Bureaucracy

I. The development of the bureaucratic state

A. BUREAUCRACIES - large / complex organizations in which employees have very specific job responsibilities and work within a hierarchy of authority.

1. The employees of the departments, agencies, bureaus, and offices of government are known as BUREAUCRATS.

2. The manner in which a bureaucracy is organized affects how well it is able to accomplish its tasks.

3. Bureaucracies are known for creating "jargon" that is often incomprehensible to the average person (or even the well-educated person).

B. Government has grown enormously / growth has come at the state and local level / federal WORKFORCE has remained stable.

1. SCIENCE AND TECHNOLOGY: Advances in science and technology have led to new roles for government. The creation of NASA is an example.

2. BUSINESS REGULATION: regulatory agencies were created to police various business markets.

3. SOCIAL WELFARE: With the Great Depression, the government began to provide income security / social services to Americans in need.

4. THE BELIEF IN PROGRESS: No problem is too big or too complicated. This spirit leads us to declare "war on poverty" or "war on cancer."

5. AMBITIOUS ADMINISTRATORS: Top agency officials look for new ways to serve clients / provide themselves job security, which in turn leads to new programs.

C. Recently a movement toward reducing size of the bureaucracy

1. Difficult - Different segments of the population work hard to protect the programs that serve them.

2. Budget cutting reflect creates tension between majoritarianism and pluralism. The broader public wants to reduce the size of government, but those who benefit from specific government programs organize into interest groups and mobilize their resources to protect programs and agencies that are of value to them.

II. Bureaus and bureaucrats

A. Basic types of government organizations:

1. DEPARTMENTS - the largest units of the executive branch / The secretaries from these departments, such as defense or health and human services, form the president's cabinet.

2. There are about sixty INDEPENDENT AGENCIES that are not part of a cabinet department. The White House controls some. Others have a good deal of autonomy, though they are influenced to some degree by the president.

a. Some agencies are REGULATORY COMMISSIONS.

b. To police the side effects of business operations / to guard against unfair business practices.

3. GOVERNMENT CORPORATIONS perform services that could be handled by the private sector, but for some reason it is thought that they need some link to the federal government.

B. Most of the bureaucrats who work for the federal government are hired under the requirements of the CIVIL SERVICE.

1. The civil service was created to reduce patronage in the awarding of federal jobs. Jobs are filled on the basis of merit instead.

2. Civil servants mirror the population in terms of education, income, and age. At the highest levels of the civil service, however, there is a disproportionate percentage of white males and those born into higher-status families.

C. Presidents can appoint less than 1 percent of all executive branch employees / the ones they appoint fill the top POLICYMAKING positions.

1. Presidents feel that they have insufficient control over the executive branch and would like to fill a larger number of positions in government.

2. The Reagan White House was able to infuse the bureaucracy with conservative ideological direction.

3. On the surface it makes sense that increasing the number of political appointments would make the bureaucracy more responsive to the president. This may not be the case, however.

III. Formal processes

A. The latitude that Congress gives agencies to make policy in the spirit of their legislative mandate is called ADMINISTRATIVE DISCRETION.

1. Critics of bureaucracy frequently complain that agencies are granted too much discretion.

2. Some go as far as to say that agencies are "out of control" and a "power unto themselves." This is particularly true of the CIA and FBI, which have routinely disregarded Congress.

3. It's true that Congress is often vague in its policy directive when it sets up a new agency or program. Administrative discretion is not a fixed commodity. When agencies do something that Congress does not like, it can rein that agency in. Moreover, informal contacts between legislators and administrators lead to compromise and consensus in agency POLICYMAKING.

B. The POLICYMAKING discretion that Congress gives to agencies is usually exercised through RULE MAKING. These administrative procedures result in the issuance of REGULATIONS.

1. Since they are authorized by congressional statutes, regulations have the force of law.

2. When agencies issue regulations, they are first published as proposals so that all interested parties have an opportunity to comment on them.

3. Regulations are controversial because they force people and business to act in certain prescribed ways, often against their own self-interest.

IV. POLICYMAKING: informal politics

A.1. The rational-comprehensive model holds that values can be ranked, objectives clarified, all possible solutions explored, and the most effective means to the desired goal chosen.

2. Real-world decision making does not meet these criteria.

B. Agency POLICYMAKERS are influenced in their decision making by some important internal and external forces.

1. The internal structure of the agency helps to shape policy. Formal lines of authority, clearance procedures, available resources for research, and the means of coordinating work with other parts of the bureaucracy are all significant factors.

