How to Cut Through the New Gordian Knots
Governance on every level has reached a gruesome nadir.
By Paul Frijters, Gigi Foster, Michael Baker at Brownstone Institute
Governance on every level has reached a gruesome nadir. Western elites entrenched in both international and national bureaucracies have been accorded the power to abuse any kind of health scare to deprive populations of their liberty and impose massive financial costs on them to boot. These ‘deep state’ bureaucracies have intertwined themselves simultaneously with each other and with big business, producing a complicated, organic patchwork of links seemingly impossible to untangle, akin to the storied Gordian Knot.
Corporations and their effective subsidiaries, including government bureaucracies, now act as if they all hold shares in each other, which effectively they do. These networks of power and resources are largely unaccountable to politicians because politicians, even if they cared, have no time to understand the complexities.
Consider for example the supply of uniforms to the US Department of Homeland Security, or the supply of flatware and dinnerware to the US Department of Defense which purchases, among other weapons of war, 500,000 pieces of cutlery annually. These are governed by the Kissell Amendment of 2009, the Berry Amendment of 1941, the Buy American Act of 1933, various WTO free trade treaties that the US has signed onto over the years, and the US-Mexico-Canada Agreement (USMCA) of 2020. They have collectively resulted in full or near monopolies to domestic producers for some products, such as VF Imagewear for uniforms and Sherrill Manufacturing for flatware. Politicians are spoon-fed, but only with the most torturously vetted spoons.
In a despairing previous article, Jeffrey Tucker opined that elections are not the answer, no matter who is voted for, simply because our immense modern bureaucracy operates independently from politics, is somewhat impervious to it, and finds ways of encircling and neutralising politicians who bring forward ideas for change.
According to historical accounts, Alexander the Great simply hacked through the Gordian Knot rather than attempting to untangle it. Where’s Alex when you need him?
A useful structure, grown into a monster
How does this type of entanglement emerge and why is reform so hard?
The deep problem is that the sheer size and complexity of vast systems such as education, health, and defence make it impossible for any single person or work team to understand them in their totality. That insight is now known as the problem of embodied knowledge: just as a body can provide its own immune defence services without the mind knowing how it’s done, bureaucracies can produce valuable services (e.g., in education, defence, and public health) without any one person or team knowing how it’s done.
Rather, each of hundreds of specialists understands a tiny part of the full picture, with the details of that picture changing constantly with the incomings and outgoings of personnel and technology.
Because no one understands these systems, insiders are able to concoct emergencies and other excuses to expand them until populations are fed up with them, an insight emphasised by William Niskanen. We are now at the point that Niskanen, writing in the 1970s, predicted would arrive: bureaucracies have become so bloated that they are no longer a net benefit to their society.
Also, when no one truly understands a system in its totality, it is hard to know where the biggest problems are. How to deduce which bits are rotten and who is corrupt, when everything is so entangled? So many strings are being pulled that identifying the puppet masters, or whether they exist at all, is virtually impossible.
Corruption in a very complex system arises in a way known to economists as ‘market discovery:’ over time, those who stand to benefit most from the corruption of particular parts of these mammoth systems are those who have found ways to corrupt them. By trial and error, top civil servants and cashed-up outsiders have identified the buttons that need to be pressed to get mutually beneficial results, and have organised themselves to control those buttons and obscure them from others. Many corruption buttons will not be widely known to exist. After all, the better hidden the corruption, the longer the relevant players can hope to enjoy the benefits of that corruption.
One well-known corruption tactic is the revolving door. Thousands of civil servants now hail from particular parts of the private sector that benefit from corrupting them. For instance, Loyce Pace, the HHS’s Assistant Secretary for Global Affairs and the person responsible for selling the World Health Organisation on plans to institutionalise the profits of Big Pharma, came into that position from the job of executive director of a health-industry lobby organisation called the Global Health Council.
A fox turned keeper of the chicken coop, invited in by elected politicians. According to Open Secrets, a non-profit group that monitors the revolving door: “public servants switching to careers as lobbyists (and back again) come from agencies as varied as the Department of Defence, NASA and the Smithsonian Institution.”
Relatedly, politicians have an incentive to vandalise independent self-analytical units inside the state bureaucracy, such as audit offices. They can sell that vandalism to their sponsors, and by avoiding scandals from being discovered, keep their public image immaculate. A typical example is that in Australia’s state of Queensland, the anti-corruption commission was neutered by politicians from both main political parties after the reform period of the 1980s, as noted bitterly by former judge Tony Fitzgerald who led those 1980s reforms. The playbook to corrupt self-critical units inside the state bureaucracy is to put one of the shady insiders in charge, reduce the mandate, reduce the funding, make legal what was previously illegal, and punish whistleblowers.
