Obama: A Grand Opportunity Missed

Coming into office, President Obama, as the first president of African-American descent, was handed a grand opportunity to move us ahead in political discourse in general and race relations in particular.

 

With regard to race, not only did he fail to move us forward, he actually took us backward. This is no bare claim.  One can simply look at current events across the U.S. and see which direction we have moved.  Though the President had many opportunities, Harvard professor Louis Gates and Trayvon Martin among others, the clearest opportunity was Ferguson.  Immediately after that shooting he could have come out and said “I choose to believe that Officer Wilson responded to the circumstances immediately in front of him, not to the color of Michael Brown’s skin, and I will continue to believe that unless and until the evidence shows otherwise.”  That would have been the high road, setting the pattern for all of us to follow – that we should judge the situation not by the color of the man’s skin but by the content of his character.  But the 44^th President of the United States chose instead a different path.  He chose to put the focus on skin color.  He chose not to calm the situation but to stoke the flames of anger and division.

 

It is also worth a look at his earlier, telling comment about the Trayvon Martin case, “if I had a son, he would look like Trayvon.” These words, perhaps intended as solace, reveal a taste of bitterness and resentment.  These were the words of a man perhaps not yet ready to release an old grudge, searching for words above that grudge, but delivering words that could not hide the feelings underneath.

 

In every such situation, whether he was speaking of racial concerns or “violent extremists” he seemed compelled to prompt Americans to restrain themselves, belying his belief that America is bigoted by its very nature, requiring constant reminders to set aside that bigotry. In fact, after the Charleston, SC shooting of nine blacks by one disturbed white man, while the families of the victims were forgiving the killer, President Obama talked about America’s “legacy of slavery” saying it is “still part of our DNA.  We’re not cured of it.”  He was left clinging to a past that no longer exists, unable to walk us into Martin Luther King’s Promised Land even though he stood right at the gate.

 

Rather than move us forward, his words and deeds reached back in history, taking us all back with him. Sadly, there is no evidence he saw the direction he was taking us.

 

With regard to political discourse, consider the partisan rancor that Obama, in his final SOTU address, wistfully regretted. Yet that regret apparently resided in his failure to cure the other side of their rancor, not in curing his own.  He said, “But democracy does require basic bonds of trust between its citizens. It doesn’t work if we think the people who disagree with us are all motivated by malice,” which was clearly directed not inward but at the Republicans who he believes are all motivated by malice and has said so in many ways on many occasions.

 

Yet, in the very same speech, just paragraphs distant from his longing for less rancor, he doubled down on his derision for the Republicans in a riff on climate change “Look, if anybody still wants to dispute the science around climate change, have at it. You will be pretty lonely, because you’ll be debating … almost the entire scientific community and 200 nations around the world who agree it’s a problem and intend to solve it.”

 

Through the entire course of his tenure, he was somehow oblivious to his part in creating the rancor. He could not see that his own use of divisive language contributed to the divisiveness.  One need only Google for examples of his derisive descriptions of Republicans.

 

One final yet simple illustration of Obama’s inability to rise to the office was with the unexpected death of Supreme Court Justice Antonin Scalia. Senate Majority Leader Mitch McConnell wasted no time turning this into a political issue, stating immediately that any nomination Obama offered would not even be considered.  McConnell’s premature positioning was both stupid politically and insensitive personally.  But his unforced error gave President Obama an opportunity to show he was the bigger man, and once again, the President came up short.  In his brief initial statement about Justice Scalia, he could have simply spoken about Scalia’s life and career and left it at that.  If asked about the nomination, the response could have been “now is not the time for that.”  It would have set a higher tone for the entire ordeal, it would have shown Obama to be above the pettiness, and it would have shown due respect for Justice Scalia and his family.  But Obama, at a moment when grace was prescribed, just could not restrain his urge for a comeback.

 

Throughout his presidency, Obama was, simply put, stuck. He was stuck on what was wrong with the America he saw, and he couldn’t let it go.  He led off his presidency on a tour to let the world know he saw the imperfections they saw and that he was right about America’s racism.  Fixing it, eliminating it, reducing it, seem to have been beyond his thought horizon and certainly beyond his ability.

