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Alan S. Gerber and Eric M. Patashnik
Journalists, activists, and other policy actors have strong incentives to publicize and stir up political conflict. Newspapers frame stories about complex issues around personality battles among the players. Political activists with parochial interests claim to be on the front lines of a "cultural war" that will determine the fate of the nation. And candidates for public office go to great lengths to differentiate themselves from their allegedly extremist opponents.
Lost in the political system's focus on conflict and controversy is the tremendous common ground-among ordinary citizens and political elites alike-over government's role in contemporary American society. No prominent leader or influential social group today advocates a wholesale shedding of the federal government's responsibility in any major area of public policy. Regardless of whether Democrats or Republicans are elected to office, the government will continue to protect the environment, assist senior citizens with health care costs, and maintain the world's most formidable military. Although the media tend to magnify the differences between opposing sides on policy issues, the reality is that even ideologically charged clashes typically take place within certain boundaries.
Consider a contentious issue such as Social Security reform. Important social values are undeniably at stake in choosing among pension reform alternatives. Liberals and conservatives have very different reform ideas. Yet, as political scientist Hugh Heclo points out, not even the most radical privatization plan calls for a total government withdrawal from the problem of retirement security. First, there is a general consensus against relying solely on "do-it-yourself" pension arrangements. The public expects the government to address the problem of financial security in old age. Second, there is no "government-less private sector in sight to withdraw to." Even the most "private" individual market plan would require an extensive framework of government rules to govern withdrawals, borrowing, and investment choices. Most plans would also include new subsidies for the poor.
This pattern repeats itself across the full scope of governance. Policy alternatives are debated, often quite vehemently, but the essential role of government as supplier of public goods and guarantor of public health and safety is not. Total government expenditures in the United States accounted for 30.9 percent of gross domestic product in fiscal year 2004. This aggregate level of government activity has been remarkably constant in the face of large-scale economic, social, and political developments since the 1970s. It is highly unlikely that the United States will soon develop a government as large as Sweden's, but it is equally unlikely that the federal government will shrink back to the size it was prior to World War II and the Great Depression.
If activist yet limited government is a widely desired and, in any event, permanent fixture of modern American society, government performance matters greatly. Can the government identify and solve collective problems? Does the government possess the political incentives, institutional capacity, and analytic tools to weigh social benefits and costs and generate useable information about problems, preferences, and policy priorities? What are the major causes of government performance troubles? When all is said and done, can the government promote the general welfare?
This book offers new perspectives on government performance. The essays in the volume address the topic by examining both the government's performance in specific policy areas and the capacity of key political institutions to identify and solve important societal problems. The first group of essays demonstrates that the government is failing to tackle significant problems in key arenas of domestic policymaking, including health (Alan Gerber and Eric Patashnik), transportation (Clifford Winston), housing (Edgar O. Olsen), and special education (Jay P. Greene). These cases are both illustrative of the tasks performed by modern American government and designed to stimulate thinking about government performance. They do not, however, represent all the important tasks government does or might undertake. We chose to study these policy areas not only because they are substantively important, but also because they demonstrate the pervasiveness and significance of market and government failures and the incompleteness of existing explanations of the sources of government underperformance. These case studies underscore the need for fresh thinking about the reasons for government underperformance and are complementary to other studies that formally test hypotheses by considering the effect of variation in independent variables across cases or over time.
It is helpful when policy analysts not only address problems that decision-makers have placed on the agenda, but also speak up for the general public and other diffuse interests that lack adequate representation in the political process. As David L. Weimer and Aidan R. Vining explain in chapter 2, prominent among those interests deserving greater voice is efficiency. The concept of efficiency takes a variety of forms. In practice, many policy analysts use the concept of potential Pareto improvement. The relevant test is whether a policy change produces sufficient social benefits that winners could theoretically compensate losers and still come out ahead. This concept of potential efficiency (formally known as the Kaldor-Hicks criterion) is not uncontroversial. Its implementation requires the ability to measure gains and losses in a common metric. Moreover, in practice, the transfer payments needed to compensate losers may not be made. Nevertheless, the Kaldor-Hicks criterion gives analysts a powerful diagnostic lens for seeing potential opportunities to improve on the status quo. Weimer and Vining forcefully argue that efficiency should not necessarily override other social values, such as equity and human dignity, but it deserves much greater respect than it often receives in the democratic process.
