Munich. For decades, every German government has campaigned on promises to cut red tape. In practice, however, regulations are rarely abolished and new ones are constantly added. Documentation requirements, proof of staff training, fire safety officers, data protection officers, equal opportunities officers, application forms – businesses complain of the mounting administrative burden. All of it costs money on both sides: the authorities that must review and monitor compliance, and the companies that have to employ staff solely to satisfy official requirements. In the United States, DODGE has swept through the system. In Argentina, President Milei has taken a chainsaw to the state in an effort to slim it down.
Strictly speaking, it is now bureaucrats themselves who are complaining about excessive bureaucracy. The ifo Institute, one of Germany’s leading economic research bodies, has published an analysis in which municipal treasurers reflect on how bureaucratic hurdles might be reduced. Treasurers, of all people, one might remark – the very officials who control local purse strings and are rarely inclined to loosen them. Yet they do not merely guard municipal funds. By virtue of their office, they also apply for grants from the Länder, the federal government or the European Union. That act alone – seeking financial support for a specific local project – is a highly bureaucratic undertaking. Completing a form is seldom enough. Expert opinions must be submitted, reports commissioned, local surveys conducted and a great deal more besides.
Bureaucracy of subsidies
One may also question, in principle, the practice of allocating grants at all. They are, after all, subsidies, and subsidies distort markets by their very nature. In essence, the system involves a higher tier of government transferring politically motivated funds to a lower tier. It could be described as an internal state subsidy. Ultimately, the money reaches the companies that carry out the contracts and implement municipal projects. Before that happens, however, higher authorities impose strict – sometimes excessively strict – procurement rules, according to the treasurers.
It is precisely here that their criticism begins, and it comes with a list of proposals for improvement. In the brochure ‘What makes public funding programmes workable – ten criteria from the perspective of municipal treasurers’, the ifo Institute brings together their observations. Cutting red tape, the authors argue, requires detailed knowledge of where the shoe pinches. Bureaucracy reduction is a granular task and demands specific insight into particularly burdensome measures. Municipal finance officers, they contend, possess concrete ideas about how practical and therefore manageable funding schemes should be structured. Having submitted countless grant applications over the years, they have acquired a steep learning curve.
Experience within the administration
The study seeks to make use of that accumulated experience. How absurd certain requirements can be is illustrated by one treasurer’s account: ‘We received federal funds for the construction of our new kindergarten. Now, for the statement of use, I have to provide the date of birth of the owner of the company that built it.’
Two points are worth noting. First, anyone who assumes that a municipality automatically receives the money promised upon approval of a grant application is mistaken. In many cases – particularly in construction projects – proof of proper use must be provided before funds are released. Why the federal authority needs to know the builder’s date of birth is a serious question. Why not his shoe size as well?
There are instances in which a municipality has spent the money, incurred debt in the process, and the funding authority simply refuses payment. The justification: a breach of procurement rules. ‘One should be able to rely on receiving the funds that have been approved. In some cases, it is outrageous what is interpreted as a procurement violation’, complains one of the municipal officials surveyed. Ultimately, such shortfalls are borne by citizens, as local budgets must cover sums that were first promised and then withheld. In ten points, the treasurers outline how they envisage a leaner system. They call for streamlined applications, enabling core administrative staff to manage procedures without hiring external consultants. They demand swift processing, timely disbursement of funds and accessible contact persons within funding authorities. No additional, onerous external audits – demands that any entrepreneur dealing with officialdom would readily endorse.
Bureaucracy burdens everyone
If one takes the treasurers’ objections to excessive bureaucracy seriously, authorities would do well to reflect. If even seasoned administrators struggle with red tape, how onerous must it be for citizens or business owners?
Consider an electrician. One might assume that his job is to ensure that electricity flows safely to the socket where it is needed. Not so. A master electrician now spends a significant portion of his working hours completing driving licence checks, residual current device test protocols, accident logbooks and detailed documentation of ladder inspections with more than ten prescribed test steps. Any sensible person can judge whether a ladder is safe to climb.
A third of all legislation could be scrapped, argues the Central Association of the German Bakery Trade, as the additional compliance costs have become wholly disproportionate. It is not individual provisions that pose the central problem for bakeries. They are being crushed by the cumulative weight of countless requirements and regulations. That is what is at stake when politicians speak of reducing bureaucracy. Men and women who take pride in their professions find themselves overwhelmed by largely unnecessary rules conceived by an intrusive administrative apparatus that no longer regards them as responsible citizens. And if the bureaucrats themselves have concluded that there is too much bureaucracy, then there is too much.