Contradictory views on the Administrative or Whimsical State

There are credible theories, bolstered by public choice analysis of bureaucracy, that bureaucracy is economically inefficient and politically dangerous—”politically dangerous” meaning the danger of growing or feeding Leviathan. (For more information, see Gordon Tullock, Bureaucracy, Liberty Fund, Inc., 2004]; and Dennis C. Mueller, Theories of Social Choice [Cambridge University Press, 1997]At the other end of the spectrum of democratic power stands the political or bureaucratic state, where elected officials can rule the state bureaucracy at will.

Many critics of the administrative state, while making good points, tend to ignore the dangers of the bureaucratic state (see “Philip Hamburger on the Threats of the Administrative State,” Future of Freedom podcast with host Mitch Daniels). If we can think of an administrative world that is equivalent to the “administrative despotism” described by Alexis de Tocqueville Democracy in America (Chapter 6 of Volume 4), the state of the politician is strikingly similar to the French political scientist’s description of an old and irrational dictatorship. Although I did not think so, the senseless violence of a political regime is at least as bad for freedom and prosperity as the oppression of an administrative regime. This is proven by the fact revealed in the prosecution and trial of Senator Sen. Bob Menendez, who was convicted by a New York federal judge on multiple counts of bribery and corruption on July 16 (“Sen. Bob Menendez Found Convicted on Corruption Charges,” The Wall Street Journal, July 16, 2024). I The Wall Street Journal previously reported (“Menendez Announced His ‘Resurrection.’ Then He Fell In Love,” July 10, 2024), referring to Wael Hana, a New Jersey businessman who was convicted simultaneously of paying bribes to Mendez and his wife:

Hana was looking for a lucrative export deal in Egypt to run her halal business—even though she had no experience in the field. Mendez called a US agriculture official whose agency expressed concern about the food the contract would produce.

“Stop interfering with my team,” Ted McKinney, the agriculture official, recalled Menendez saying on the phone.

The main office of the US Department of Agriculture represents the country’s administration, which administers the laws voted by elected officials in Congress. He also indirectly influences the law through its regulations if not its influence on the political system. I don’t know why the USDA really intervened in the export of Hana to Egypt, because the authorization to import beef kidneys into that country was given by the Egyptian government. I Washington Post suggests the reason was that Hana’s independence would cut off other American sellers of this product in the Egyptian market, as always happens when a foreign government decides for any reason. (See also “Menendez Bribery Case Details Egyptian Halal Beef Monopoly Witnesses,” Court News Service, July 3, 2024.) Political issues and management being what they are, it wouldn’t be surprising if Hana needed some license or an unofficial nod to get his beef kidneys out of Egypt. But my point is that, even though it was supposed to be a law, an elected official could impose his wishes, whether corrupt or not, on public servants. How much better is that than a bureaucratic regime?

The fact that under the secretary of agriculture, the position of Mr. McKinney at that time, the political appointees do not change the opposition between the ruling state and the unruly state. It just goes to show that the administrative state is less independent, less critical in the United States, than in most, if not all, major Western countries.

Many other examples can be found, perhaps even more powerful. There are good arguments to suggest that central banking is dangerous compared to free banking and private finance. But given that the government exists partially independently of issuing domestic currency, who would argue that this power would be less dangerous in the hands of the president or Congress as opposed to an independent bureaucracy like the Fed? Tax Policy is another example: Congress set tariffs in the 19th century, and its political horse-trading was never really successful (see Doug Irwin’s book. Trade Conflict), and recent presidents have been, if anything, worse.

What is the bottom line? When the state has the power to grant great privileges (money or other types of benefits) to some citizens at the expense of others, we should expect that those seeking accommodation will use resources to get their hands on the treasure chest, including informal or (as in the case of Menendez) formal bribery. There is no way an ambitious, activist, and aggressive government can exist without large administrative resources or cynical and irrational political rulers, or a combination of the two. The fundamental problem is not the state of governance or the state of politicians that is in shambles, it is the powerful state. Worshiping elected officials is as bad as a bureaucratic regime. These general results do not depend on the culture of the ruling party or the country under review.

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