Revenge of the Contractors

Charles Stross, the scifi writer, has written a fantastic post on why the spies of the NSA/CIA/TLA* have sown the seeds of their own destruction. In short, a culture of lawlessness needs loyal agents that these agencies have purged and replaced with hired-gun contractors, who might not toe the party line so well. It’s excellent and should be read right now, but the punchline sums it up well:

“…slighted and bruised employees who lack instinctive loyalty because the culture they come from has spent generations systematically destroying social hierarchies and undermining their sense of belonging are much more likely to start thinking the unthinkable.”

This is absolutely correct! If you look at the sociological literature on why good people do bad things, the role of “socialization” is key. That is, the pressure for group acceptance is strong enough that people can abandon their sense of morals and go along just to get along. For its ultimate extension, see the book “Hitler’s Willing Executioners” about how a regular Army unit (i.e.., mostly middle-aged non-Nazi reservists) became front-line agents of the Holocaust. Similar pressures operate in any tightly-bound organization – likely much much more so under the incredible isolation and pressure of clandestine intelligence work. The reliance on outside contractors like Edward Snowden populates the ranks with people that haven’t been socialized into the NSA culture and can react with horror when they find out what’s really going on.

This is an upside of the “contractor revolution” I’ve never thought of. While contractors are more expensive relative to career civil servants, they can serve as a countervailing force to the excesses that socialization engenders. This isn’t limited to illegal spying – consider whether an independent consultant or a career civil servant is more likely to spill the beans on an SEC director taking bribes. Especially given that the consultant herself is often the employee of a large impersonal bureaucracy (e.g., Booz Allen Hamilton) to which she may owe little allegiance.

The ultimate conclusion is that the principal-agent problem is one nasty son of a bitch. The principal-agent problem is conventionally stated with the observation that employees hired for a task may have different interests than their employer (for example, taking bribes). Consultants are often touted as a solution to the principal-agent problem by making sure that employees are toeing the line, but they bring principal-agent problems of their own. Namely that their work is ultimately in the hands of their own agents that may have agendas differing sharply from the employers.

As Mitt Romney once said, “Corporations are people, my friend”. A poorly phrased but astute point, which is that these massive bureaucracies comprise many people of varying motivations. Corporate America may come to regret the destruction of the employer-employee bonds of loyalty, because it is a two-way street. However, this is ultimately a great thing for America because it increases the possibility for credible restraint of wrong-doing. Corporations and government bureaucracies terrified of their own employees are much less likely to misbehave in the first place.

So let’s raise a glass to Edward Snowden, may he be the first of many.

*:Three Letter Agency

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