Hierarchies are systematically stupid and inefficient, for the following reasons.
1. Hayekian information problems: The people in authority who make the rules interfere with the people who know how to do the job and are in direct contact with the situation. The people who make the rules know nothing about the work they’re interfering with. The people who make the rules are unaccountable to the people who do know how to do the work. Consequently, all authority-based rules create suboptimal results and irrationality when they interfere with the judgment of those in direct contact with the situation.
People in authority make stupid decisions because the people who know more than they do are their subordinates, and the only people who can hold them accountable know even less than they do.
The only way the people doing the work can get anything done is to treat irrational authority as an obstacle to be routed around, the same way the Internet treats censorship as damage and routes around it.
2. Groupthink: Hierarchies systematically suppress negative feedback on the results of their policies. As R.A. Wilson said, nobody tells the truth to a man with a gun. Hierarchies are very good at telling naked emperors how good their clothes look.