Government Employees Gone Wild: A New Freakonomics Radio Podcast

(Photo: Hans Gerwitz)

Our latest podcast is called “Government Employees Gone Wild.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript below; it includes credits for the music you’ll hear in the episode.)

It’s about a book that I’ve come to love — a most unusual book. What makes it unusual?

  1. It is made available online, as a Word document, but is not actually published.
  2. It is free (or, more accurately, it’s already been paid for — by U.S. taxpayers).
  3. It is published by the U.S. Department of Defense.

This unusual book is called The Encyclopedia of Ethical Failure, and you can get it here (2013 additions here). What is it? It’s an ethics guide for  government employees, full of true stories about epic screw-ups. In the podcast, you’ll hear from the Encyclopedia‘s founding editor (Steve Epstein) and its current editor (Jeff Green). Epstein explains how the project came about:

EPSTEIN: There was a requirement that we train our senior officials and many other officials in the government every year. And the problem of course is keeping that training fresh, keeping it relevant. And to do that we discovered that the first thing you have to do is you have to entertain folks enough so they will pay attention.

How do you do that — entertain folks while teaching them? By telling stories, of course. In this case, all the stories are true, divided into chapters that include “Fraud,” “Gambling,” “Conflicts of interest,” and “Abuse of Position.” Here’s one, for instance, that gives “governmental red tape” a new meaning:

“Two workers at the Veterans Affairs Consolidated Mail Outpatient Pharmacy, which mails prescriptions to veterans, were charged with taking kickbacks for purchasing a product from a supplier at more than twice the normal price.  The product?  Red tape.  The employees were charged with purchasing 100,000 rolls of the tape, which is stamped with the word “security” and is meant to deter tampering, at $6.95 a roll rather than its $2.50 retail value.  In return, they received kickbacks of more than $1 per roll. The duo will have plenty of time to appreciate the irony of their situation, as they face a sentence of 15 years in jail.”

There is also, as you can imagine, a lot of sex in the Encyclopedia. Here’s Green explaining a particularly twisted incident:

GREEN: We have one involved a navy officer who was in charge of a submarine. He was married and was carrying on an affair with another woman and he got her pregnant. And so he rigged up his email so that someone else sent her an email that said he passed away in the service of his country.


My favorite thing about this episode is the voice you’ll hear reading several Encyclopedia entries. It belongs to Laura Walker, President and CEO of New York Public Radio. We recruited her based on her compelling pledge-drive announcements (seriously, I find them compelling). For this task, she came to the studio prepared and upbeat, and did a great job. Much thanks to her, Epstein, and Green.

Audio Transcript

[MUSIC: Ross Talbot, “Child Don’t You Call Me Boo Boo” (from The New Sound..Bermuda is Paradise)]


Stephen J. DUBNER: Are you looking for a good beach read this summer? If so, I can help you - I’ve got just the book for you. It’s got pretty much everything in it – sex, crime, power struggles. Its got drug dealers and prostitutes, cheating scientists, Russian brides, even rogue real-estate agents. And the best part? Every word is true. And oh yeah, it won’t cost you a penny – because it’s already been paid for by your tax dollars. What is this magical book? It’s called “The Encyclopedia of Ethical Failure.”


ANNOUNCER: From WNYC this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.


[MUSIC: Glenn Crytzer and his Syncopators, “Fumblin’ Around” (from Harlem Mad)]


DUBNER: So I am very pleased to present today the founding editor and current editor of one of the most unusual publications I have ever come across. It’s called “The Encyclopedia of Ethical Failure.” And it’s published by the United State Department of Defense. So gentlemen, can I first ask you to introduce yourselves please?


Jeff GREEN: I’m Jeff Green, I’m a senior attorney in the Standards of Conduct office, part of the Office of General Council here at the Department of Defense.


DUBNER: And  that would make you the current editor of this publication, correct?


GREEN: Correct.




Steve EPSTEIN: And I’m Steve Epstein. I used to work with Jeff at the Department of Defense. I’ve moved on. Now I’m the chief counsel for Ethics and Compliance at the Boeing Company.


DUBNER: Very good, and that would make you the founding editor of “The Encyclopedia of Ethical Failure,” correct?




DUBNER: So Epstein and Green are my new favorite authors. “The Encyclopedia of Ethical Failure” is meant to be a sort of manual, an ethics guide for government employees. Steve Epstein started it about 10 years ago.


