Public Choice Theory

September 4th, 2018

In the pages of The Economist;  “A list of things that Americans judge more favourably than Congress, according to Public Policy Polling, a survey firm, includes colonoscopies, root canals, lice, and France.”

Damning stuff.  But why do you suppose people are so anti-government?  Well, it’s not due to politicians, however we may think so, it’s the bureaucrats that make politicians look saintly.

A politician may try to help, say, single parents, but it’s the bureaucrats that actually do the helping.  Let’s say the politician gets enough votes to start a new Agency to help these single parents.  The new Agency will need some staff, right?  Those staff should be good, caring people, with helping single parents as their first priority.  So they should be.  But they won’t be.

Instead, newly minted Agency staff prioritize their own interests ahead of the interests of single parents.  The staff want salaries of course, preferably impressive ones, and they want equivalently impressive job titles and a nice benefits package because they have teeth problems and underground parking because its cold outside.  And a nice office environment, with a corner office.  For them.  Obviously.  Then they’ll want decent (read: decadent) vacation days, sick days, flex time, personal time and any other plausible euphemism for getting paid while not working.  And swag.  They’ll want Agency jackets, lanyards -anything freebie and Agency labeled.

After all of these priorities have been thoroughly satisfied, and provided nothing else enticing comes to mind, only then will the bureaucrat at the new Single Parents Agency get ‘round to helping the single parents.  The bottom line is that all bureaucrats, like all people, are driven by self interest.  It’s just that unrestrained self interest in the real world is self correcting (ripping people off tends to dwindle customers, for instance) whereas government is not self correcting, there is no natural constraint on the self-centred dealings of government bureaucrats.

There’s a politician in Canada who’s right now as popular in the Conservative Party as colonoscopies, root canals and head lice, and his name is Maxime Bernier.  It seems that Mad Max is painfully familiar with institutionalized self interest.  Recently, he wrote a National Post article on Public Choice Theory, an economics argument to explain the natural creeping expansion of rent-seeking organizations, including public Agencies.

Governments are awash in well packaged pleas for public money, all apparently for good purposes (helping single parents, for instance) and all costing a pittance relative to the national economy.  And that’s just it folks; a favour to one small group, even at a cost of millions of dollars, is at most a few dollars per taxpayer, so its easy to justify and hard to notice, at least on its own.  But there’s no shortage of such well packaged pleas for money, such that the cumulation of them is extraordinary, and the profits passing to bureaucrats are so enormous that this pleading practice by them is constant.  “This dynamic,” saith Max, “ of ‘concentrated benefits versus dispersed costs,’ explains why we have so many bad policies that are obviously not in the public’s interest.”

Prof. William Shughart puts it this way;  “Small, homogeneous groups with strong communities of interest tend to be more effective suppliers of political pressure and political support […] than larger groups whose interests are more diffuse.”  Indeed.  That’s quite like the Canadian Standards Association (CSA), an small outfit with an even smaller mandate somehow getting large lumps of money with ease, without oversight, and against the interests of the Canadian people, yet purportedly in their benefit. 

Also, did you note the Prof’s definition, “…strong communities of interest”?  You know what CSA calls its insiders’ forum?  That’s right, it’s called Communities of Interest.  Or at least it was until recently, they’ve changed the label to just “Communities”, though you can still find the full Communities of Interest name in a few places, like here, for instance, or here.

Back to Shughart; “Owing to the benefits of specialization and division of labour, legislatures delegate responsibility for implementing their policy initiatives to various departments and agencies, staffed by career bureaucrats, who secure their positions through civil service appointment”.  Sounds like CSA, doesn’t it?  And more so;  “Budget maximization was assumed to be the bureaucracy’s goal because more Agency funding translates into broader administrative discretion, more opportunities for promotion, and greater prestige for the Agency’s bureaucrats.” 

Decades of this sort of thing, constantly reinforced, leads these bureaucrats to believe that their cloistered experience is legitimate, and their lofty role within government is their natural place in the world.  The citizens are the servants; the bureaucrats are the masters.

This attitude is very dangerous when those who hold it also hold the powers of government.  Agencies like CSA use their Governmental position to “capture financial returns through special government privileges or monopoly rights.”  Indeed, PS Knight Co is in year seven of a ruinous litigation to defend against CSA their peculiar notion of privately owned law (special government privileges) and resultant monetizing of access to those laws (monopoly rights). 

Bureaucrats also use government powers to shakedown legitimate businesses for money, market share, turf, or whatever it is the bureaucrat wants at the moment.  In the US for instance, the Orwellian named Consumer Financial Protection Bureau (CFPB) routinely targets companies who may, or may not, have done anything untoward.  The CFPB is always after money, whether or not any fine is actually warranted.  Such targets “were almost certain to write a cheque, especially if they were accused of subjective ‘unfair, deceptive, or abusive acts or practices.’  Even the size of the cheques didn’t depend on actual wrongdoing -during investigations, [CFPB] Enforcement demanded targets’ financial statements to calculate the maximum fines they could afford to pay.” 

Yup, we got that treatment too.  Our financials were demanded almost immediately after CSA filed their first lawsuit against us, and CSA’s subsequent demands were based upon them.  We’ve also been accused in Court of unfair, deceptive and abusive acts.  We’ve had the full Orwellian CSA / CFPB / DoJ shakedown experience.

“With no meaningful opportunity to defend themselves, many businesses were forced to pay millions of dollars, regardless of guilt or harm to consumers.” 

We know this too.  We’ve heard from CSA’s victims, some of whom were financially wiped out by the Agency’s bureaucrats.

And this brings us back to Max.  We’re not endorsing anyone with this article, our struggle to survive the CSA’s crooked targeting isn’t ideological, it isn’t political.  The struggle for clean, honest government is a matter of civil society, it’s in everyone’s best interest.  It’s just that Maxime Bernier is the first political figure to publicly acknowledge the self serving nature of government bureaucracies and the problem of rampant corruption in the Federal Civil Service.  He gets it, and thankfully he’s not the only one who does.

“If you let yourself be manipulated by such a small cartel, how will you be able to resist other interest groups and make the right decisions for all Canadians?  Simply, you won’t.”

Quite right, Max.