Mind Matters Natural and Artificial Intelligence News and Analysis
businessman are floating on the sea of paper
Image licensed via Adobe Stock

The Modern World’s Bureaucracy Problem

The Iron law states that any market reform or government initiative aimed at shrinking bureaucracy ends up expanding it.

The modern world has a bureaucracy problem. We’ve known this since the post-Cold War years, as words like “paperwork” started popping up in media and conversation and a spate of anti-bureaucratic books like The Peter PrincipleThe Bureaucratization of the World, and Bureaucrats: How to Annoy Them hit bookshelves. In other words, we’ve recognized that bureaucracy is annoying, soul-killing, and worthy of scorn and derision for decades. Apparently, we just can’t do anything about it. The world is more bureaucratic today than ever. We’re going backwards.

I’ll admit, I wasn’t planning on writing about bureaucracy. How boring. I try to, essentially, duck and cover. Hide from it. You need a spy-like furtive footprint, a feel for staying unentangled. Slip away sight unseen.

No such luck. The States greeted my return from Europe with news that my bank info had been compromised (in one of these periodic drone-like non-admissions of responsibility — didn’t someone break into your computer systems? — advising everyone to change their passwords). I didn’t think anything of it, it’s sort of like those Amber alerts you get, where you’re informed there’s a ten year old whose uncle snagged her and they’re now in a beige Dodge Caravan heading south a hundred miles from you. I didn’t think anything of it. Until I looked at my credit card. And here begins my story of bureaucracy. 

Bureaucracy is one of these rare topics that nearly everyone recognizes sucks — it’s quite literally a waste of productive time for anyone entangled in it — but no one can ever confront. Bureaucracy keeps getting bigger, no matter how much politicians talk about taming it, with “deregulation” (deregulation usually spawns more bureaucracy somewhere else), or making government smarter, or using market solutions to cut through the mindless paper pushing and look more like an efficient business. But American business — business anywhere save maybe Somalia — is just more stupefying bureaucracy. No wonder there’s a neo-Luddite movement. It simply doesn’t matter what we do. Bureaucracy grows. It never shrinks. If there ever is a Singularity, it won’t be a super smart computer flummoxing us, but an unmanageable morasse of questions about what to do with all the forms, procedures, authentications, and mind-numbing spiritless discussions. Someone will sit up from a desk somewhere in some glass tower, and realize no one any longer has the foggiest idea what’s going on. Tax codes, legal systems, getting solar cells installed on your house (personal example), fixing your car, modifying a will, anything. Next follows the tortured whisper that we’ve hit the “critical point.” It’s here: not superintelligence, the opposite. Stupidity. Bureaucracy, ascendant.

Folks who insist advances in artificial intelligence will somehow tame this beast must face uncomfortable truths. Information technology puts bureaucracy on steroids. A superintelligent AI will no doubt generate forms to simplify other forms, proving what the late anthropologist David Graeber dubbed “The Iron Law of Liberalism” (as in “classic liberalism”):

The Iron Law of Liberalism states that any market reform, any government initiative intended to reduce red tape and promote market forces will have the ultimate effect of increasing the total number of regulations, the total amount of paperwork, and the total number of bureaucrats the government employs.

This helps explain why deregulation failed. It had to. We know this, actually, but we seldom talk about it. How many times have we “simplified” the tax code? Or streamlined hiring procedures, or loan applications? Or done anything under the banner of “reducing red tape” that didn’t involve painting a lot more tape red? When Lehman Brothers and the other too big to fail banks collapsed the real estate market, they nearly brought down financial markets across the globe. Volumes of paperwork got filed (and I include all the electronic box-checking and signing), recruiting more lawyers to place more rules on more agencies to reign in worse, unruly banks and their cigar-chomping CEOs.

It’s a nice image, but there’s a problem. It’s not true. The banks today are bigger than ever, and the CEOs got quite rich overseeing their own f*ck up. You can bet that all those well-intentioned legal machinations in the aftermath of the credit crisis multiplied the total amount of red tape. Breaking up the banks made them larger, and gave us more bureaucracy.

Many people I speak with about this quickly grab a right-wing/left-wing weapon and start explaining that in principle this wouldn’t happen, it’s just that we have dumb politicians or misaligned incentives or both. But really since the French Revolution, the bureaucratic state has been inevitable, and the stuffy functionaries and aristocrats with their land titles and salt taxes have multiplied, now under the guise of bureaucrats and technocrats overseeing the new liberal state. 

I’ll explain what the aftermath of the French Revolution has to do with applying for a car loan or filing your taxes or getting insurance to pay out after a flood or fire (“did you document this was actually in your home?”), or renewing your driver license or disputing a charge — or for that matter dealing with your HOA. But first, back to my present malaise.

