Rent seekers who demand government production: Bureaucratic output and the price of complements

Many goods and services produced by government bureaus are sold at prices which do not maximize net revenues (maximize profits or minimize losses). Indeed, bureaucratic institutions typically create incentives to expand production beyond that which would maximize net revenues. Furthermore, many of the products sold by government bureaus are highly complementary to privately produced goods and services. If a bureau's output is not priced to maximize net revenues, then private sellers of various complements may be in a position to extract rents by adjusting their prices. This paper explores the implications of bureaucratically generated rents for privately produced complements. First, rent seeking can materialize when private sector interests apply pressure for expanded bureau production and lower bureau prices. Second, if the bureau does expand its production capacity beyond the net revenue maximizing level, and if a private producer obtains exclusive rights to supply complements, then the extraction of rents will result in an inefficient mix of resources in bureaucratic production. The basis of the inefficiency is not the reason often given, however. Rather, inefficiencies arise because the actual level of use is less than that which the ‘bureaucratic plant’ was constructed to produce due to the relatively high price of the complementary services.     

Electoral accountability in a country with two-tiered government

In democracies, elections are the primary mechanism for making politicians act in voters?? interests, but voters are unable to prevent that some resources are diverted to political rents. With two levels of government, the rents are reduced if voters require higher beneficial public expenditures for reelecting incumbents. Voters can also strengthen their power by holding politicians liable also for decisions made by the other level of government. When the incumbent at one level acts as a Stackelberg leader with respect to the other, there is no risk of this leading to Leviathan policies on the part of the incumbents.     

Endogenous changes in the exchange rate regime: A bureaucratic incentive model

Public choice submits that legal changes can be endogenous in such a way that they are manipulated by bureaucrats who want to maximize rents from transactions with various interest groups. This paper takes the change in exchange rate regimes to empirically examine the premise. It offers a two-stage method, in which we first show that the exchange rate is influenced by interest group pressures, and subsequently that the 1990 market average regime (MAR), as a phase-in policy in Korea, was introduced mainly to serve bureaucratic incentives. This method is expected to be useful to a host of countries for various studies attempting to test a possible existence of bureaucratic or other hidden motivations behind any “isolated'' event of policy change.     

The Importance of Trust in Government for Public Administration: The Case of Zoning

Many scholars argue that citizens with higher levels of political trust are more likely to grant bureaucratic discretion to public administrators than citizens with lower levels of trust. Trust, therefore, can relieve the tension between managerial flexibility and political accountability in the modern administrative state. Unfortunately, there is little empirical evidence showing that trust is actually associated with citizens' willingness to cede policy-making power to government. This article tests theories about political trust and citizen competence using the case of zoning. Trust in local government is found to be an important predictor of support for zoning, but trust in state government and trust in national government have no effect. These findings suggest that trust affects policy choice and helps determine how much power citizens grant to local administrators.     

Government Credible Commitment to the French and American Nuclear Power Industries

Backlash against nuclear power, although widespread, affected nuclear power programs differently in the United States than in France owing to their differing institutional setups. This article uses a transaction costs economics approach to examine government credible commitment to the French and American nuclear power industries. Positive political theory sheds light on the comparative institutional environment in each industry. The American combination of fragmented power, little reliance on bureaucratic expertise, an independent judiciary, and opposing interest groups greatly undermines the ability of the U.S. government to credibly commit to the nuclear power industry. In France, despite substantial anti‐nuclear interest groups, the impermeability of the institutional setup—no division of power, weak judiciary, and reliance on bureaucratic expertise—effectively prevents activists from influencing policy outcomes. © 2001 by the Association for Public Policy Analysis and Management.     

Friction and bureaucratic control in authoritarian regimes

Democracies deliberately create “friction” in bureaucratic processes, using inefficiencies to mitigate the impact of government transitions and asymmetric information on leaders' ability to exert control. With far more centralized power, would authoritarians prefer less friction? We argue that they do not. In fact, excess friction is actively supplied to hinder bureaucratic coordination independent of or even in opposition to top-down control, leaving the central leaders the only player powerful enough to organize complex actions. Our analysis of data on the Chinese government indicates that bureaucrats are systematically sent to unfamiliar work environment, and that agencies that are more exposed to the resultant inefficiencies are also more likely to come under direct control by senior Politburo members. The pattern of targeted intervention indicates that bureaucratic control in authoritarian regimes is predicated not only on centralized power in general but also the deliberate supply of friction to obstruct independent actions from the bottom up.     

Are bureaucrats efficient? An application to the provision of AFDC

The question on how bureaucrats behave in the provision of a public service has been the subject of a considerable amount of research, most of which has been largely theoretical and inconclusive, especially on the issue of efficiency. This paper builds a bureaucratic theoretical model and provides empirical evidence by examining the workings of a government bureau, supplying a public service, namely Aid to Families with Dependent Children (AFDC), at the state level. It builds and estimates a generalized short run cost function that allows for systematic relative price inefficiency and does not require cost minimization subject to market prices as a maintained hypothesis. The model tests cost minimization as a testable special case. The estimating procedure allows us to test for a number of other features of the technology that are of interest such as productivity growth, marginal costs, returns to scale, technical change, and factor demands.     

