What Is Happening to the US Economy?

Abstract

Chapter 3 brings about the very questionable situation our economy is in.

Appendices

Appendix

Bureaucratic Barriers to Economic Progress

Introduction

Countries, organizations, and businesses are all managed by bureaucracies. In fact, there is no other way of managing societies and their components. Bureaucracy is a system of administration distinguished by its clear hierarchy of authority, rigid division of labor, written and inflexible rules, regulations, and impersonal relationships (Gajduschek 2003; Webber 2008; Johnson 2014; Notes 2013). No country or organization can function without fully active bureaucracies, but in time these bureaucracies have a tendency to become less functional.

Basic Functions of Bureaucracies

Exhibit A-1 presents seven key functions of bureaucracies.

Exhibit A-1

Basic functions of bureaucracies at their beginning

Functions	Implications
• Strategic decision making	Quicker and better decision making
• Exercising authority	Establishing clear authority to accomplish the tasks
• Making it possible to get results	Careful organization of workers to fulfill its goals
• Centralization of decision making	Clear-cut instructions for workers for specified works
• Strong control mechanism	Establishing strong boundaries for decision making
• Well-defined specialization	Establishing the needed task identification
• Identifying best practices and using them	Operations are clearly identified at all levels of the bureaucratic process

Perhaps above all, bureaucracies are engaged in making strategic decisions to fulfill the goals of the organizations they represent. In doing so and in implementing their decisions, they exercise authority. Through decision-making and implementation, bureaucracies exercise authority. This is how they get the results that the organization – or the society – needs. Bureaucracies are centralized in both their decision-making and the implementation. In order to compete their major functions as planned, bureaucracies develop strong control mechanisms. These well-defined functions and control mechanisms then condition the defined specialization of the functionaries who are assigned to perform carefully identified functions by proper specialization. Finally, particularly at the beginning, bureaucracies would use, on the basis of their own knowledge and experiences, best possible practices for their functional survival (Johnson 2014). These functions, and perhaps many others, are essential for an organization, government, or country to survive and make progress. These basic functions must continue. But, the bureaucracies which are performing these functions change over time. As these bureaucracies continue existing and functioning, they become dysfunctional in time.

Dysfunctionality of Bureaucracies

The potential for dysfunctionality of bureaucracies can be demonstrated in many different ways. Exhibit A-2 illustrates four different and significant ways of bureaucracies which may lead to dysfunctionality.

Exhibit A-2

Dysfunctionality of advanced bureaucracies

Characteristics	Impact
• Rigidity	Not being able to cope with unexpected new situations
• Being self-centered	Concerned more about its power and continuity than other things
• Dictatorial	Too much ordering rather than listening
• Blocking progress	Considering any unexpected development as a threat

Above all, bureaucracies are rigid. While this rigidity may be quite appropriate at the beginning, indicating focus and concentration, in time as things, conditions and needs change, they remain focused on the original ideas and procedures.

While bureaucracies emerge to help the organizations for which they work, in time they become self-centered. Their orientation becomes more inward and more focused on their own survival than helping the organization they work for.

In order to perform whatever they are supposed to perform at the beginning, they are dictatorial. While this is expected and functional at the beginning, as the conditions and needs change, they do not. As a result, they become dictatorial and perform in unnecessary or outdated activities.

As bureaucracies become older and more introverted, they do not like certain activities which may threaten their existence in the long run. Thus, they block many activities which may be progressive for the organization they work for.

As can be seen, the older and more well-established bureaucracies, in time, become self-centered and redundant. This situation causes serious problems for organizations that are supposed to serve. They simply become outdated, dysfunctional and extremely rigid. In other words, instead of being proactive and progressive forces, they become a burden to organizations for which they are working. This situation not only may create stagnation within the whole society but may also block economic progress. This can become extremely serious and damaging for some societies.

Blocking Economic Progress

Older and well-established bureaucracies can be enemies of economic progress. Exhibit A-3 presents some aspects of this possibility.

Exhibit A-3

Blocking economic progress

Bureaucratic Behavior	Implications
• Too connected to existing technologies	Does not consider supporting disruptive technologies
• Does not tolerate competition	Tries to stop potential new competition
• Would ignore radical innovations	Counteract development of radical innovation
• Does not encourage exploration	Stuck with doing things as they have been done in the past
• Is motivated for its own well-being	Much more interested in its continuity rather than contributing to the organization for which they work
• Being connected to a political party	Considers well-being of that part rather than national progress

First of all they are too tied to existing technologies. These technologies may have helped them to perform their functions at the beginning, but they may have become rather old ways of performing certain much-needed activities. But bureaucracies may not consider new disruptive technologies which may make major contributions to the company and the society.

Not only would they not consider new and dynamic disruptive technologies, but they also look at them as potential new competition which, in their minds, must be stopped. Thus, they are typically anti-competition.

If there are new radical innovations, the well-established bureaucracies typically dismiss them. They do not support major innovations that, they think, will make them outdated or dysfunctional.

Since they are very closely tied to the well-defined, rigid, and not very flexible procedures, bureaucracies are not open to new orientations or new explorations which may contribute significantly to their organization’s well-being.

Old and well-established bureaucracies become more interested in their own existence and sustainability rather than making major efforts to improve the organization they work for or the society within which they function.

Finally, at the national level, bureaucracies may be very well connected to a political party or a political position and might ignore national progressive decisions, which need to be emphasized (Clark et al. 2013).

Remedial Action

Just how do we keep bureaucracies progressive, dynamic, and innovative as they may have been at their beginning? In fact, how do we determine that bureaucracies, at least some of them, have become dysfunctional? This particular area must be explored very carefully before it is too late for any bureaucracy. Certainly no bureaucracy must be left alone to become harmful to the society. This particular area needs to be explored carefully so the remedial action could take place. This is particularly important in developing countries so that bureaucracies are not going to block their progress.

Conclusions and Future Research

It is maintained here that bureaucracies are necessary for organizations or societies to function. But while bureaucracies are very functional, productive, and proficient at the beginning, they become old and dysfunctional in time. They become self-centered and dictatorial. They do not tolerate change and new innovations. This may be extremely serious, particularly in developing countries if they start disrupting progress.

Future research must explore when and how to determine the dysfunctionality of bureaucracies and how to remedy this situation.