The TSA vs. The American Traveler Dignity Act of 2010

The link found in the title describes a proposed bill by Congressman Ron Paul. In reaction to the Transportation Security Administration's (TSA) heightened security checks using x-ray technology and enhanced pat-down screening protocols, Mr.Paul has written out H.R. 6416:The American Traveler Dignity Act. This bill proclaims that "no law...shall be construed to confer any immunity for a Federal...agency...who subjects an individual to any physical contact...x-rays...as a condition...to be in an airport or to fly in an aircraft."

In light of this development, how can Niskanen's traditional approach help us understand the TSA's actions and the response by Congressman Paul? One of the crucial implications of Niskanen's view is that the federal agency, like a monopoly supplier, will want to produce more than the sponsor wants, thereby getting more profits/funds/power. In accordance with this view, because of 9/11 and terrorist threats, the TSA has expanded and ramped up its efforts to ensure that airports remain safe. Because the demand for their services has become rather inelastic, they have the ability to extract more surplus value. Congressman Ron Paul's proposed legislation though illustrates how the Congress can in fact curve a bureau's ability to "run wild." Some would therefore claim that this provides evidence for Weingast and Moran's model that argues that to "understand regulatory policymaking we must understand legislative politics." Although legislators may not be continously or directly monitoring the federal agency, Congress possesses sufficient rewards and sanctions to creative an incentive system.

The problem with this argument in this particular case is that the legistlation proposed still has to pass through the House Judiciary committee for approval. One of the essential components of the Congressional Dominance Approach is that rewards "go to agencies that pursue policies of interest to the current committee members" while "those agencies that fail to do so are confronted with sanctions." Therefore this bill is not an example of the relevant committee demonstrating its influence over the TSA; rather, this bill seeems to be evidence that the federal agency has operated independently of Congress. Ron Paul, who oftentimes points out the inefficiency of federal agencies, is trying to explicitly limit the power of this "unaccountable government entity." (from Paul's speech) In order to know which model is more accurate, we will have to see what the House Judiciary committee and the subcomittee on the Constitution, Civil Rights and Civil Liberties in charge of overseeing the TSA deciedes. Furthermore, the Weingast and Moran model still might hold because the committee might in fact favor the actions taken by the TSA to heighten security screenings, thus explaining why Mr. Paul's legislation will not pass and the status quo persists. More importantly, if H.R. 6416 fails, it will demostrate how the isolation of some federal agencies allows them to increase their power and reach without being subject to efficiency incentives.

The Bleakness of a Bureaucratic Lifestyle

This article from The American Thinker, published in 2007, explains the failures of a system entrenched with bureaucracies, at almost every level of organization, that are doomed to fail. The author writes three examples, each with starkly different circumstances, where bureaucratic thinking led to disastrous results. The first was the failure of the British Navy in the Persian Gulf, the second was the tragic school shooting at Virginia tech, and the third is the War on Terror.

In the first event, priceless time was spent checking and rechecking with officers and superiors to determine what should be done, resulting in a "humiliation by a militia of speedboats." He tells an anecdote of legendary Horatio Nelson, who decided to ignore an order he thought must be a mistake, and went on to win a crucial naval victory. The author claims this blatant disregard of standard procedure was the obvious correct choice. At Virginia Tech, despite numerous incidents that seem like clear red-flag-raising warnings, nobody could connect the dots and declare Cho Seung-hui a threat. And in the War on Terror, the author says the problems of bureaucracy are "everywhere."

Though it seems hasty to claim that following orders in the military equates to dumbly obeying an inefficient bureaucracy, he says, "It used to be understood that there where times when you would throw out the rule book." Easier said then done, obviously, but that's entirely his point. He sees the system overrun with bureaucratic incompetence, where we believe, in government at least, that it's "The only way of doing things." He mentions the typical argument that one makes about bureaucracies: that they are self perpetuating, and that they don't work to the ends for which they were created. He also mentions a different problem: bureaucracies rely on rational rule-following for people whom, he says, are often unpredictable or irrational. And in some situations, trying to follow a by-the-book paint-by-numbers solution is the most impractical thing to do.

What is his solution? It's bleak, really, because as he points out: any chances at reform of the bureaucracy must make it through a bureaucratic system. No, he says, the only thing that can save us is individual willpower and determination, an inherent drive to be self-sufficient. Hard to do when you have to fly home this Thanksgiving break and enjoy some quality time with the TSA agents.

BP and the Minerals Management Service

This New York Times article talks about a recent report compiled by a committee of experts within the National Academy of Engineers. The report puts blame not only on BP for the gulf coast oil spill, but also on the Minerals Management Service. The Minerals Management Service was the federal agency in charge of monitoring offshore drilling. Since the spill the agency has been dismantled and replaced by the Bureau of Ocean Energy Managment. The article says that there were insufficient checks and balances for the decisions made at BP and the committee found that "the minerals agency had failed to put in place the oversight that could have helped prevent the blast, as well as procedures that could have saved lives." Our recent study of bureaucracy identifies two different camps that address the relationship between government agencies, Congress, and the resulting inefficiency in bureaucracy. First, we can consider that the bureau was acting autonomously and decisions they made were insulated from both Congress, and from American citizens. They had no incentives to put in extra monitoring effort of BP and as long as nothing terrible was happening, everyone was content with the results. Alternatively, we can consider the congressional dominance model and would then need to place blame on BP, on the Minerals Management Service, and also on Congress. This model asserts that agencies are controlled by incentives and rules put in place by Congress. In this case, this kind of analysis would assume Congress either put limits on the investigatory power of the Minerals Agency and/or did not provide incentives for the agency to provide sufficient oversight. If the congressmen essentially controlling the Minerals Agency are elected by voters who support big business and receive campaign contributions from BP and other big oil companies this view definitely makes sense and would then extend blame for the oil spill to Congress as well.

