[pmyteh]

The entire basis of modern public administration (and one of the reasons it can be more bureaucratic than market mechanisms for delivering services) is that it attempts to rigorously exclude cronyism. The reason for civil service tenure, for example, was to stop politicians selling public service jobs to the highest bidder, or handing them over as a quid-pro-quo for favourable decisions. As seen in the late 19th and early 20th Century 'Progressive' movement in the US, for example, the idea was for a government of the highest possible rectitude.

Now, that obviously doesn't happen in all areas all of the time. And we have moved away from that kind of rules-structured ideal over the last forty years or so in pursuit of greater efficiency (which has re-introduced cronyism in the UK to a greater degree, for example - see the present government) but it's grossly over-simplified to say that cronyism is an 'essential' part of big government, when its original foundations were intended to produce a (big) government of laws and not men.

[HPsquared]

The existence of all these protections against cronyism in the public sector is evidence that it is an inherent problem. If it wasn't, there would be no need for all the protections.

Edit: the problem is kind of moral hazard. Much like a chemical plant or nuclear reactor needs a range of protection systems to prevent the dangerous chemicals from going out of control, public administration needs a range of systems to prevent corruption getting too out of hand.

[pmyteh]

Yes indeed (and, even more so, the culture of non-corruption which reformers tried to put in place at the same time). But, like in the chemical plant, it is possible to run a government with minimal levels of corruption and many (better-governed) countries do it.

It's not just a public admin problem, either - corruption and self-dealing are potentially endemic in the private sector, too. The concern has traditionally been higher for the public sector, both because of the potential for abuse of state power and because it is/was seen to be corrosive to public trust and self-government. A private company is more likely to trade off the cost of controls versus the dollar value of the future loss (or the controller is the one running the firm strictly for their own benefit, in which case they're likely to get away with it without intervention by the legal system). And the largest companies have had actual public power greater than the smallest countries for centuries by this point, so the two concerns are not completely disjoint.