What do bureaucrats maximize?
Economics of the Public Sector, Joseph E. Stiglitz, 2nd ed., 1988, W.W. Norton & Company, NY, pp.204/205
Economists begin with the presumption that individuals act in their own self-interest. Thus, to understand the behaviour of bureaucracies, one must ask, What is it in the interest of bureaucrats to do? In the preceding section we argued that, for a variety of reasons, bureaucrats are not given incentive structures in which their pay is related very closely to their performance. The question then is, What do bureaucrats seek to maximize? One answer is provided by W. A. Niskanen*, a member of Council of the Economic Advisers in the Reagan Administration and a former vice-president of the Ford Motor Company.
He postulated that bureaucrats seek to maximize the size of their agency. Bureaucrats are concerned with "their salary, the perquisites of office, public reputation, power, patronage," all of which are related to the size of their agency. In this view, the bureaucrat attempts to promote the activities of his bureau in many of the same ways that a firm attempts to increase its size. He competes with other bureaucrats for funds. Bureaucratic competition replaces market competition.
*W.A. Niskanen, Jr. Bureaucracy and Representative Goverment (Chicago: Aldine, 1971), p.38.
Economists begin with the presumption that individuals act in their own self-interest. Thus, to understand the behaviour of bureaucracies, one must ask, What is it in the interest of bureaucrats to do? In the preceding section we argued that, for a variety of reasons, bureaucrats are not given incentive structures in which their pay is related very closely to their performance. The question then is, What do bureaucrats seek to maximize? One answer is provided by W. A. Niskanen*, a member of Council of the Economic Advisers in the Reagan Administration and a former vice-president of the Ford Motor Company.
He postulated that bureaucrats seek to maximize the size of their agency. Bureaucrats are concerned with "their salary, the perquisites of office, public reputation, power, patronage," all of which are related to the size of their agency. In this view, the bureaucrat attempts to promote the activities of his bureau in many of the same ways that a firm attempts to increase its size. He competes with other bureaucrats for funds. Bureaucratic competition replaces market competition.
*W.A. Niskanen, Jr. Bureaucracy and Representative Goverment (Chicago: Aldine, 1971), p.38.
posted by Petronius at 11:23
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