EPSTEIN: There was a requirement that we train our senior officials and many other officials in the government every year. And the problem of course is keeping that training fresh, keeping it relevant. And to do that we discovered that the first thing you have to do is you have to entertain folks enough so they will pay attention.


[MUSIC: Salim Nourallah, “We Did Some Things” (from Polaroid)]


DUBNER: And entertaining it is, because the encyclopedia is 160-odd pages of true stories about government employees who screwed up. Now, the chapter headings are helpful. You’ve got your “Fraud,” “Gambling,” “Conflicts of interest,” “Abuse of Position.” And even though the book is published on the Department of Defense website – actually, it’s not really “published,” it’s just sitting there as a Microsoft Word document for anybody to read – but anyway, the screw-ups that it chronicles are not limited to the Department of Defense. The stories come from all over the Federal government. You’ve got the I.R.S. represented, Veterans’ Affairs, government safety inspectors. Here, here’s one entry. The headline is: “But Judge, I Didn’t Get Anything!”


READING: An offshore safety inspector found much of the Government’s equipment to be in need of repairs to meet safety standards. He then referred the business to his brother-in-law's repair shop. The rig operators smelled a rat and called the F.B.I. They discovered that, in return for each referral, the brother-in-law was treating the inspector to an evening with a lady of dubious morals. The case was brought to trial. In his defense, the inspector claimed that he had not received a "thing of value" in return for the referral. The judge didn't buy it - and neither did his wife.


DUBNER: Now, it should be said that Epstein and Green are rather considerate in how they point their fingers. They don’t always name names, and they don’t include a story unless it’s been settled – with a conviction or guilty plea or some other disciplinary measure. The stories are taken from media reports, press releases, and the inspectors general of other agencies.


EPSTEIN: There are so many favorites, it’s like going to an ice cream shop and picking your favorite flavor. There’s really no such thing. But the one that I always remember was an employee in actually DOD who was also a real estate agent. And she basically put her, on her real estate card, her business card, she put her phone number and address at the Pentagon. And at her desk in the Pentagon she would answer the phone K&B Real Estate (sic).


DUBNER: Even I can tell that’s probably no go.


EPSTEIN: So this one sort of surprised us that she was so bold and basically taking her outside business and making it her primary business.


DUBNER: Now I don’t know how well you know the case, Steve, but do you have any recollection of, or knowledge of, what her response was when she was challenged on this, when she was caught on it?


EPSTEIN: Well as a matter of fact that’s part of it, and yes, she was basically called and pointed out that she was misusing government office and her government resources to carry on her outside business, which is also prohibited by the rules. And she said well in that case I’d rather be a real estate agent. And she quit.


DUBNER: Okay, Jeff, how about a favorite from you?


GREEN: Like Steve…


DUBNER: There are so many.


GREEN: Different ones… But one of the ones actually was not involving a Defense Department employee, it involved the Drug Enforcement Agency. And they had an agent who was responsible for protecting a confidential source whose husband was a drug trafficker.


DUBNER: Oh, I remember this one I hate to say. Yeah, this is unbelievable. Go ahead, sorry.


GREEN: Yeah, he had a government vehicle. He was taking her to cafes. He was taking her to the airport. And then it got to the point where he was taking her to the hotel to go to bed with her. And he even was kind enough to give her some of his ammunition for her gun.


DUBNER: So this is a D.E.A. official who's got a confidential informant and he’s cheating on the informant’s wife and giving her government bullets in a nutshell, yeah?


GREEN: Yes, and one of the problems that the MSPD really went after him for was the misuse of the vehicle, which I thought was kind of funny.


[MUSIC: The Cheebacabra, “Extend the Knowledge” (from Pass the Information)]


DUBNER: Sex, as you might expect, is a common theme. But a plain old extramarital affair gets a lot more problematic in the military, where adultery is a crime. And you know what happens next, right? Like they say: the cover-up is always worse than the crime:

GREEN: One, involved a navy officer who was in charge of a submarine. He was married and was carrying on an affair with another woman and he got her pregnant. And so he rigged up his email so that someone else sent her an email that said, well he passed away in the service of his country. She was so upset about it, so she took her mother, they drove to his home in Virginia. And the new owner said, oh he’s fine he’s up in Connecticut. So they drove up and all of a sudden they find out that it was all a ruse. And so to make a long story short, her sister contacted the Navy JAG office and he will no longer be head of any kind of ship or commander of any sort.


DUBNER: Now, let me just ask you quickly there Jeff, what’s worse there, the sex or the pretending to be dead?