We see the results of this approach now throughout the West. In Greece, for example, tax audits of more than 5 years back are unconstitutional and the journalist exposing the list of powerful Greeks dodging their taxes was hounded in the courts by state authority. Edward Snowden avoided jail for exposing corruption in the US, but Julian Assange did not, with neither Democrat nor Republican presidents offering these whistleblowers a pardon. It has been the same story, told and retold, for decades.
For those that are not yet subscribers to the blog, using the coupon below gives you 50% off annual subscriptions for as long as you wish to remain a subscriber:
How bad is it?
The problems are far worse than even this dismal depiction indicates. Not only have leaders in our state institutions been captured and made subservient to special interest groups, but the very fabric of operations of both politics and the bureaucracy has become captured, procedurally and technologically, by special interest groups. These mechanisms of capture are not fully seen by anyone, create consequences that reach decades into the future, and are virtually impossible to pick apart.
Think of the thousands of international treaties to which the US is beholden that collectively bind the hands of future generations when it comes to the taxation and regulation of industries. On top of this, the US is estimated to enter into a further 200 international treaties every year, many written by special interest groups to secure their future profits at the expense of the public.
Think also of the use of privately-owned technology to run key infrastructure and weaponry, where continued functionality depends upon maintenance and upgrades. Think of the thousands of ‘public-private partnerships’ that are essentially written by private partners and pushed through by bought politicians, locking in future generations to excessively expensive toll roads, medicines, broadband, and so on.
In such an environment, one cannot isolate a few corrupted parts of the state bureaucracy, excise them, and start afresh. The system has become entangled precisely to prevent such a solution: to do any serious reform ‘from the outside’ you would not merely have to axe all the major departments, including the army, but also the legal structures and the major businesses that have grown around the state bureaucracy. Even whispering about such matters would put one on the radar of the security apparatus and the propaganda machinery of both government and Big Business. Beware the fate of Edward Snowden and Julian Assange.
We can forget about seemingly simple fixes, like giving politicians the right to fire civil servants on the spot. Besides, giving clueless and corrupted politicians yet more power is not going to make matters better. Real reform will have to be dramatic, and it will come about only in dramatic circumstances.
We know how this goes
It was exactly like this both in the Soviet Union in the 1980s, and in the Austro-Hungarian empire of the 1910s. Every small bit of the huge public machinery had intertwined itself completely with infinitely many other bits, so the whole monstrous Knot eventually became impervious to attempts to change anything.
Franz Kafka worked in the Austro-Hungarian empire and despaired at its nonsensical bureaucracy. His posthumously published book, The Trial (1914/1915), tells of someone accused by a remote authority of a crime never revealed to either the book’s protagonist or the reader. The protagonist is not even told where the court is, finding it eventually in the attic of a government building, full of bureaucrats annoyed that the protagonist is late for his own trial. The book goes from one such absurdity to another, giving rise to the word ‘Kafkaesque’ as a description of mindless, self-obsessed bureaucracy.
Friedrich Hayek, a generation after Kafka, also worked within that Austro-Hungarian bureaucracy, and also despaired. He concluded that one should never let the state bureaucracy get that big or intertwined, an insight delivered in his book, The Road to Serfdom. Hayek was especially noted for his argument that bureaucracies are oblivious to the damage their actions cause elsewhere.
Neither the brilliance of Kafka nor that of Hayek made the slightest difference. What eventually dragged the Austro-Hungarian empire out of its quagmire was total defeat on the battlefields of WWI and WWII, creating the conditions for real reform by conquerors (the Americans took over the Austrian bit, and the Soviets the Hungarian bit). Such can be the benefits of military defeat.
The Soviet Union’s quagmire was just as bad, but unlike the Austro-Hungarian empire, some insiders made serious attempts at fixing it towards the end. The Gorbachev-led Soviet leadership really tried to experiment their way out of the Knot of the Soviet economy in the 1980s, such as allowing people in designated regions to ignore piles of regulations and experimenting with market reforms. All this was to no avail, as the monstrous system itself sabotaged every experiment, leading Gorbachev to essentially let the system collapse into a chaos of mafiosi and nationalistic forces.
These examples illustrate the historically normal ways in which a wholly corrupt, intertwined system eventually collapses under its own weight.