Government Strength, Power Dispersion in Governments and Budget Deficits in OECD-Countries. A Voting Power Approach

We test for the influenceof government strength and dispersion ofpower among the parties of coalitiongovernments on the size of annual debtaccumulation through budget deficits inOECD-countries from 1970 to 1999.Government strength and power dispersion incoalition governments are measured by theBanzhaf index of voting power, respectivelythe standard deviation of Banzhaf indicesof coalition parties. We believe that theseare better-suited proxies than most of whathas been applied so far. Governmentstrength turns out to be insignificant.However, coalitions with equally strongpartners run significantly higher deficitsthan coalitions with one dominating party.     

Divided government and US federal rulemaking

Despite paying a great deal of attention to the effects of divided government on legislative outputs, scholars of American politics have surprisingly ignored the potential impact of divided government on bureaucratic regulatory outputs. In this article we argue that divided government should reduce the volume of federal agency rulemaking. We test this hypothesis against a data set covering 21,000 rules from 1983 to 2005. Our study is one of the first to analyze the determinants of federal bureaucratic rulemaking activity across such a long period of time. Our results demonstrate that during periods of divided government, agencies issue fewer rules and fewer substantively significant rules than they do during periods of unified government. These findings suggest that divided government impedes agency rulemaking.     

Electoral Competition, Participation, and Government Responsiveness in Mexico

In this article I test two competing visions about how democracy produces responsive government. Electoral theories of democracy posit that elected governments are responsive to public demands because citizens are able to sanction bad politicians and select good ones. Participatory theories attribute responsiveness to a citizenry's ability to articulate demands and pressure government through a wider range of political action. I test hypotheses derived from these two approaches, using an original dataset that combines electoral, socioeconomic, and public-financial indicators for Mexico's 2,400 municipalities, from 1989 to 2000. The data show that electoral competition has no effect on municipal government performance. But the results are consistent with the hypothesis that nonelectoral participation causes improved performance. Thus, I suggest that the quality of municipal government in Mexico depends on an engaged citizenry and cooperation between political leaders and their constituents, rather than the threat of electoral punishment. I recommend that scholars broaden the study of government responsiveness to account for participatory strategies of political influence and critically assess the claims of those who would promote elections as a cure-all for poor democratic performance.     

Political Control and Managerial Survival in State‐Owned Enterprises

This article explores the impact of political determinants on the survival of managers in state‐owned enterprises (SOEs). Drawing on theories of bureaucratic delegation, it is argued that preference divergence between principals and agents as well as among principals is a major driver of managerial turnover. More specifically, the partisan affiliation of SOE‐managers with the government, the opposition, or individual ministers can serve to explain the length of their tenure. The analysis employs Cox proportional hazard regressions to test these hypotheses on an original data set of 1,671 managers serving in 87 public corporations in Austria between 1995 and 2010, thus presenting one of the first large‐n analyses of political appointments in a parliamentary system. The results strongly support the proposition that partisan affiliation drives managerial survival.     

The Budget‐Minimizing Bureaucrat? Empirical Evidence from the Senior Executive Service

In a representative democracy, we assume the populace exerts some control over the actions and outputs of government officials, ensuring they comport with public preferences. However, the growth of the fourth branch of government has created a paradox: Unelected bureaucrats now have the power to affect government decisions (Meier 1993; Rourke 1984; Aberbach, Putnam, and Rockman 1981).
In this article, I rely on two competing theories of bureaucratic behavior-representative-bureaucracy theory and Niskanen's budget-maximization theory-to assess how well the top ranks of the federal government represent the demands of the citizenry. Focusing on federal-spending priorities, I assess whether Senior Executive Service (SES) members mirror the attitudes of the populace or are likely to inflate budgets for their own personal gain. Contrary to the popular portrayal of the budget-maximizing bureaucrat (Niskanen 1971), I find these federal administrators prefer less spending than the public on most broad spending categories, even on issues that fall within their own departments' jurisdictions. As such, it may be time to revise our theories about bureaucratic self-interest and spending priorities.     

What Do Bureaucrats Like Doing? Bureaucratic Preferences in Response to Institutional Reform

How do bureaucrats respond to administrative reform in relation to their overall administrative goals? The authors test the bureau‐shaping thesis, which holds that bureaucrats’ preferences for certain kinds of roles and tasks motivate their support for bureau reform. Drawing on attitudinal and behavioral data from a survey of English local government officials, the findings underscore how bureaucrats with different interests and motivations sort themselves into job types. Their preferences drive support for reform, which, in turn, strengthens the executive structure of English local government. Drawing on the literature on bureaucratic responses to institutional reform, the authors offer a more nuanced portrayal of bureaucratic preferences in line with the bureau‐shaping model. A key conclusion: political principals need improved empirical awareness of bureaucratic preferences when undertaking public institutional reforms.     

