Politics and Administration

This article develops a theory of the administration and effectiveness of government programs. In the model, a bureaucrat chooses a mechanism for assigning a good to clients with uncertain qualifications. The mechanism applies a costly means test to verify the client's eligibility. A politician exercises oversight by limiting the bureaucrat's testing resources and the number of clients to be served. The model predicts the incidence of common administrative pathologies, including inefficient and politicized distribution of resources, inflexibility, program errors, and backlogs. When the politician favors marginally qualified clients, per capita spending is low and error rates are high. When the politician favors highly qualified clients, per capita spending is higher and error rates are lower. In the latter case, the bureaucrat may also use discriminatory testing, which allows the politician to target favored clients. Such targeted programs increase budgets and reduce backlogs, but they also increase error rates.     

Utility maximizing bureaucrats: The bureaucrat's point of view

In this paper we develop a model to examine the extent to which bureaucrats are maximizing their own utility. In the spirit of Williamson (1964) and Simon (1957), we assume that bureaucrats are utility maximizers but not necessarily cost minimizers and we investigate how well the bureaucrat is doing in relation to his own goals. First, we hypothesize a utility function for the bureaucrat — we assume that the bureaucrat gains utility from producing municipal services as well as from hiring additional labor and capital. Then, using the concept of money metric utility, we determine the minimum expenditure necessary to achieve the same level of utility actually observed. Secondly, we determine the bureaucrat's distance from the utility maximizing choice of resources for a given level of expenditure. Finally, using a sample of public sector bureaucrats we attempt to explain the variation in wasted expenditure across municipalities and why bureaucrats might be underutilizers of each input relative to their own utility maximizing point.     

A constitutional interpretation of the firm

When members of a firm make firm-specific investments they will earn rents. Potential rent-seeking on the part of the owner of the firm and other employees reduces the value of an employee's firm-specific investment and, as a result, reduces the level of those investments. In this context the firm can be thought of as a set of interdependent relationships where the actions of any one individual can affect the rents of all others. The owner of the firm will desire to set up an institutional arrangement to protect the individual's property rights in specific investments as part of his effort to maximize profit. Establishing this institutional arrangement is similar to the establishment of a constitution by the state or other organization. This constitution protects the property rights of the members of the firm and as a result encourages the creation of property, that is, the firm-specific investments. The constitution of a firm consists of a set of interdependent explicit and implicit contracts between the firm and its various members, as well as mechanisms for enforcing and monitoring these contracts. As a practical matter, it is obvious that workers normally do not enjoy costless or near-costless mobility, and thus an ordinary “at will” employment contract may no longer be sufficient to induce workers to join a firm. If, in order to function productively within an enterprise, individuals have to accumulate, and pay for, firm-specific capital assets, the simple neoclasical logic fails (Furubotn, 1988: 167).     

Federal antitrust enforcement: A principal-agent perspective

We study the choices of two types of maximizing Public Servants over how far to carry privatization of industries and in what order to privatize. Two stylizations of the Public Servant's objectives are considered, a Niskanen-style Bureaucrat who maximizes a surplus budget subject to the constraint of staying in office, and a Populist who maximizes popularity/consumer welfare subject to the constraint of a balanced budget. Other things being equal, the Bureaucrat will privatize the sector (firms) with the least market power and the largest subsidy first. The Populist will adopt the same policy, if the marginal costs of products in the private sectors are not too high with respect to the marginal utilities. If the marginal costs are too high, however, the Populist will privatize the sector with the largest market power first. We also show that privatization is easier and faster in less democratic societies.     

Electoral Manipulation as Bureaucratic Control

Bureaucratic compliance is often crucial for political survival, yet eliciting that compliance in weakly institutionalized environments requires that political principals convince agents that their hold on power is secure. We provide a formal model to show that electoral manipulation can help to solve this agency problem. By influencing beliefs about a ruler's hold on power, manipulation can encourage a bureaucrat to work on behalf of the ruler when he would not otherwise do so. This result holds under various common technologies of electoral manipulation. Manipulation is more likely when the bureaucrat is dependent on the ruler for his career and when the probability is high that even generally unsupportive citizens would reward bureaucratic effort. The relationship between the ruler's expected popularity and the likelihood of manipulation, in turn, depends on the technology of manipulation.     

