Public choice theory says that institutions are run for the benefit of those who run them. Administrators run universities.

Which is a problem if you're a charity that doesn't face a meaningful market test.  And by meaningful market test I mean that you don't face consumers (or donors) who are using their own money that they earned with their own hands to purchase or support your services.  If they don't make a trade off between buying you and going to Six Flags or eating steak, then you are a menace to our society who inevitably exploits the rest of us for your comfort and status.  Take the Universities, please:

HIGHER EDUCATION BUBBLE UPDATE: University Administrative Glut Worse Than We Thought.
Over the last 25 years the number of administrative employees at U.S. colleges and universities more than doubled, according to a joint study by the New England Center of Investigative Reporting and the American Institutes for Research. The ratio of nonacademic positions to faculty positions doubled at both public and private institutions. Overall, the industry has added an average of 87 administrative positions per day, a rate has scarcely slowed since the economic downturn, despite tuition increases. Even more surprising, academic institutions have added more administrative employees despite part-time faculty taking on more teaching duties than full-time professors. . . .

Administrative hiring shouldn’t come at the cost of delivering quality, cost-effective college educations. The more evidence we see, the worse the problem looks.

HT Instapundit