The markets rallied Monday on news that global leaders favor additional stimulus. The hope is that additional spending will induce growth and put the world back on track.
Don’t hold your breath.
Big government robs the economy of wealth, strips it of initiative and further undermines our recovery.
So why, then, do our leaders continue to throw good money after bad?
Try this on for size.
In 1958, a man named Cyril Northcote Parkinson published a series of essays in book form called Parkinson’s Law: The Pursuit of Progress. In it, he postulated a mathematical equation that describes how bureaucracies expand over time and why.
I don’t know if he had a wicked sense of humor or a dramatic flair for irony but the equation at the core of his argument relied on something he termed the “coefficient of inefficiency.”
The coefficient of inefficiency says the size of a committee or government decision-making body is determined by the point at which it becomes completely inefficient or irrelevant. Or both – hence the name.
Parkinson determined that the minimal effective size for a decision-making body is about five people, and the optimal size is somewhere between three and 20.
Last time I checked, we had 548 people inside the beltway – 535 voting members of Congress, nine Supreme Court justices, one president, one vice president, one treasurer and one Fed chairman – who are responsible for making decisions on behalf of 330 million citizens.
Combine that with nearly 2.8 million total Federal employees (excluding our military) and we’re waaaaay beyond anything even remotely resembling workable decision making.
Now here’s the thing. Parkinson also observed that bureaucracies grew by about 5%-7% a year, “irrespective of any variation in the amount of work (if any) to be done.”
In other words, the larger bureaucracies become, the more ineffective they get even if additional people are hired to do work that doesn’t exist.
And to think, all this time I thought our government ran on the Peter Principle!
Parkinson attributed this to two things: