Lecture-6-Theories+of+Public+Budgeting

Thislineofreasoningisvalidbutnonetheless

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Unformatted text preview: an politics can triumph in governmental resource allocation. As naive as this may appear, it is a powerful vision that has survived in a number of forms: program evaluation, performance measurement, and results­oriented governance. For better or worse, budgeting is political as well as technical. But if technocracy, though presaged by Pigovian thinking, was not altogether successful, elements of it remain in contemporary practice. 51 51 Public Choice The rationality that informs the welfare economics and general equilibrium­driven models such as PPBS and ZBB also breathes life into another economic approach to budgeting. In this case, however, it takes up a political perspective at the opposite end of the spectrum from the 1960s style optimization. Public choice adherents hold rationality of behavior and constrained choice in the same high esteem as their more politically liberal colleagues, but there the similarity ends. Adherents of the New Political Economy see government as a poor service provider at best, a threat to individual freedom at worst, and a meddler in a market system that needs little public intervention to function appropriately. 52 52 Public Choice At the core of the public choice belief system is a fundamental mistrust of bureaucracy and its connection with elected officials. It can be sketched in the following interrelated propositions. The bureaucrat has critical knowledge of governmental operations that a cadre of predominantly part­time elected officials lack; this information asymmetry allows government agencies to overproduce public goods at wasteful prices. Elected officials’ incentive structures make re­election paramount; this is the impetus for bureaucratic overcharging and oversupply through a bias towards increased size of the public sector. 53 53 Public Choice Operating out of self­interest, bureaucrats are predominantly members of the liberal parties of major democracies; hence political influence, particularly at the local level, can add to the oversupply of government with strong government unionization enhancing this accretion. Representative democracy is a messy means of translating collective desires into optimal levels of government service provision; the absence of referenda and direct forms of balloting for specific goods and services leads to an oversupply of government. 54 54 Public Choice Fiscal illusion allows current voters to consume in the present via the issuance of debt which will be paid for by future voter­consumers; these consumers will be represented by an ostensibly different generation of elected officials. This seemingly painless consumption in the present leads to over­expansion of the public service. Decentralized governance structures and multiple, competing jurisdictions allow voter­consumers to choose between jurisdictions that provide them with the best mix of goods and services for a given tax price; inefficient or oversupply jurisdictions will lose residents or businesses. 55 55 Public Choice Voting with their feet places a check on bureaucratic growth and oversupply of government services. A necessary check on the growth of government and the bureaucratic­elected official nexus is discernible in the constitutional limitation on revenue and expenditure. These tax and expenditure limitations are, from the public choice perspective, the most effective means of thwarting thegrowth of government. 56 56 Public Choice One could argue that public choice is not so much a budget theory as it is a theory of the bureaucracy or a theory of government in general. This line of reasoning is valid but nonetheless misses the point. The fact of the matter is that the public choice perspective of government and bureaucracy is probably the dominant mindset of governance over the past quarter century. As Rosenbaum and Gajdosova (2003) note, the growth of government and its capacity to effectively deliver public goods and services are front­burner issues in both the developed and 57 less­developed nations. 57 Public Choice Recent efforts by the bureaucracy to shed its image as an inept over­supplier of public goods, efforts echoed in the many attempts to rebrand it re­engineering, comparative performance measurement, and customer­ oriented governance, must be seen as direct reactions to the challenges that public choice has made to mainstream public administration and the Weberian bureaucratic model upon which it rests. 58 58 Pu...
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