The Failure of the Local Bureaucracy

 As a native of Albemarle County, I am quite connected to the local school system, known as Albemarle County Public Schools or ACPS. Growing up, ACPS was known for its accepting community and strength of education, while not making the environment overly competitive or toxic. However, as a result of bureaucratic changes in recent years, ACPS has gone from being the sort of school system that one might want to move to and instead a place from which they would want to leave. And while I'm glad that I have escaped the horrid nature of the current school system, my sister is still trapped in it, giving me a reason to still feel invested.

The full story of what has recently happened with ACPS is a long one, so the short of it is that as a result of new policies that are being pushed through by bureaucrats, "half of all county schools failed to achieve acceptable state accreditation ratings in the last year." The head of this, or the Senior Bureaucrat as Niskanen might say, is Superintendent Matthew Haas. When the voters signed a petition to prevent his contract from getting renewed, his office blamed the School Board instead. This problem is most certainly of the principal-agent variety, seeing as parents put their kids in school to get an education, and they vote for members of the School Board to put in place policies that agree with their ideals. Somewhere along the road, something appears to have been lost in translation, to the point that the bureaucrats are openly hostile to the voters, who are the people who are indirectly putting them in power in the first place.

psl(F)

Public Service Loan Forgiveness (PSLF), envisioned as a transformative solution for public sector workers drowning in student debt, faces a daunting bureaucratic reality. Despite a potential target audience of 25% of the workforce, the program's impact remains remarkably low. A mere 6.9% of eligible borrowers applied, with only 2.3% approved since its inception, highlighting a stark misalignment between potential and actual relief.

The bureaucratic lens, guided by Mueller's insights into power maximization, reveals a troubling disconnect. Bureaucrats, inherently driven by goals such as salary, power, and patronage, may inadvertently hinder the very program designed to alleviate debt burdens. The PSLF program, riddled with administrative hurdles like annual certifications and complex applications, mirrors the bureaucratic dilemma – a struggle between intended relief and unintentional barriers. The intricate dance between bureaucracy and public service dynamics echoes Mueller's model of bureaucratic behavior, where power maximization overshadows program efficacy.

The PSLF program's potential impact, thwarted by low participation rates, racial disparities, and bureaucratic challenges, highlights the need to reevaluate its design and implementation. As political actors navigate the economic landscape, understanding these dynamics becomes paramount in assessing the tangible impact of policies designed to shape our financial future. The PSLF program, in its current form, falls way short of its transformative potential. If I was a teacher (especially one eligible for PSLF), I would give the program an F for Failure, not for Forgiveness.

Ice Cream Galore

When comparing and discussing the theories of congressional dominance and agency autonomy, I thought of the housing program I am in at UVA. I live in a house with 12 girls, and we are part of a program with 7 guys. In this program, we receive funding for Thursday night dinners. We rotate the cook team that must buy groceries and make dinner for everyone, and the cook team gets reimbursed for the groceries. We have a budget of $175 from the stud to spend per dinner. The stud staff attempts to keep us under budget, explaining that the money we don’t use can go to other uses. However, when we haven’t used the money, it seems to just disappear… I’m sure it’s used for something, but it’s not used directly for us. In other words, we don’t get the direct benefit. AND after maxing out our $125 budget for every meal one semester, our budget got upped. So there are large incentives to use the whole budget: we get the direct benefit of the food bought, and using all of it could lead to increased budgeted money. So, we have a collective agreement. When the grocery shoppers are under budget, what do they do? Buy ice cream. Our freezers are overflowing with ice cream, and we get the benefit of all the money budgeted to our program. Plus, there’s the chance we’ll get more money the next semester, and thus, more ice cream. This is the same problem we have with bureaucracies budget maximizing! Like bureaucracies push past providing the optimal amount of their service, we push past the optimal point of ice cream in order to maximize our budget. 

Not so rotten kids

 College students enjoy brand new freedoms – being able to design their schedules, pick their majors, and engage in new social activities. However, in this new quest of separation and individuation – natural to adolescence – you often hear students still doing what their parents want. 

Now this may be out of love, but I want to consider the deeper reason why a “latent” group like newly solo college students may still respond to their parents’ desires: selective incentives. Olson writes that the only “organizations” with the ability to be coercive or have positive incentives. And parents have both of those! They pay for your tuition and provide a place to sleep during break – so that’s quite the coercive power. They are also (generally) very loving – and may even show extra affection should you follow their wishes – like my mom when I promise her not to ride Veo scooters. 

