Credible Commitment and Council-Manager Government: Implications for Policy Instrument Choices

The credible constraint of morally hazardous or opportunistic behavior can enhance efficiency. This idea is applied to an examination of local government institutions to identify how council-manager government constrains opportunism in economic development by substituting low-power bureaucratic incentives for high-power electoral incentives. A panel design isolates changes in the use of development strategies or instruments in 516 cities.
The central argument presented here is that the Progressive ideology of the separation of politics and administration, institutionalized in the council-manager plan, allows administrators and elected officers to more easily resist opportunistic behavior. Economic and political forces have significant effects that are different for mayor-council communities than for council-manager communities. The influence of strategic planning is evident in council-manager cities, but not in mayor-council communities. Under council-manager government, development is carried out in a discriminating manner, leading to lower levels of financial incentives but more loan and business-attraction programs. In conclusion, the authors discuss how the career patterns of city managers are shaped by the incentive structures created by the council-manager plan.     

Does Decentralization Improve Perceptions of Accountability? Attitudinal Evidence from Colombia

Decentralization is argued to create incentives for local and regional politicians to be more responsive and accountable to their constituents, but few studies have directly tested this claim. We use survey data from Colombia to examine individual‐level evaluations of the degree to which decentralization prompts citizens to view department government as more accountable. We estimate the effect of administrative, fiscal, and political decentralization, controlling for participation, political knowledge, confidence in government, education, and income on perceptions of accountability. Our results indicate that administrative and fiscal decentralization improve perceptions of accountability, while political decentralization does not.     

The (Il)logics of Federal Budgeting,and Why Crisis Must Come

The U.S. federal budgeting system faces severe challenges in coming years. Deficits are being recorded at levels and with regularity not seen in prior periods. This article suggests that such problems reflect the uncomfortable mix of logics informing budgetary and political institutions—that is, the rules of the game. Logics make it appropriate to expect that government be limited in its tax demands but simultaneously responsive in providing expensive services necessary for the achievement of the American dream, for example. Crisis is needed to allow the emergence of institutional forms that mediate between these conflicting logics.     

An institutional explanation of party system congruence: Evidence from six federations

Abstract.  The allocation of resources between the federal and state levels of government is a key institutional variable explaining the congruence or similarity of party systems. It affects the incentives voters and parties face, and opportunities for cleavage mobilization. This article pioneers measures for comparing congruence across federations. Evidence from state and federal elections in six federations produces clear evidence that party systems are least congruent in decentralized federations and most congruent in centralized federations. Voter behaviour, indicated by the variation of electoral support for parties across units of the federation and the similarity of swings in support between the state and federal levels, is most responsive to the allocation of resources. Party system structure is less responsive to this variable.     

People Power or a One‐Shot Deal? A Dynamic Model of Protest

In the aftermath of the Arab Spring, a crucial question is whether popular protest is now likely to be a permanent part of Middle Eastern politics or if the protests that have taken place over the past two years are more likely to be a “one‐shot deal.” We consider this question from a theoretical perspective, focusing on the relationship between the consequences of protests in one period and the incentives to protest in the future. The model provides numerous predictions for why we might observe a phenomenon that we call the “one‐shot deal”: when protest occurs at one time but not in the future despite an intervening period of bad governance. The analysis focuses on the learning process of citizens. We suggest that citizens may not only be discovering the type or quality of their new government—as most previous models of adverse selection assume—but rather citizens may also be learning about the universe of potential governments in their country. In this way, bad performance by one government induces some pessimism about possible replacements. This modeling approach expands the formal literature on adverse selection in elections in two ways: it takes seriously the fact that removing governments can be costly, and it explores the relevance of allowing the citizen/principal to face uncertainty about the underlying distribution from which possible government/agent types are drawn.     

Does domestic politics limit the influence of external actors on ethnic politics?

Conclusion Domestic politics is naturally important in ethnic policies. However, in spite of their potency, domestic political factors are not always the most decisive. International organizations have influenced the Latvian and Estonian governments, and at times the Slovak and Romanian governments. However, the ability of different organizational strategies to overcome domestic opposition and thus bring about their desired policy varies widely. In most cases, actors need to use conditionality and aim it at the appropriate decision makers. In spite of their widespread use, efforts that rely solely on persuasion and diplomacy tend only to work when the domestic opposition is initially quite low or when ethnic minorities themselves have some bargaining power in the government. The key policy implication is that domestic factors do not make failure, or success for that matter, a foregone conclusion. For example, ethnic minority representation within the government coalition is not in itself a guarantee of passage of the policy preferences of the minorities. Conversely, the presence of authoritarian-style leadership does not automatically mean a rejection ethnic minority accommodation either, if organizations present their suggestions so that such leaders view it as being in their greater interests to maintain power. Conditionality that targets incentives to fit goals of the leadership can work. External actors are thus not justified in backing off from action based purely on a domestic analysis.     