Reforming Indian agriculture and the rise of farmer's protest in India: Tracing the discourse and the way ahead

The Indian government unveiled new farm legislation on September 27, 2020, with the goal of empowering the farming community. According to the government, new farm regulations will reduce the reliance of indigenous farmers on the mandi (market yard) system, which is now in place and is quite exploitative and full of middlemen and legal cartels. The regulations made contract farming lawful with the intention of luring private sector investment in bolstering agricultural supply chains and infrastructure to give farmers better pricing. But these rules are referred to as repressive and anti-farmer by the farming community. Farmers believe that eliminating the mandi system will eliminate the minimum support price (MSP) mechanism and that contract farming will ultimately be damaging, enticing major corporations and private investors to bind them to unfair contracts that will result in exploitation. Farmers' demonstrations have begun as a result in the former territory of the green revolution. In order to determine if the new farm regulations introduced by the central government are indeed beneficial to the rural community or not, the article followed the debate among many academics, policy makers, economists, researchers, stakeholders, and politicians (the government's spokesman). The article's main focus is on analysing the farmers' demand for the new farm rules to be repealed and the economic justification for their opposition. Additionally, it contends that new farm rules will encourage capitalistic farming and endanger the viability of farming communities, particularly small and marginal farms (S&M).     

Risk aversion and rent-seeking: An extension and some experimental evidence

Theoretical investigations indicate that the risk attitudes of individuals will effect the amount of rent that can be assumed to be dissipated by rent-seeking activities. Following this line of investigation we extend Hillman and Katz's work to a small numbers case and demonstrate that the degree to which a monopoly rent is dissipated is dependent upon the structure of the risk attitudes of two risk averse individuals.Our earlier laboratory results were evaluated with respect to the risk neutral Cournot-Nash predictions. However, given the uncertainty present in the rent-seeking experiment, our ability to reject these risk neutral predictions may not be, in fact, a failure for the model but a result of risk aversion. In laboratory experiments in which we control for the relative risk attitudes of individual agents, we show that risk aversion matters. The relative risk aversion of individuals affects the level of rent-seeking activity and the extent to which rents are dissipated. In our experiments, the relatively less risk averse individuals dissipated relatively more rent.     

Uncertain subjects: risks,liberalism and contract

Uncertainty has been largely overlooked in the governmentality literature dealing with risk, especially because of contemporary emphases on models of statistical or actuarial risk calculation. Yet it represents a distinctive way of governing through the future, whose place in the formation of rationalities of neo-liberalism, and of 'enterprising subjects', is vital. Indeed, in domains of enterprising activity, the governmental modality of uncertainty marginalizes or subordinates statistical and expert models of risk management. In part this is because of enterprise's 'inventive' orientation - which sits ill with risk's assumption of a future that reproduces the past. Not only is uncertainty central to techniques of neo-liberal government, it has a genealogy that is distinguishable from the genealogy of more rationally calculative modalities of liberal government - but also reaching back to the beginnings of liberalism. In the development of contract law, blueprints for government through uncertainty provide a foundational element in the constitution of liberal subjects, and for the 'reasonable' techniques of government through the future which are a hallmark of liberalism. It is concluded that the place of uncertainty is central to liberalism and thus unlikely to be marginalized by 'risk society' developments.     

Effects of Public Ownership over Firms' Size and Overstaffing Problems

A model is presented to analyse the impact ofownership over the problem of excess of employmentgenerally found in public firms. A government has toprovide a service or build an infrastructure, underuncertainty about the valuation of the project byconsumers. Three possible ownership schemes areconsidered for the provision of this service: astate-owned firm, a private firm with a completecontingent contract, or a private firm with anincomplete contract. In all three schemes, the agentthat chooses the size of the project is always thegovernment, without any asymmetries of information.Even though multiple solutions are feasible and nodefinitive conclusion is found to be valid for allstates of nature, an evaluation of outcomes shows thata private firm tends to underprovide infrastructure orservices more often, while under public ownership thefirm is typically larger. If incomplete contracting isadded to the private firm case, the model exhibitssolutions in which outcomes could be socially worsethan those obtained by a public firm. Only changes inthe voting behaviour of workers and contracting costsare required in this model to derive these results.Thus, the paper provides an example that ownershipper se may have an effect on the size andefficiency of firms, even under symmetric informationconditions, an extreme that has been generally deniedin the literature on public firms and privatisation.     

Does Public Service Motivation Lead to Budget Maximization? Evidence from an Experiment

ABSTRACT

One of the most enduring theories in public management is Niskanen's model of the budget-maximizing bureaucrat. While popular, the image of bureaucrats relentlessly advocating for larger budgets has been frequently attacked. A chief criticism is that the assumption of self-interest does not align with budget maximization, since bureaucrats have little direct way to benefit from larger budgets. A more plausible assumption that offers a stronger causal logic for maximization behavior is that bureaucrats are motivated to help others. If they believe that spending on public goods is beneficial to society, public employees may be likely to advocate for larger budgets. Using vignette-experiment methodology, this article finds that individuals with higher levels of public service motivation do not advocate for significantly higher budgets. The results undercut an alternative theoretical means to support Niskanen's original theory, thereby further undermining the budget maximization model.