The idea that kids generally grow to be harmonious and obedient is not new. Becker explored this in his Rotten Kid Theorem, holding that due to the selective incentive power of parents, even your most rotten kids will be heavily incentivized to be well-behaved in the eyes of their parents.

A career in politics? Nah. Give me civil society.

In high school, I dreamed of a career in politics so that I could make a positive impact by writing legislation (or more likely, by allocating budget money to bureaucrats who create policy). But my interests have shifted more to for-profit jobs. Why the change? I derive less utility from pursuing political, ideological behavior. As Kalt and Zupan discuss in their paper, “pursuit of such a [civic] duty is a consumption activity that yields utility in the form of the warm glow of moral rectitude” (280). Looking at our grand challenges, increasing polarization, and worsening cynicism, I realized how difficult it would make a positive impact in politics right now. I no longer get as much of a warm glow from thinking about politics, and my opportunity costs have risen with the skills I have developed in college.

But all is not lost. I still care about civil society (and I know you do too). Michael Walzer defines “civil society” as the space of uncoerced human association and relational networks that form from our interactions with one another. Think about your place of worship, your neighborhood, the school you attend, the CIOs you are a part of, your workplace, etc. These are the places we choose to spend our time, where we take greater interest in the lives of one another, where our utility functions are more tied together, and where we overcome rational ignorance. The stakes here are lower than the political arena, and we have a greater ability to influence the local environment. It's where our interests reach farther than our egocentric goals and where we stay engaged with one another.

So long as we remain invested in the personal relationships we create with one another, we can all reap the “profits” as residual claimants in the shared endeavors that form civil society.

The Bullet Budget

The summer after my first year, I was a first-hand beneficiary of bureaucratic surplus. For Naval ROTC after first year, everyone spends a month in San Diego where we get a week each with the Surface Navy, Naval Aviation, Submarines, and the Marine Corps to get a sense of what our jobs will be like after graduation. During our Marine week, we were scheduled to go to a range to shoot M240s. We were the last group to go, and we were all supposed to get 100 rounds to shoot. After everyone shot, the Marines realized there was still a lot of unused ammunition. They said that they were required to use all of the ammunition every time they went to the range, so they gave us each another turn shooting. During this, I heard some of the officers joking about how if they were given the ammo they better shoot it or they won't get it again. These Marines are bureaucrats adhering to the fifth assumption in the Agency Autonomy theory which is that the agency exhausts the entire budget. They knew that if they didn't use all the ammunition that they were given for this exercise, the next budget may be smaller to eliminate the waste. The Marine Corps and the DoD as a whole want to maintain as high a budget as possible. By maximizing the budget, the utility of the senior bureaucrat is maximized which is the foundation of the Niskanen model. They use their entire budget, including all the ammunition they are given, in order to prove to Congress that the money they received for the last year was necessary for their operations when in fact it was just used so that some college kids could have fun shooting a second time. 

The Surplus

Many of life's greatest lessons can be learned from The Office (the American version that is). And no Office character exhibits this microcosm of deep knowledge than the one and only Michael Scott. For those of you who haven't watched the show or don't know who Michael is, how do I put this...let's say that he's interesting. In the "The Surplus" episode, Michael is made aware (like a 5 year old) the branch has a $4300 surplus that it "needs to spend", or it will be removed from the budget the following year. Factions form in the office and tensions rise between the copier and chair lobbyists. But wait, there's more! Michael is also made aware that he could receive an individual bonus for returning the surplus to "corporate".

Besides being a humorous situation, this scenario applies some of the concepts about bureaucracy from Weingast and Marshall. Not only is the principal-agent problem very evident ("corporate" and shareholders want costs lowered, but the agents [employees] are looking to maximize their own benefit/utility by buying an expensive chair or copier) but we also see the behavior of Senior Bureaucrat (Michael) affected by the maximization of his power and salary, both related to the size of the budget he oversees. 

Bureaucracy of Hitting a Shark

 Recently, Lex Fridman had Elon on his podcast and they just so happened to talk about his recent struggle with bureaucracies, specifically the U.S. Fish and Wildlife Service (FWS). Elon (as billionaire often do) is trying to launch his rocket, Starship, into space; but he's spent the last few months jumping through some peculiar hoops to do so. 

First, FWS was EXTREMELY concerned about a shark or whale getting his by his rocket on descent. Now you would think they could pretty quickly calculate the probability of this occurring, but it took a few months of dealing with permissions issues and data moving back and forth through internal departments for them to figure it out. Turns out... P(Rocket hitting shark/whale) = pretty much 0.

