By pointing out that the bureau must prohibit economic transactions that do not advance its overall plan, Thomas Sowell (1980) lays the groundwork for understanding the institutional structure and, hence, the incentive environment of the bureau end of our continuum:
This is to say that when the state prohibits mutually beneficial transactions, people will often engage in them anyway but do so surreptitiously. This point is underscored by the saying, "Income tax laws have made liars out of all of us." People feel that they have a moral right to engage in certain acts that are prohibited by law. For example, land-use laws run counter to the moral necessities of private property rights. Under such circumstances, people use duplicity to break the law and do so with moral rectitude. That is, they believe that the law of the land has diverged from a higher law of morality. As Martin Luther King Jr.'s 1963 "Letter from Birmingham City Jail" shows, this divergence was instrumental in fomenting the 1960's civil rights movement:
More than one hundred years before King's "Letter," Frederick Bastiat (1950) made the same point by arguing that "when law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law (p. 12).
Relating King's and Bastiat's insights to the bureau, formal rules or laws of the bureau may prohibit conduct that bureau inhabitants feel they have a moral right to engage in and may allow conduct that they feel is wrong. In the first case, people are tempted to ignore the rule and follow their conscience. In the second case, people are tempted to ignore their conscience and indulge in what the rule allows. In both cases, as Bastiat pointed out, people tend to lose the "distinction between justice and injustice " (p. 12).
Robert Jackall (1979) argues this point in a different context and on a smaller scale. He argues that bureaucracy in organizations engenders a "rational/technical ethos" because of its emphasis on calculated achievement and its disdain of moral issues that threaten the calculated achievement of goals. In this environment, all issues become practical ones. The bottom line, says Jackall, is that "all the elements of functional rationality which mark bureaucracy -- goal-orientation, calculated planning to achieve those goals, and abstracted language -- make the institution an effective administrative tool, but they also 'invite' erosion of moral consciousness." (p. 54).
Tullock (1965) argues that the erosion of moral consciousness is actually an aid to those in a bureaucracy who aspire to advance. According to his argument, once people decide upon the best way to reach the top, they must then decide if this way is consistent with their moral values. If not, they must choose between their values and being advanced as rapidly as possible. "Thus, and apparently paradoxically, the more important moral considerations are to a man trying to rise in a hierarchy, the more likely is that hierarchy to select for higher leadership people who have relatively little concern for moral matters" (p. 22).
There is a considerable literature regarding the distortion of information in the bureau. This literature recognizes that people can benefit themselves by distorting information that is submitted to a central authority for use in policy formation. This phenomenon was first brought to our attention by Hayek's (1948) "particular information" argument. Since then a number of writers have developed the idea. Anthony Downs (1964) argues that because of differences in knowledge among the various levels of the hierarchy, "officials can engage in considerable distortions without too great a risk of being detected" (p. 11-12). Altheide and Johnson (1980) argue that bureaus falsify the official paperwork constituting their files; official reports are distorted with the tacit permission of bureau members and for the purpose of creating the impression that the bureau is complying with institutional expectations when it really is not. This gives bureau members discretionary time and resources that were, according to official reports, used for official purposes. (p. 23-31). Official reports should therefore, they say, be viewed as an "organizational product with practical consequences..." Many social scientists do not view them as such and "too readily use official reports for their own research" (p. 36), thereby compounding the distortion problem.
Planning authorities also distort information. As Hayek (1972) argues, the need to rationalize its official policy forces the planning authority "to construct theories, i.e., assertions about the connections between facts, which then become an integral part of the governing doctrine" (156). In this process, the truth of theories becomes relative to whether it advances or hinders people's acceptance of the overall social plan. Such theories "are destructive of all morals because they undermine one of the foundations of all morals: the sense of and the respect for truth" (p. 155).
We can get an idea about the scope of deception in the bureau, viewed on a national scale, by Boulding's (1971) contention that "there is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds" (p. 30). More specifically stated, "in our country the lie has become not just a moral category but a pillar of the State" (Solzhenitsyn, 1974).
The policy formation process is rife with what Kingdon (1995) calls "policy entrepreneurs" (p. 204) and what North (1981) more broadly defines as "intellectual entrepreneurs" (pp. 51-54). These are, in different contexts, people who lie or use other forms of deception in an effort to attain federal grants or favorable legislation in the policy-making process, creating a drag on the policy process that Milgrom and Roberts (1990) call "influence costs" (p. 86). For example, Robert P. Liburdy, a cell biologist at the Lawrence Berkeley Laboratory in Berkeley, an arm of the Energy Department, was found to have published two papers in which he eliminated data that did not support his conclusion that there is a link between electromagnetic radiation and cancer. "Federal officials say his misrepresentations helped him win $3.3 million in grants from the National Institutes of Health, the Department of Energy and the Department of Defense to investigate a link between electric power and cancer " (Fairbanks Daily News Miner, July 24, 1999).
Even more brazen, a report published by the American Association of University Women (AAUW), How Schools Shortchange Girls, concluded that girls are victimized because schools are biased toward boys' learning needs. Reviewing the study, after encountering deliberate roadblocks to her obtaining the original data, Judith Kleinfeld (1998) found that the AAUW's report is based on a selective review of the study and that data contrary to the report's message was omitted from their media kit. Kleinfeld concludes that
Rarely do such shenanigans get exposed. The ease with which people can be fooled by playing to their biases, i.e., telling them what they want or expect to hear, was demonstrated by NYU physics professor Alan Sokal's (1996) outrageous, tongue-in-cheek article disingenuously submitted and subsequently published in Social Text. Sokal's experiment is a model example of the agency relation inherent in what Hiser (1999) calls the "information relation" (p. 15). Sokal's opportunity for deception, like all others in the bureau, exists, as Downs (1964) and Hiser (2000) argue, because the bureau cannot solve the monitoring problem.
A list of bureau virtues would certainly include a number of those in Jacobs' (1992) "guardian syndrome," the most obvious being "respect hierarchy," "deceive for the sake of the task," and "dispense largesse"(pp. 23-24). These virtues, embraced for their effectiveness at obtaining benefits, are hardly what we commonly refer to as virtues. Evan so, the charge of pragmatically chosen virtues could be leveled against the private property order as well. After all, market participants choose honesty because it gets them trading partners; however, market virtues are those that are able support social order and production, while those of the bureau break down social order and reduce production as producers focus on favor seeking.
We must allow, however, another possibility regarding the virtues inherent in the bureau: Perhaps bureau members do not recognize their virtues for what they are. To accept the above arguments regarding the bureau is not necessarily to conclude that the bureau is filled with liars. People are liars if what they tell us is contrary to what they believe, but if people believe their falsehoods, such people are sincere and honest -- but deluded. Delusion of this nature is possible on a grand scale because of what Klein (1998, p. 65) calls "belief plasticity," which allows people, as Benson (2002) argues, to rationalize the norms that support the activities or social relations in which they wish to engage. Payne (1991) actually documents belief plasticity in members of Congress, showing that a steady stream of one-sided information instills the "presumption of governmental efficacy" and the "philanthropic fallacy," which is the belief that taxes have no adverse affect on the economy and that government spending is therefore a philanthropic gesture.