Where was I? Right. On the phone with the credit card company. After about an hour, I wanted to push back on the credit card company somehow — hint, it’s a misspelling of “City”— but I decided I don’t want to get sued, which would of course be an invitation for more red tape, followed by bankruptcy and abject failure. But here’s what happened (yes, this really did happen. It really IS happening). Someone, or likely a group, let’s call them “Jack Asses,” managed to gain access to my credit card account, delete my actual bank info linked in the application for (timely) payments, put in an invalid account (which somehow registered as “Active” in my iPhone application, indicating the app thought it was valid), and started claiming credit for my payments over the months. You’re in a state of disbelief, it’s like the doctor told you in a hushed tone you have cancer, and you realize finally “oh, it’s identity theft.”

Calling the credit card company is the first thing you do, and this is where you enter into the first stage of hell. What follows is paraphrased but pretty much how it went down.

Customer Service (CS): “Hello, Mr. Larson, how are you?”
Me: “I just returned from Europe. There’s a message to call as there’s a concern about my account. I now see why, I think, and I’m back in the States and calling.”
CS: “Sure let me just confirm your info.”
Me: “The automated system already received my info, why do we have to go over that again?”
CS: “Sure, Mr. Larson [I’m afraid I can’t do that, Dave], but this is an authentication check.”
Me: “Really? What was the automated system doing then? It recorded my full name, account number, etc., already?”
CS: “Mr. Larson, can you please give me the last six digits of the account you use for payments?”
Me: “Yes, it’s blah blah blah, but that’s not the account that’s currently in my app. That’s what I’m trying to say.”
CS: “We can try to authenticate you some other way. Do you have a second phone line?”
Me: “Does anyone have a second phone line anymore? No. I don’t.”
CS: “Can you provide banking details if you bank with us?”
Me: “I don’t bank with you. It’s just the credit card.”
CS: “I’m sorry Mr. Larson, you failed authentication, as you couldn’t provide the account number of the bank we have on file for your payments.”
Me: “Yep. That’s because it’s not my account (I can see the last four digits). When exactly did my bank info change in your systems? From where? Initiated by whom? CS: “We can’t tell you that, since you failed the authentication.”

This is where I go into this sort of partial apoplexy, followed by a determined and more than a little testy philosophical debate mode. The hapless customer service agent (and I always say “this isn’t personal, I’m not mad at you!” — I try to keep this polite to them) is sitting somewhere on the other side of the planet reading a script, essentially, so you can imagine how the “Isn’t it true that on the night of….” Perry Mason schtick goes over. It’s basically adding another hour of pain. Here’s the finale:

Me: “So, what do I do? I’m pretty sure you want someone—call it the primary account holder, otherwise known as me—to make payments, right? Or should I let the person with the account that’s not mine, sitting in my account do that?
CS: “Would you like to make a payment on the account?”
Me: “The account you just informed me I’m not authenticated on? You want an unauthenticated user to make payments on the account?”
CS: “The minimum payment is due.”
Me: “So you want me to make payments on my account while you authenticate that it’s my account. Don’t you find that a bit absurd?” (She didn’t.)

This went one, and I’m not kidding, for over two hours. It got escalated to a manager, to no avail. It’s still unresolved.

Back to the bigger picture.

Graeber (of “Iron Law of Liberalism” fame) wrote a sprightly, intelligent critique of bureaucracy, and I owe much of what follows to his book and ideas. If you haven’t read The Utopia of Rules, and are worried about bureaucracy, you should pick up a copy. Graeber is fantastic. In the remainder of this essay I will draw heavily on his book and his other writings, over the years, on the subject.

Replacing a Monarchy Means Printing More Forms

Yes. The critique on the Right (and I’m not picking on the Right here, it’s just that this is the critique) was that the warrior elites, the aristocracy, the kings and courts with their authoritarian governments and religious dogmas, all the machinery of the Old Order, gradually gave way to a new set of ideas we recognize as classically liberal: liberty, equality, democracy, and enlightened commercial self-interest. It was the last gasps of the Old Order, the mercantile class chewing from the bottom up to collapse the structure of aristocrats and stuffy functionaries with their endless procedures. Time for some free markets.

In other words, the Old Order was “bureaucratic” to the new intellectuals and the free market enthusiasts — France at the time of the revolution in the 1780s was an ugly excrescence of unfair taxes, property deeds, titles, venal offices, and all the rest. It was, in other words, a big stinky bureaucracy. When the Old Order went away, that was supposed to go away too.

The story that slowly emerged in middle class circles in Europe — which had, notably, much in common with philosophes on the Left, the Diderot’s and Condorcet’s and Voltaire’s — assumed that all the execrable dehumanizing aspects of oppressive government were a function of stupid ideas about kings, priests, and occult forces rather than an emerging physical science. They assumed, in other words, that something like a rational free system would replace the stuffy-types they all despised, with less paperwork and taxes and beheadings. The madness of bureaucracy — and the threat of violence always required to enforce it all — was simply a function of bad and outdated ideas about governance. Off with Louis the XVI’s head. On with the revolution. We’re going paperless! Information wants to be free! (Different era.)