Then, they were worried about the sonic booms of the rocket launch may disrupt seal procreation in California. To prove this wasn't the case Starlink kidnapped a seal, put headphones on it, and played sonic boom sounds to it...twice. (I swear the picture below is real)

  

We, the voters, indirectly paid this organization $3.7 billion in 2023. Because we're all rationally ignorant individuals, I highly doubt any of us know in depth what this organization does day to day or even knew it existed at all. However, even if we did, how would we measure their output? The amount of sharks they save from rockets, the number of seals born, or how much they annoy Elon Musk? It is possible that these monitoring problems play significant role in extremely slow and expensive processes or their huge budget. 

Sororities & Bureaucracies

     I currently hold the position of president of my sorority. I oversee eight vice presidents and each of the VPs has a few subsequent Directors that work under them as well. In a way, each of my VPs act as the Senior Bureaucrat of their ‘bureau’, which in this case is their area of expertise, whether that be managing our chapter’s finances, planning our philanthropic events, etc. Each of these VPs has their own portion of the total budget given to us by Nationals each year.

    During recruitment last year, my VP Membership was extremely conservative with her spending, in fear of running out of money. She didn’t end up spending her entire budget and nationals cut her budget for this year by a couple hundred dollars. When finding this out, she was furious. In fact, she plans to overspend so that the budget gets reset to the previous value. This directly reflects the behavior of Senior Bureaucrats who produce past Q* to use up their budgets - because the budgets will get cut if they don’t do so. 

    Each year, chapter members request more transparency on our budget and where their dues are actually going. Unfortunately, we do have a case of the monitoring problem, as the output of each VP is not necessarily measurable and quantifiable, much like the monitoring problem at the federal level. As President, I try my best to ensure that everything that absolutely needs to get done is getting done first, and only then after that do I allow frivolous spending.

Shirking the Lawn

 Last spring my friend Eli was ecstatic to learn he had been accepted to live on the lawn for his fourth year. However, the day of lawn room selection, Eli was tasked with a last minute emergency shift at his job and could not attend the meeting. I received a call from him electing me as his representative. Therefore, a consensual fiduciary relationship of agency had been created. Eli the principal, and I the agent tasked to act on his behalf and choose his lawn room.  

    We all met in a sophisticated conference room, akin to the house chamber, hidden within the labyrinth of Newcomb. Tensions and emotions ran high as the random name generator assigned the order of selection. My heart sank when I saw I would be selecting 41st of 54 people meaning the potential for a principal agent problem of shirking just skyrocketed. Eli texted me a list of 10 rooms ranked in order of preference and they were all gone by the 20s. Among chatter and logrolling between future lawnees, I randomly chose a room number and the conference room halted to a deafening silence. I looked around in confusion unaware that I had just selected a room specifically awarded to students of color at the university. 

I was already embarrassed to be imposing at the future lawnee meeting and now I just looked like an ignorant jerk too. After being informed of the gravity of the decision I just made, I changed my approach and started to act within my own interests. Within the utility equation discussed from Kalt and Zupan, I had an ideological incentive to respect the legacy of lawn rooms, and had an economic incentive to not spend anymore of my personal time here viewing more powerpoints on lawnee protocol. Therefore, regardless of my principal’s preferences, I shirked and chose a random room in order to maximize my own utility function.

Seeking Rent in the Big Brother House

Big Brother, like most reality competitions, involves acquiring power through various means such as weekly-competitions or favors from the viewers. Each week the houseguests compete for safety and one player is voted out of the house by the other houseguests.

In a game of social warfare, reality competitions reflect the principles of rent that are explored in Public Choice. Houseguests vie for a limited number of valuable resources such as cash prizes, luxuries, and power (first 36 seconds). Economic rent-seeking activities include forming alliances, lying, and strategic behavior that maximizes benefits beyond what an individual player contributes.

Similar to the real world, rent-seeking behavior in the Big Brother house is unproductive for the social cohesion and experience of the other houseguests. In an environment where you are trapped inside for 18+ hours daily, required to take cold showers, and tasked with the sometimes impossible decision of evicting one of your fellow housemates, social cohesion can be equated to social welfare within the Big Brother economy.

Like our own community, the Big Brother community experiences the inefficiency of rent-seeking behavior.

The Coasian Cat

This past weekend I had the pleasure of visiting my friend's newly adopted kitten, Billy Bop. I admit that I am a dog person through and through, but boy oh boy did I find true love with Billy Bop. His eyes were so eye-like (round, and so big you can see your soul in them), and his fur was so fluffy it made cotton candy seem hard as brick. 