The second group of chapters examines novel institutional mechanisms for improving government performance, including the use of laboratory experiments as a tool for policy design (Charles A. Holt, William M. Shobe, and Angela M. Smith) and the creation of information markets (Robin Hanson). The chapters explain how new analytic tools can promote more informed decisions and the conditions under which their use is likely to be compatible with the incentives of policymakers. The point of these chapters is not that such methods can identify the "right answers" to complex problems such as the prevention of terrorist attacks, but rather that they may help policymakers evaluate alternatives and reduce the uncertainty under which they must make high-stakes decisions.
In the third part of the book, the authors step back from the details of specific policy debates and assess the overall performance of three foundations of American government: Congress (chapters by David R. Mayhew and Sarah A. Binder), the political party system (Morris P. Fiorina), and federalism (Mark Carl Rom and Roberta Romano). These contributors evaluate whether electoral incentives and institutional rules give politicians an adequate motivation to support public policies that are in the broad national interest. Several of the chapters raise disturbing questions about whether recent political developments have led to a decline in the amount of problem-solving activity in government. In the concluding chapter, Eugene Bardach critically reviews the arguments and assumptions of the individual essays, pointing out the strengths and limitations of the two major contending disciplinary perspectives (economics and political science) on government underperformance. He argues that economists' studies of the relative efficiency of specific policies are very useful in assessments of government performance, but that it is also important to understand the political and institutional conditions that promote or hinder effective government problem solving. Bardach suggests that this is a research area to which political scientists could bring special insights, and he urges the political science profession to devote far more energy to studying this topic.
Although we are sympathetic to Bardach's advice, we also recognize that any effort to persuade political scientists to direct more attention to the overall quality of government performance is an uphill battle. Most political scientists today view politics as a zero-sum game in which values and scarce resources are allocated among contending social groups. Since the 1930s, the fundamental political science research question-following the pioneering work of Harold D. Lasswell-has been "who gets what the government has to give?" Relatively few political scientists investigate the political requisites of effective problem solving or the conditions under which government promotes (or frustrates) the efficient operation of society as a whole. As table 1-1 shows, the ratio between the level of attention given to distributive issues and that paid to efficiency in leading political science journals is almost four to one. It is not surprising that the situation is reversed in top economics journals-economists publish nearly three articles on efficiency for each article on distributional issues.
Recent developments in political science are only likely to reinforce these basic patterns. Under the leadership of Theda Skocpol, the American Political Science Association has published major reports on the impact of economic inequality, race, and ethnicity on democratic governance. Some of the discipline's most distinguished scholars have strongly criticized the profession for devoting too little attention to "the distribution of political power and influence." We applaud this important commitment but also see an unmet need for a research agenda that assesses the political system's capacity to identify and solve problems that are not essentially distributional in nature.
In this introductory chapter, we frame some new arguments about the politics of government underperformance. Drawing on the individual chapters, we shall argue that a critical attribute of American government is the degree to which social problem solving and efficient policy design emerge as a by-product of democratic politics, which we take to be "that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people's vote." This "Schumpeterian" perspective on government performance stands in contrast not only to idealistic models of democratic deliberation, in which the people directly get to decide public policy matters, but also to more realistic "public-choice" theories in economics. Because the classic public choice theories have contributed a great deal to our understanding of public sector underperformance, we begin by discussing these theories.
