Right now our exponentially increasing federal government bureaucracy is where the money is and it worries the hell out of me. I believe there is an increasing moral hazard here that is even more dangerous than innate governmental inefficiency. I believe it may have implications for the future of US entrepreneurship and capitalism itself.
I started thinking about this a couple of weeks ago at the Inc. GrowCo convention in Nashville when I noticed an inordinate number of companies were focused on government business—how to get it, how to navigate it, how to penetrate it. It seems to me this focus has enormous potential for skewing and perverting healthy capitalist business process. This is purely anecdotal, but it seemed to me there was extraordinary concern with the ROI of government ass-kissing.
And why not? “That’s where the money is.” But what does this say about the societal efficacy of entrepreneurship? It says to me that the creative focus of our enormously fecund money generating, job creating community may be being subtly shifted from building better mousetraps to inventing schemes for feeding at the public trough, like a lamprey eel sucking on a big blue whale.
This new bureaucratic bloat is leeching energy and incentives away from the practical problem solving of traditional darwinian capitalism, into a focus on firstly looking for ways to manipulate and win within imposed oligarchic rules. Once again—“That’s where the money is.” It is a tax-payer funded moral and economic strangulation of healthy capitalist process.
To cite but one example, look no further than the rollout of Obamacare. From what I can see from Congressional hearings, it’s pretty clear government IT procurement procedures are idiotic. The Obamacare IT work went to insider firms whose proficiency was in jumping through hoops of government rules. Efficient companies like Apple and Google didn’t even bother to bid on it. What passionate entrepreneurial company wants to vitiate their originality and energy fighting bureaucratic torpor—energy that should be going into creating the new, disrupting the old? Not only is a bloated bureaucracy a burden on efficient government and the taxpayer, but it also obviates the civic logic of the entrepreneurial process.
Indeed, please note Nicholas Eberstadt‘s best-selling book of 2012 called A Nation of Takers: America’s Entitlement Epidemic. Eberstadt holds up Eric Conn as poster boy for a new, destructive sort of mutant entrepreneur/legal con man. Conn has established a whole new niche for legally snookering government into paying thousands of unworthy people disability benefits by effectively navigating the imprecise, easily abused strictures created by unaccountable and inept government rule makers with too much money and too much power.
Aesop tells this story:
A scorpion and a frog meet on the edge of the river, and the scorpion asks the frog to carry him across on his back. The frog asks,”How do I know you wont sting me?” The scorpion says, “Because if I do, I will die, too.”
The frog says OK and then they set out, but at midstream, the scorpion stings the frog. As the frog dies he gasps out, “Why?” The scorpion replies, “It is my nature.”
Joseph Schumpeter, the Austrian economist and Harvard professor, pointed out that an overweening bureaucratic class is in very much the same relation to healthy business as the scorpion to the frog. Even if it is ultimately destructive to government itself, bureaucrats will drown free enterprise to create a controlling governmental hegemony. It is their nature.
Gore Vidal said in his 1968 book Sex, Death and Money, “There is something about a bureaucrat that does not like a poem.” Or an entrepreneur. Thanks, Gore.