Friday, July 15, 2011

Business Bureaucracy 3: Their Rules and Life

I tweeted these "bureaucracy rules". Now I will elaborate or give examples on them. Bureaucracy here means government bureaucracy.

1. Once a bureaucracy is created, its 1st act is to perpetuate itself. It has no allowance for self-destruction someday.

2. When one coalition of governments and bureaucracies don't work to one's advantage or agenda, create a new one.

3. If threatened w/ abolition, bureaucracy's main defense is counting d no. of bureaucrats who'll lose job, social tension.

4. Before the main mandate is accomplished, create new functions, prgrams and "needs" to perpetuate itself forever.

5. Create one admin or regulations order, monitor how ineffective it is, create a revised regulations order, monitor...

On #1, this is a universal rule of the bureaucracy in possibly all countries and governments. And this largely explains why many bureaucracies, from local to national governments, to multilateral and inter-governmental bodies, keep expanding.

On #2, good examples are the new US government initiatives, the Partnership for Growth (PFG) and the Trans-Pacific Strategic Economic Partnership (TPP). Many if not all countries invited for this new economic coalition are also members of the Asia Pacific Economic Cooperation (APEC). Since the US does not get all its demands and economic agenda from APEC, then it created a new coalition where member-countries and governments will be indebted to it for such new "initiative" and thus, agree to a number of US government demands and political-economic agenda.

On #3, many agencies, departments and bureaus whose mandate has been outdated or irrelevant, cannot be abolished because they have already packed those offices with many employees and directors. Abolishing the office would means several dozens, if not hundreds or thousands, of bureaucrats who will be displaced.

On #4, one option for the bureaucracies whose original mandate has become outdated, is to expand its mandate so that it will remain "relevant and needed." One good example is the Department of Agrarian Reform. The Comprehensive Agrarian Reform (CARP) was enacted in 1988 and was given 10 years to be implemented. DAR is supposed to evaporate once CARP has been fully implemented. Then CARP was not fully implemented for various reasons, so it was extended for another 10 years, to end in 2008. Then it was not fully implemented again, extended again for another 5 years, until 2013. It is safe to assume that there will be another 5 years (or longer) extension as DAR has created more programs like "urban land reform" and there is no limit to those urban land redistribution.

On #5, this is how various Administrative Orders (AOs), Executive Orders (EOs), Republic Acts (RAs) and other laws and regulations keep expanding. The previous regulations allow certain loopholes for the regulated sectors and businesses, so the next administration and officials create new regulations and orders to amend and revised the previous ones. And another change of administration and officials would mean new changes and revisions to recent revisions.

I wrote this last December 16, 2009:

Unemployment and Statism

The National Statistics Office (NSO) released yesterday its October 2009 Labor Force Survey (LFS),

One ugly result is this: Out of 45.08 million Filipinos in the labor force, 2.72 million were unemployed, and 6.88 million were underemployed (have jobs but need additional work, mainly to augment current small income).

That's a total of 9.6 million Filipinos were either jobless and poor, or have jobs but feel poor enough and look for additional work and additional income. They constituted 21.3 percent of those in the labor force.

Now, there are also people who can be economically productive, but are not looking for a job, mainly because they think they can't find a job anyway. Or they may find a job but not at a salary that they wish to receive. So either they become idle ("tambay"), or pursue new studies to acquire new skills. Say an engineering graduate who cannot be hired as an engineer, so he studied BS Nursing to be hired as a nurse abroad someday, where expected income is a lot higher than local jobs.

For this group of people, they are not part of the labor force at the time of the survey. And this has the tendency of not worsening the already bad unemployment situation.

Who hire workers? The entrepreneurs, the investors, the capitalists. Local or foreign, corporations or single proprietors (or partnerships). They are the main job creators.

"Wait, wait, we are also job creators!" Say government. Oh Yes, thousands of government agencies and bureaucracies, national and local, also hire people. My estimate is that there are almost 4 million Filipinos who are working in government, both national and local government units.

But government hire people not as food producers or transporter of people, food, and other commodities. But mainly as politicians and their staff; as regulators and tax inspectors and collectors. The people who oftentimes give the entrepreneurs and private sector job creators a hard time.

So in a period of high unemployment and high underemployment, the best policy tool is to relax or abolish certain regulations and taxes that discourage the entrepreneurs, the capitalists and job creators. More job creation by private entrepreneurs in exchange for less bureaucracies and less taxes. But this is not happening. Rather, there is more bureaucratism, more regulation, more taxation.

Statism and heavy State intervention in business is a scourge. It drives millions of people to poverty and hopelessness.

I hope more people and voters will realize it in this coming national and local elections on May 2010. Then they will demand for a team of less interventionist candidates who will minimize and reduce the scourge of statism.

* See also:
Business Bureaucracy 1: Avoiding government: Egyptian experience, March 12, 2007
Business Bureaucracy 2: We don't need a new DICT bureaucracy, July 13, 2010
Welfarism 11: Bureaucratizing Entrepreneurs, April 11, 2011

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