Bureaucratic Politics (Fifth Edition)

Author: (USA) Peter
Publisher:
Publish Date: 2006-07-01
Features: Public Bureaucracy After the public bureaucracy—our main focus of discussion—has itself been considered a cause of public spending and government expansion. One typical public bureaucracy system is a set of organizations with acquisition and expansion tendencies. William Niskanen powerfully expressed this viewpoint in his work. He believed that administrative heads—career public officials—are budgetmaximizers, who would use their control over information and their own abilities to conceal the actual costs of providing public services, keeping the budget far above the necessary level. In this model, Niskanen argued that since department heads monopolize information, legislatures are almost powerless to control the bureaucracy. As a result, legislatures cannot independently judge the budget, and government spending rises rapidly: Niskanen’s proposed solution is to establish a market-like mechanism where multiple administrative departments compete within a service area to provide better services to the public. Such competition would lower costs because poorly performing organizations would be weeded out. However, this sophisticated economic analysis is based on a series of weak assumptions and does not align with the realities of public bureaucracy in the real world.
First and foremost, in a institutionalized bureaucratic system, individual bureaucrats have incentives to maximize their department’s budget. Considering the relatively fixed wage system based on formal positions and years of service rather than organizational size, individuals gain little from budget expansion. Lower- and middle-level employees in these organizations might receive faster promotions through new positions, but for administrative heads in Niskanen’s model, they gain little for themselves. In fact, expanding the size of an organization only increases bureaucratic management difficulties, which contradicts the general image of bureaucracy as someone who seeks to reduce personal burdens rather than expand the budget.
This model also greatly underestimates the legislature’s ability to form independent judgments. As we will discuss in detail later, legislatures have made efforts to establish control over public spending and have developed independent information resources regarding public expenditures and projects. Even in places where the "anti-bureaucracy" sentiment is not prevalent, legislatures seek to restructure themselves to strengthen spending oversight. In short, if the legislature assumed by Niskanen’s model were passive and irresponsible, it no longer exists today. Even if Niskanen’s model refers to the bureaucracy of the United States, its applicability to other countries is questionable, mainly because the independence of administrative heads in cabinet-level departments is not typical in the U.S. Similarly, outside the U.S., public officials’ positions are not entirely confined to a single organization, so they consider their career futures within the entire bureaucratic system rather than within one organization. Such thinking would lead them to emphasize building a trustworthy and reliable record rather than concealing costs to achieve organizational growth.
Finally, if logical and conceptual analysis is insufficient to refute this model, it also has a significant drawback. The model itself does not work. Empirical research used to test Niskanen’s model has rarely found evidence supporting it. The model does not apply outside the U.S., and even within the U.S., it is ineffective. The role of public bureaucracy in policy-making and the dynamics of budgeting are complex and subtle, and cannot be fully explained by such a simple model. The "bureaucracy-shaping" model attempts to highlight the subtle relationship between bureaucracy and public spending. The premise of this model is that different bureaucratic heads have varying understandings of public spending. Ironically, reformers in the public sector, who aim to make the government more efficient and effective, may inadvertently produce the negative effects anticipated by Niskanen. For example, using semi-autonomous organizations like agencies to implement public programs gives bureaucrats the freedom to use their positions to benefit themselves and their organizations. Similarly, abolishing internal public employee rules and implementing "merit-based pay" can lead to greater pay disparities. Positions originally reserved for public employees are now open to competition, which can erode trust in public services and weaken the values that limit the use of public positions for personal gain. While competition mechanisms are introduced, internal controls are lost, seemingly creating the corporate-like world that Niskanen criticized.