It’s a nice story, and it’s true in bits and pieces. But the emergence of modern bureaucracies are an embarrassment to this story, to the early belief in a new enlightened liberalism, because — and there’s really no other way to say it — modern corporate bureaucracies generate vastly more labyrinths of rules, regulations, forms, court orders, ordinances, subpoenas, and all the rest. The Old Order, turned out, was by comparison paperless. In the past, an annoying taxman would show up in the village once a year. He’d leave with a few chickens, a pig, and maybe some coins. After modern bureaucracy, you don’t see the taxman anymore (unless you’re Al Capone). What you see now is an endless sea of bureaucrats and technocrats, vastly more prominent and powerful than what they replaced. Sure, folks lost their heads in the Old Order, and injustices were part of life. Now, we die a slow suffocating death by pencil pushers, backed by other pencil pushers with tasers and guns. Are we getting somewhere?

So what-we-think-of as the Right-wing story about emerging out of the Dark Ages into liberty and free markets (think Adam Smith, not Karl Marx) has a fatal flaw. It’s not that we dig Monarchs, and want them to come burn down all the government agencies and install a gold throne in Washington D.C. — not anyone sane, anyway. It’s that the notion that we’d rid ourselves of the bureaucracy of the Old Order because we had better ideas was always a fiction. We had — we really did have — better ideas than aristocrats and kings or queens. But the liberalization of everything also meant a multiplication of all those stuffy functionaries. Technocrats and bureaucrats are part and parcel of the whole damn thing. Look around.

It’s popular today — and really since back in the Reagan-Thatcher era — to blame government on mucking up freewheeling markets and bureaucratizing everything. All those damn Leftist politicians and appointed technocrats, trying to grow the welfare state. Graeber explains:

First of all, historically, markets simply did not emerge as some autonomous domain of freedom independent of, and opposed to, state authorities. Exactly the opposite is the case. Historically, markets are generally either a side effect of government operations, especially military operations, or were directly created by government policy. This has been true at least since the invention of coinage, which was first created and promulgated as a means of provisioning soldiers; for most of Eurasian history, ordinary people used informal credit arrangements and physical money, gold, silver, bronze, and the kind of impersonal markets they made possible remained mainly an adjunct to the mobilization of legions, sacking of cities, extraction of tribute, and disposing of loot. Modern central banking systems were likewise first created to finance wars. So there’s one initial problem with the conventional history. There’s another even more dramatic one. While the idea that the market is somehow opposed to and independent of government has been used at least since the nineteenth century to justify laissez faire economic policies designed to lessen the role of government, they never actually have that effect. English liberalism, for instance, did not lead to a reduction of state bureaucracy, but the exact opposite: an endlessly ballooning array of legal clerks, registrars, inspectors, notaries, and police officials who made the liberal dream of a world of free contract between autonomous individuals possible. It turned out that maintaining a free market economy required a thousand times more paperwork than a Louis XIV-style absolutist monarchy. 

Okay. Like I said, the Right has (or had) a critique of the unwanted growth of all things bureaucratic, it’s just “not a very good one,” as Graeber memorably put it. But the Right at least has a critique of bureaucracy. The Left has nothing. When the Left wants to address what we might call “the problem of ever-increasing administrative bullshit,” the only stratagem that comes to mind is to reduce the size of government somehow, or give lip service to the adoption of “market” principles. The Left ends up reluctantly (and somewhat risibly) embracing some version of the flawed Right critique. In the meantime, bureaucracy grows, like Doomsday in Batman vs. Superman

The central problem in both cases is the Iron Law, where really any market reform or government initiative aimed at shrinking bureaucracy expands it. One reasonable interpretation of our current malaise is simply that we’re living now in a giant corporate bureaucracy, growing since the “new ideas” of the late 18th century, all the while touting innovation and change and all the rest.

I would love to keep at this article, but alas, bureaucracy beckons. I must call the bank.

Cross posted at Colligo.

Erik J. Larson

Fellow, Technology and Democracy Project
Erik J. Larson is a Fellow of the Technology & Democracy Project at Discovery Institute and author of The Myth of Artificial Intelligence (Harvard University Press, 2021). The book is a finalist for the Media Ecology Association Awards and has been nominated for the Robert K. Merton Book Award. He works on issues in computational technology and intelligence (AI). He is presently writing a book critiquing the overselling of AI. He earned his Ph.D. in Philosophy from The University of Texas at Austin in 2009. His dissertation was a hybrid that combined work in analytic philosophy, computer science, and linguistics and included faculty from all three departments. Larson writes for the Substack Colligo.

The Modern World’s Bureaucracy Problem