[Supplementary material is available for this article. Go to the publisher's online edition of International Public Management Journal for the following free supplemental resource: Survey Text with Vignettes.]     

Fault Lines: The Effects of Bureaucratic Power on Electoral Accountability

This article introduces a new explanation for why citizens may fail to vote based on government performance. We argue that when politicians have limited capacity to control bureaucrats, citizens will not know whether government performance is a good signal of the incumbent's quality. We develop a selection model of elections in which policy is jointly determined by a politician and a bureaucrat. When politicians have incomplete power over policy, elections perform worse at separating good and bad types of incumbents. We test the theory's predictions using survey experiments conducted with nearly 9,000 citizens and local officials in Uganda. We find that citizens and officials allocate more responsibility to politicians when they are perceived as having more power relative to bureaucrats. The allocation of responsibility has electoral consequences: When respondents believe that bureaucrats are responsible for performance, they are less likely to expect that government performance will affect incumbent vote share.     

Globalization and the Korean electronics industry

Abstract

Northeast Asia is notable for the relative absence of regional institutions. The Six Party Talks could constitute an embryonic starting point for the development of such institutions. The path toward greater institutionalization is likely to begin in a modest fashion. Functional working groups on topics such as the environment, maritime transport, technical barriers to trade, road and rail links, and energy could provide the locus for integrating North Korea into the broader regional and global economies. Foreign ministries will inevitably take the lead in developing the Northeast Asia Peace and Security Mechanism (NEAPSM), but meaningful economic achievements will require the involvement of other ministries. North Korea has proved problematic in this regard thus far. Moreover, given the importance of private-sector involvement in achieving sustainable economic development in North Korea, modalities will have to be developed to integrate private-sector actors when possible. The governments of the region, and particularly China and South Korea, may continue support on a bilateral basis as a hedge against North Korea's collapse or as inducements in the context of the nuclear talks. But the development of more permanent multilateral structures is unlikely until the nuclear issue is resolved.     

Political Ideology and Social Services Contracting: Evidence from a Regression Discontinuity Design

Theoretical perspectives on the ideological influences on government contracting predict that local governments controlled by right-wing political parties will contract out a higher proportion of services than those controlled by left-wing parties. However, empirical evidence on the impact of political ideology on contracting out remains inconclusive. To cast new light on this important issue, the authors apply a quasi-experimental research design to contracting choices in children's social services in English local government. Because local governments in England are largely divided along partisan lines, it is possible to estimate ideological effects using a regression discontinuity design that captures changes in political control at 50 percent of the seats gained in local elections. The regression discontinuity estimates reveal that left-wing controlled local governments exhibit a marked aversion to private sector involvement in service provision and a clear preference for in-house service provision. These results are robust to a variety of alternative specifications.     

Self-regulation and the enforcement of professional codes

This study examines society's choice of inputs for the creation of trust in professional services. Professional codes and their enforcement are only one possible input that society has at its disposal for the production of this trust. Other inputs include civil and criminal codes. If society is modeled as a multi-input “firm,” then it will tend to use less of any input as that input grows less productive or more costly. To identify factors that might impact society's future use of professional self-regulation as a trust-producing input, the productivities and costs of enforcing professional codes are modeled. The effectiveness of professional enforcement is seen to have its origin in the losses members face if they leave the profession. These “exit costs” are analyzed in detail. Other factors affecting professional enforcement are also evaluated. A mathematical model of society's choice problem, contingent on exit costs and other factors, permits formal derivation of several results. Among these are the ideas that monopoly rents and specificity of skills are important in creating the conditions that make professional enforcement possible. As these deteriorate, society's reliance on professional enforcement will decline, and its dependence on courts will rise.     

The secular contract: sovereignty,secularism and law in Australia

What does it mean to say that a nation-state is secular? Secular law typically begins when a state has no religious competitor for authority. For this reason, it can be said that the Australian state is secular because its authority is derived from its own laws. What makes Australian law sovereign, the highest authority within the state, is its secularity. However, given Australia's colonial heritage, it is not just the absence of religious authority, such as a state religion, that gives the state its secularity. The law's foundations in colonial violence and the extinguishment of Indigenous sovereignty as a competing authority are also a crucial way in which secular Australian law can continue to operate as the sovereign authority within the state. Using the work of Charles W. Mills, I will critically interrogate how legal and political characterisations of the law as secular work to disavow the state's racialised foundations in colonial violence in the form of a “secular contract”. In developing this notion of a “secular contract” I hope to show that secularism be must re-thought of as not simply the operation of law without religion, but also, as complicit with the ways indigenous sovereignties in (post)colonial states are negated.     