 

Barack H. Obama, 44^th President of the United States, was so focused on what was wrong with America, he couldn’t shift into making it right.  This left him dwelling in the past and dithering in pettiness, all too often choosing the low road rather than leading us to the promise of his election.  He was simply unable to meet the grand opportunity placed in his hands.

The Other Man

Here, let me teach you something – something you need to know.  Let me teach you that you are being held down by the Other Man.  The obstacles you will face in life will be numerous, and many are put there by the Other Man.  If you will listen closely, I will tell you all the ways the Other Man is keeping you down.

He sends his children to top-notch private schools and works the system to keep your children in public schools that don’t care about your child’s education.  He refuses to pay more school taxes, which I can assure you are needed in order to improve those schools, and he has the power and connections to keep the taxes from going up.  In fact, he would completely do away with public schools without me keeping him in check.  He throws out words like “vouchers” and “school choice” as if they are some sort of magic elixir, but I can tell you those words are nothing but an illusion that he wants you to believe.

On the job, he pays you pennies while he pays himself and his cronies thousands.  In fact, he would pay you even less if not for me watching over him.

He puts machines and robots in his factories or moves his factories overseas just so he can put more money in his own pocket and keep it out of yours.  He doesn’t care about you.  But I do.  I will keep him from stealing those jobs from you.

Healthcare costs are constantly rising, but that’s no problem for the Other Man because he can afford it.  How?  He keeps cutting the healthcare benefits he offers you in order to keep more money in his own pocket.  If not for me, he would pay nothing for your health coverage.  But I will take his money to help you pay for your healthcare.

He enjoys his country club and his yacht while you struggle just to make ends meet.  If not for me taking his money to give you food stamps, you might go hungry.

He would charge you rent too high to afford and kick you out on the street without me keeping the proper controls in place.  Money is what matters to him.  He does not care about you.  I do.

In all sorts of professions, he is constantly looking for new ways to take more and give less.  Whether he owns a plumbing business, a construction business, a car dealership, a real estate agency, or whatever, he will find new ways to cheat you.  But I will create laws and regulations to lord over his powers.

Finally, he builds a police force designed to keep you in your place.  This police force views you with an always suspicious eye, ever assuming you to be guilty.  Meanwhile, the Other Man’s neighborhood is crime-free and quiet; the streets are clean; the potholes are filled; the kids are safe to roam freely.  Just compare his neighborhood to your neighborhood.  The Other Man’s police force protects him and keeps you where you belong.

When you find it hard to get ahead in life, you must see that it is not your fault.  It is because the Other Man is holding you down.  There is really very little you can do to get yourself out of the life you were born into, because that is where the Other Man wants you.  Yes, you are a victim of the Other Man, and you are powerless to change it.  Come to me and I will protect you.  I will make life easier for you.

As I have always done before, I will continue to lord over the Other Man to keep him from lording over you.

My conscience is better than yours

Regarding the recent Indiana hysteria over religious freedom, take religion out of it and look at it simply from the perspective of conscience.  Consider Tim Cook, CEO of Apple, Inc.

As evidenced by Apple’s app store policies, he reserves the right to choose which customers Apple will and will not serve, i.e., which apps it will and will not publish, based on what falls within Apple’s moral code.  Feel free to Google the app store policies to see for yourself.  Those policies are nothing short of an expression of the Apple conscience.  Yet, by threatening to pull Apple businesses out of Indiana on the basis of alleged discrimination built into a religious freedom law (Google that one too so you know the facts), Apple, via Mr. Cook, is unwilling to acknowledge that Memories Pizza in Walkerton, Indiana, or any other similarly-minded business in Indiana for that matter, has the same right to exercise its conscience.

Stated another way, Mr. Cook’s (and presumably Apple’s) position is this:  My moral code is superior to yours and you must abide by mine, by the force of law if necessary.  I am free to follow my conscience, but you are not.

Stop and absorb that.  It is the essence of the position held by those in uproar over this.  I am free to follow my conscience, but you are not.

Note to Apple

Added to the above, your willingness to pull out of Indiana for a law that allows citizens to assert their religious beliefs, compounded with your existing operations in Muslim countries where people can be put to death for homosexuality, put you at a level of hypocrisy that is simply immeasurable.

