I’m a Bureaucrat: A Confession

I am employed by the University of Virginia as a Rotunda Ambassador, one of those friendly people at the desk who greets guests. With the University being public, that makes me a government official. I will not deny that I am sometimes unmotivated to do a good job, but luckily I have a certain level of insulation to accountability that comes with being a bureaucrat, according to Niskanen.

My output is definitely nonmarket. I’m supposed to greet visitors and provide answers to their questions to the best of my ability. This is not measurable. This allows me to be bad at my job, as there isn’t any concrete way to hold me accountable for my abilities at the end of the day. There is also no competition in the services I supply. If guests are dissatisfied with my greeting and my information, that’s too bad for them. There’s only one Rotunda and I’m the greeter. Last is the compensation structure. Unsurprisingly, I get paid by the hour. There are days when nobody visits, like when I worked during fall bre…ahem, reading days. There are other days with many visitors, like parents weekend. I make the same amount of money regardless of how many visitors come, how many people I greet, how many questions I answer, how many times I tell people that the color of the wall is pale moonlight. So if you come in the Rotunda and I’m good at my job, then I’m probably in a good mood that day.

(Brief note: the fact that I make slightly more than minimum wage could be a result of UVa, as a government agency, overproducing, if you subscribe to the Niskanen "Traditional View")

Committees run the agencies, but party leadership runs the committees

Weingast and Moran discussed how specific Congressional committees are the ones who have control over federal agencies. But who controls the committees and the Congressmen who make them up?  In Weingast and Marshall's paper, they assume that parties place no constraints on the behavior of individual representatives. That is objectively false. Party leadership has a similar system of rewards and sanctions that encourages their members to vote in line through threatening their probability of re-election. These fall in three main categories, the last of which is relatively new and currently evolving: 1) Committee assignment  2) Campaign funding and 3) Threat of a primary challenger.

We know elected officials have one main goal: to get re-elected. To do that, they obviously need votes, which are obtained mainly through providing benefits to their constituents and campaign funding. Constituent benefits are delivered by passing legislation favorable to your district. Being on the right committee is crucial to impacting issues important to your district. Though members state their preferences at the beginning of their term, at the end of the day, the majority party leadership determines committee assignments. The major determinant of placement has shifted from seniority to party loyalty. Those who vote against the party too often can lose their membership on valued committees, as Representative Tim Huelskamp of Kansas did in 2012 when he was removed from the budget and agriculture committees. This is why we currently see so many party line votes and why the most outspoken critics of the current direction of the Republican Party are Senators like John McCain and Jeff Flake who are not seeking re-election and thus don't face the same incentive structure party leadership relies upon to force conformity onto their members.

Dam Rent-Seeking

Kaligandaki Hydro powerplant (Syangja District)

Recently in Nepal there has been a greater push for the creation of more hydro-power plants to help increase the supply of electricity. Until this past year, up to 20 hour periods per day of load-shedding were common across the country. This is not surprising given an average customer increase of 9% per year and much slower growth, almost stagnant, of the power grid. The state owned Nepal Electric Authority (NEA) has started to build more hydropower-plants in recent years to try and catch up with this demand.

The plants are built on a bidding process by contractors where rent-seeking is prevalent. Suppose that NEA decides that on River A they are going to build a hydropower station they will then start the process of looking for a contractor to build the plant. As soon as contractors get word that a new station is being built they immediately are in contact with directors at NEA and ministers to start offering employment for family members, fancy dinners, and even straight out cash bribes in order to win contracts. This leads to an increase in costs bared by the contractor which they then usually pass on in their bid, which usually gets selected. Upon completion, this higher cost of building the station is passed on by NEA to the consumers, the Nepali people, as higher price of electricity. In the end, society's welfare comes at the expense of resources being diverted from other uses in the economy.

Not Your Typical Simple Majority

A few weeks ago my sorority voted on the slate for next year. The slate consists of all of the exec positions such as President, Vice President, Secretary, Treasurer, etc. A committee puts on interviews beforehand for each position and then combines the people they think are best suited for each job to create the overall executive "slate". Everyone then comes together to vote (voting is required by everyone) on the committee's chosen slate instead of voting on each position individually. The downside is that if the slate doesn't pass, everyone has to stay while all of the candidates for each position make a speech and we vote on the positions individually (this is very time consuming). 

Our process is pretty different from other chapters, but another major difference from many elections is that instead of requiring a simple majority for the slate to pass, we require a vote of 2/3 of our chapter. Buchanan argues that different issues require different voting thresholds. Since the new slate is a very important part of the chapter-they represent our group and make important decisions-we require a 2/3 vote. Looking at the graph below, it is easy to see how why we have this requirement: 

There are two types of costs: Decision making and External. Decision making costs in this case are the costs of the large group coming together and making the decision on a vote. They are increasing at an increasing rate as the required amount of voters needed to pass nears unanimity. External costs are those that are imposed on people as a result of the actions of others. An example is if everyone is required to sit through hours of speeches and several rounds of voting if 1/3 of people vote the slate down. In this case, external costs are high. When the costs are added together and minimized, Na* (the optimal number of voters needed to pass the slate) is larger than simple majority, which is why we have the requirement of 2/3 of voters to pass the slate. 

Low Carbon Emissions in Denmark

Last semester I studied abroad in Copenhagen, Denmark. Copenhagen is well known as being a very bike friendly city, where half of its residents bike to and from work everyday. People even refer to Danes as the "Biking Vikings". The main motivation for biking in the city is to reduce pollution from cars. In fact, Copenhagen wants to become the first carbon neutral capital in the world by 2025. In order to reduce the negative production externalities of vehicles, Denmark placed a very high tax on owning them. Recently, Denmark has decided to cut taxes on the cheapest cars from 105% to 85%. 

Although Denmark's government was involved in reducing the externality, Coase would argue that clear property rights should allow parties to negotiate an effecient level of cars and pollutants in the city. However, the assignment problem of deciding who specifically is being hurt by the pollutants and how much they are value would bring about issues to his theory. From what I witnessed, Danes were very enthusiastic and willing to bike everywhere, even in cold and windy weather. Many bike stores even offered student deals so we could rent our own bikes for the semester. This allowed me to join the Danes in the bike lane.