Public Choice Theories and Government Failure
Public choice scholars argue that politics, like markets, is organized around the pursuit of self-interest. The decisions public leaders make depend largely upon the pressures they face from social actors. Hence, public choice scholars have traditionally emphasized the role of interest groups and have neglected other actors in the political process. There is considerable disagreement among public choice theorists about whether pressure group influence leads to efficient outcomes. "Virginia School" public choice scholars, such as Gordon Tullock and James Buchanan, are quite pessimistic about this. For the Virginians, government is not an institution that promotes social welfare by producing public goods and overcoming externalities. Rather, government officials use their monopoly on the coercive power of the state to extract wealth, which is redistributed to favored "rent-seeking" groups. In contrast, the "Chicago School," associated with widely influential economists such as Gary Becker, is much more sanguine about the possibility of efficient governance. Like the Virginians, Chicago School theorists recognize that compact groups may function as cartels and that diffuse interests may be poorly represented in the political process. Groups that are able to overcome the free-rider problem will be more able to win favors from politicians in exchange for political support. Chicago School theorists, however, are as skeptical of claims about destructive monopoly power in political markets as they are about assertions of destructive monopoly power in economic markets. Chicagoans believe that political competition limits the social costs of rent-seeking behavior, very much as the 1950s "pluralist" theorists in political science once claimed that interest groups check and balance one another. According to Becker, a particular interest group can gobble up only so much wealth before it triggers a political countermobilization or undermines the economic production that makes its subsidies possible. Because inefficient policies reduce the surplus available for distribution (an outcome no one wants), there should be strong pressure toward efficiency. Yet we know empirically that inefficient policies (such as farm subsidies) can last for long periods of time. If the Virginia model is too pessimistic, the Chicago model can lead to Panglossian conclusions.
For all their differences, the Virginia School and the Chicago School share some fundamental analytic assumptions. Both seriously downplay the importance of competition among public officials or candidates in a representative democracy and the myriad ways that political elites seek to build public support for their platforms, proposals, and pet ideas. In classic public choice models, the government is a "black box." At best, politicians are brokers who exist to do client groups' bidding. This portrait is misleading. U.S. politicians are also sellers of problem definitions and proposed policy solutions who may be entrepreneurial in searching for market niches for their products. The creative problem-defining and problem-solving role of politicians must be taken into account in any effort to understand and evaluate what government does or how well it performs. As Richard Posner observes, the most interesting politicians are the ones who seek to create (to satisfy at a price) new demands among the public. "The consuming public did not know that it wanted social security, conscription, public education, an independent central bank, an interstate highway system, a Presidency open to divorced or Catholic persons, the North Atlantic Treaty Organization, or the auction of rights to the use of the electromagnetic spectrum before those things were proposed by political entrepreneurs, as distinct from run-of-the-mill politicians."
In sum, traditional public choice theories of government failure-for all their important insights-often rest on a simplified view of the political process. The public choice literature tends to focus on sins of commission (the myriad ways that government blunders). Less noticed are the government's sins of omission. If government fails to seize opportunities to improve social welfare that are technically feasible and for which supportive political coalitions are potentially assemblable, it is not serving the citizenry, its constituency. Many government performance problems are extremely subtle. The same litany of concerns (for example, rent seeking, bureaucratic waste and abuse, pork barrel spending) receive seemingly endless attention. Yet these are not necessarily the worst policy distortions. Less obvious but far more serious government performance problems include the failure to bring relevant information to bear on complex problems; the undersupply of political entrepreneurship in areas where diffuse constituencies lack representation; the unwillingness of policymakers to experiment with new approaches when old ones are not working; and, above all, the maximization of the appearance of problem solving rather than the successful execution of its reality.
A Schumpeterian Perspective on Government Failure
These governance failures can be best understood from a Schumpeterian perspective. In the starkest version of this model, there are only two sets of actors: politicians, whose sole motivation is to win office, and voters, who evaluate the politicians and cast votes. Good public policy will emerge if politicians have the capacity to produce good public policies and voters adequately reward politicians who offer it. These conditions sound easy to satisfy, but they might not be.
Excerpted from Promoting the General Welfare Copyright © 2006 by Brookings Institution Press. Excerpted by permission.
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