However, when at my friend's apartment I couldn't help but be distracted by the tremendously loud music and stomping from the ceiling above. It was absolutely irritating. And poor poor Billy Bop who was trying to sleep. My friend was considering calling in a noise complaint, but as I looked Billy Bop in the eyes I was reminded of our beloved Coase. With only two parties (my friend and her upstairs neighbor), and the only presumable transaction cost being the flight of stairs going up to see the neighbor (sorry Coase, there will never be "no" transaction cost), surely a solution could be worked out amongst them both without having to involve an official regulatory body. 

Granted, a third party may be needed to determine who's at fault. If the neighbors were at fault, perhaps they could pay Sarrah in kitten food to continue playing their loud music, hence internalizing the externality. Seeing Billy Bop's face, I could tell he was an eager economist-in-the-making.

Fig 1: Billy Bop

(a kitten that is adorable)

Borda Saves Diwali

Today, my suitemates and I wanted to do something to celebrate Diwali. Our options ranged from getting dinner at Kanak, lighting fireworks, watching India's cricket match against the Netherlands, or going shopping for new clothes While we had several options on what to do, we were struggling to pick just one as all of us did not have the time to do all of these activites.

All of my suitemates have taken ECON 2010, and when one of them jokingly brought up comparing our utils, my Econ brain turned on, and within a few seconds, I realized a possible solution to our problem was using the Borda Count. I quickly told my friends about this method and instructed everyone to rank the events based on their individual interests. We would assign a point value to each rank, and then sum up each event's points. The activity with the most points would be the one we would partake in.

I then created a table with everyone's preferences ranked and used a point system where 1st gets 4 points, 2nd gets 3 points, 3rd gets 2 points, and 4th gets 1 point.

	Kanak Dinner	Fireworks	Watching Cricket	Clothes Shopping
Krishna	1	3	2	4
Saahas	3	2	1	4
Raj	2	4	3	1
Siva	4	3	1	2
Quinn	2	1	4	3

Kanak = 4 + 2 + 3 + 1 + 3 = 13

Fireworks = 2 + 3 + 1 + 2 + 4 = 12

Cricket = 3 + 4 + 2 + 4 + 1 = 14 (Winner)

Clothes Shopping = 1 + 1 + 4 + 3 + 2 = 11

After computing everything, I was able to determine that watching India's cricket match was the activity all of us would do for today, as it had received the most amount of points (14). The cricket match was fun to watch as India won their match and is now advancing to the World Cup semifinals this coming Wednesday!

Rent Sea-king Behavior

Bristol Bay, Alaska, is the most bountiful source of sockeye salmon in the world. In 2023, the Bristol Bay salmon fishery harvested 40.6 million sockeye salmon for a total value of nearly $117 million, and has historically provided over 50% of the worldwide supply of the fish. In order to maintain a sustainable population, the fishing season is restricted to just 6 weeks, and boat length is restricted to 32 feet to discourage over-fishing.

However, these indirect regulations on the total catch have presented opportunities for some rent sea-king behavior. Fisherman must race from the docks to the fishing grounds, and once they are out there they battle dangerously – veering wildly towards each other, crowding the waters and tangling their nets together, all of which reduces fishing efficiency. Additionally, the boat length restriction didn't account for all dimensions, and so fisherman began investing money into building upwards instead of outwards – the two boats pictured below are both 32 feet long for example:

5'11 vs 6'0

A potential solution to these issues introduced by the regulatory catch restrictions could be to instead allocate quotas on catch amounts through auction. Similar to the auction we ran in class, this approach would better select the fishermen with the greatest benefit of salmon production without any of the aforementioned wasteful and dangerous activities.

Shirking in SNL

         This week on Saturday Night Live’s Weekend Update segment, they featured one of the cast members as a “guest” titled “Your Co-Worker Who Is Extremely Busy Doing Seemingly Nothing.” The character was one that was dressed professionally, carrying all a sticky-note-covered laptop, pages and pages of loose paper, three cell phones and a giant water bottle that just kept talking about how busy she was with work and how important her job was, despite the fact that she could never really say what she did and all of 900 emails were from horoscope.com. 

As Colin Jost was interviewing her, I realized that her character was a great example of a shirker. She “worked and worked and worked” but actually just wasted everyone’s time and money by getting literally nothing done. Whoever her boss was could possibly implement some ways to get her off of horoscope.com and actually working, like maybe setting up firewalls on her work computer and phones so that she could only access work-related sites, or tie her pay to objective metrics or tasks that she accomplishes, or just sit next to her and make sure she’s working. Let's just hope this co-worker never decides to run for Congress, because she would shirk constantly and truly demonstrate the Principal Agent Problem.