The Elephants that Trample America

The creation of big bureaucracies in America is as natural as the two party system. Take a good idea like Social Security, simply add money and time and sooner rather than later you have a bureaucracy. Voila! All great bureaucracies started as good ideas and usually provided a net good for the citizenry. Over time, however, almost everyone (outside the named bureaucracy) will question its overall value to society.

So why are bureaucracies so bad? Two big reasons: (1) they lose sight of their original purpose and importance and (2) they began as competing ideas (to something) then worked hard to eliminate all competition. For example, the purpose of Social Security was to provide a small amount of retirement subsidy while taxing the public a very small amount. There were thirty payers for one small retirement benefit in the late 1930s. Now there are two workers paying for one retiree. Any talk of competition or private accounts turns grey hair white for fear.

Free enterprise in America is predicated on competitive forces. Competition breeds innovation, efficiency, and hard work. Bureaucracies, through their size and thinking, destroy competition and end up as a huge cost burden.

In our near future, the great Health Care debate will resign us to the ultimate bureaucracy unless we see the competitive light in time. We have all been reading the plight of local and regional hospitals showing miniscule profits and at the same time our patient costs and health insurance are increasing 5-10 times the rate of inflation. How can this be? Like Wal-Mart, health care providers need to address the middle man. If some of the costs of the insurance bureaucracy could be sidestepped, there might be more profit margin left for providers. In health care, the idea of insurance only for the catastrophic event needs to be revived.

So how can bureaucracies returned to the life-giving efficiency of competition? First, competition should be embraced. We can’t be drawn into social protectionist thinking. We just have to learn to embrace the bloodied results. Second, bureaucracies will never evolve slowly into something better. A single or collective will for revolution is required for things to change. Over a ten year period, the embattled Donald Rumsfeld revolutionized our military from low-tech to high-tech.

A healthy amount of competition can also be the driver to end bureaucracies. Think of how communication has moved from landline to cable and now to wireless. Ironically, federal anti-trust broke up AT&T into the baby bells and now AT&T is coming back as a wireless player.

Whether health care, education, or government, most of our fiscal challenges in America can be directed toward the elephants that trample competition. And we are not just talking peanuts here.

I’m interested in what you think. Your thoughtful opinions are appreciated and may be printed in my next Chip Shots column!