I currently own an iPhone, but your disdain for another’s conscience will be guiding me to exercise mine and look at Androids the next time around.  And I hope those on Apple’s board of directors will ask whether its CEO should be wandering off into the social engineering business, where he appears to be highly unqualified.

Net Neutrality

In a span of merely 20 years, the internet went from nonexistent to globally pervasive, giving you the ability to answer any question you can imagine within a matter of seconds – all with ALMOST ZERO government regulation.

Now the Feds want to come in and protect you from bogeymen who do not exist. Meanwhile, the entrenched, big-money interests will graciously offer their expertise to help write the new regulations in order to protect … wait for it … the entrenched, big-money interests. They will succeed in obfuscating their objectives by claiming to protect the little guy and by giving the whole show the innocuous moniker “Net Neutrality”.

What, exactly, are the ACTUAL problems (not alleged problems) that this new regulation would solve? Who has suffered an infringement of his/her rights at the hands of one of these rapacious companies?  Is the concern about local access monopolies?  Are people disillusioned with their 10 MB connection speed?  Fifteen or so years ago the phone companies held the local monopolies and offered 56K connection speeds.  Only Fifteen years ago!  Those monopolies have vanished and connection speed is vastly better.  Did the government make that happen?  Did the government build that?  Those hawking this “Net Neutrailty” elixir are inventing the bogeymen they will protect you from. Why would anyone believe that a posse of bureaucrats in Washington will make for a better internet than thousands and thousands of individuals acting in their own best interests in a competitive and free market?

What about cost?  Let’s look at this from a broader, more conceptual level, and consider the 332 pages of new regulations to which these internet companies must adhere. Will this regulation cost them money or save them money? It cannot possibly save them money because if it did they would already be doing it. It, by definition, will cost them money. Guess who gets to pay those costs. (If you are a bad guesser, the answer is: the customer). And, who pays the salaries of the regulators?  Hint: We the People. Guess what will soon start showing up on your internet bill? The same federal taxes that are now on your phone bill.

And, what about innovation? With regulators in place, any company with a new or innovative idea will have to go seeking a Mother May I before the bureaucrats, making it much more difficult for innovations from existing companies or new competitors.

So, all told, innovation will be slower, costs will go up, it will be more difficult for new competitors to enter the market – all in order to save us from problems that do not currently exist.

Who could possibly see a downside to all of that?  With a name like Net Neutrality, it has to be good.

Sending jobs overseas

“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”

― Adam Smith

Lots of people, politicians in particular, make a big hullaballoo over the idea that many large U.S. companies are sending our jobs overseas.  In so doing, we see only the most visible part of this transfer and ignore important hidden components.  So, let’s explore this with an example.

Imagine you have a choice of two grocery stores: one nearby owned by John; the other a bit further away owned by Yuri.  Even though they sell the same brands, Yuri’s prices are lower than John’s.  John believes he has a significant obligation to his employees, so he pays them well and has chosen not to deploy some technology because it might worry his loyal employees about job stability.  Yuri has taken advantage of every technology improvement available and has thus been able to reduce his total labor cost.

Because of that, Yuri’s prices are 10% lower than John’s.  Let’s also assume you know John personally and your kids attend the same school so you want to support his business.  But, for a family spending $1000 per month on groceries, this means $100 per month in extra cost for shopping at John’s.  How long would you continue to shop there?  In other words how long would you continue to make your $100 monthly charitable contribution to John?  Not long.

So you change grocers.  But once you do, what happens to that $100 you are no longer spending at John’s?  Does it simply disappear?  Of course not!  You are free to use that money in other ways, such as for clothing, schoolbooks, etc., even savings for some future investment or purchase.

Now let’s change the picture slightly.  Imagine that John’s and Yuri’s businesses are not groceries but are, instead, parts suppliers for an appliance manufacturer.  This appliance manufacturer will save money by buying from Yuri.  Like you, the owner can put this savings to other uses, such as lowering her prices or investing in plant and equipment to further improve productivity.  Her savings would be a net benefit to her customers and employees alike.

Now, one last change.  Imagine that Yuri’s plant is not in the U.S.  How does that change anything?  If you would buy your groceries from the low-cost grocer, why should any business not buy its components and supplies from the low-cost supplier?  Even if the supplier is “un-American”?  If another manufacturer, foreign or domestic, can make a product less expensively than we can, why should we object?  Let’s take the savings and invest it elsewhere just the same as you would for your own family.

