Dissecting the Procedure Fetish
What explains the tendency of administrative bureaucracy in the United States to cripple state capacity with layers of procedural rules and regulations? In The Procedure Fetish, Nicholas Bagley offers two potential motivations for this trend, seeing the spread of procedure as stemming from (1) a desire for bureaucratic accountability on the part of Congress and the public, and (2) an attempt to provide legitimacy to the Constitutionally-weak administrative state. Bagley singles out lawyers, in all branches of government, as particularly culpable for the defense of procedure as a force for accountability and legitimacy.
Bagley presents a compelling counterargument against the validity of these proposed defenses of procedure. The particularly high approval ratings for the Federal Reserve and the Department of Defense, two agencies with little procedure and public comment, strongly undermines the argument for procedure as legitimizing agencies in the eyes of the public. Similarly, the argument for accountability fails when we acknowledge the inequity and capture that results from the “time, attention, and resources” (Bagley, 2021) needed to parse complex rules and regulations.
Let’s say we agree with Bagley’s assessment regarding the deleterious effects of procedure on state capacity. Is the answer to replace all lawyers in the executive branch and Congress with engineers and consultants? Would that it were so simple. In this paper, I will argue that lawyers are a symptom, not the cause, of the broader risk-averse mentality that pervades public administration. I will first defend risk aversion as a rational approach given that most government agencies deal with domains of diffuse benefits and concentrated costs. I will then analyze why the private sector does not suffer from this problem to the same extent and argue that a resolution to the United States’ state capacity problems will require changes in both agency and public perceptions of how to weigh the costs and benefits of public sector action.
For two years, I worked in an executive branch agency of the Massachusetts state government. My team’s main purpose was to conduct program evaluation on populations receiving government services from multiple agencies across the social safety net. A massive undertaking in such projects was to get agencies to share their data. Even for internal data analysis, we had to first apply statistical algorithms to these datasets to protect the privacy of the populations in the data. We spent almost my entire tenure working on these engineering challenges, with analytical work consistently pushed back.
I found this approach incredibly frustrating. What good was all of this work to protect privacy if we weren’t using the data for any legitimate purpose? Over my time there, I began to realize that most of the policy and data managers I worked with shared the same mentality: better safe than sorry. Rather than seeing this as pure obstructionism, I realized that this approach made a lot of sense in a simple cost-benefit analysis. The cost of a privacy breach was large, likely leading to a Boston Globe story and a public backlash, while the benefit of access was small, in the form of a marginal tweak to program design leading to higher social welfare. In data privacy, the costs are concentrated, while the benefits are diffuse.
The cost-benefit analysis of data privacy is not unique in government. Improvements to existing public goods, including clean energy, equitable public safety, and transit infrastructure, suffer from the same problem. Here, the social costs of a mistake, such as a nuclear reactor failure, a murder, or derailment, appear to dwarf the social benefits of success, such as a small reduction in global temperatures or racial inequality. In this view, a status quo bias for government agencies is often rational, from a short-term perspective. I say short-term perspective, because it is quite plausible that the net benefits could outweigh the costs, even if they are diffuse, over a longer time horizon.
One obvious question for this account is why the public sector suffers from this problem much more than the private sector. The potential for a data breach does not stop Google or Facebook from using our data to make billions in profits off of personalized advertisements. This is partly because there is a higher base rate for the problem of concentrated costs and diffuse benefits in public goods, by definition. Because a public good is non-excludable, its benefits will inherently be spread more broadly throughout the population than an iPhone or a Tesla. Public goods also tend to be essential services, meaning a failure will be more catastrophic than for many consumer products or services. Certainly, the incentives facing private sector employees from equity packages, the prospect of promotion, or the threat of firing, also contribute to greater risk taking behavior.
I do not, however, believe this explains all of the public sector’s relative risk aversion. Based on my experience and my perception of the general public, government is held to a different standard than the private sector. As the protector and provider for those who are most vulnerable, government is often expected to adhere to a form of the Hippocratic oath, “do no harm.” Contrast this with the private sector, where executives have a direct duty to act in the best interests of their shareholders, which usually means maximizing their annual rate of return.
Given this asymmetry, the “low state capacity” criticism of government can seem like a double-standard. Government is asked to follow a moral procedure that focuses on limiting harm to those at the bottom, but is then judged by a standard of its overall efficacy across all of its functions. This is not, however, to argue against state capacity as a barometer of government success. Far from that, I believe it is essential that government in the 21st century is judged by this standard. The problems we face, from climate change, to AI, to societal distrust, depend directly on the government being able to overcome collective action problems and make tough decisions quickly.
Increasing state capacity will almost certainly involve some of the institutional changes that Bagley discusses in his piece. Reforms to OIRA, environmental protections, notice-and-comment rulemaking, and legal rules governing procurement would all contribute to a more dynamic public sector. But this must be accompanied by a collective understanding that public goods are not private goods, and government cannot simultaneously act to minimize the chance of harm and maximize its overall positive effect. In turn, this means a recognition of the unprecedented nature of our problems and cultural shift towards collectivism, a tall task to put it mildly. Nevertheless, it is only with these changes that we can align the incentives facing government employees, eliminate the procedure fetish, and boost our state capacity.