L. von Mises, The cost of public administration is arbitrary

In public administration there is no connection between revenue and expenditure. The public services are spending money only; the’ insignificant income derived from special sources (for example, the sale of printed matter by the Government Printing Office) is more or less accidental. The revenue derived from customs and taxes is not “produced” by the administrative apparatus. Its source is the law,not the activities of customs officers, and tax collectors.

It is not the merit of a collector of internal revenue that the residents of his district are richer and pay higher taxes than those of another district. The time and effort required for the administrative handling of an income tax return are not in proportion to the amount of the taxable income it concerns. In public administration there is no market price for achievements. This makes it indispensable to operate public offices according’ to principles entirely different from those applied under the profit motive.

Now we are in a position to provide a definition of bureaucratic’ management: Bureaucratic management is the n1ethod applied in the conduct of adn1inistrative affairs the result of which has no cash value on the market. Remember: we do not say that a successful handling of public affairs has no value, but that it has no price on the market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money.

If we compare the conditions of two countries, say Atlantis and Thule, we can establish many important statistical figures of each of them: the size of the area and of the population, the birth rate and the death rate, the number of illiterates, of crimes committed, and many other demographical data.’We can determine the sum of the money income of all its citizens, the money value of the yearly social product, the money value of the goods imported and exported, and many other economic data. But we cannot assign any arithmetical value to the system of government and administration. That does not mean that we deny, the importance or the value of good government. It means only that no yardstick can measure these things. They are not liable to an expression in figures.

It may well be that the greatest thing in Atlantis is its good system of government. It may be that Atlantis owes its prosperity to its constitutional and administrative institutions. But we cannot con1pare them with those of Thule in the same way as we can compare other things, for instance, wage rates or milk prices. Bureaucratic management is management of affairs which cannot be checked by economic calculation.

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