On his Atlantic Correspondents blog, Judge Richard A. Posner makes the case that President Obama has centralized power and created a top-heavy government through his numerous high-level appointments, generating extra layers of management--a case in point being Lawrence Summers and the National Economic Council "prowling the corridors of the Treasury building and distracting the denizens with demands and commands."

The effect on the economy, Posner says, could be disastrous:

I have been concerned since the beginning of the Obama Administration with what seems a determined effort at overcentralization. The tendency in American government in recent times has been to centralize power more and more in White House staff. The effect is to insert a layer of managerial control above the Cabinet officers, who themselves constitute a layer of control above a number of other political appointees in their departments (laterals), who in turn are layered over the career civil servants. A recent and very pertinent literature in economics--"organization economics"--emphasizes the costs of hierarchical management in slowing and distorting the flow of information up the chain of command and the flow of orders down it. The problem is compounded when as in the federal government the top layers are political appointees who may have little experience with the operation of the agency they find themselves managing.

Obama is extremely able and self-confident and has appointed on the whole very able people to his staff and to the departments; some of them are brilliant. But the capacity of brilliant people, appointed to high positions in the federal government from outside, to screw up is legendary. The danger is amplified when the government tries to do too much. The economist Frank Knight used to quip that although production beyond capacity is a contradiction in terms, it is observed every day in academia--to which we can add, in the U.S. government as well. There is danger that the government is trying to do too much and that the economic consequences will be negative and serious.

But it's not just a problem of governing--to Posner, any difficulties with the economic management structure might doom Obama's domestic agenda. The recession and Obama's agenda are more intertwined than the administration would perhaps like to admit, Posner suggests, and a top-heavy management structure might not be able to handle the load:

Further compounding the budget problem, the Administration wishes to spend trillions of dollars on ambitious social programs without having any good prospects of being able to finance the expenditures either by higher taxes or by reducing other spending.

And if that isn't enough to frighten one, the immense financial problems crowding in on the government, and the variety and complexity of the short- and long-range spending programs, make it extremely difficult for a poorly structured, top-heavy government to execute competently any of the multidinous problems that clamor for solution now, so that the government's efforts to speed recovery from the depression can succeed.


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