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The least studied part of the federal government is the higher civil service. It’s largely invisible to the mainstream media because reporters rely heavily on career bureaucrats for coverage and tips. Therefore, for professional reasons, they leave it alone. It becomes a sort of cabal, with each side protecting the other.
The administrative state is by far the most powerful branch of government in terms of weight and longevity, and yet it is not mentioned anywhere in the US Constitution. It didn’t even exist from the Gründerzeit until the end of the 19th century. It had little or no power until after World War I. Even today, most Americans know nothing about it, even though its power is everywhere.
I recently lectured to audiences, just walked through the story of his birth and growth, and the huge drama surrounding President Trump’s innovative executive order that would have placed many of the 2.3 million in freelance employment. They would be reclassified in a new way: Appendix F.
Then at least there would have been an oversight. But that order was shot down by Biden on the day he took office.
The struggle for the future of the administrative state — sometimes, and rightly, called the Deep State for its seemingly invisible power and persistence — may be the most important issue in American political life today. The massive and overwhelming power of the federal government depends entirely on it. The Democrats are counting on their continuation, as are some of the Republicans.
When Trump took office as President, he naively assumed that he was some kind of CEO. Responsible. His wishes would be granted. His policy would come into effect. Instead, he faced a force he had somehow not reckoned with. The swamp he was trying to drain wasn’t a swamp but a Hoover Dam, made of concrete and impossible to move.
An aerial view of Capitol Hill and its surroundings in Washington, DC on May 25, 2020. (Brendan Smialowski/AFP via Getty Images)
They persecuted him and tried to destroy his presidency. They struck twice before finally unleashing the killer app: a pandemic. This put him in the odd position of being forced to listen to government “experts” telling him to shut down the entire economy. Incredibly, and thanks to persuasion from people within his own administration, he went along. After that point, the Deep State ran the show while on hiatus until being swept out of office.
In any case, many people today are aware of this beast that rules the Beltway. Many politicians come in today swearing they will take it over and dismantle it. There is no other option but to defund it entirely through Congress. There must be big and dramatic cuts in funding. There will be screams and screams like we’ve never heard should that day come. We will see.
A big question: how to take over the administrative state? A neglected and all-important Wall Street Journal investigative report is leading the way. This remarkable piece of journalism required the collection and study of many thousands of financial reports. In fact, 31,000 financial disclosure forms from 12,000 senior executives. The dates are from 2016 to 2021, so this is essentially now. They collected data on 850,000 financial investments and 315,000 trades in stocks, bonds and mutual funds from civil servants, spouses and children.
The results are extremely newsworthy and absolutely shocking:
“Thousands of officials in the executive branch of government reported owning or trading stocks that would rise or fall based on the decisions of their agencies….
“More than 2,600 officials in agencies from the Commerce Department to the Treasury Department have disclosed stock investments in companies during both Republican and Democratic administrations, while the same companies used their agencies to promote favorable policies. That equates to more than one in five senior federal employees in 50 federal agencies reviewed by the Journal.”
More than one in five federal employees have investments in the companies they regulate! This is truly remarkable and far worse than anything I had imagined.
(Source: Wall Street Journal)
None of this information is publicly available. It has to be requested and then reporters have to wait for the feedback. One might assume that reporters would have been on it for years. In truth, apart from regular coverage in The Epoch Times and now this report from The Wall Street Journal, it is totally ignored.
To put it in a nutshell: This is corruption. And it needs to be studied more thoroughly. We cannot allow regulators to be influenced by corporations when the people there with the power to make or break entire corporations have a financial stake in the results.
It’s so common today – the virus of corruption is so pervasive – that this crowd of bureaucrats probably thinks it’s perfectly normal and expected. At this point, for goodness sake, they’re probably bragging about it and trading stock picks. This is major third world level corruption that you would think we would never see in a constitutional republic. And yet here it is.
The Journal goes on to report:
- More than five dozen officials from five agencies, including the Federal Trade Commission and the Department of Justice, reported trading in company stock just before their departments announced enforcement actions, including indictments and settlements, against those companies.
- More than 200 senior EPA officials, nearly one in three, reported investing in companies that lobbied the agency. EPA employees and their family members owned between $400,000 and nearly $2 million in oil and gas company stock on average each year between 2016 and 2021.
- At the Department of Defense, officials in the secretary’s office said they own, on average, between $1.2 million and $3.4 million each year in stock in aerospace and defense companies studied by the Journal. Some held shares in Chinese companies, while the United States considered blacklisting the companies.
- About 70 federal officials said they used riskier financial techniques like short selling and options trading, with some individual trades being worth between $5 million and $25 million. Overall, the forms showed more than 90,000 stock trades during the six-year period studied.
- When financial holdings caused a conflict, sometimes the agencies simply waived the rules. In most of the cases identified by the Journal, ethics officers certified that employees had complied with rules, which provide for several exceptions that allow officials to hold stock that conflicts with their agency’s work.
Why hasn’t this been announced yet? Well, under federal regulations, investments of $15,000 or less do not qualify as potential conflicts. This also applies to investments of $50,000 or less in mutual funds that focus on a specific industry. This small loophole can be exploited for big profit.
In the British comedy series Yes, Minister – which is brilliant – we are presented with a picture of the government’s administrative bureaucracy, adept at thwarting the schemes of politicians and temporary ministers inhabiting bureaucracies. They show up and are mostly laughed at by the civil service.
The civil service has all the institutional knowledge and can easily break the reputation of the servants. This has been going on for decades and we see it every day in politics. Because of this, fundamental changes never really happen, no matter who comes into office or leaves. These people are masters at making democracy an illusion.
That’s bad enough and reason enough to immediately implement Plan F as the first step in dismantling this machinery. In reality, however, the situation is even worse. It’s not just an impenetrable and impossible bureaucracy that thwarts voters’ desires after every election. Turns out it’s also a corrupt financial thug. This story proves it with shocking details.
Years ago, before federal bureaucracies were fully closed to the public, I spent some time hanging out in offices of the Department of Transportation and the Department of Housing and Urban Development. Both places were a ramshackle mess of laziness, incompetence, disregard, and indifference. The professionals there banked, specialized in survival, and were otherwise utterly useless as far as I could tell.
I wondered at the time why more journalists weren’t investigating. Later all these bureaucracies closed to visitors. Now we know why they are particularly invisible. That’s because terrible things happen in those marble palaces that dominate the streets of DC. They use their power to inflate their 401Ks. That’s the key to understanding what drives them.
I suppose that’s one of those Washington secrets that everyone knows but nobody talks about publicly. If anything is ever to change in this country, thorough investigation and decisive action must be taken.
The views expressed in this article are the author’s and do not necessarily reflect the views of The Epoch Times.
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Jeffrey A. Tucker is the Founder and President of the Brownstone Institute and the author of many thousands of articles in the academic and popular press and 10 books in five languages, most recently Liberty or Lockdown. He is also the editor of The Best of Mises. He writes a daily business column for The Epoch Times and lectures widely on business, technology, social philosophy and culture.
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