Bureaucratic Theory Meets Reality: Public Choice and Service Contracting in U. S. Local Government

This paper examines the UK poll tax or 'Community Charge' proposals and legislation from a public choice perspective. It argues that there is more logic behind the tax proposals than many credit, and that public choice theory provides the implicit philosophy or ideology behind the proposals. The paper reviews the main concepts in public choice theory, and their application to local government, stressing the ways in which local social and economic landscapes can generate 'fiscal exploitation'. It then applies these ideas to the UK context, arguing that the existing rating system allows major mismatches between local voters, taxpayers and expenditure beneficiaries, so generating an excessively large local public sector and fiscal exploitation. It argues that the poll tax will reduce this mismatch and provide a more appropriate basis for local taxation. The poll tax, whose logic is based on local government providing public goods from which all benefit equally, is not the ideal tax for financing many existing local services, but there is no such ideal tax. Public choice theory also provides a framework for examining how local government provision may develop with (a) more emphasis on private provision to satisfy individual preferences, and (b) more emphasis on redistribution to individuals instead of to local government areas. A slimmed down local government, providing genuine local public goods, would be appropriately financed by a poll tax.

This chapter looks at the utilization of economic theories—public choice, transaction cost, and expectancy theories—in Public Administration literature in Europe and the US. The research shows that mathematical models in the field are predominantly associated with public choice and rational choice theories that have strong microeconomic assumptions connected to them. Although the discussion surrounding economic modelling in Europe has been more critical in tone compared to the US, it has paradoxically led to a wider use of economic modelling driven by model upgrading. The chapter argues that the lack of general theory building in the Public Administration discipline, both in Europe and the US, drives the perpetuation of economic modelling in the field.

Geographies of local government

Public choice theory is listed under microeconomics in the JEL code. It is considered largely an issue of microeconomics, as well as the microeconomists who straddle the boundary between economics and political science. Starting from the 1970s, however, there has been an increasing number of macroeconomists researching on topics related to public choice-inspired macroeconomic models, and a few public choice scholars have discussed macroeconomic issues under the public choice framework. The difference is that the first group has attempted to separate themselves from the very label of “public choice” itself, adopting all manners of alternative labels (such as political macroeconomics, political economics, new political economy, among others). To these I use the term “New Political Macroeconomics” as an umbrella label for this tradition. This has created conflicts with other public choice traditions, especially the Virginia tradition. They claim that this attempt to “separate” from public choice is harmful to the entire field of economic analysis of politics. This article is an attempt to understand the formation of new political macroeconomics, how it became its own tradition of public choice and why it would want to separate from the label of “public choice theory.” The reasons, as this article shall detail, are primarily the political macroeconomists’ adoption of the macroeconomics paradigm, and the attempt to distance themselves from the ideological association with libertarianism present in some public choice traditions. This discussion indicates how differences in language and values might impact how economists see their subject of study: even if public choice theorists and political macroeconomists study similar topics, they have different understandings of them.

THE principal rationale for public policy intervention lies in the inadequacies of market outcomes. Yet this rationale is really only a necessary, not a sufficient, condition for policy formulation.1 Policy formulation properly requires that the realized inadequacies of market outcomes be compared with the potential inadequacies of nonmarket efforts to ameliorate them. The "anatomy" of market failure provides only limited help in prescribing therapies for government success.2 That markets may fail to produce either economically optimal or socially desirable outcomes has been elaborated in a well-known and voluminous

This chapter analyzes within a public choice framework the current and ongoing reforms of local government described in the preceding chapters. The analysis pulls together, within a more general analytical framework, many of the theoretical propositions developed in earlier chapters relating to the behaviour of service users and providers and the financing mechanisms for local government services. It will become apparent that, in combination, those propositions create a strong theoretical base upon which to analyse the recent and ongoing reforms of local government in many countries. Note that, while many of the general reforms being introduced in different countries can be legitimized in theoretical terms, this does not mean that reforms were introduced as a direct result of public choice theory.

This paper describes and analyses current and ongoing reforms of British local government in a public choice framework. These involve a shift from a vertically-integrated corporate institutional form of direct service provision by British local government to one of an enabling function within a horizontally- coordinated network of multi-agency service provision. It considers a fundamental reappraisal of the form of democracy and the way in which it can be secured, a questioning of the behavioural characteristics of local government in relation to the public interest, a reinstatement of the public interest, a reinstatement of the rights and responsibilities of the individual and of the family, a reduction of local government's role in providing the welfare state and a preference for multiple solutions provided by agencies in place of monolithic provision by local government monopolies. Such functional decentralisation is in marked contrast to the political decentralisation in other European countries.

