Death by a Thousand Paper Cuts
19th January 2024
Sometimes in this job I have a kernel of a column idea that doesn’t pan out. But other times I begin looking into a topic and find a problem so massive that I can’t believe I’ve ever written about anything else. This latter experience happened as I looked into the growing bureaucratization of American life. It’s not only that growing bureaucracies cost a lot of money; they also enervate American society. They redistribute power from workers to rule makers, and in so doing sap initiative, discretion, creativity and drive.
Once you start poking around, the statistics are staggering. Over a third of all health care costs go to administration. As the health care expert David Himmelstein put it in 2020, “The average American is paying more than $2,000 a year for useless bureaucracy.” All of us who have been entangled in the medical system know why administrators are there: to wrangle over coverage for the treatments doctors think patients need.
The growth of bureaucracy costs America over $3 trillion in lost economic output every year, Gary Hamel and Michele Zanini estimated in 2016 in The Harvard Business Review. That was about 17 percent of G.D.P. According to their analysis, there is now one administrator or manager for every 4.7 employees, doing things like designing anti-harassment trainings, writing corporate mission statements, collecting data and managing “systems.”