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Sometimes you read something that makes you challenge your opinions, in a positive way. Steve Landsburg’s piece on government spending vs government debt did that for me today. His argument: it’s not government debt that is problematic, but government spending.
I volunteered to do a summary of a piece of non-core reading for my MPA class this week. The piece I chose was:
Goodin, R. (1982) ‘Rational Politicians and Rational Bureaucrats in Washington and Whitehall’, Public Administration, Vol. 60, pp. 23-41.
This paper is a discussion and reformulation of Niskanen’s model of decision-making. This model has apparently been very influential, especially with Keith Joseph.
First, the paper outlines what it was that Niskanen thought:
The bare bones of Niskanen’d model are very simple indeed. Basically, there are two types of actors: bureaucrats and politicians. The relationship between them is one of bilateral monopoly. The bureaucrats are the sole suppliers of public goods and services, and politicians are the only buyers of bureaucratic outputs. The goals of each actor are equally simple. Bureaucrats are aiming to maximise theor agency’s budget…. Politicians, in turn are aiming to maximise the votes cast for them at the next election….
Niskanen’s thesis is that, owing to special features on both sides of this bargaining game [namely the way that Congressional committees that authorise budgets are stuffed with those who benefit disproportionately from those budgets] public goods and services are oversupplied at a rate of anything up to twice what would be optimal in terms of citizen preferences.
As the paper discusses, this model leads Niskanen to recommend many NPM style government reforms, to enable bureaucrats to compete for resources.
Goodin applauds this model for its simplicity, but doesn’t think that it offers a good description of decision-making, for a large number of reasons, such as:
As a result of these criticisms, Goodin offers an alternative model in which bureaucrats and politicians collude to overload oversight bodies with information, and use the ensuing confusion to bid for higher budgets. This results in the skewed spending around core programme areas, leaving too little for cross-cutting or broadly defined issues.
In general, this is a refreshingly clear article. However, I found it odd that it did not pick up on the one obvious criticism of Niskanen’s model that occurred to me straight away: Niskanen posits that as a monopoly provider of bureaucratic goods and services, bureaucrats would oversupply and overcharge. Indeed, it appears (from Goodin’s discussion) that he confused the two, or saw them as synonymous. But this is odd, given that it is a standard tenet of economic theory that monopolists undersupply and overcharge. If one grafts this assumption to Goodin’s rebuilt model, you get the worst of both worlds – a collusive bureaucratic-political machine that under-delivers and overcharges in core areas, and doesn’t deliver at all in non-core ones. Impartiality prevents me from commenting on whether this is an accurate picture of Washington or Whitehall.
A work meeting last week reminded me of Frederic Bastiat’s quip:
The state is the great fiction by which everyone seeks to live at the expense of everyone else.
Looking the quotation up, I discovered that Bastiat’s Economic Sophisms covered the economic impact of new railways. Can it be mere coincidence that this is what the meeting was about?
Much of the core reading for my ongoing Master’s degree is dry. Some is painful. Occasionally, however, you get a gem of a paragraph, such as this:
The common problem, I believe, is this: the nation-state is becoming too small for the big problems of life and too big for the small problems of life. It is too small for the big problems because there are no effective international mechanisms to deal with such things as capital flows, commodity imbalances, the loss of jobs, and the several demographic tidal waves that will be developing in the next twenty years. It is too big for the small problems because the flow of power to a national political center [sic] means that the center [sic] becomes increasingly unresponsive to the variety and diversity of local needs. In short, there is a mismatch of scale.
That’s Daniel Bell “previewing Planet Earth in 2013″ in The Washington Post in 1988. I think his core focus is on the US government. I have heard that this (with a UK/EU spin) is somewhat the theme of the Douglas Carswell and Daniel Hannan book, The Plan: Twelve Months to Renew Britain, which I have not read, but plan to.
John Blundell, the departing head of the Institute of Economic Affairs writes in today’s Sunday Times of his quest to keep the IEA ‘clean’ through strict donor rules, including:
He mentions how he had received offers of tax-efficient funding in return for his extension of scholarships/bursaries to the donor’s progeny (he refused: “Sorry, no deal”). He also thinks that politicians have become more guarded in their dealings with think tanks since 1997.
Fact! After having spent a good five minutes on this site, I still can barely understand whether it is a movement, a party, or some combination of the two. And just how does ‘WAI D’ mean ‘your choice’? In what language? It seems I am not the only one confused.
I was very interested to come across this post from Will Wilkinson, on the ‘fear’ of democracy by libertarians, and the various responses to that ‘fear’. It reminded me of a number of things, particularly the strange but wonderful world of Patri Friedman and the Seasteading movement. And I noticed this:
“… I have questions about how well the Friedman plan can scale, as newcomers come to the settled frontier, and as pioneers raise children who do not share the consensus of the initial settlement. Sooner or later the problem of pluralism and moral disagreement will rear its head, and there are liberal and illiberal ways to respond.”
This, to me, is more confirmation of my long-held belief that the major problem of all forms of liberal political organisation inter-generational conflict: you may agree that the current set-up is fair (after all, you created it) but what if your children see it differently? In my view, this is a problem for libertarianism, but also for notions of meritocracy, social democracy, etc.
Those who know me well will know that I love to use films as analogies. The case study here would by M. Night Shyamalan’s The Village - a text-book case of an illiberal response to inter-generational conflict?
