Contrarian ideas about the administrative or capricious state

There are credible theories, supported by the public choice analysis of the bureaucracy, that the administrative state is economically inefficient and politically dangerous – ‘politically dangerous’ meaning the risk of growing or feeding Leviathan. (For an overview, see Gordon Tullock, Bureaucracy, Liberty Fund, Inc., 2004]; and Dennis C. Mueller, Perspectives on public choice [Cambridge University Press, 1997].) At the other end of the democratic power spectrum is the political state or the state of politicians, where elected officials can overrule the state bureaucracy at will.

Many critics of the administrative state often ignore the disadvantages of the political state, even when they make good points (see for example “Philip Hamburger on the threats of the administrative state”, a Future of Liberty podcast with host Mitch Daniels). If we can regard the administrative state as equivalent to the ‘administrative despotism’ that Alexis de Tocqueville described in Democracy in America (Chapter 6 of Part 4), the state of the politicians is not without similarity to the erratic aspect of the French political scientist’s description of age-old and arbitrary tyranny. Although I have not always thought so, the capricious tyranny of the political state is at least as bad for freedom and prosperity as the despotism of the administrative state. This is illustrated by a fact that came to light during the prosecution and trial of Senator Bob Menendez, who was convicted by a federal jury in New York on July 16 on several bribery and corruption charges (“Senator Bob Menendez found guilty of corruption,” Wall Street Journal, July 16, 2024). The Wall Street Journal Previously reported (“Menendez declared his ‘resurrection’. Then he fell in love,” July 10, 2024), speaking about Wael Hana, a New Jersey businessman who was simultaneously convicted of paying bribes to Menendez and his wife:

Hana was looking for a lucrative export contract from Egypt for his halal business, despite having no experience in this field. Menendez called a U.S. agriculture official whose agency had raised concerns about the monopoly the contract would create.

“Stop interfering with my constituent,” Ted McKinney, the agriculture official, recalled on the call.

The vast bureaucracy of the U.S. Department of Agriculture is, of course, representative of the administrative state, which implements laws passed by elected officials in Congress. It also indirectly influences legislation through its regulations, but also through its influence on the political agenda. I don’t know why exactly the USDA had intervened in Hana’s exports to Egypt, because the monopoly on the import of halal beef kidneys into that country was granted by the Egyptian government. The WashingtonPost suggests the reason was that Hana’s monopoly would cut off other American exporters of this product from the Egyptian market, as happens every time a foreign government decides to do so for whatever reason. (Also see “Menendez Bribery Trial Witness Details Egypt’s Halal Beef Monopoly System,” Courthouse News Service, July 3, 2024.) As political and bureaucratic as things are, it wouldn’t be surprising if Hana needed a permit or an unofficial nod to export his beef kidneys to Egypt. But my point is that, despite the supposed rule of law, an elected official could impose his whims, corrupt or otherwise, on public officials. How is that better than the administrative state?

The fact that the Ministers of Agriculture, which was Mr McKinney’s position at the time, have political appointments does not change the inherent contradiction between the administrative state and the capricious state. It just shows that the administrative state is less autonomous and more subject to state capriciousness in the United States than in many, if not all, major Western countries.

There are many more examples to be found, perhaps more powerful. There are good arguments suggesting that a central bank is harmful compared to free banking and private currencies. But given that the government has a partial monopoly on issuing domestic currency, who would argue that this power would be any less dangerous in the hands of the president or Congress, as opposed to an independent bureaucracy like the Fed? Another example is tariff policy: Congress set tariffs in the 19th century, and its political horse-trading was not exactly a success (see Doug Irwin’s article Clash over trade), and recent presidents have been even worse.

What’s the bottom line? When the state has the power to grant great privileges (money or other benefits) to some citizens at the expense of others, we should expect rent-seekers to spend resources to control the treasury, including through informal or (as in the Menendez case) formal bribes. No ambitious, activist, inquisitive government can exist without a large administrative apparatus or capricious and arbitrary political rulers, or a combination of both. The fundamental problem is not the administrative state or the erratic state of politicians, but the powerful state. The worship of elected officials is as bad as the administrative record. These overall results do not depend on the ideological nature of the party in power, nor on the country under consideration.

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