GREEN: The U.C.M.J., which is the law that governs military officers, prohibits that kind of activity. And in addition pretending to be dead is a pretty draconian way of trying to solve the problem. It’s another poor judgment I think.  


[MUSIC: The Red Planets, “Get Thee Behind Me” (from Chases Lead To Crashes)]


DUBNER: When we come back, you’ll hear about an absolutely idiotic burglary, a creative use of religious leave, and a story about governmental red tape -- actual rolls of governmental red tape.




ANNOUNCER: From WNYC this is Freakonomics Radio. Here’s your host, Stephen Dubner.


[MUSIC: The Mag Seven, “Jive Turkey” (from Black Feathers)]


DUBNER: The “Encyclopedia of Ethical Failure,” an ethics guide published by the Department of Defense, includes plenty of kickbacks and bribes, the misuse of government funds – and what might be called the misuse of theology:


GREEN: Some military members who were instead of taking annual leave which is the government’s way of vacation time, they decided to bank everything under what they called religious leave, and whether it was going to the doctor, whether it was playing golf, they used it as religious leave. So at some point, someone found out about this and called the IG for investigation, and when they were questioned about this, someone said well, what did you think of golf as a religious experience? And the military member said, oh well I think it certainly could be. But they ultimately were dismissed and weren’t able to take advantage of their religious leave.


EPSTEIN: I think it’s only a religious experience when you hit the hole in one.


DUBNER: One thing that’s astonishing is how lazy some scammers are about covering their tracks. Here, from the “Encyclopedia of Ethical Failure,” is an entry called “It’s Five O’clock Somewhere”:


READING: A government employee attached to a service base in the United States, ended up taking a permanent vacation after a pattern of working an abbreviated work week. The investigation showed the employee worked an average of three hours a day, before leaving around nine or ten each morning to spend the rest of the day drinking at a local bar. The employee put in for retirement in lieu of disciplinary action.


DUBNER: And this one is called “What Do You Mean, This Isn’t My Property?”


READING: One entrepreneurial federal employee backed his panel van up to the office door one night and stole all the computer equipment. He wasn't too hard to catch: he tried to sell everything at a yard sale the next day — with barcodes and "Property of U.S. Government" stickers still prominently displayed.


DUBNER: I’m curious to know any observations that either of you have made over the years, whether they’re empirical or anecdotal on the different kinds of violations among different departments, maybe among even different political parties, male versus female, any kind of categorizing that you can help us with a way to think about how different violations sort of break down.


EPSTEIN: I actually did a taxonomy of this a couple years ago. Because I was intrigued by why, in most cases good people make bad mistakes. And I found it didn’t really relate to grade, or rank, or gender. But I found that at least within the government where I think most of your people are trying to do the right thing that the predominant issue was at the moment they didn’t think of the ramifications. It was an error in judgment of people who were generally well meaning but at the time they saw an advantage, or they saw something which distracted them from what they should have been doing, and I think in most of the cases when you would sit down with these folks afterwards and say what were you thinking? They would be banging their heads on the table and saying you’re right, I wasn’t thinking.


DUBNER: Jeff and Steve, you both sound and on paper look like the kind of guys who would not have the jobs you have if you were the type who would make the kind of bad decisions that get made by the people who were in your book. But I’m still curious whether either of you have ever been on the border of doing something that may be just a little bit beyond the reach of good judgment and thought back to that story in your own “Encyclopedia of Ethical Failure” and helped yourself with your encyclopedia?


EPSTEIN: Well I can emphatically say yes. And more than once. There are times when I would like to do something, and I first of all check the legality of it and say okay I think this is legal, but then I step back and say okay, let’s think about it one more time, how would this appear, how would people, would people challenge my judgment if this were disclosed. And then it comes into very much some of the stories we look at about that. And it causes me to back off.


DUBNER: Do either of you ever worry that this “Encyclopedia of Ethical Failure” could be read not so much as a set of cautionary tales but instead as a handbook for, oh there’s something I hadn’t thought of doing, there’s a way to wrangle a little extra money or influence of whatnot?


EPSTEIN: Well it’s funny, it’s a good point you raise there. I don’t see that because in most of these cases you’re seeing people who made very poor judgment calls. And they weren’t very successful in a criminal manner. So it would hardly be a handbook for how to be a successful criminal. As a matter of fact it’s more of a handbook of how to be an unsuccessful criminal.


