"Once you have a large bureaucracy, say several hundred people who have little or no contact with customers patients, passengers, pupils, or parents or whatever, it becomes a staff welfare system.In commenting Patrick Dunleavy doesn't wish to be solipsistic (someone who believes they themselves are the only object of real knowledge) but reckons his own theory on bureau-shaping "covers much of the same ground, but better." Whilst Ian notes James Buchanan's nobel prize for public choice theory.
All the impetus for the staff is to improve their welfare and reduce their worry. It becomes all about overseas trips, important lunches, important car parking spaces at the expense of customers, larger offices, more assistants, reduction of opportunities to be blamed, bonuses and special payments.
The main job of management has to be to counter this tendency. The motivation of management in the competitive world is that if they fail they lose their job and the company fails. But in government monopoly bureaucracy this spur is removed. The purpose for which the bureaucracy was founded ceases to become an objective. Instead, it beomes a constraint."
Jay is a little harsh in describing the process as a staff welfare system. What happens in large bureaucracies is that it becomes risky at a personal level to act in the interest of the customer or the organisation, in a way that is not prescribed by organisational procedures. Staff who get burnt once too often, for looking after customers by breaking procedures, eventually conform. It is more a risk aversion or safety seeking process than a staff welfare system. So people acting rationally in their own self interest do not always lead to the emergence of benefits for the system as a whole, contrary to popular belief.