If bureaucrats are successful in reducing costs, they will likely see their budget decreased, a disincentive which has an effect contrary to bureaucratic power and prestige enhancement. Without the guidance offered by prices and profits, bureaucrats have no real way of determining the point at which their decisions impose more costs than benefits. Another problem in the public-sector incentive structure is that it obscures information. In the example of glass production in socialist economies, managers cannot know how they can provide the appropriate type of glass because they do not profit. Without profits, bureaucrats do not, and can not, know if their services are valuable at the price offered.
Mistakes are inherent in human endeavors.
Every bureau or enterprise must deal with mistakes. However, in the private sector, the mistakes that matter are the ones which reduce profits. In a government agency, there is no way to determine which mistakes are costly and which are unimportant, since there are no profits to inform decision makers. To insure taxpayers' resources are not wasted, officials must develop rules and procedures that define appropriate behavior. However, rigid rules have a serious down side.