Sorting for Stupidity?

Thoughts on the state of the federal government.

Is the federal government sorting for stupidity?

I had this thought when I was out for beers with an old friend, who’s a former Senior Executive Service bureaucrat with the federal government.  He was remarking that in the old days of Washington, say up through the 1960s or maybe the 1970s, being a senior federal bureaucrat was a plum job, and often even paid more than working in the private sector.

That was also a time when Washington, D.C. was a comparatively sleepy town where a senior civil servant’s salary was plenty to allow a nice house in the suburbs and meals at the best restaurants (such as they were) that Washington had to offer.

Now, however, you can make much more money outside the government, trying to influence it, than you can make inside the government, trying to do your job.  The result is a steady movement of the smartest people out of government.  That of course tends to mean that the people who remain are, well, not the smartest. (There are plenty of exceptions on both sides of this, of course, but  the overall impact is as described.)

The reason why it’s so lucrative to influence the federal bureaucracy now is that the federal bureaucracy is sweeping and powerful.  You would be a fool – as Microsoft learned in the 1980s and 1990s when it bragged about not having a DC office – not to try to influence it, if only out of self-protection.  Back when the federal government was much smaller, say in the 1940s, 1950s, and even the 1960s, there was less call to influence it, and so the opportunities for people to earn big salaries by moving from administrating to lobbying were much less.  But that changed.

This happened in the early 1970s, during the Nixon Administration.  Despite (because of?) Nixon’s conservative reputation, his administration saw an explosion of federal regulatory power, to the point where those years are known among scholars of administrative law as the “regulatory explosion.”  New agencies like the EPA and OSHA were created, new statutes  like the Clean Air Act, Clean Water Act, OSHA Act, etc., were passed, and existing agencies were given – or simply assumed – much farther-reaching powers.

As Jonathan Rauch notes in his classic book, Demosclerosis, in 1929 the federal government made up about three percent of the U.S. economy.  Now it’s closer to twenty-five percent.  Also according to Rauch, interest-group domination started to take off about the time of World War II.  Whereas the number of lobby groups was about 400 in the late 1920s, by 1950 that number was over 2,000, and the mid-1990s the number approached 25,000.  It has only expanded since then.  A government that. can regulate wages attracts the attention of lobbyists for trade unions and manufacturers; a government that can pass "crime" bills attracts the attention of police unions, local governments, gun-control activists and opponents, and so on. This should come as no surprise.

(Much of this discussion comes from things discussed in Chapter 10 of The Appearance of Impropriety, coauthored with Peter W. Morgan, where you will find many of the citations for items mentioned below).

And the regulatory explosion facilitated the brain drain in two ways.  Even with the post-New Deal expansion, before the 1970s Washington was something of a backwater, famously derided by JFK as a city of northern charm and southern efficiency.  Outside of highly regulated industries like railroads, airlines, and broadcasting, few paid it much attention.  And although there were Washington journalists, lawyers, and trade associations they were much less important than they would come.  Compared to other major cities like New York, Los Angeles, or Chicago, Washington didn’t matter as much.  It was a city of bureaucrats and mediocre but inexpensive restaurants, not a place that catered to the lifestyles of the rich and famous.

The regulatory explosion vastly accelerated the trend away from that.  As Fred Barnes wrote in The New Republic, the regulatory explosion produced what he calls a “parasite culture of lobbyists, trade associations, journalists, and similar government hangers-on.  After the regulatory explosion, says Barnes,

Soon the city was thick with “public interest” outfits pressing for strict enforcement.  To combat them and cope with the new regulations, corporations had hired more and more Washington lawyers. . . .  Membership in the District of Columbia Bar Association more than doubled between 1975 and 1986, from 20,311 to 44,394.

According to the D.C. Bar’s 2021 annual report, there are now over 111,000 members.  And lawyers are only the tip of the iceberg:  Washington also became a magnet for lobbyists, trade associations, industry newsletters with names like Candy Industry or Satellite Week that advise readers on regulatory developments and the like.  And, most important for our discussion here, Barnes notes that the city became flooded with the kind of money that such interests bring, sprouting luxury car dealerships, expensive restaurants, upscale shops and five star hotels until parts of it looked more like Rodeo Drive than with the Washington of previous years. 

The growth of federal power increased the role of special interests because it made lobbying the federal government more attractive to companies and interest groups.  If a $100,000 expenditure in lobbying can produce a $100 million return – which is entirely possible in the right industries – then your money is coming back a thousandfold.  That’s a much, much better return on investment than any actual business effort can produce.

But more importantly for our purposes, the growth of federal power made lobbying the federal government a more attractive career for federal workers.  When the most expensive restaurant in town comfortably fit within the budget of a senior civil servant, a senior civil servant could feel well off.  By the time I was practicing law in D.C., as a fairly junior lawyer, I was making more than any civil servant up to Executive Level III, and expensive places like 21 Federal (a $300 date back in the 1980s) were comfortably within my price range, but pricey for anyone whose salary scale started with GS.  And it only got worse.  Dining with Roger Simon in DC during the Obama Administration, he pointed out the $140 Wagyu steaks and noted that you used to only see prices like that in Hollywood and New York.

So if you’re a senior civil servant, you were constantly reminded that you could make a lot more money taking the revolving door to an outside interest, and you felt like you needed it because otherwise you felt poor in your own city in a way civil servants hadn’t felt before.  When everyone drove Buicks and Fords, you fit in; when BMWs and Benzes became the norm, you didn’t.  And, of course, all those incoming lawyers and lobbyists drove housing prices way up too.  So why not switch teams?  And people – disproportionately the smartest – did.

Thus, my hypothesis is that these factors produced a new kind of sorting among the bureaucrats, in which the brighter ones were more likely to leave meaning that, over time, the people staffing the agencies would become, on average, dumber.  And note the double whammy – the agencies are becoming dumber because they were more powerful, since that produced the lobbying dynamic that made the smarter people more likely to leave.

The upshot, then, is that as the federal government got bigger and more powerful, it also became more stupid.  All because of the sorting I describe above.

There have been various tweaks in personnel and compensation policies designed to hold on to talent, but none have made much difference.  So there we are.

Well, this is just a hypothesis.  But I have to ask:  Doesn’t it fit the observed facts pretty well?