America's Managerial Elite Has Failed, But We Can't Get Rid of Them

June 19, 2019

The system is broken, and the managerial elite will keep it broken because it serves their interests to keep it broken.

America's managerial elite came to do good and stayed to do well--at the expense of everyone beneath them. Now that they've entrenched themselves at the top of the status quo, there's no way to dislodge them, even as their failure to address what's broken, much less actually fix what's broken, insures systemic breakdown.

In government, the managerial elite is known as The Deep State: those who remain in power regardless of who's in elected office. In local government, managerial elites often shift positions, moving from elected office to a plum position in the bureaucracy where they can draw a big paycheck out of sight until they retire.

In Corporate America, managerial elites also move around, leaving sinking ships (that they may well have helped sink) as needed, and moving to think tanks or academia if their failures start multiplying.

Changing elected officials does nothing to dislodge our managerial elite overlords. The new mayor, governor or president comes and goes, and all the major institutions--education, higher education, healthcare, national defense, critical infrastructure--continue down the same path of enriching entrenched insiders while the institution fails its core missions.

If you think this chart of soaring student loan debt is a sign of "success," you are 1) delusional 2) protected from the dire consequences of this failure 3) getting your paycheck from this failed system. That in a nutshell is the state of the nation: those who are protected from the consequences of failure are loyal to the Establishment, as are the millions drawing a paycheck from systems they know are irredeemable failures.

Let's review the central institutions of the nation:

1. Healthcare: a failed system doomed to bankrupt the nation.

2. Defense: a failed system of cartels and Pentagon fiefdoms that have saddled the nation with enormously costly failed weapons systems like the F-35 and the LCS.

3. Higher Education: a bloated, failed system that is bankrupting an entire generation while mis-educating them for productive roles in the emerging economy. (I cover this in depth in The Nearly Free University and the Emerging Economy and Get a Job, Build a Real Career and Defy a Bewildering Economy.)

4. Foreign policy: Iraq: a disaster. Afghanistan: a disaster. Libya: a disaster. Syria: a disaster. Need I go on?

5. Political governance: a corrupt system of self-serving elites, lobbyists, pay-to-play, corporate puppet-masters, and sociopaths who see themselves as above the law.

In Why Our Status Quo Failed and Is Beyond Reform, I explain why the only possible output of these systems is failure.

The sole output of America's managerial elite is self-serving hubris.

In an open market, failed leadership has consequences. Customers vanish and the enterprise goes bankrupt, or shareholders and employees rally to fire the failed leadership.

In our state-cartel system, failed leadership only tightens its grip on the nation's throat. The Deep State can't be fired, nor does it ever stand for election. The two political parties are interchangeable, as are the politicos who race from fund-raiser to fund-raiser.

It's tempting to blame the individuals who inhale the wealth and power of our failed system, but it's the system, not the individuals, though a more corrupt, craven, self-serving lot cannot easily be assembled.

Centralized hierarchies concentrate power at the top of the pyramid. That power is a magnet for everyone who seeks to wield power and enrich themselves in the process.

In the financial system, this concentration of power is visible in the chart below: the super-rich have become immensely richer in the past few decades of central banks' vast expansion of credit and financialization.

As systems become more complex, the need for a professional class to manage the overwhelming complexity grows. This class excels at appearing to manage complexity while ignoring the larger dynamics driving the system over the cliff.

And so we have endless meetings of highly paid people over trivial issues while the entire system careens toward meltdown. "Stakeholders" multiply in endless profusion, dooming every project to a glacial process that increases the sums paid to manage the glacial process and pushes the final cost to the moon.

The self-serving managerial elite always has one answer for every problem: give us more money. If the budget expands by 10% and nothing actually changes for the better, then the "solution" is a 25% increase in funding.

Budgets expand by leaps and bounds, but none of the systemic problems are ever resolved.

It's not hard to figure out why: look at the system's incentives. If systems were radically simplified and made more efficient, the need for an ever-expanding class of permanent managers would diminish. And so the solution is always more fodder for the managerial elite: more complexity, more meetings, more accumulation of power, more managers and always, more money.

Thus it is no surprise that the calls for "free" college and "Medicare for All" are rising: the managerial elite that has bankrupted higher education and healthcare while enriching themselves desperately needs to be bailed out, lest the systems they've steered toward the fiscal cliff deservedly go broke.

In a similar set of incentives, few weapons systems ever come in under budget when the Pentagon can always come up with another $10 or $20 billion for cost over-runs.

The system is broken, and the managerial elite will keep it broken because it serves their interests to keep it broken. Unfortunately we'll all suffer when the managerial elite is no longer able to stave off the dire fiscal consequences of their self-serving leadership.


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