Capturing My Thoughts: Public Choice Theory / Public Choice Economics

From here (spellchecked) at TDAXP:

Generally my take on Public Choice is…

Bureaucrats and politicians (in the public sector or inside corporate bureaucracies) have an incentive problem. They do not have a price system to guide them. They do not have a beneficial profit motive. They do not fear for the loss of their job for reasons of failure (e.g. Peter Principle, incumbency re-election rates). These actors lack good incentives.

So,they tend to uses metrics like size of budget, number of reports, personal affluence, perceived power of position, accumulation of perks,and personal status as the guiding incentives. They are not primarily motivated by the success of the others or the organization as a whole.

Really public choice economics is just looking at decision-making from the point of view of economics keeping in mind the driving incentives are different.

The design of any government or internal bureaucracy should purposefully try to minimize the effects of these bad incentives and include counter-balancing incentives (to create a negative-feedback loop).

Some things that come to mind:

– Funding of robust and aggressive Auditors and Inspector General offices to root out graft and corruption and abuse

– Term Limits, Job rotations, automatic cutting of low-performers

– Open records, transparency of records and actions, sunshine, ridicule of abuse (name names)

– single-subject legislation (harder to hide stuff); no conference report hidden earmarks

– all legislation and project should have “expire on” dates, requiring purposeful renewal for continuation

– decentralization / federalism / spinoffs

…so I don’t have to remember it.

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2 Responses

  1. It’s quite a broad field – I don’t think there’s been a good mass market book about it though. I saw James Buchanan speak about ten years ago and it was quite informative.

  2. I don’t know of a good book either. I am as interested in seeing it applied to organizations such as the inner workings of businesses, as I am to political bodies.

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