Critics of bureaucracy argue that mountains of paper and rules only slow an organization's capacity to achieve stated goals. They also note that governmental red tape costs taxpayers both time and money. Parkinson's Law and the Peter Principle have been formulated to explain how bureaucracies become dysfunctional.

Bureaucracies can render systems formal and rigid, which is needed when following safety procedures is critical. The term bureaucracy is often criticized and deemed negative because of the implication that procedures are more important than efficiency. The Glass-Steagall Act is a good example of effective bureaucracy in place in the United States.