The Government Peter Principle

Meredith Turney
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Posted: Nov 06, 2009 10:50 AM
In 1969, Dr. Laurence J. Peter and Raymond Hull developed a business theory entitled the Peter Principle: “In a hierarchy every employee tends to rise to his level of incompetence.” The Peter Principle theorizes that at some point, previously competent and productive employees are promoted to a position in which they are no longer either. Having peaked in their own usefulness and ability, they reach their level of incompetence.

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The Peter Principle has applications outside of the business world. If ever there was a perfect example of the Peter Principle, it would be government. The United States government has certainly promoted itself to its level of incompetence.

Take for example the federal government’s Medicare program. The healthcare program provides medical coverage for 46 million Americans. Out of a $453 billion budget, there is an estimated $6 billion in fraud every year. CBS’s 60 Minutes program recently conducted an investigation into Medicare fraud and uncovered a shocking number of front organizations defrauding the embarrassingly incompetent government agency.

In several cases, suspicions of fraud were reported directly to the U.S. Department of Health and Human Services with repeated inept responses that the matters were being investigated. This indicates either an inability or unwillingness to guard taxpayer dollars from being wasted or abused. Either way, such an outrageous lapse in oversight is inexcusable. Taxpayer money—the product of others’ labor—is spent with a cavalier, careless attitude.

Medicare is just one of numerous examples of systemic fraud, waste and abuse in government spending. Bureaucracy is almost a complimentary description of the turgid, intractable complexity that federal government programs have become.

Another embarrassing example of government ineptitude is the Bernie Madoff scandal. For sixteen years, one of Wall Street’s most successful businessmen operated a $65 billion Ponzi scheme right under the nose of the Securities and Exchange Commission. In a 450-page report released by the SEC’s inspector general, the agency is excoriated for missing repeated opportunities to catch Madoff—even at the earliest stages of the scheme, when more investor money might have been saved. The Obama Administration’s dumbfounding response to the SEC’s incompetence is to increase its power to prevent future Madoff-type scandals.

In the Beltway’s inverse universe, incompetence—even malfeasance—is rewarded. Albert Einstein explained this process when he defined insanity: doing the same thing over and over again and expecting different results. Medicare and the SCE are just two examples of the inherent danger in government stepping outside the bounds of its authority. Government—especially the federal government—was designed to do very few things and to do them efficiently. No where in the Constitution is the power granted to the federal government to establish behemoth programs that provide for citizens’ every need from cradle to grave. The massive healthcare bureaucracy being forced through Congress right now asks Americans to do something that defies logic and common sense: entrust their personal, private medical decisions to government. With the government’s stellar record of efficiency, responsiveness and trustworthiness, it’s hard to imagine why there are huge protests occurring all across the nation. Could Americans be suspicious of political promises of government guarantees for future complete medical care? Perhaps their experience with Social Security explains such trepidation. Social Security was sold as the government’s guarantee care for the elderly and disabled. But like all collectivist programs, those guarantees end up as nothing more than empty promises. Social Security will soon be bankrupt and those paying into it will never recoup their investment. With such an abysmal track record on operating and policing its agencies, why should Americans agree to a trillion dollar government healthcare program that will fundamentally alter this nation? If government isn’t even competent in running its relatively paltry billion dollar programs, why should it be entrusted with trillion dollar programs directly affecting the health and happiness of its constituents? The federal government reached its level of incompetence decades ago. Instead of a promotion, it’s time for a long overdue demotion.