Rewarding failure in government

If you step back a bit from the complex and still-evolving aftermath of the atrocities of Sept. 11, you can see a pattern that was established firmly in American governance during the previous century, especially since the New Deal.

In a phrase, in government nothing succeeds like failure – unless it's a temporary perception of success.

Government agencies and entities get to have it both ways come budget time.

If they are succeeding in their job of – just as an example –- protecting the American people from crazed terrorists, that is an obvious sign that they should be rewarded for their solid performance with a larger budget and more power. On the other hand, if they fail at the job, that constitutes irrefutable evidence that they have been "starved" for funds and resources and need to have a larger budget and more power.

Either way, government grows and civil society – here defined roughly as the sector in which activities are voluntary and relationships implicitly or explicitly reciprocal, the only foundation on which genuine community can be built – shrinks. And the taxpayers pay.

Two modes of analysis in recent years have explained this apparent paradox with some persuasiveness. The "public choice" school of economics, for which James Buchanan won a Nobel Prize in Economics and Gordon Tullock should have, views people in government as like people in the private sector, driven by their own personal interests and the interests of the institutions with which they are affiliated.

Thus, a manager at Macy's wants his own department (and the number of subordinates he/she supervises) and his/her company to grow and beat out Nordstrom. And an official in any bureaucracy seeks to multiply subordinates and find ways to make the department itself grow.

If anything, the institutional and self-interest incentives are stronger in government, because all government employees get some benefit when almost any sector of the larger institution grows. And there's seldom a chance that the growth of a FEMA will run another disaster-oriented agency into failure or bankruptcy, as can happen in the private sector driven by consumer choice.

Combine the public-choice insight that government agencies have an institutional incentive at all times to expand with the insights explained by Robert Higgs in his classic 1984 book, "Crisis and Leviathan," and the apparent paradox becomes understandable. Higgs argues that during war and other crises (depressions and natural disasters count) government naturally seeks to assume more power, and is usually able to do so because of the perception of a crisis that might require extraordinary exertions to handle.

At the end of the crisis, the extraordinary emergency powers are trimmed back somewhat – but almost never to the level of power the government held before the crisis. So government keeps growing in power and wealth with each crisis. And the higher level of power that prevails at the end of the crisis is soon viewed as the "norm" from which the government can never retreat, but can only build on when the next crisis comes – as it inevitably will.

Thus changes in institutions lead to a change in the rough-and-ready (though not always explicitly articulated) ideology that prevails in a society. Before World War I, for example, only a few radicals and visionaries saw more than a marginal role for the federal or national government in shaping and molding the economy. After World War I and the New Deal, only a few radicals still clung to the "anachronistic" constitutional constraints on the central government's economic role, constraints that were obviously no longer "practical" in a complex modern technological society.

How does all this apply to the attacks of Sept. 11? Clearly, the crisis those attacks precipitated unleashed the ever-present institutional imperative of government to grow and acquire more power.

We should be clear about the genesis of the demand, however. Sept. 11 was a massive failure of government intelligence and protection systems. It's not as if they didn't have resources. And hindsight is suggesting increasingly that intelligence agencies had information that they simply didn't put together.

Why did they fail? In part, because in government service there is no real personal penalty for failure. You might get fired for making a bigoted remark, but you can't get fired for failing massively at your assigned duty – you're more likely to be beneficiary of a convenient cover-up. Look at how consistently those responsible for huge misjudgments at Waco, Ruby Ridge and Oklahoma City have been protected against anything but mild slaps on the wrist.

As for the institution, failure doesn't mean going out of business, as it can in the private sector. Often enough, it means a bigger budget next year. So where's the incentive for integrity, courage, independence of judgment, relentless pursuit of facts and truth, or even simple competence?

If we had any sense, we would recognize these perverse incentives and put more aspects of security – more aspects of life – in the private sector. Instead, most of us will cheer as government grows again.