The incentive effects of property taxes on local governments

This paper applies the ideas of Brennan and Buchanan (1977, 1978, 1980) to local property taxes. When local governments maximize their revenues, property taxes provide incentives for adequate amenity provision. Local amenity provision determines property values which then determine local tax revenues. As long as the demand for housing is inelastic, property-taxes will provide stronger incentives for local governments than lump-sum taxes. As current property values reflect expectations about future amenity levels, property taxes create incentives for even the most myopic government to invest for the future. Local property taxes can also act to limit the incentives of localities to tax; there are cases where higher levels of local property taxes lead to lower overall tax burdens. These ideas are applied to the tax reform in the late 1970s; one reason that tax reform may have been so successful is that in a period where land prices are driven by many forces other than government amenities, property taxes lose their value as incentive devices.     

Can participation be induced? Some evidence from developing countries 1

Influenced by Amartya Sen, over the last decade, The World Bank has allocated nearly US$80 billion to local participatory development projects targeting poverty, improved public service delivery, and strengthened social cohesion and government accountability. But the success of these programs is hindered by both endogenous local factors and flawed program design and implementation. Two especially important local obstacles are (1) entrenched interests of political agents, civil bureaucrats, and non-governmental organizations (NGOs) with either incentives to resist or capabilities to appropriate program resources, and (2) poverty and illiteracy, as the poor and illiterate participate less and benefit less from participatory projects than do the wealthier, more educated, and more connected. After reviewing hundreds of participatory projects, three lessons are clear for program planning. First, contextual factors like inequality, history, geography, and political systems (among others) are important. Second, communities do not necessarily have a ready stock of ‘social capital’ to mobilize. Third, induced participatory interventions work best when supported by a responsive state – donors cannot substitute for a non-functional state, and successful programs combine enlightened state action from above with social mobilization from below. Future participatory development projects would benefit substantially from revised planning and considerably more attention paid to evaluation and monitoring. Project managers have historically paid little attention to context, monitoring, or evaluation, in part because The World Bank’s operational policies did not provide incentives to do so. Donor agencies should also exercise greater patience and allow for flexible, long-term engagement to facilitate contextual and programmatic learning, including learning from failure.     

Reinventing Reforms: How to Improve Program Management Using Performance Measures. Really

This paper looks at the design and use of incentivized performance measures to motivate managerial efficiency and promote greater program effectiveness. It starts off by looking at recent reforms like the Government Performance and Results Act to understand why they were largely unsuccessful in altering the decision‐making process of government agencies. One problem was that performance measures have been both numerous and complicated, thereby making their role in management and oversight difficult. Equally important, no external incentives were attached to program accomplishments. The paper then examines what elements would be needed to build a management system that encourages both more efficient and more effective agency behavior. The goal of performance budgeting is to develop performance measures that display the progress of a program toward its stated objectives. Assessments based on these measures may then call for rewards or punishments. As such, it also may encourage program managers toward improved performance. The paper examines the pitfalls and complexities dealt with by Congress and Office of Management and Budget in the process. For example, a performance system must distinguish between funding program needs, as warranted by sectoral indicators, and management concerns. It must also unambiguously tie incentives to performance measures to motivate agencies, while building in commitment devices for the principals. Incentivized performance measures may not be appropriate in all conditions, but may be helpful for motivating managers and improving program performance in particular circumstances.     

Sources of Authoritarian Responsiveness: A Field Experiment in China

A growing body of research suggests that authoritarian regimes are responsive to societal actors, but our understanding of the sources of authoritarian responsiveness remains limited because of the challenges of measurement and causal identification. By conducting an online field experiment among 2,103 Chinese counties, we examine factors that affect officials' incentives to respond to citizens in an authoritarian context. At baseline, we find that approximately one‐third of county governments respond to citizen demands expressed online. Threats of collective action and threats of tattling to upper levels of government cause county governments to be considerably more responsive, whereas identifying as loyal, long‐standing members of the Chinese Communist Party does not increase responsiveness. Moreover, we find that threats of collective action make local officials more publicly responsive. Together, these results demonstrate that top‐down mechanisms of oversight as well as bottom‐up societal pressures are possible sources of authoritarian responsiveness.     