A simple way of looking at all of this is to think of money as nothing but a yardstick which measures productivity.  If someone else can do something more efficiently (less costly) than we can do it our selves, why not let them?  That, in turn, by our money yardstick, makes us more productive because we have accomplished the same with less money.  And he who is the most productive will be the most prosperous and will enjoy the highest standard of living.

But is this true if we look at it from a national perspective?  If we draw a figurative fence around America, doesn’t John’s loss of business result in a net loss to our economy?  After all, we could either keep $1000 inside the fence or send $900 to someone on the other side of the fence.  When stated that way, it is a clear net loss.  But that only looks at one side of the transaction, the monetary side.  In exchange for the 900 dollars going over the fence, we have $900 worth of goods coming back in.  It is an even trade.  In fact, considering that the other option was to pay John $1000, we are, in a way, bringing in $1000 worth of goods for only $900.  In reality, we are trading 9 small portraits of Benjamin Franklin for $1000 worth of goods, so who, really, is getting the better end of the deal?

This should also make it clear that this talk by all political hucksters and their comrades in the boardrooms about trying to keep our jobs from being shipped overseas is utter nonsense.  We should make our business purchase decisions the same way we would make our personal purchase decisions – buy from the low cost supplier (assuming product equality, of course).  There is separate argument, of course, that the high income tax rates politicians impose on successful businesses does drive jobs overseas, which in fact does hurt our economy, but that’s a topic for another day.

If you are like most people, it probably still feels a bit counterintuitive to send our jobs overseas.  It feels to us that we would be better off by keeping jobs here; there is a gut feel that we should protect “our” jobs.  But where do we get that feeling?  That gut instinct is inherited from our tribal ancestors.  They spent hundreds of thousands of evolutionary years learning that cooperation within the tribe benefitted both the individual and the tribe.  They trusted those they knew in their own tribe and distrusted – rightly so – those potential marauders from other tribes.  So, intuitively, instinctually, we believe we should protect the “us” and distrust the “them”.

But, can we set aside the tribal instincts and look at the facts?

If China can make some things more cheaply than we can, even if they have to manipulate their currency to do so, why should we object?  If China can produce some goods at a lower cost than we can, why not just take that dollar-measured improvement in our productivity and go on to other things?  If we so strongly believe in free market capitalism, why would we be afraid of China’s command economy?  If we truly believe the cumulative intelligence of free people acting in their own best interests is far superior to the combined intelligence of those few bureaucrats driving a command economy, why spend one millisecond of concern on China?  A free market economy will always outperform a command economy.  Always.  China might pass us in total GDP but – as long as we remain free – it will never pass us in per capita GDP.  Never.

Let’s just take the savings China is providing and invest it somewhere else, which will turn into other jobs in other industries, and we will all be the better for it.

Government is Force – A Fundamental Contradiction in the Liberal Theology

The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse.

–  James Madison

 

 

Liberals believe in the power of government.  They want government to do more, spend more, provide more.  They want government to protect us from all number of things: unequal distribution of wealth, unfair treatment of one group by another, economic hard times, the high cost of healthcare, the high cost of retirement, and, especially, to protect us from corporations who are willing to destroy both people and planet in their obsessive pursuit of profit.  Liberals also believe in protecting the group from the selfish decisions of the few – all in the name of fairness, all in the name of what is best for society as a whole.  As but one example, they are willing to let the government prevent a few students from leaving the public school system in search of better schools – because it would not be fair to the many left behind.

Liberals even want the government to protect us from ourselves.  In our old age Medicare covers our healthcare costs and Social Security covers our life expenses in case we didn’t arrange for that ourselves.  They want to protect us from unhealthy products such as trans fats, extra large sugary soft drinks, tanning beds, and cigarettes by banning such products where they can or by taxing them if they cannot succeed in banning.  But here is the catch.  Once those laws have been written, an enforcement mechanism is required.  Once those taxes have been created, a police force must be empowered to apprehend anyone who fails to collect those taxes on the government’s behalf.

