Bureaucracy and the ?publicness? of local public goods: A reply to Gonzalez, Folsom and Mehay

Abstract

Readers of the literature on bureaucracy will recall that three years ago Gonzalez and Mehay,(1985) published an empirical piece utilizing a slack-maximizing model of bureaucratic behavior which concluded that local public goods are really private goods. My own article (Wyckoff, 1988a) reached the same conclusion using theoretical means. The effect of bureaucracy, I argued, is to bias our results toward the conclusion that local public goods are public in nature, so the empirical results showing the opposite cannot be blamed on bureaucracy. Now, in a surprising comment on my paper, Gonzalez, Folsom and Mehay (1988) (GFM) assert that I made methodological errors in the process of establishing my result. Not content with my agreement with their conclusions, GFM demand that I reach these results using their methodology. GFM insist that I ignore four special cases in my paper. Each one of these special cases is discussed below. In general, I find little merit in their arguments. Each special case is either obviously unrealistic or relates to a question completely different from those discussed in my paper. First of all, GFM argue that I fail to note that the voter's tax share t is likely to vary with city population N. When this correlation is incorporated into my model, they say, the reverse of my results could occur. But there is a fundamental error in allowing t to vary with N. The issue in this paper is not whether large cities spend more than small cities - nobody disputes this - but whether local public goods are public goods or not. What we want to know is whether two people can enjoy a public service just as easily as one. By including tax considerations in the calculations as they have done, GFM confuse crowding effects with changes in spending caused by changes in tax burdens. When t is allowed to vary with N, we no longer have a measure of the crowding parameter, but a composite which cannot answer the question we originally asked. An analogy may help clarify GFM's error. GFM's approach is equivalent to suggesting that, since wealthy people have larger homes and hence larger tax