Judicious Incentives: International Public Policy Responses to the Globalization of Environmental Management

Public policymakers and regulators worldwide are grappling with the desire to improve environmental quality through appropriate regulation of business, while also streamlining government. Concurrently, environmentally conscience consumers are calling for improved environmental performance by industry. As a result of these pressures, regulators and lawmakers worldwide are attempting to craft effective policies that create adequate incentives for environmental protection on the part of firms, in the face of decreasing budgets and an increased demand for the use of market‐based incentives. To aid decision makers as they struggle with these concerns, this study provides a detailed case examination of the dilemmas and responses of national‐level regulators as they try to develop appropriate responses to the rise of international and “voluntary” management regimes. To accomplish these goals, this article compares the public policy responses of governments around the world to one such voluntary international environmental regime: ISO 14001. ISO 14001 is a form of industry self‐regulation in response to market forces calling for harmonization in environmental management and as a result of consumer and trade‐partner demands. This study examines the relationships between regulators and the regulated in order to understand if ISO 14001 certified firms are receiving regulatory relief or other forms of public policy/regulatory benefits as a result of their certification. It will also examine the impact that government incentives (or their absence) are having on the certification decisions of firms around the world. This information helps us to begin to understand how the trends toward smaller government and voluntary environmental regimes are affecting one another.     

African chiefs: comparative governance under colonial rule

This paper analyzes how British colonial rule altered the club-like and competitive features of chiefdoms and weakened the incentives of political leaders to be accountable to citizens. Political institutions in late pre-colonial West Africa aligned the incentives of the chiefs such that they were responsive to their people. Alignment arose because of a high degree of competition between governance providers and because political leaders were effectively the residual claimants on revenues generated from providing governance services. I identify the mechanisms by which colonialism severed the link that aligned the incentives of government with those of its citizens. British indirect rule did that by reducing political competition and softening the budget constraints of the chiefs. Toward the end of colonial rule, chiefs became less accountable to their people as evidenced by the widespread corruption and extortion by the chiefs and by their unprecedented constitutional violations and abuses of power.     

Democracy,creeping socialism,and ideological socialism in rent-seeking societies

Rent-seeking societies suffer from a serious distortion of incentives. Incentives to engage in distributional struggles, to seek contrived transfers are strong, but incentives to engage in productive work are too weak. Stagnation and some unemployment should be expected. Long lasting democracies within unchanged borders create a permissive environment for rent-seeking. The provision of rents very much depends on government. The stronger the governmental involvement in the economy, the higher social security spending, the more rents the government is likely to generate. Therefore, creeping socialism understood as increased government control of the economy should reinforce the rent-seeking society and the corresponding negative effects on growth and employment. Whether such creeping socialism is backed by ideological socialism or not should make little difference for growth or employment. These ideas have been tested and partially supported by a 19 nation sample of industrial democracies, using data from the sixties and seventies. By and large, the rent-seeking approach is fairly successful in explaining national differences in economic growth rates, but receives ambiguous support or less for unemployment. Olson's (1982, 1983) proposition about the negative impact of long lasting democracy within unchanged borders on economic growth is much better supported than the growth-retarding effects of government revenues or social security spending are.     

Cleaning up and invigorating the civil service

Reliable quantitative estimates are not available of: (1) the quality of civil service performance and changes therein as the result of development projects, or (2) the importance of civil service performance for various development outcomes. Nonetheless, anecdotal evidence indicates that in some countries government performance has indeed collapsed, with calamitous effects on development. Although poor government performance is theoretically overdetermined—there are many possible causes, which we cannot disentangle in practice—a plausible story can be told based on institutional economics, using such concepts as information, incentives, and credible commitment. This version of both problems and solutions is supported by examples of successful reforms. The article argues that “institutional adjustment’ deserves more consideration as a basis for reforms. Two practical examples are discussed in some detail: improving incentives in the public sector and strategies to combat corruption. © 1997 John Wiley & Sons, Ltd.     

The opposition deficit in EU accountability: Evidence from over 20 years of plenary debate in four member states

Debates about the European Union's democratic legitimacy put national parliaments into the spotlight. Do they enhance democratic accountability by offering visible debates and electoral choice about multilevel governance? To support such accountability, saliency of EU affairs in the plenary ought to be responsive to developments in EU governance, has to be linked to decision‐making moments and should feature a balance between government and opposition. The recent literature discusses various partisan incentives that support or undermine these criteria, but analyses integrating these arguments are rare. This article provides a novel comparative perspective by studying the patterns of public EU emphasis in more than 2.5 million plenary speeches from the German Bundestag, the British House of Commons, the Dutch Tweede Kamer and the Spanish Congreso de los Diputados over a prolonged period from 1991 to 2015. It documents that parliamentary actors are by and large responsive to EU authority and its exercise where especially intergovernmental moments of decision making spark plenary EU salience. But the salience of EU issues is mainly driven by government parties, decreases in election time and is negatively related to public Euroscepticism. The article concludes that national parliaments have only partially succeeded in enhancing EU accountability and suffer from an opposition deficit in particular.     