But somehow, in being so willing to grant more power to government in order to force society to do what they believe it ought to do, liberals fail to see the consequences of that power getting out of hand.  Everyone has heard the maxim “power corrupts and absolute power corrupts absolutely”.  Those profit-obsessed corporations do have plenty of power, but governments have absolute power.  And there is no clearer illustration of that absolute power than what we have seen in recent events in Ferguson, Missouri and Staten Island, New York.

 

All of this brings one to wonder why the liberals are so determined to classify these recent events as racism when there has been no shred of evidence that the people directly involved were, in fact, racists.  Liberals, the very people who claim to be most appalled when people judge someone by skin color, seem to be claiming in these cases are self-evident racism, that we should judge the police not by the content of their character but by the color of their skin.

Could it be that finding racism in these events is a way to avoid seeing the truth that government is force and that government is not just power but absolute power which can and does get out of hand?  Does the racism meme allow the liberals to avoid confronting the fundamental contradiction between their belief in government force and their disdain for the very people whose job it is to exercise that force?

 

In anticipation of the counterargument, is there a liberal in the world who has read and understood the implications of Animal Farm?  Do people realize George Orwell was a socialist?  His intention in writing Animal Farm was not that socialism is bad but that the wrong sort of people (Lenin and Stalin) got in control and made it bad.  Orwell failed to see that which contemporary liberals also fail to see – that the problem is not that the wrong sort of people got control but that it is socialism itself which leads to the wrong sort of people getting control.  Socialism is government and government is force, and for socialism to work, it needs people in power that are willing to exercise that force, ruthlessly if necessary.

 

Profit, The Evil Demon

Since many on the left try to paint Profit as inherently evil and for-profit corporations as evil incarnate, I thought I would try to illustrate what profit really is.

To get a sense of the evil being done by profit-seeking corporations, let’s go back in time before corporations existed and imagine the simplest of economies.  Imagine a small village operating under a barter economy with many individuals providing goods and services to others in the village.  Let’s focus on just three of these individuals.  One individual, Farmer Bob, grows corn and raises pigs.  The other two individuals, Farrier Fast Freddy and Farrier Slow Joe shoe horses.

The going rate in this village to shoe a horse is 5 ears of corn and 1 pound of pork.  How did that become the going rate?  Well, Farmer Bob has the skill to shoe his horses himself, but it takes him about 4 hours to do it.  He estimates all of the work involved in gathering up 5 ears of corn and producing a pound of pork comes to about 2 hours, so he figures he would be getting a pretty good deal by exchanging something that costs him 2 hours for something that would cost him 4 hours.

Farrier Fast Freddy is similarly situated.  He can shoe a horse in 2 hours, but doesn’t like messing with corn and pigs.  He figures all of that corn and pig work would end up taking him about 4 hours to complete, so he, too, likes the 2-hour time-saving deal he is getting.

Both parties spend 2 hours to get 4 hours worth of value.  Both parties benefit by saving 2 hours, and those 2 hours saved are the exact equivalent of what we now call Profit.

Meanwhile, it takes Farrier Slow Joe 3 hours to shoe a horse, which means he earns a profit of only 1 hour.  Over the course of 12 hours, Fast Freddy can earn 30 ears of corn and 6 pounds of pork while Slow Joe earns only 20 ears of corn and 4 pounds of pork.  So between Fast Freddy and Slow Joe, who enjoys a higher standard of living?  Fast Freddy does because he was more productive, or, in modern day terms, he earned a greater Profit.

What applies to Fast Freddy and Slow Joe also applies to villages, towns, cities, states, and nations as a whole.  Those who are the most productive, that is, those able to produce the greatest profit, are those who will enjoy the highest standard of living.  The United States enjoys the highest standard of living in the world for one and only one reason – we are the most productive.  Period.  That also means we make the highest profits.

As it turns out, Profit is simply the difference in the cost of doing something versus the price we would be willing to pay someone else to do it.  Put another way, profit, which is counted out in our modern world in the form of cash or wealth, is simply a measure of productivity.  He who is the most productive earns the greatest profit and the greatest standard of living.  We see that clearly with Farrier Fast Freddy versus Farrier Slow Joe; it is no less true in any other situation.

Finally, we should note that, as individuals, by continuing to develop our skills and learn new ones and by deftly managing our responsibilities and taking on new ones, we are able to produce more for our employers and thereby earn a higher salary.  In other words, we make ourselves more profitable.  Each day each of us, individually, actively seeks a higher standard of living by seeking a higher personal profit.

