Stimulus money is awash in our country. Billions of dollars have been legislated by the United States Congress and signed by the President to be released into our economy to “stimulate” economic growth. In the wake of that enormous stimulus bill the debate has increased in volume on both sides either touting the effectiveness of the stimulus money or denouncing it as ineffective for economic growth.
The other day I had a conversation over the Internet with a friend here in my small town. It was about this same subject regarding how government works. We talked about the money swirling around and economic growth, but then brought it home to our own specific situations.
My friend posed the question regarding his property taxes. In our little town we have extremely high property taxes, so he asked since the value of his property had gone down since the recession has hit, why his taxes wouldn’t be reduced accordingly. It seemed like a logical question since I know that mine had not been reduced either. My friend’s assertion was that he was now paying more for less service. Of course he was correct in that we are paying more taxes for less service.
In most cases, however, when a tax is levied it is rare that it is ever eliminated. It usually gets folded into the process and becomes part of the base for the cost of the current services, even if those services had been reduced by layoff as he had mentioned. The process, however, rarely recognizes a return to the former levels. So even though we pay more for less, if we do a call-back to restore those jobs that have been lost to bring the service up to the former level, it will cost much more. It seems to always work that way when government is involved.
Bureaucracy is the process he was looking for in the way of explaining why this type of thing happens.
Case in point: Our local school district has eliminated several positions. Presumably the services will be less because those positions were eliminated; what the people in those positions were doing will no longer be done. By cutting those services does it mean that we have solved the cash short-fall issue? No, in fact the district is considering a referendum in November to increase the tax. If that passes and additional revenue is received with that new tax, will those positions be restored? It is not likely because the cost of doing business will have leveled out with the addition of the new referendum revenue for the same level of service. If history is our teacher, in two years (or less) the district will then advance the idea of yet another referendum to gather more tax revenue that will bring us up to the same level of service we received prior to this current cut.
Our little town has four school districts, and with its four distinct school districts, it serves as an excellent example of bureaucracy and how bureaucracies grow. Remember the goal of the 15 thousand plus population in this small town, and most other towns across America, is to provide a good education for our children. But the method in which we do that is to grow four school districts (plus at least two faith-based organizations) each with its own division of labor, recruitment of a stable, long-term career, each with a leveling system that creates a hierarchy to support the division of labor, and each with a linear growth that focuses on supporting the individual organization. Within each organization comes specialization and with it, requirements for more resources. This process will likely continue to grow even if in the future the enrollment diminishes.
My friend wrote back to me and indicated that I made a strong case for the consolidation of districts to reduce or eliminate all of the administrative and organizational overlap. He said my points sounded very familiar to a book he had just finished reading entitled, "Caught in the Middle" that presented the exact same arguments regarding mid-west counties, states and universities that needlessly compete against each other rather than working together toward shared goals.
My friend continued, “Locally, I've understood the layoffs are due primarily to belated state funding payments. Of course that led me to consider what will happen if and when the state revenues are in fact finally paid. If they never are paid then I can understand the defensive positions the districts have made. But, what will happen when/if the state finally comes through and the money is paid to the districts when budgets and positions have already been cut. Would it be reasonable to assume they would reopen the teaching positions?” He continued his thoughts, “My thought is that down the road there will be positions opening up; maybe not as many as were closed, but a reasonable percentage. On the other hand, urban school populations have been declining for many years and this just might have been the much needed and delayed correction.”
My answer to my friend was I had not read the book he mentioned, but was glad there was support for my argument “out there” somewhere. I went on to explain I do understand a little bit about bureaucracy however, and know that most of our “organizational behavior” is built up around the creation and growth of bureaucracies.
Again, his original comment focused on the “process” used to arrive at the value of property to calculate the person’s share of taxes. I maintain that the foundational process upon which all of those processes rest is the advancement of a bureaucracy, no matter which one it is.
Keep in mind that bureaucracies are like galaxies in the universe: They are relatively independent of each other, yet interrelated; they are fighting for independent survival and constantly growing, but competing for the same space or resources as all the others; and they are in the process of protecting their own, especially those in the hierarchy that are closer to the top or at the center. Once formed the bureaucracy must consume resources just for survival; and the larger it grows the more resources it needs.
Another example from my small town illustrates the point: A few days earlier my friend and I had read the account of the outgoing City Treasurer. In essence, the City Treasurer publicly reported that for the city and county to provide services it needs a certain amount of money. The only place that money can come from is taxing the citizens of the town and the County. Some time before I had researched the population of my town and found that from the year 1900 to 2000, a one-hundred year span, the population in the town did not change significantly. The town’s population has remained steady at around 15,500 for the past one hundred years. However, by examining the difference in the city government over that one hundred year period one will find that the cost of doing government business had increased exponentially. Although the population had remained the same, the local government and cost of maintaining that government had significantly increased. Why do you suppose that is? Some will say more complicated equipment (computer age) for firefighters, policemen, Sheriff deputies; some will say a reassignment of the division of labor. Likely both are right. The most significant reason for the increase, however, was due to the growth of the city’s Departments of services, employees, regulation enforcement, school enhancements and other off-shoots of those entities that decided to create things like recreational services that all should have a part in paying for regardless of the frequency of their personal use of such facilities.
Throughout history governmental bureaucracies have always had more power since they make and control the laws and the enforcement of those laws.
So, bureaucracy will grow simply for the sake of growth. The answer to the question in my friend’s email asked about the taxes on property and why they were not cheaper since the value of the house had decreased during the recession. The answer is not the rise and fall of the value of the house that determines the taxes; it is the requirement of need for resources to maintain the bureaucracy to continue to allow its steady growth rate.
The thing we must remember, however, is the bureaucracy does not produce any product to generate independent resources; it only takes from those who do produce and redistributes those resources to those who have not produced it. So when the government bureaucracy uses money to stimulate economic growth, much of that will be used to maintain or grow the bureaucracy.
It only robs Peter to pay Paul; and Peter will eventually run out of money after having been robbed so many times. Not to mention that Peter will likely lose heart and simply reduce or eliminate his production.