A recently released parliamentary audit report has kicked of quite a storm in the UK. The audit was the result of an inquiry into controversial fines imposed by the country’s National Health Service (NHS) on individuals accused of illegally accessing medical services reserved for low income earners. Per the report, of the 676 million sterling pounds levied in fines by the NHS since 2014, almost a third was directed at innocent individuals. The comedy of errors that occasioned this colossal mishap is emblematic of public bureaucracies the world over. Every system of government known to man is rife with bureaucratic inefficiencies, irrespective of a country’s level of socio-economic development. Economists, policy wonks, and the general public are consistently clamoring for ‘reforms’ that are aimed at tackling this challenge once and for all. Unfortunately, it has proven to be a leviathan that is impossible to kill.
In view of the seemingly intractable nature of bureaucratic inefficiencies, one cannot help but wonder about its root causes. While several such causes exist, the most fundamental is the non-competitive nature of government enterprises. It is worth noting that public enterprises are primarily set up to administer and implement public policy. Unlike the private sector, the profit motive is never an overarching objective. Therefore, there is no sure-fire yardstick of measuring the progress of government programs against the cost incurred by way of taxpayer funds. In this non-competitive environment, there is no incentive for employees to exert themselves beyond the bare minimum-irrespective of how crucial their services may be to the general public. The end result of this incentive mismatch is a bloated public wage bill with little result to show for it.
Another factor that inexorably leads to the emergence of bureaucratic inefficiencies in government is the web of vested interests that surrounds most publicly funded programs. The political marketplace is structured in such a manner as to attract multiple stakeholders. The interaction among these stakeholders is defined by incessant power games; the moves and countermoves that ultimately decide who gets what. In this Machiavellian chess game, access to government resources and control over the policy making process is the prize. It follows, therefore, that whoever wins the game does everything in their ability to consolidate their gains and power with a view to extracting as much rent as possible, for the longest time possible. In the end, wasteful programs that are of little value to taxpayers are continued as long as they serve the interest of a powerful stakeholder. Cost overruns and overall inefficiency are the logical outcomes in such an environment.
Ideological commitments are also another critical source of bureaucratic inefficiency. Governments are, by nature, defined by specific sets of ideological frameworks. A conservative government is expected to be fashioned differently from a liberal one. The programs implemented by either are expected to be consistent with the ideological principles underpinning each of them. Public leaders and civil servants are thus bound to act within a narrowly defined construct that is amenable to a given political constituency. Consequently, programs will be sustained regardless of their economic viability as long as they are in line with the ideology espoused by a given constituency. For instance, the cost of Medicaid in the US has consistently gone up due to a commitment to social welfare programs by liberal governments over the years. Some contend that the biggest beneficiaries of this rapid expansion are not the poor for whom the program was designed, but the bureaucrats who administer it.
All the aforementioned root causes of bureaucratic inefficiencies in government combine to produce a crisis of accountability. Skewed incentives, vested interests, and ideological commitments are the essential ingredients in the recipe of poor oversight in public institutions. Insufficient oversight creates the kind of inertia that allows wastage of public resources to fester on unperturbed for years. One of the most prolific instances of this problem emerged recently in New York City. In a damning audit report by the city’s comptroller, it was revealed that chronic mismanagement and extremely poor oversight at the New York City Housing Authority cost the city over four million US dollars in unnecessary roof repair costs, costs which would have been covered by existing warranty. The extent of oversight mediocrity unearthed by this report is of a near-medieval scale. Essentially, this was a case study of how not to run a public housing scheme.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.