2. Interest groups, public opinion, congressional preferences, and White House goals shape an agency's external environment.

C. The behavior of bureaucrats is often a source of irritation. They often act "bureaucratically" by going by the book.

1. Norms and rules of agencies affect the Bureaucrats

2. We might find it distressing if bureaucrats were highly independent and interpreted rules as they pleased.

V. Problems in policy implementation

A. The implementation of programs and policies out in the field can be affected by many factors. Vague directives to bureaucrats in the field are one source of difficulty.

B. Faulty coordination can occur when programs cut across the jurisdiction of a number of agencies or lack coordination between national and state or local officials.

C. Implementation is an incremental process in which trial and error eventually lead to policies that work.

VI. Reforming the bureaucracy

A. The newest wave of reform / called REINVENTING GOVERNMENT

B. DEREGULATION is a reform championed by conservatives who prefer less government involvement in the economy.

1. Deregulation of airlines shows how consumers can benefit with lower fares through greater competition. A number of bankruptcies and mergers, however may leave us with fewer airlines

2. It's more difficult to decide the appropriate level of deregulation in an agency like the Food and Drug Administration. How do we balance the need to evaluate prescription drugs carefully with the need to relieve the suffering of those being denied access to them during the FDA evaluation?

C. Making government smaller and reducing its regulatory activities can entail serious risks.

1. The collapse of the savings and loan industry occurred following significant deregulation. The costs to "clean up" the savings and loan bankruptcies will be paid by taxpayers for years to come.

2. Government must balance the freedom of the marketplace with appropriate regulation to protect the public.

D. In addition to regulating for a responsible marketplace, government must increase the efficiency and responsiveness of its own bureaucracies.

1. Some government agencies are imitating the private sector by employing the TOTAL QUALITY MANAGEMENT (TQM) methods.

a. TQM involves employee teamwork.

b. It also emphasizes that the client is a "customer."

c. One problem for government is to decide who is the client. Is the FDA's client the person with AIDS or the pharmaceutical companies

THE PROS AND CONS OF REGULATION

I. What is regulation?

A. A DEFINITION: Regulation can be defined as the "imposition of restrictions on the activity of market participants."

1. EXAMPLE: The Federal Communications Commission licenses operators of radio and television stations. One must purchase a license to enter this marketplace.

2. EXAMPLE: The Federal Energy Regulation Commission sets rates for natural gas. Price is not determined by free market

B. Regulation is understood as it applies to "markets." When we use that term, we are referring to the buying and selling of goods and services in a particular industry.

1. In a free market, goods and services are sold purely on the basis of supply and demand.

2. In a non-market economy, such as North Korea’s, the price of goods is set by government

3. In our regulated market economy, there is an important modification of the forces of supply and demand. For some industries, government rules directly influence supply and demand. In many industries, government affects the price indirectly by policing the behavior of firms.

C. The authority of the federal government to regulate various markets comes from the interstate commerce clause of the Constitution. In our modern economy, there is very little major economic activity that does not cross state lines.

II. Why do we have regulation?

A. There have been three major periods in American history when we have experienced significant growth in the amount and type of federal regulation.

1. THE TURN OF THE CENTURY: Regulation first came to the federal government with the establishment of the Interstate Commerce Commission in 1887. The push toward regulation at this time was stimulated by unfair trade practices by oligopolies.

a. The pressure that led to the creation of the ICC came from farmers who were angered by what they considered to be excessive charges by railroads. If you had to get a crop to market, you had to use the railroad and pay the price that was charged. There wasn't a competitive free market in operation.

b. The Sherman Antitrust Act was subsequently passed to help government fight undue market concentration.

2. THE NEW DEAL PERIOD: As confidence eroded in our economic system, regulation was seen as one means of restoring markets to their proper workings.

a. The most far-reaching of the actions taken was the establishment of the National Recovery Administration. The NRA (which was later undone by an adverse Supreme Court decision) permitted businesses within an industry to set prices through codes of fair trade.

b. Many other regulatory agencies, such as the Federal Communications Commission, the Securities and Exchange Commission, and the National Labor Relations Board, were created during this era.

3. THE LATE 1960S AND EARLY 1970S: Many of the new regulatory agencies created during this period were aimed at broad problem areas (such as pollution) that cut across a whole range of industries. Thus, agencies like the Environmental Protection Agency and the Consumer Product Protection Agency regulate the behavior of the many industries that fall under their authority.