[MUSIC: Ruby Velle & The Soulphonics, “Longview” (from It’s About Time)]


DUBNER: The lessons of the “Encyclopedia of Ethical Failure” are pretty straightforward – and helpful whether you work in government or not. Don’t steal stuff from your office and sell it at home in a yard sale. Don’t spend all day in a bar if you’re supposed to be working. Don’t pay a kickback with hookers. And if you are going to do any of these things, don’t lie about it and then pretend you’re dead. That just won’t work. Now it’s impossible to say how successful the Encyclopedia has been, if at all, in preventing ethical failures. One thing it has going for it is that it tells stories. It doesn’t dwell on the rule that gets broken; it tells us who does what, to whom, and how, and sometimes why. Nobody wants to read a set of rules. But all of us like a good story – and we’ll remember it, too. With that in mind, I’ll leave you with my favorite story from this wonderful book. This one’s called “Employees Fail to Profit From Red Tape.”


READING: Two workers at the Veterans Affairs Consolidated Mail Outpatient Pharmacy, which mails prescriptions to veterans, were charged with taking kickbacks for purchasing a product from a supplier at more than twice the normal price. The product? Red tape. The employees were charged with purchasing 100,000 rolls of the tape, which is stamped with the word “security” and is meant to deter tampering, at $6.95 a roll rather than its $2.50 retail value. In return, they received kickbacks of more than $1 per roll. The duo will have plenty of time to appreciate the irony of their situation, as they face a sentence of 15 years in jail.



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  1. Dimitri says:

    I’m guessing this will be entertaining, and I’ll probably read it, but I assume you’ll write a similar work detailing the excesses of private sector employees? Or is it easier to focus on the public-sector, since they are more publicly accountable, and have already compiled most of the stories for you?

    I say this as a public employee myself; and let me just add that the one meeting I am going to this year to present my research, I’m splitting a hotel room with a colleague, and avoiding the meetings recommended hotels, since we could find a much cheaper deal that involved a bit of walking. This is terribly boring and makes for bad reading, but it is also the norm.

    Hot debate. What do you think? Thumb up 20 Thumb down 16
    • Jeff says:

      A private sector employee is only accountable to the company’s shareholders and (maybe) customers. The code of ethics they follow is defined by either regulation (in which case they’re probably engaging in criminal, not just unethical, activity) or their corporation, who puts such rules in place to protect the company’s reputation. If that reputation becomes tarnished I, as a consumer, can “punish” that company by not doing business with them anymore. If it’s a public employee, I don’t really have a choice unless I want to renounce my citizenship and move.

      Point being, when it’s my consumer dollars at stake, there is no “public accountability”. When it’s my tax dollars, it’s a different story.

      Well-loved. Like or Dislike: Thumb up 18 Thumb down 6
    • Oliver H says:


      It’s pretty much that attitude that then leads to the government having to bail out said company.

      Human beings are human beings, they don’t become angels or superman just because they work for a public authority.

      Which is also why vice versa, it is naive to assume, as is often done, that private enterprise is necessarily more efficient. The larger an administration is, the more inefficiencies are bound to crop up, but even in smaller enterprises, the most mind-boggling things can happen.

      Hot debate. What do you think? Thumb up 12 Thumb down 10
    • Steve says:

      I also did that during my 10 years of federal civil service, but I definately would not call it the norm. Mostly, I saw people using as close to the full amount of the per diem allowed. More recently, as a contractor working for a defense company in support of the US govt, I negotiated my own hotel rates that were 35% lower than the government employees staying in the same hotel. I told them about it and their attitude was “Hey, I am paying the per diem rate, so why bother?”

      My experience has been that accountability is higher in the private sector – at least for the rank and file. There appears to be no accountability at the top of the ladder (particularly in the Federal gov’t) based on the last several years.

      Well-loved. Like or Dislike: Thumb up 7 Thumb down 0
  2. Enter your name... says:

    If it’s “sitting there online for anyone to read”, then it *is* “actually published”. “Published” means “made available to the public”, even if there was no traditional publishing company involved.

    Thumb up 3 Thumb down 6
  3. Rick says:

    Is there some reason that the mp3 cannot be downloaded from this page? iTunes is a terrible way to manage podcasts and I refuse to use it, even if it means no more Freakonomics.

    Thumb up 4 Thumb down 2
  4. Katrina says:

    As an ethics expert and lawyer, my only thought is “how did I not know about this book?” It will be my top priority to find this book and use it in my own training programs! Great story, freakonomics guys!

