News

Loading...

Wednesday, October 19, 2011

Bureaucracy

When I've worked for a private company they generally haven't cared about making personal phone calls so long as the amount billed didn't become outrageous. But today, I am filling out paperwork on writing a check for the 96 cents worth of calls I have made this semester.

Doesn't it occur to anyone that:
1) printing a statement of my calls;
2) printing a form where I assert their purpose;
3) distributing such forms to my pigeon hole;
4) having me spend time filling the forms out;
5) having me spend time writing a check;
6) having me spend time delivering the forms and check; and
7) processing said forms and check...

Are going to cost a lot, lot more than 96 cents? And that maybe they should set a threshold below which charges are ignored?

8 comments:

  1. This is why the banks failed, stupid.

    Not "too little" regulation or "not the right kind".

    Costs of doing some things relative to others were out of whack. To do one thing would cost 10x more than another cause of paper work / legal issues even if it was the right thing to do. So in the end you got bizzare and pathologic behavior.

    Its not a simple one cause one effect relationship like most even libertarian analysis of the regulations make it out to be.

    And in the end all would have been well anyway if the banks just went broke. Like in Australia a few merged, some just disappeared, same with New Zealand. Everything is ok. Few former CEOs don't get to own 400 yachts anymore, minor share holders lost money.

    ReplyDelete
  2. Sure, Avram. The banks failed because they were billing employees for phone calls.

    ReplyDelete
  3. No, Avram, the biggest reason banks failed is severe principal-agent problems: traders and salespeople had huge financial incentives to make as much short term profit as possible, even if it blew up the entire bank in 3 or 4 years. If they could walk away with 4 straight years of 10 million dollar bonuses, what did they care? They were set for life.

    ReplyDelete
  4. Gene, the P/A problem doesn't explain why so many banks blew up (and successfully got bailouts) in 2008, but not 2007, 2006, ... 1990, 1985, etc.

    In any case, the promise, implicit or otherwise, of a bailout, is going to encourage significantly more dangerous lending policies than you'd see without. Credit unions almost universally didn't get involved in the stuff TBTF banks got involved in, and so didn't have any problem making loans in '08-'09 (a CU near where I work has had a "Yes! We are still making loans!" sign up since the crisis).

    Unfortunately, the TBTFers were able to blur the distinction between "the US needs banking" and "the US needs these specific clumsy, incompetent, dinosaur banks whose biggest innovation was hiding risk better" ... hence our current dilemma.

    Btw, I know what you mean about private sector bureacracy: I thought I had a "good story" when a VP personally came down and questioned me about a request for one more $35 software license (for another employee) that I had found indispensible. And the labor costs of this (me + VP) was certainly more than $35, without even having the effect of making employees "more careful" about requesting wasteful software licenses. But that doesn't hold a candle to your $0.96 recovery.

    Penny wise, pound foolish.

    ReplyDelete
  5. Silas, I certainly agree that principal agency problems alone don't do it, and that the hope (and later reality) of bailouts was a huge factor.

    ReplyDelete
  6. I was referring to things outside a particular company that would have influenced company policy.

    i.e. I'd say management's decision to award those financial incentives you talk about was influenced by costs imposed on alternatives by bureaucracy.

    But whatever its not like I have anything intelligent to add. Carry on.

    ReplyDelete
  7. Come on, Avram. There are a lot of costs imposed upon pharmaceutical manufacturers too, but we don't see them blowing up and crashing the world economy.

    ReplyDelete
  8. Yes this is because in pharmaceuticals when a company or even a large amount of companies go bankrupt their assets get sold off and merged into another company like they should.

    Gene I think that banks failing like they did in 2008, if they actually do fail and not cause drastic political activity and media scare mongering, have a negligible effect on the economy.

    Nothing would have went wrong if say BoA was bought out by Deutche Bank, and GM by Toyota. All would have been ok in a few months.

    You said "too big to fail" the other day and that indicates that you bought on to the bait. Its Bullshit. Failure doesn't mean wiped off the map, collapse and ruin. It means everything not useful here needs to go, everything useful goes to someone more responsible.

    Both the smash the central banks and regulate the banks movements gained a lot from the financial crisis being bigger than it could have and should have been.

    Just the regulate the banks movement are the same people who were the heads of the banks making billions, and the leaders of the "oh no we're too important to not have 79087 + 1 yachts so make sure we still exist or uhh drastic consequences drastic!" and now they're all "yeah things were terrible terrible to make sure they never happen again pass these laws that ensure I make even more money by destroying my compeititors"

    So I like the regulate the banks movement less.

    ReplyDelete