Ancillary Agencies

The President’s recent proposal of a new Secretary of Business seems more likely to add to government bureaucracy than to streamline it, whatever the stated aim.

One week from Tuesday will finally see this year’s election conclude—no doubt a relief to many fatigued from two-plus years of campaigns, debates, ads, canvassing calls and donation solicitations. But in the push to the finish line, we’re likely still in for our share of rhetoric, promises and bluster, in various forms, from both major parties. A quintessentially American tradition, really—every four years, we let ourselves get caught up in believing one presidential candidate or the other is the one we’ve been waiting for. Whatever our political perspective, we often fall hook, line and sinker for pretty words carrying promises of a future brighter than any America’s known, coming from candidates’ mouths.

And almost on cue, President Obama announced during an interview on Monday his intention to create a Secretary of Business in his second term—a role intended to consolidate and oversee several extant departments including, presumably ... the Department of Commerce (incidentally, a synonym for “business”).

Now to be sure, an effort at consolidating redundant federal agencies is one we’d heartily support. After all, the primary beneficiaries of government redundancies are arguably the resulting employees. Cut back on some of the overlap, and folks are freed from bureaucratic employment to seek private sector employment—which, in the long run, is far likelier to yield productive fruit overall additive to US output. The secondary beneficiaries, not to be overlooked, are of course taxpayers, who receive far more efficient government service when such overlaps are, to the greatest extent possible, minimized.

Some may argue this isn’t the time for that, though, given our still stubbornly high unemployment rate—now’s not the time to cut more government jobs. Well, then we suppose President Obama’s doing his part to gradually ease that particular sticking point, one new government bureaucracy at a time. In which case, if that’s indeed his aim, might we humbly suggest next his consideration of a Ministry of Silly Walks?

Kidding aside, though, a large part of the problem, in our view, stems from the relatively low likelihood the consolidation anticipated actually ever happens. After all, government bureaucracy and red tape have tendencies to increase over time, not the reverse. A point the non-partisan Government Accountability Office (GAO) attempted to make when it reported in March 2011 to Congress on areas ripe for duplication reduction. In its report, the GAO found such instances of overlapping efforts as 15 different agencies overseeing food safety laws, 82 federal programs aimed at improving teacher quality, 47 for job training and unemployment and 56 to help people understand finances, among others.

Keep in mind these are just federal programs—never mind many areas no doubt addressed as needed at the state level, too, thereby adding in an entirely new level of redundancy and overlap. Probably not surprisingly, when the GAO followed up with Congress this year, it reported little progress in reducing areas of overlap—which of course prompted both sides to point fingers squarely across the aisle.

Interestingly, the use of the term “bureaucracy” as it’s typically understood is broadly credited to German political economist and sociologist Max Weber, who advocated government division of labor and hierarchical administration. He was quite clear, though, such organization should be clearly delineated along lines of expertise—in other words, agencies should have authority in fixed areas, the idea being primarily creating efficiency through such an organization. We seem pretty far afield of that original intention, though. And suffice it to say the Secretary of Business seems unlikely, in our view, to help accomplish a return to a consolidated, hierarchical, functionally specialized bureaucracy.

On the contrary, it seems more likely to turn out rather like Monty Python’s Royal Society for Putting Things on Top of Other Things—a group that, were it not for things on top of other things, would be “nothing more than a meaningless body of men that gathered together for no good purpose.”

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.