B. Despite some differences in historical circumstance, there are some common ties between these epochs. The need for regulation grew out of problems that commonly developed in a market-economy

1. TO MAINTAIN COMPETITION: Strong firms may drive out the less efficient, resulting in domination of a market by a few businesses.

a. If those firms begin to take advantage of the lack of competition by charging unfair prices, new competitors should emerge to restore market equilibrium.

b. Entrance costs can be too high, though, preventing new competition from emerging.

c. Thus government acts at times to prevent unhealthy market concentration.

2. TO POLICE NATURAL MONOPOLIES: in some cases it may be in the public interest that there to be NO competition / we might not want competing public power companies.

a. For "natural" monopolies, it is necessary for the government to regulate rates.

b. Not everyone agrees on what a natural monopoly is.

(1) Not long ago it was inconceivable that we needed more than one long distance telephone company.

(2) That monopoly has been deregulated.

3. TO REDUCE EXTERNALITIES: government regulates various markets that it wants to eliminate / reduce effects of EXTERNALITIES. - an EXTERNALITY - "a cost upon persons not party to a contract or transaction."

a. Air pollution - an EXTERNALITY.

(1) People living near a factory may not work there / or may not even buy any of its products.

(2) They may be adversely affected by the pollution emitted from its smokestacks.

b. Love Canal tragedy.

(1) In the Love Canal section of Niagara Falls, New York, a parcel of land owned by the Hooker Chemical Company was used to bury wastes that were by-products of chemicals it manufactured.

(2) The hazardous wastes, including dioxin, were not contained by the landfill. As a consequence of the hazardous wastes, there were unusual incidences of miscarriages, birth defects, cancers, and nervous system and brain disorders.

(3) It took years for the people living in Love Canal to understand what was happening to them.

(4) Eventually, the high incidence of serious illnesses among Love Canal residents indicated that they were being victimized by this company's carelessness.

III. Voluntary policing

A. Why can’t firms police themselves?

1. Firms are not interested in harming their neighbors or clients.

2. Businesses must be concerned with competition.

3. They do not manufacture products with the same efficiency, capture equal shares of the market, or make equally wise investment decision.

B. Steel companies offer a case in point.

1. One company might like to spend money voluntarily on highly effective pollution control equipment that would make the air around its plants much cleaner.

2. But what if it found out that no other steel companies were going to follow suit?

a. The first company would then be faced with either

(1) Passing the cost of the equipment on to customers (thereby making its steel more expensive and less competitive in the marketplace), or

(2) Reducing its profits (thereby disappointing shareholders).

C. The solution is regulation / business leaders cannot be expected to find optimum balance between profits / civic responsibility

IV. Problems with regulation

A. Critics contend that government does a poor job of finding balance between profits and responsible corporate behavior / regulation sometimes seems to be an inefficient solution to the problems it addresses.

B. Regulation can actually drive up prices by restricting competition. Interstate trucking was regulated, but at a cost to shippers (and thus, ultimately, to consumers).

C. Foreign competition is also a problem. If we require American car manufacturers and their suppliers to install expensive pollution control equipment in their plants, but foreign countries do not require the same of their manufacturers, the result is a price or profit advantage for those foreign manufacturers.

D. Regulation can also work to reward the powerful and well represented. Many economists and political scientists have argued that regulation favors established firms who develop favorable working relations with their regulators

V. Deregulation

A. DEREGULATION - reduces government's role in the marketplace.

1. In recent years, significant deregulatory moves have been made in airlines, trucking, and telecommunications.

a. All have had their benefits to consumers.

b. Many point out, however, that telephone and airline service have declined as well, so it's fair to say that there have been costs, too.

2. Conservatives and liberals have both backed efforts to make markets (like trucking or airlines) more competitive.

3. There has been sharper disagreement about deregulation of health and safety standards.

a. Strict health standards may protect factory employees from workplace dangers / it can also add to the costs of factory's products.

b. Those added costs may make the products less competitive against foreign goods, and companies may hire fewer workers because of lagging sales caused by stiff foreign competition.

4. Important to remember why government establishes health and safety regulations.

a. The Consumer Product Safety Commission regulates baby cribs. This may seem rather frivolous.

b. Some babies were strangling themselves between slats.

c. By having a regulation set for the distance between slats, such tragedies are now avoided.

B. Politicians say that we need a balance between the need to protect workers and the public through regulation and the need to promote economic growth through a free market economy. For each issue, different voices argue that they know the right balance of the individual?