Public choice theory is an established part of general economic theory. It emerged as an offshoot of the mainstream in the 1940s and deals with applying economic methods to political analysis and decision making within political institutions. Today, the public choice approach is being used successfully in a wide spectrum of social sciences, as well as in politics at the macro- and international levels. At the theoretical level, we feel that public choice theory is of wide importance relating to the change in definition of its traditional place in economic theory. Approximately, this change began to occur during the 1980s, and it documents an interpretative shift from public choice theory being a relatively independent economic discipline to a discipline that is presented as an immanent part of the new political economy, a newly created school of opinion. This paper’s goal is to analyze and discuss the paradigmatic, historically conditioned theoretical-methodological concept of public choice by using research into the literature. Concurrently, our ambition is also to define key points of overlap that link public choice theory to the economic mainstream (neoclassical economics) on one hand and the new political economy on the other. We have developed the conclusions of this analysis and intellectual comparison into a wider discussion of public choice theory’s significance and its role in the formative process of economic theory’s development and future trajectory.

Public choice theory plays a critical role in public law, particularly for legal scholarship and to some extent for doctrine. To be sure, it is not the only game in town, but it is an important one. We take broad views of both public choice and public law. Public choice theory, as the term is used in this volume, not only includes the classic application of economic principles to constitutional structure (as fi rst articulated by James Buchanan and Gordon Tullock) but also the overlapping categories of social choice, rational choice, and positive political theory. In short, public choice theory captures the application of basic economic principles – including rationality and self-interest of participating actors – to any public institution, whether formally political or not. Public law here is also used broadly. For our purposes, it encompasses most formal and informal interactions with governmental institutions, such as those between legislators, or between lobbyists and a federal agency. These interactions may be entirely among governmental actors or may include connections between the state and private individuals. This volume is part of a new series, Research Handbooks in Law and Economics, which has been developed under the direction of Judge Richard Posner and Professor Francesco Parisi. Each volume in the series aims to serve as a reference, providing helpful introductions to important topics, and as a provocateur, suggesting weaknesses and important areas for further exploration. This volume also emphasizes interdisciplinary and empirical approaches to public choice and public law, drawing from a range of social sciences and legal subjects. It is broken into four major segments: foundations, constitutional law and democracy, administrative design and action, and examples of specifi c statutory schemes. The contents are described in more detail below. This introductory essay has several goals and audiences. To situate the novice, it starts by providing some cursory background on public choice theory, which the fi rst part of the book covers in a more deliberate and stimulating manner. For the more sophisticated reader, it suggests that the fi eld has shifted considerably in its aims and even its methods, comparing its origins to its current manifestations. For scholars engaged in this or related research, it then off ers some lessons to consider as the fi eld moves forward. Finally, for all readers, it summarizes the chapters contained in the volume. One cautionary note should be made at the start. No component of the introduction or the book itself is meant to be all encompassing or conclusive. Rather, each hopefully stands as a helpful starting point to a much richer and more complex set of ideas in the extensive literature on public law and public choice.

Purpose: The main objective of this study was to explore the impact of devolution on local governance and service delivery in Kenya.
 Methodology: The study adopted a desktop methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.
 Findings: The findings revealed that there exists a contextual and methodological gap relating to the impact of devolution on local governance and service delivery in Kenya. The empirical review revealed the devolution in Kenya has brought about positive changes in local governance and service delivery. To sustain and enhance these gains, it is imperative to prioritize capacity building, accountability, and collaboration among counties. Devolution remains a powerful tool for fostering development and democratizing governance in Kenya, but ongoing commitment and effort are required to ensure its continued success in improving the lives of Kenyan citizens.
 Unique Contribution to Theory, Practice and Policy: The Decentralization theory, the Public Choice theory and the Institutional theory may be used to anchor future studies on the impact of devolution on local governance and service delivery in Kenya. There is a need for greater coordination and collaboration among counties. Many challenges, such as infrastructure development and resource allocation, transcend county boundaries. Counties should work together on regional development initiatives to maximize their impact and address common issues effectively. The national government can play a facilitating role in promoting inter-county cooperation through the provision of technical assistance and resources.