Individually, we are just as “guilty” of profit-seeking as those evil corporations.

ELIMINATE the corporate Income Tax

Want corporate money out of political campaigns?

Want to jumpstart the economy?

Here is one stone for both of those birds:  Eliminate the corporate income tax.

Consider this.  The primary focus of every corporation is the bottom line – net after-tax profits.  In the U.S., with a top corporate income tax rate of about 40%, corporations get to keep only 6 dollars out of every 10 they earn; the other 4 go to taxes.  Eliminating the corporate income tax would have the same impact to after-tax profits as a 66% increase in sales.  Imagine the impact to the economy if every company received an immediate 66% jump in sales.

• Imagine the reinvestment and growth opportunities a company would have with 66% more after-tax cash in its coffers.
• Imagine what U.S. multinationals would do with the cash they are holding overseas if they were able to keep 10 out of 10 dollars they bring back home instead of just 6.
• Imagine where foreign companies would invest their money if they knew they got to keep all of their profit here in the U.S. versus just some of it in other countries.
• Imagine the additional savings U.S. corporations would reap by eliminating the expense of corporate tax compliance.
• Imagine the jobs being created in, and flowing back into, the U.S. from all of that new investment.
• Imagine businesses making investment decisions on the merits of the investment itself, not whether it saves them taxes.
• With no need to distinguish between for-profit versus not-for-profit corporations, imagine the elimination of the arcane rules for 501c3 and 501c4 organizations and the like, and imagine the associated IRS targeting shenanigans completely vaporized.
• In fact, imagine the vast volumes of tax laws that could be entirely eliminated.
• Imagine the savings in federal spending gained by eliminating the corporate division of the IRS.
• With the value of tax loopholes reduced to zero, imagine what happens to the level of corporate lobbying in DC.
• With corporations unable to get a return on investment from their political contributions, imagine what happens to corporate cash in political campaigns.
• With corporate cash drying up for politicians and no favors to be gained or given, imagine what happens to crony capitalism.

Politicians from both sides of the aisle have been advocating corporate tax reform for years but have taken no action.  Why?  Two reasons:  a) both the liberals and the media would howl at Republicans for aiding and abetting the enemy – corporations – regardless of the above-mentioned political and economic benefits; and b) power.  The vast amounts of cash in The Capital that are associated with corporate income tax are a big conduit of power for politicians and corporations alike.  Eliminate that conduit by eliminating the corporate income tax, and the problems will go with it.  Simply reducing corporate income tax rates is not enough.  We must wipe away the entire rat’s nest.  Besides, corporate income taxes account for only about 10% of federal tax revenue, and the net drop in revenue would be much, much less due to the positive impact on the economy.

Increasing the Minimum Wage and Growing Money on Trees

A wee bit of thinking is required to conclude whether raising the minimum wage will help.

First, ask who pays the increase? Answer: the employer. Now imagine a small business owner who pays her 10 employees $8 per hour and is now forced, by our ever-intervening federal government, to raise their pay to $10 per hour.  This is an increase of $2 per hour times 10 employees times 2000 hours in a work year which comes to a grand total of $40,000. (I’m using round numbers to make the math easier). That is $40,000 off of her bottom line and for many such employers that would amount to a significant chunk of the bottom line if not the entire bottom line.

So, what is this employer going to do? Swallow the costs? Of course not. She has 2 choices, lay off two employees to keep her payroll costs from going up, or raise the price of her products/services. If she lays off two employees, which two will she lay off? The best two ? Of course not. She will lay off the worst two, the two most in need of a job to help them continue to develop their skills.

What if, instead, she decides to raise the price of her products/services? As we all know, when the price goes up, demand goes down, meaning her total sales will go down. So, with costs up and sales down, she has less profit with which to continue growing her business and therefore diminishes her ability to hire future employees.

So, by increasing the minimum wage, we give a few people a pay increase at the expense of either taking away someone’s job today or taking away someone’s job tomorrow. Either way, raising the minimum wage could not possibly succeed in improving the economy any more than an edict from Mr. Obama commanding money to grow on trees could succeed.