Our own situation today is similar and dire. We live in an ocean of nonsense so deep that few have any idea which way is up or down. Still, the proven solution of total defeat or collapse, à la Austria-Hungary or the Soviet Union, is not appealing.
How to untangle the Knot?
With no Alexander the Great to lend his sword, the way to extricate Western societies from our Gordian Knots is beyond our ken, but we can offer a few pointers about how to start. Here we suffice with short descriptions, with a promise of more detail in the future.
First, we need to think about how to get specialised help injected into the system. Crucially, we do not need to understand the whole system in order to change the motivations that currently drive actions within it. One way to change these motivations is to move towards a different system of appointing the people at the top of organisations within the Knot.
We could replace the current systems that use such appointments to reward political loyalty and large stakeholders with a system in which ordinary citizens play a far more direct role in appointments.
To make this work, we would need to do it in a way that motivates the general population to pay attention and put in effort. Using juries of up to 20 people to appoint someone to a given role may work; elections in which tens of millions pay no real attention, in the hope that everyone else does, will not. If we get it right, juries of the public will spawn tens of thousands of public-sector directors and top managers who do our bidding rather than the bidding of outside money and political power. Those tens of thousands would form the backbone of a national renewal drive. No one person would see the entire Knot, but together those thousands would. We need their help.
Second, we need to think about a large-scale walking away from national and subnational commitments. In a more or less wholesale manner, we could simply axe large numbers of laws, international treaties, public-private partnerships, regulations, and labour contracts. The time may come when we want to switch to endorsing only a bare-bones number of laws and regulations, evaluating on a case-by-case basis whether we truly need the additional laws, regulations, contracts, and treaties that are presently on the books.
This is admittedly radical, but the corruption today is so deep that only radical solutions will get us out of the hole. As a start, we would need to consider what our ‘bare-bones’ laws would include. A bare-bones restart would inevitably be painful, as we can glimpse in the UK recession engendered by its divorce from the EU with which it was so integrated.
Third, we need to think about how to unravel the influence of dead or blind money, such as that wielded by the huge philanthropic organisations that run much of science today (e.g., the Gates Foundation and the Ford Foundation). It is dysfunctional that long-dead individuals (Ford, Wellcome, Rockefeller, the deceased alumni of many universities) and other rich, naive donors would have so much say about our lives today via the decisions of trustees, who are at the end of the day not grand world saviours but merely a bunch of unelected self-replicating bureaucrats.
Fourth, we need to think about radical changes to our democracy and our legal system, including the use of referenda, citizens’ assemblies, and international arbiters.
Fifth, we need to think about radical changes to the nature of taxation. Part of the complexity of both the legal system and the bureaucracy comes from the state’s attempt to get taxes from people and organisations on the basis of what they reveal about themselves (e.g., via annual reports and tax returns). This has led to massive gaming of the system as well as many paid-for exemptions and hugely complex tax laws. We should seriously think about other systems that are simpler and call to a lesser degree on self-reporting. Options like tributary taxation (aka direct tax demands based on revenue guesses) or time taxation (demanding months or years of public service from everyone) could be on the table.
Sixth, we need to think about radical changes in the production of news and other media, a topic we have written about in detail in a previous Brownstone piece. Part of the problem of the last few decades is that the basic media model, based on journalists waiting for stories to come in that are then sold to the public, is like child’s play for Big Money to corrupt. Knots can simply make up and then push stories that suit them, and ‘flood the zone’ if distractions are needed from an unwelcome story.
A radically different model is one in which part of the social contract involves citizens both producing and vetting news, underpinned by the recognition that media is such a vital public good that it is reasonable to press the public itself into its direct production and quality control. This already happens somewhat with hyper-local news, like student news or club news produced and vetted by the community it informs, but the principle could be institutionalised.
We remain hopeful that the new Gordian Knots will face significant setbacks in our lifetimes, but to see that progress, many people must aid the effort to design and then demand radical change. Your country needs YOU!
About The Authors
Paul Frijters, Senior Scholar at Brownstone Institute, is a Professor of Wellbeing Economics in the Department of Social Policy at the London School of Economics, UK. He specializes in applied micro-econometrics, including labor, happiness, and health economics Co-author of The Great Covid Panic.
Gigi Foster, Senior Scholar at Brownstone Institute, is a Professor of Economics at the University of New South Wales, Australia. Her research covers diverse fields including education, social influence, corruption, lab experiments, time use, behavioral economics, and Australian policy. She is co-author of The Great Covid Panic.
Michael Baker has a BA (Economics) from the University of Western Australia. He is an independent economic consultant and freelance journalist with a background in policy research.