The Government Really Wants You To Eat Cheese

The U.S. Department of Agriculture created “Dairy Management” in 1995 as a marketing organization to promote dairy products. Its annual budget approaches $140 million, funded mostly by a government-mandated fee on the dairy industry. According to this NY Times article, the U.S.D.A. also gives several millions of dollars to the organization, “appoints some of its board members, approves its marketing campaigns and major contracts, and periodically reports to Congress on its work.”

Lately, the organization has been adamantly pushing cheese to the American consumer. Dairy Management partnered with Domino’s pizza to create a new, “better-tasting” pizza that contains 40% more cheese. A few years back, Dairy Management also created a marketing campaign around the premise that consuming more dairy products could lead to weight loss, even though no research asserted this fact.

By law, the secretary of agriculture approves Dairy Management’s contracts and advertising campaigns. Nevertheless, the article claims that the organization has become a full-blown, relatively independent company. The government has recently warned about the dangers of a diet high in saturated fat, yet it allows Dairy Management to market increased cheese consumption. This view of the Dairy Management organization follows Niskanen’s traditional view of bureaucracies that they act independently of the wishes of their sponsors (i.e. that a government bureau pushes for increased cheese consumption despite government warnings for reduced consumption).

However, I would argue that Dairy Management exactly follows the wishes of Congress and exemplifies the model of bureaucracy presented in Weingast and Moran. Undoubtedly, Congress members on the agriculture subcommittee for dairy closely follow and are happy with the work of Dairy Management. An increase in dairy sales pleases their dairy farmer constituents, and thus gives congressmen more votes. The government’s message for a reduced-fat diet (i.e. less cheese) is half-hearted – congressmen want votes more than they want healthy constituents. Therefore, Dairy Management isn't the one to credit for increased dairy consumption. Congress is.

The End of US Postal Service

      In a recent Washington Post article, the USPS reported an $8.5 billion loss this past fiscal year, claiming that it will run out of money by 2011 unless Congress takes action, with most of the losses coming from obligations to retiree health benefits and workers’ compensation. This all happened even with cuts in costs and the removal of 105,000 jobs. The inefficiencies of a bureaucracy are clearly portrayed through this example.

      The USPS works as the agency between the citizens and the government that makes the laws and regulations. Because the USPS is such a huge organization, the relationship between the individuals and the government leadership is very distant. As a result, the bureaucrats are not urgent to make changes to the regulations and laws because they don’t have an incentive to please the individuals. They don’t really worry about it either, because they don’t have to deal with the complaining directly. It is extremely hard to get anything done.

      Chief Financial Officer of the Postal Service Joe Corbett calls for a change in legislation, regulation, and labor contracts. However, the presumptive future chairman of the postal affairs House committee Darrell Issa suggests that the USPS should cut costs even more, rather than risk changing the workings of a postal system that currently does not use taxpayer funding. In addition to the lack of incentive, representative Issa may be doing this to gain more power. Because he doesn’t gain anything if the USPS does well, he has more control and power when the USPS does poorly and comes to him asking for help.

      To circumnavigate this problem, the Postal Service proposed plans that would allow them to make changes without congressional approval. To decrease the losses, the USPS also wants lawmakers to change the law that requires $5 billion in annual payments to retiree health benefits. The fate of our mail depends on if Congress decides to make some changes!

How Bureaucracy Removes Efficiency

After the discussion of bureaucracy in class, I came across an article that proves lack of efficiency among state officials. Through the historic analysis of bureaucracies, such as the Australian tax office, the article shows how the mass computer and technology automation has not increased their real efficiencies.

As we noticed in class, bureaucrats have no incentive to please the customer, as their personal utility function does not depend on the satisfaction of the customers. Managers and people who have high bureaucratic positions are not interested in their subordinates’ efficiency, but, on the contrary, are happy with more people working and bigger payroll. This supports the assumptions made by the author of the article:

Any increase in the efficiency of individual workers has simply been consumed by increased bureaucratic complexity. As the primary net effect of software is to facilitate bureaucratic complexity it is therefore essential that software projects fail if society is to function effectively. In this way the heavy burden of guilt can be lifted from the shoulders of the numerous project managers that have subconsciously devoted their careers to ensuring that projects rarely, if ever, succeed.

Australian tax office described in this article is a good example of bureaucracy whose function has remained unchanged regardless the technological breakthroughs. While back in the 1955 almost all the processing had to be performed completely manually, technology has developed dramatically since that time: tax returns are entered electronically over the internet, analyzed and processed by different complex computer systems, and refunds or payments are processed via direct bank deposits. A big number of returns is never touched by a human hand! The internal management systems are also automated, from the allocation and tracking of audits to processing their payroll and benefits systems. However, it turns out that modern bureaucracy can function effectively within the same budget without the use of the automatic equipment. In 2007 the tax office's internal budget was AU$11.4 billion, or 1.23% of GDP while in 1955 it performed essentially the same task without automation for A£66.7 million which was 1.33% of the 1955 GDP. The difference is not significant. These quite surprising results prove that technological breakthroughs have no significant effect on the size or efficiency of a bureaucracy. The increase in the efficiency has simply been “consumed by increased bureaucratic complexity”.