Economists' continuing criticisms of protectionism make a valuable contribution to the general interest element of the forces which operate to keep propensities to protect somewhat in check. McKenzie rightly warns, however, that proposals by economists for giving protection in more efficient forms run the danger of increasing the total supply of protection. Thus, we agree that serious consideration should be given to the political economy responses which may be induced before one advocates ways of doing more efficiently what one believes should not be done in the first place. It does not follow, however, that all such policies will have net negative unanticipated consequences. In the case of tariffs versus quotas, we do not believe that we have yet sufficient knowledge of all of the relevant political economy considerations to predict about the full effects of legislation which allowed trade protection to only take the form of tariffs. We are doubtful, however, that such a measure would increase the total quantity of protection through the channels outlined by McKenzie. We believe that the same type of basic public choice analysis of the individual incentives to lobby which suggests that consumer-taxpayers will not force the political process to operate so as to maximize aggregate economic efficiency with respect to the level of protection also suggests that the net lobbying for quotas is likely to be higher on average than the net lobbying for tariffs. Political effectiveness and ability to overcome free riding on the part of tariff revenue seekers is likely to be low at the margin. Furthermore, issues of visibility and institutional structure are likely to lessen the ability of anti-protection forces to lobby against quotas. Placed within a broader framework, public choice and rent-seeking theory is consistent with the empirical evidence that where quotas are used, protection is high.

The paper explores the Public Administration roots and facets of the Bloomington School of Public Choice and Institutional Theory and in doing that, it revisits the problem of the applied dimension of Public Choice. The paper investigates and documents the nature, significance and reception of Vincent and Elinor Ostrom’s work, approaching it as a pioneering attempt to promote a double agenda: on the one hand, to advance Public Choice theory as a paradigm shift in Public Administration, and on the other, to advance Public Administration as the preeminent applied domain of Public Choice theory.

This study explores refuse collection as a municipal service using qualitative methods to examine how government makes decisions about residential refuse collection services in Portland, Gresham, and Beaverton, Oregon. The study explores the history of refuse collection in these three cities to identify factors that influence bureaucratic behavior and decision making when selecting a municipal service delivery option for refuse collection. Public choice and public policy analysis theory are used to discuss those non-monetary considerations present when government makes decisions about service arrangements. Qualitative data was collected from public officials and private haulers involved in refuse collection in the three cities. This qualitative process was to capture, in context, the development of the industry. The use of a single criterion in determining choice of private organizational forms may not create the results desired by municipal governments. Choice in the selection of a service arrangement has two important aspects: (1) the array of service arrangement options that can be developed and (2) the contextual environment within which bureaucrats operate and which influences the decision making process. It was found that decisions about which type of service arrangement to use for refuse collection did not always stem from monetary factors such as cost. Non-monetary factors such as tradition, legal considerations, and lobbying can influence decisions about which type of service arrangement to use.

Public choice theory should be taken seriously—but not too seriously. In this thought-provoking book, Jerry Mashaw stakes out a middle ground between those who champion public choice theory (the application of the conventional methodology of economics to political science matters, also known as rational choice theory) and those who disparage it. He argues that in many cases public choice theory's reach has exceeded its grasp. In others, public choice insights have not been pursued far enough by those who are concerned with the operation and improvement of legal institutions. While Mashaw addresses perennial questions of constitutional law, legislative interpretation, administrative law, and the design of public institutions, he arrives at innovative conclusions. Countering the positions of key public choice theorists, Mashaw finds public choice approaches virtually useless as an aid to the interpretation of statutes, and he finds public choice arguments against delegating political decisions to administrators incoherent. But, using the tools of public choice analysts, he reverses the lawyers' conventional wisdom by arguing that substantive rationality review is not only legitimate but a lesser invasion of legislative prerogatives than much judicial interpretation of statutes. And, criticizing three decades of "law reform," Mashaw contends that pre-enforcement judicial review of agency rules has seriously undermined both governmental capacity and the rule of law.

An important element of New Right economics is public choice theory (also known as the ‘Virginia School’, or rational choice theory, or the economics of politics; see Dunleavy, 1986), which has been especially influential amongst New Right intellectuals. However, the term ‘public choice’ or the ‘economics of politics’ has not gained the wide usage of other New Right terms like monetarism and privatisation. This reflects the complexity of rational choice analysis. But there is significant overlap between public choice theory and other aspects of liberalism. Also, the influential New Right Institute of Economic Affairs has devoted part of its publications to propagating public choice arguments in a highly readable form. This has increased their accessibility for liberal politicians. This chapter begins with a discussion of the meaning of public choice analysis and then considers specific contributions. These include rational choice arguments about the behaviour of voters, politicians and bureaucrats in liberal democracies, and issues such as the prisoners’ dilemma and the problem of collective action. Technical explanation is eschewed in favour of qualitative exposition of the core assumptions. The chapter does not provide a comprehensive account of public choice theory (for reviews see Laver, 1981; Mueller, 1979; Barry and Hardin, 1983; Bonner, 1986). Rather this chapter illustrates the nature of public choice analysis and identifies the contributions most influential amongst New Right advocates.