Why Bureaucratic Bungling is No Surprise

Government bureaucracies are built to perform very specific functions, which are laid out in detail in laws and further clarified in regulations.  As such, there is no room for a government bureaucrat to take his own initiative.  He is obligated to adhere to the bureaucracy’s stated mission, rules and regulations.

Therefore every bureaucrat is required to follow what I refer to as the two Prime Directives:

1)  Follow the rules;

2)  Obey the boss.

There is actually one additional, clarifying directive, which is:  If there is a conflict between Directive 1 and Directive 2, follow Directive 2.

As a result, there is no innovation, no thinking outside of the box, no focus on productivity, growth, quality improvement, etc.  People in a bureaucracy are not paid to think.  In fact, they are paid to not think.  They are paid to follow the rules and obey the boss.  Period.  That’s why bureaucracies get stuck when an unanticipated situation arises.  The low-level bureaucrats who face this situation have nothing in the rule book specifically addressing it, so they don’t know what to do.  They are not authorized to make decisions on their own, so they have to wait for the boss to make the call.  In many cases, the first-level boss does not have authority to make the call either, so the problem gets floated slowly up the ladder, where, at some point, one of the bosses sees it as too low of a priority to bother his boss with, so he tables it.  As a result, nothing happens.  Word flows back down the chain to be patient, a decision is in the works.  And the whole system becomes paralyzed on the issue at hand because no one is willing to make a decision.

This same process is in also in effect when the bureaucracy takes what appears from the perspective of an objective outside viewer to be an inexplicably stupid course of action.  A clear example is a second-grader who was recently suspended from school for bringing in a toy gun.  In this case, the boy discovered the toy gun in his back pack and, realizing it was against the rules, forthrightly brought it to his teacher’s attention.  The school suspended him.  No doubt, at some point the school district had made it clear that weapons – or anything that even looked like a weapon – would result in immediate suspension.  This toy gun certainly fell within the strict definition of the rules, since it did in fact look like a weapon, and that made the suspension entirely legitimate from the perspective of the education bureaucrats.  Once such an action has taken place, the bureaucracy seems to be paralyzed in addressing it.  Most often, the bureaucracy’s first reaction is a full-fledged defense of its own actions.  If that fails to stand up to public scrutiny (and a total onslaught is the pertinent bar to judge by) then usually a lower-level bureaucrat is blamed for misapplying some of the bureaucracy’s rules.  It is a very rare situation when the bureaucracy admits its error and, because of that, changes policy.

Adding to this effect is the nature of people who are attracted to and stay in this type of job role.  People who hold a bureaucratic job accept that their job is to apply an established set of the rules and do what the boss tells them to do without question, day after day.  Creativity and ingenuity is not needed and not wanted.  These are not the type of people who are out to change the world; they do not enter each day with the idea of improving how things work on the job; they do not think outside of the box in order to solve problems.  They are the type of people who will show up, do the same job day in and day out, always do what they are told to do, and cash their paychecks every Friday.  Even if they come into the bureaucracy with the can-do, make-it-happen, improve-the-world mindset, they will eventually either be beaten down by and succumb to the system or they will leave it.  Only the Kafkaesque bugs remain.

Finally, this effect is all the worse for larger bureaucracies with broader missions.  If the mission is narrowly defined – “put a man on the moon and return him safely to earth” or “build an atomic bomb” for instance – a bureaucracy can be quite effective in delivering on its mission. In smaller bureaucracies, even with a broader mission, there is the very real potential to create an effective and efficient organization – if the person at the top has the right drive and determination to do it.

But rarely do such people get to the top of bureaucracies.  Referring back to the Prime Directives, individuals in the bureaucracy are not rewarded for innovation or excellence; they are rewarded for toeing the line.  For an organization to grow (not in terms of size but in terms of the quality and value of the products and services it provides), it must, at some point, take risks.  But risk is anathema to the Prime Directives.  Innovation and creativity invite the possibility of failure.  Rarely is a person with true drive and determination willing to operate under the Prime Directives long enough to get to the top with his or her drive and determination still intact.  Such a path is much longer for a large bureaucracy than a smaller one.  Consequently, the rewards of leadership go not to those pushing the envelope of innovation and change but to those who can quietly work within the confines of the system under the thumb of another long-surviving bureaucrat.

Ludgwig von Mises’ 100-page book Bureaucracy is an excellent source for a deeper understanding.