant differences.6 Studies of other services produced similar kinds of mixed results. Charles Goodsell is a professor of Public Administration and Public Affairs at Virginia Polytechnic Institute and State University who has spent much of his life studying bureaucracy. After examining these efficiency studies, he concluded: “In short, there is much evidence that is ambivalent. The assumption that business always does better than government is not upheld. … When you add up all these study results, the basis for the mantra that business is always better evaporates.”7

Further evidence that business is not always superior to government bureaucracy can be found in the area of health care. This is a critical issue today and it is well worth examining in some detail the question of whether market-based health care is superior to government run programs. Conservatives constantly warn us that adopting “socialized” medicine would put health care in the hands of government bureaucracies, which would be a recipe for incredible waste and inferior care. But is this really the case? We can answer this question by comparing the performance of public versus private health care systems. Every other developed country has some form of universal health care with a substantial amount of public funding and administration. In contrast, while the U.S. has a few programs like Medicare and Medicaid, most of our health care system is privately funded and administered. According to conservative mythology, this market-based system should produce better health care and do so more cheaply. But neither of these claims hold up when we look at studies of the actual performance of public and private approaches to providing health care.

First, studies have found that the U.S. health care system is by far the most expensive in the world. We spend 13.6% of our gross domestic product on health care – the highest in the world. The average for the other 13 industrialized countries in the OECD is 8.2%.8 We also rank number one in terms of health care expenditures per capita, with U.S. spending $4,090 a year for every citizen. The highest figures for other industrialized nations are $2,547 per year for Switzerland, $2,339 for Germany, $2,340 for Luxembourg, and $2,095 for Canada.9 But while we clearly have the most expensive health care system in the world, it does not always deliver the best health care nor does it provide health care in the most efficient way.

Research has shown that the U.S. ranks poorly compared to many other countries in terms of some common measures of health. For example, we rank 26th among industrialized countries for infant mortality rates.10 We also do much less well in terms of life expectancy. In one typical study, the World Health Organizations (WHO) looked at “disability adjusted life expectancy”– the number of years that one can expect to lead a healthy life. The U.S. came in a disappointing 24th on this measure. As one WHO official concluded: “The position of the United States is one of the major surprises of the new rating system. … Basically, you die earlier and spend more time disabled if you’re an American rather than a member of most other advanced countries.”11 Moreover, an article in the Journal of the American Medical Association in 2000 noted with concern the results of a comprehensive study that compared how 13 industrialized nations were ranked on 16 different measures of health. The U.S. ranked an average of 12th – second to last.12

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