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0
  5. Julien Couvreur says:

    Those are entertaining stories (and I am sure there are similar stories in the private sector), but frankly they are small fries when it comes to governmental ethical failings.

    What about drug policies that killed tens of thousands on net (FDA)? Foreign policies which result in hundreds of thousands civilians on net (Iran)? War on drugs policies which put millions of non-violent criminals in prisons (loss of freedom, mistreatment and rape)? Public school policies which stifle the potential of so many kids? Restrictionist immigration policies which prevent millions from being more productive?

    Thumb up 6 Thumb down 2
    • Julien Couvreur says:

      Small correction, I looked at FDA impact in more details. Mary Ruwart estimate about 4 millions lives lost due to delays introduced in the 60s, compared to about 7000 lives possibly saved.
      The estimates have some error margin but err on the safe side. The point is how significant the net harm is (two orders of magnitude more than I said in my comment above).

      Thumb up 1 Thumb down 1
    • Hotdogs says:

      To paraphrase Rostand, kill one man and you’re a murderer but kill thousands and you’re a heroic leader.

      Thumb up 0 Thumb down 0
  6. Richard Miller says:

    I’ve known about this document for years. As a Federal employee working budget and involved in procurement, i find it valuable in maintaining my moral compass. It should be mandatory reading for every Federal emplyoyee.

    Thumb up 2 Thumb down 0
  7. James says:

    I have to wonder about some of these. As for instance why is it unethical to take side business calls at work, but (apparently) perfectly ethical for your employer to call you about work stuff at home?

    Or why it’s ethical for someone who practices an accepted religion to get to take time off for it, while we non-religious (or non-mainstream) folks don’t get equivalent time. I wonder, though: if I become a practicing pagan, would taking time off for a walk in the woods be acceptable religious practice?

    Thumb up 3 Thumb down 1
    • your tax dollars... says:

      I am a federal employee and an orthodox jew. I take time off for religiously mandated holidays, but it gets filed under religious comp time, which I have to make up and it has to be done in a certain amount of time. I work almost every Sunday morning of the year to make up for the time I take for religious holidays. Around here noone questions the religious reason so yeah, you could take time off for a religiously mandated walk in the park, but you’d have to make it up during off-hours. The flexibility is a nice perq, but it’s not time off.

      Well-loved. Like or Dislike: Thumb up 6 Thumb down 0
  8. Caleb B says:

    CNBC’s American Greed featured a great story about two sisters that ran a small hardware store ( either DC or S. Carolina). They had a tiny military contact where the government would order four hammers, or five washers. It only existed bc it kinda “spread the wealth,” and helped come election time.

    They sisters accidentally put the invoice number into the shipping cost line. To their surprise, they received a check for something like $3,000 on a $48 order. Apparently, orders were all processed by a computer that only monitored product prices, but never shipping costs. In fact, shipping was paid out of an entirely different pool of money.

    The sisters gave the money back, but the person in charge acted like they didn’t care to get the money back….so a few months latter, the “accidentally” did it again. This time they waited months to see if anyone would call them out on it. When no one did, they did it again, and again, and again. In six years they charged over $6 million in fake shipping charges, the worst being $900k for two 19 cent wing nuts.

    They only got caught bc they pressed enter twice and submitted two of the same invoice. An actual human looked at it and figured out the scam.

    Thumb up 1 Thumb down 0
    • Gary near NYC says:

      What this all comes down to is inherent ethics.

      We can architect the most elaborate checks and balances system, but if people are compromised within they’ll find a way around that. But today, oversight has been mostly dispensed with. This makes it even easier to leech from the system or take advantage of illegitimate opportunities. On top of all this, the media coverage continually dredges up examples of people who have cheated and been caught after a careless mistake. What that ultimately does is embolden others who feel that THEY won’t make such mistakes and get caught. Lastly, the punishments are usually much less severe than anticipated.

      We raise children in schools where ethics is not taught; only memorization and test prep. They are also raised by parents who barely have time to focus on the most basic of things, like providing for their children and finding ways to appease them. Instilling discipline and morals is not even given much thought on average. What this ultimately does is create more children with poor ethical values.

      Think about it. If you couldn’t help but feel seriously guilty for doing something wrong like stealing money from the government or businesses, wouldn’t you stop yourself? But with the mentality of being attracted to “something for nothing” when it seems like the odds of getting caught are slim, more often than not people will exploit it. THAT is the society we are fostering.

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