This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Federal Civil Service System and The Problem of Bureaucracy Volume Author/Editor: Ronald N. Johnson and Gary D. Libecap Volume Publisher: University of Chicago Press Volume ISBN: 0-226-40170-7 Volume URL: http://www.nber.org/books/john94-1 Publication Date: January 1994 Chapter Title: The "Problem of Bureaucracy" Chapter Author: Ronald N. Johnson, Gary D. Libecap Chapter URL: http://www.nber.org/chapters/c8632 Chapter pages in book: (p. 1 - 11) 1 The “Problem of Bureaucracy” 1.1 Introduction Cynicism about the federal bureaucracy is widespread. The general public views federal employees as aloof, uncaring bureaucrats who are unresponsive to their requests. Throughout the country, there is a prevailing sense that gov- ernment is synonymous with inefficiency and waste and that the federal bu- reaucracy is essentially out of control. Discussions in both the academic and the popular press have focused on the issue of poor productivity and ways to make the bureaucracy more effective and responsive to voters in the provision of services. ’ dIndeed, restructuring the federal bureaucracy so that it “works better and costs less” is a major objective of the Clinton administration.2 In addition to concerns about worker productivity, presidents have also expressed serious misgivings about their ability to manage and direct the bureaucracy in the implementation of p01icy.~President Nixon, for example, felt that the bureaucracy was subverting his programs, and President Reagan repeatedly charged that big government was the problem, not the solution. Despite all this attention and concern, antibureaucratic sentiments are long standing, and few would claim that substantial progress has been made in ad- dressing the problems of bureaucracy. From time to time, there have been at- tempts to reform the federal civil service through the installation of new per- sonnel rules that would reward performance and allow for a greater degree of political control over the actions of federal employees. These efforts began in 1905 with President Theodore Roosevelt’s appointment of the Keep Commit- tee to investigate ways of organizing the federal government more effectively; they were followed by President Taft’s 1912 Commission on Economy and Efficiency, President Franklin Roosevelt’s Brownlow Committee in 1936, Pres- ident Truman’s Hoover Commission of 1949, a second Hoover Commission in 1953 under President Eisenhower, President Carter’s Reorganization Project of 1 2 Chapter 1 1977, President Reagan’s Private Sector Survey on Cost Control in 1982, and, most recently, President Clinton’s National Performance re vie^.^ In each of these cases, recommendations have been made to provide incen- tives for productivity, to develop procedures for greater control of the bureau- cracy, and to eliminate redundant programs and bloated staff^.^ These efforts, however, have met with entrenched opposition, both from federal employee unions, which stress that civil service rules are in place to guard against a return to the evils of patronage, and from elected officials, who have been wary of implementing major changes in the federal personnel system.h Besides performance, the other major problem of bureaucracy is a lack of accountability. Much of the current discussion of accountability has centered on the latitude available to administrative agencies for engaging in opportunis- tic behavior of their own in the implementation of congressional statutes and administration policies. Within the literature on this subject, there is debate as to how far agency officials can go in policy making to channel programs and services to favored constituents, to expand agency mandates and budgets, or to act on their personal preferences in ways that deviate from the desires of Con- gress and the president. Some authors view the federal bureaucracy as acting in self-interested ways to promote agency growth and budget maximization.’ Other authors emphasize strategic alliances made among the bureaucracy and congressional committees that weaken presidential control of executive agen- cies and allow for opportunism (see Sayre 1965, 1-3; Kaufman 1965,57-68). This problem has often been traced to the rise of professionalism in the civil service and the formation of close ties between agency officials and profes- sional interest groups. A parallel literature has developed regarding the ways in which Congress and the president attempt to constrain the discretionary actions of administra- tive officials, although congressional and presidential interests can, and often do, diverge. One avenue is through congressional committee oversight of spe- cific agencies (see Weingast and Moran 1983; Gilligan and Krehbiel 1989). Another is through the budget appropriations process (see Fenno 1966; Wil- davsky 1979; and Weingast and Moran 1983). A third is through systems of administrative rules for policy making, such as those outlined in the Adminis- trative Procedures Act (60 Stat. 237 [and subsequent amendments]; see also Arnold 1979; McCubbins, Noll, and Weingast 1987; and Wilson 1989). In- deed, some argue that the intricate system of committee oversight, appropria- tions hearings, and administrative procedures provides a relatively short rein that does not allow federal bureaucrats to stray very far from the wishes of Congress (see, e.g., McCubbins, Noll, and Weingast 1987). Nevertheless, it is fair to say that much skepticism remains as to how much these institutions really constrain the bureaucracy. In this book, we examine the persisting problem of bureaucracy. Our objec- tive is to identify the forces that have molded the existing civil service system. The analysis offered reveals that, as the federal civil service system developed, 3 The “Problem of Bureaucracy” a permanent bureaucracy and a vast array of bureaucratic rules were created as the result of conscious decisions by successive politicians. The system was put into place incrementally through executive orders and statutes, following political negotiations among the president, members of Congress, and interest groups, particularly federal employees. Understanding why the federal civil service system has evolved in the way it has, with its well-known problems of productivity and accountability, requires attention to the objectives of elected officials and the confused political property rights that exist over the federal bureaucracy. As we point out, the U.S. Constitution did not provide either the president or the Congress with clear authority over the federal bureaucracy. Hence, they have competed as rivals to direct the bureaucracy in different ways. In part, the civil service system has been designed to reduce the costs of competition over control of the bureaucracy. This rivalry, however, has also allowed federal em- ployees to figure as a powerful additional interest in molding the civil service system. The book concludes that, given the forces underlying the civil service system, major institutional changes, such as adoption of the full list of pro- grams suggested by the National Performance Review in 1993, is unlikely. It is ironic that the current civil service system is, itself, a product of an earlier reform movement, one that was aimed at correcting conditions that are reminiscent of today’s problems-a federal labor force that was inefficient, wasteful, and, seemingly, out of control. In the beginning, the federal civil service system was based on patronage, and reforms were sought by the presi- dent and the Congress to improve productivity in the provision of government services. Lafer, rules and sanctions were added to limit the president’s and the Congress’s access to the bureaucracy in order to shield bureaucrats from politi- cal manipulation and threats. These protections, however, reduced political control of the bureaucracy and facilitated the rise of federal employees as a third party, with a specific agenda for further structuring the civil service sys- tem. Despite the complaints of politicians about the functioning of the bureau- cracy, much (but certainly not all) of the current arrangement is as they have wanted it and, indeed, as they have designed it. Recognizing this point helps make clear why meaningful change will be difficult to achieve.8 The shift from a patronage system to one of bureaucratic civil service rules was, in aggregate, a major institutional change, one that has important implica- tions for the control and effectiveness of the government labor force. We argue that an analysis of the political economy of the origins and development of the civil service system is essential for understanding the rationale for the current arrangement and how it affects presidential and congressional authority over the bureaucracy and the performance of federal employees. Moreover, analysis of the gradual formation of the modern civil service system provides a case study of the mechanisms by which institutions are created and altered in the political arena. In general, these institutions can have profound implications for long-term economic gr~wth.~Analyzing the historical development of the 4 Chapter 1 civil service will help in understanding how the system, with all its apparent faults, came to be. Importantly, the analysis provides an explanation for why elected officials, who often run campaigns directed against the bureaucracy, do not support major reforms.'O 1.2 Political Institutional Change