Global norms in domestic politics: environmental norm contestation in Cambodia's hydropower sector

Policymakers in many developing Asian countries have commonly relied on investment incentives as a major policy instrument to attract foreign investment. Using comparative case studies of Asian transnational corporations (TNCs) in Southeast Asia, this paper argues that investment incentives per se are ineffective in attracting foreign investment. The paper first examines the role of government incentives in the inflow of foreign investment, with particular reference to the Southeast Asian region. It then provides a comparative study of Hong Kong and Taiwanese investments. Hong Kong TNCs are shown to have invested in Southeast Asia because of market or market‐related reasons, not investment incentives per se. To these firms from Hong Kong, investment incentives are more a kind of post hoc rationalization of their decision making. For the Taiwanese investors in Malaysia, government incentives are less important than the existence of market access and the friendly host country environment. The paper also suggests some implications and specific policy recommendations for policymakers in host country governments. Instead of over‐reliance on investment incentives, host country governments should be more concerned with: 1) a commitment to internationalization through the promotion and marketing of international images; 2) the upgrading of domestic resources through continuous training and development; 3) a more efficient allocation of resources; 4) supra‐national coordination and promotion.     

The erosion of retiree health benefits and retirement behavior: implications for the disability insurance program

The effects of retiree health insurance on the decision to retire have not been examined until recently. It is an area of increasing significance because of rising health care costs for retirees, the uncertain future of Medicare, and increased life expectancy. In general, studies suggest that individual retirement decisions are strongly responsive to the availability of retiree health insurance. Early retiree benefits and retirement behavior are also important because they may affect the Social Security Disability Insurance (DI) program. It is not apparent that if a person loses retiree health benefits, or if fewer people are eligible for retiree health benefits in general, claims for DI will increase. The potential 2-year loss of health benefits may be a deterrent to leaving the labor force and claiming DI, although persons who are unable to work would leave the labor force even without health benefits. In order to understand how the decline in retiree health benefits may affect enrollment in DI, analysts must at least incorporate the role of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). That act provides many people with access to health insurance during the 2-year gap between eligibility for DI and Medicare. In fact, persons with sufficient means to retire early could use the income from Disability Insurance to buy COBRA coverage during the first 2 years of DI coverage. Determining the effect of the erosion of retiree health benefits on DI must account properly for the role of other factors that affect DI eligibility and participation. The financial incentives of Social Security, pension plans, retirement savings programs, health status, the availability of health insurance, and other factors influencing retirement decisions must be taken fully into account in order to isolate the precise effect of retiree health benefits.     

Comparing Implementation Processes in Sweden and the United States

This article attempts a systematic comparison of how policy is implemented in Sweden and the United States. We suggest that differences might be explained by examining policymaking processes, policy content, and governmental structure. The comparison reveals differences in 'incentive structure'. Both Sweden and the U.S. have responded to the complexity and uncertainty that accompanies increased demands on central government by adopting 'softer' mechanisms for implementation. The effect of these shifts in both systems is to devolve important decisions to lower levels of government. In Sweden, this devolution is still accompanied by strong incentives for national policymakers to undertake implementation, although the incentives may not be as strong as they were in the past. In the U.S., it is accompanied by a radical weakening of incentives to carry out implementation and increasing instability in policy content and relations among key actors.     

Public employees lining up at the polls—the conditional effect of living and working in the same municipality

Do public employees vote more frequently than private employees? The turnout of public employees has been of central interest to public choice scholars for almost a century. Utilizing a government records dataset that is not subject to over-reporting and differential social desirability bias, we find that public employees voted 11–12 percentage points more than their counterparts in the private sector. In a multivariate analysis, however, the effect is only four to five percentage points greater for local government public employees, which is in the lower range of previous studies. We are able to distinguish between local government and central government employees and show that the latter vote two percentage points less than the former. Controlling for the specific type of educational background does not explain the public–private turnout differential. Finally, the effect of working and voting in the same municipality is larger for local government employees than other citizens. This is in accordance with their greater incentives as they elect their future employer, though the effect size is surprisingly small.     

Does Foreign Aid Promote the Expansion of Government?

Building on the literature on public finance, I seek to advance our understanding of variations in government size by exploring the impact of official development assistance on fiscal policy. I hypothesize that foreign aid operates in accordance with the "flypaper effect," systematically generating incentives and opportunities for the expansion of government spending. Results from a time-series cross-sectional regression analysis of growth in government spending over the 1970–99 time period are consistent with the hypothesis. For middle- and lower-income nations, aid represents an important determinant of government expansion. Looking at the tax and revenue side of the equation, however, reveals a more perverse pattern of response: aid promotes not only increased spending but also reduced revenue generation. The results have important implications from both a theoretical and policy perspective. Inter alia they point to the potentially self-defeating nature of efforts to promote market-oriented programs of state retrenchment via development assistance as well as to the importance of incorporating international transfers into future research on government spending.