Some empirical evidence on rent-seeking

We tested for the capture of net gains by winners in rent-seeking competitions, using the most prominent announcements of government favors in the Canadian economy over a twelve-year period. Stockholders' returns were not significantly different from zero. One possible explanation is that government assists firms only when assistance creates political gains. Refusing to transfer economic rents to firms maximmizes the resources available to serve political purposes. This kind of behavior by government officials would imply that government has market power, which is consistent with several well-known theories of government.     

Authoritarian Integrative Governance in China: Understanding the Crucial Role of Political Risk Aversion

Establishing a model of public administration distinct from those of Western countries has been a long standing hope of the Chinese Communist Party (CCP) and Chinese government. Using the Creating a National Healthy City (CNHC) campaign as a case study, this article demonstrates evidence for an emerging authoritarian integrative governance model (AIGM) in China. Given their limited and scattered resources in terms of both bureaucratic structure and geography, local government officials cannot effectively complete the numerous tasks transferred to them from higher‐level government offices. Therefore, relying on an authoritative system to integrate dispersed resources has become a rational solution. The emergence of AIGM is more contingent upon the weighing the political risks that originate from competition between different political ideologies, environmental feedback on the failure or success of solutions to bureaucratic problems are considered less significant, which furthers allow the emergence of AIGM to be an inevitable consequence. Copyright © 2016 John Wiley & Sons, Ltd.     

Bureaucratic Power and Public Policies: a Test of the Rational Staff Maximization Hypothesis

This paper tests the staff maximization hypothesis that bureaucratic power is positively related to labour inputs to the production of public sector goods and services. The context of the test is the staffing policies of three groups of British local authorities in three time periods. The relationship between bureaucratic power and changes in authorities' staff is estimated while controlling for the influence of local party politics, central grants and conditions in the environment of the local political system. The results of the statistical analysis refute the staff maximization hypothesis.     

The Impact of the Tax Revolt Era State Fiscal Caps: A Research Update

Fiscal caps, the most common form of fiscal limit adopted during the tax revolt era, are again on the agendas of state government. In this article, we evaluate the claims made by cap supporters and opponents by examining the impacts of caps adopted during the tax revolt. Updating Lowery and Cox's (1990) analysis of the impact of state fiscal caps through 1991 using a comparative state, interrupted time-series design, we find some evidence—albeit very weak—that fiscal caps may have modestly reduced the size of government and no evidence that they have been evaded through budget end-runs.     

建构信任合作的府际关系：总体性治理根基

我国自上而下的政策执行模式导致政府间缺乏理解、信任、对话、互动。多元行政主体受制于科层制窠臼而难以建构合作机制,行政层级的位势差导致了中央及部委、地方政府及地方部门之间信任度较低。总体性治理尊重行政主体的个体独立性,破除信任危机和营造诚信原则方法,建构起多元县市、省市及作为行政主体的政府部门之间平等信任的伙伴关系;对府际关系的历史发展趋向予以引导,在共同的语境下将共识转换成多元主体皆可接受的符号,建构符合发展规律的自生自发秩序;立基于公义建构宪政秩序和法律规则,主动协调多元政府和社团间关系,破除行政层级的束缚,全方位实现政府层面的跨界相互依赖和社团层面的多元共治。     

Democracy,Government Spending,and Economic Growth: A Political-Economic Explanation of the Barro-Effect

The paper develops a political economicargument for the recently observed inverseu-shaped relation between the level ofdemocracy and economic performance. A modelis constructed that shows why and howpolitical participation influences thespending behavior of opportunisticgovernments that can choose an optimalcombination of rents and public goods toattract political support. If the level ofdemocracy remains comparably low,governments rationally choose rents as aninstrument to assure political support.With increasing democratic participation,however, rents become an increasinglyexpensive instrument while the provision ofpublic goods becomes more and moreefficient in ensuring the incumbentgovernment's survival in power. As a consequence, an increase in democracy tends toraise growth rates of per capita income.However, the beneficial impact of democracyon growth holds true only for moderatedegrees of political participation. If –in semi-democratic countries – politicalparticipation increases further,governments have an incentive toover-invest in the provision of publicgoods. This model allows to derive and testthree hypothesis: Firstly, based on asimple endogenous growth model, weempirically substantiate our hypothesis ofa non-linear, inverse u-shaped relationbetween the level of democracy and growthof per capita income. Secondly, we showthat the impact of government spending oneconomic growth is higher in moredemocratic countries. Thirdly, wedemonstrate that the level of democracy andgovernment share of GDP are correlated in au-shaped manner.     

论现代官僚制的双重困境

官僚制作为一种政府组织体制,奉行效率优先,体现了时代的工具理性精神.然而它面临着内外双重困境.在官僚政府内,有官僚体制与行政人员之间、行政目的与行政手段之间、政务官与常务官之间、官僚体制内部结构矛盾等四大矛盾;在外部环境上有官僚制与民主政治体制的矛盾、官僚制与资本主义社会之间的矛盾、官僚价值与民主价值的矛盾等三大矛盾.官僚制政府改革必须同整个政治体制的改革联系起来才有望成功.