Contests with an unknown number of contestants

This paper studies rent-seeking contests where the contestants do not know the number of actively competing contestants. Two models are compared. In the first, all players are risk neutral; in the second, all have constant absolute risk aversion. If the expected fraction of active contestants is low, an increase in the number of potential contestants increases individual rent-seeking efforts. This effect is in contrast to the complete information case where individual rent-seeking efforts decrease in the number of contestants. The effect is more likely under risk neutrality, but also possible under risk aversion. Equilibrium rent seeking efforts are lower under risk aversion if and only if the expected fraction of active contestants is low.     

Restoring trust in the police: Why female officers reduce suspicions of corruption

Recent studies show a clear link between women in government and reduced concerns about corruption. Until now, it remains unclear which underlying attitudes about women explain the perception that they will reduce corruption. Using a survey question about adding women to a police force, with an embedded experimental treatment, we examine three distinct stereotypes that might explain the power of women to reduce concerns about corruption: gender stereotypes of women as more ethical and honest, the perception of women as political outsiders, and beliefs that women are generally more risk averse. We find that people do perceive women as more effective at combating corruption, and these perceptions are greatly enhanced when information about women's outsider status and risk aversion is provided.     

Cost–benefit analysis: New foundations on shifting sand

New Foundations of Cost–Benefit Analysis, by Matthew Adler and Eric Posner, represents the most ambitious and credible effort to date to build a solid theoretical defense of the use of cost–benefit analysis (CBA) in evaluating government regulation. In this review, three cost–benefit “skeptics” offer their reactions to this ambitious and important book. We note its virtues – its humility, its scrupulousness, its open‐mindedness. We also explore its vices. If preferences are to be “laundered,” is it intellectually defensible to remove the bad but not consider adding the good? Does Adler's and Posner's welfarism really play the limited role they suppose, or does it risk “crowding out” other important deontological and distributional values? If CBA is merely a decision procedure that provides an imperfect proxy of welfare – the moral criterion we really care about – how do we know that the proxy it provides in practice will actually be accurate enough to be useful? Isn't this at bottom an empirical question that cannot be answered by this thoroughly theoretical book? If CBA is no more than an imperfect proxy for welfare, then alternative imperfect decision procedures may perform better in the real world.     

Rent seeking and market competition

This paper emphasizes that political behavior of interest groups is a result of economic calculation, and therefore is affected by the market conditions under which they operate. We develop a two-stage game to link political and market decision-making. We find that if unproductive rent-seekingdirectly contributes to rent-seekers' market operations, then their lobbying efforts will be excessive if the number of outsiders is relatively large, restrained if it is relatively small. If rent-seekingdirectly impairs rent-seekers' market operations, the above described behavior will be reversed. The analysis also reveals that as wasteful rent-seeking may increase rent-seeker's production cost, market competition shifts production from now less efficient rent-seekers to their non-rent-seeking rivals. Welfare gains from this shift may overshadow the direct waste of influence activities.     

The colour purple: perceptions of accountability across the Tasman

This article explores the changing rhetoric and substance of accountability in the relationships between parliamentarians and public servants in what Alex Matheson terms the ‘purple zone’—where the ‘blue’ of political strategy and ‘red’ of public administration merge in ‘strategic conversation’. The primary focus is on current developments in Australia. As the Westminster system of governance, and the role of public administration within it, undergo profound transformation, the prerogatives of elected parliamentarians (in the blue corner) and the responsibilities of career public servants (in the red corner) are changing fundamentally. In Australia and New Zealand the increasingly complex relationships that exist between government, parliament, public service and the wider community challenge the traditional notions of accountability. Both the lines of accountability, and its standards, are under challenge. The acceleration of Australia's move to contract out the delivery of government services is creating new arenas of creative tension between administrative review and management for results. Public service agencies are increasingly perceived to be themselves in a contractual relationship with government. There is a risk that the public good may become subverted by private interest. How will we ensure that agencies will ‘not contract out responsibility at the citizen's expense’? © 1997 by John Wiley & Sons Ltd. Public Admin. Dev. Vol. 17 , 293–306 (1997). No. of Figures: 0. No. of Tables: 0. No. of Refs: 33.