Contrarian Ideas on the Administrative or Whimsical State

There are credible theories, bolstered by the public choice analysis of bureaucracy, that the administrative state is economically inefficient and politically dangerous—“politically dangerous” meaning a 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 opposite end of the democratic power spectrum stands the political state or politicians’ state, where elected officials can overrule the state bureaucracy at will.

Many critics of the administrative state, even when they make good points, often ignore the drawbacks of the politicians’ state (see for of “Philip Hamburger on the Threats of the Administrative State,” a Future of Liberty podcast with host Mitch Daniels). If we can think of the administrative state as equivalent to the “administrative despotism” that Alexis de Tocqueville described in Democracy in America (Chapter 6 of Volume 4), the politicians’ state is not without resemblance to the whimsical aspect of the French political scientist’s description of ancient and arbitrary tyranny.  Although I did not always think so, the whimsical tyranny of the politicians’ state is at least as bad for liberty and prosperity as the administrative state’s despotism. This is exemplified by a fact revealed in the prosecution and trial of Senator Sen. Bob Menendez, whom a New York federal jury condemned on several charges of bribery and corruption on July 16 (“Sen. Bob Menendez Found Guilty of Corruption Charges,” 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 of a Wael Hana, a New Jersey businessman who was simultaneously condemned for paying bribes to Menendez and his wife:

Hana had been seeking a lucrative export contract from Egypt for his halal business—despite having no experience in the 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 Menendez saying on the call.

The US Department of Agriculture’s large bureaucracy is of course representative of the administrative state, which administers laws voted by elected officials in Congress. It also indirectly influences legislation through its regulations if not its influence on the political agenda. I don’t know why exactly the USDA had intervened in Hana’s exports to Egypt, for the monopoly of halal beef kidneys imports into that country had been granted by the Egyptian government. The Washington Post suggests the reason was that Hana’s monopoly would cut other American exporters of this product from the Egyptian market, as happens every time a foreign government so decides for whatever reason. (See also “Menendez Bribery Trial Witness Details Egyptian Halal Beef Monopoly Scheme,” Courthouse News Service, July 3, 2024.) Matters political and bureaucratic being what they are, it would not be surprising if Hana needed some license or unofficial nod to export his beef kidneys to Egypt. But my point is that, notwithstanding the supposed rule of law, an elected official was able to impose his whim, whether corrupted or not, on civil servants. How is that better than the administrative state?

The fact that under secretaries of agriculture, Mr. McKinney’s then position, are political appointees does not change the inherent opposition between the administrative state and the whimsical state. It just shows that the administrative state is less autonomous, more subject to the whimsical state in the United States, than in many, if not all, large Western countries.

Many other examples could be found, perhaps more potent. There are good arguments suggesting that a central bank is detrimental compared to free banking and private currencies. But given that government exists with a partial monopoly on issuing domestic currency, who would argue that this power would be less dangerous in the hands of the president or Congress as opposed to an independent bureaucracy such as the Fed? Tariff policy is another example: Congress set the tariffs in the 19th century, and its political horse-trading was not exactly a success (see Doug Irwin’s Clashing Over Commerce), and recent presidents have been, if anything, even worse.

What is the bottom line? When the state has the power to confer great privileges (money or other sorts of advantages) to some citizens at the expense of others, we must expect that rent-seekers will spend resources to get their hands in the treasure chest, including with informal or (like in the Menendez case) formal bribes. There is no way an ambitious, activist, nosy government can exist without a large administrative apparatus or whimsical and arbitrary political rulers, or a combination of both. The basic problem is not the administrative state or the politicians’ whimsical state, it is the powerful state. Worship of elected officials is as bad as the administrative state. These general results do not depend on the ideological shade of the party in power nor on the country considered.

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