My intuition is that sometimes having a large budget for a sake of a large budget is desirable even when only wasted on stuff like paper because it's more prestigious. For example, at a dinner party, you can brag about how big your budget is or how many people you direct.
But other times certainly you are right and the bureaucrats are more concerned with massaging the budget to get themselves more direct perks.
Don't forget the career-advancement motive. A larger budget (but not a larger surplus) shows you're "capable" of handling a larger agency - you may get promoted to a more prestigious position.
When a bureaucrat cannot pocket government money as direct personal profit, they maximize their utility through non-pecuniary benefits—often referred to in economics as "bureaucratic fat" or "perquisites" (perks).
To improve their quality of living and status, the bureaucrat will deploy the $1 million on:
Physical Comforts: Upgrading to luxurious office spaces, buying high-end ergonomic furniture, or installing premium interior decor.
Professional Luxury: Upgrading travel arrangements to first-class, booking expensive multi-day conferences at resort destinations, and hiring personal drivers or security details.
Empire Building: Hiring more staff and assistants. While this increases output marginally, its primary utility to the bureaucrat is elevating their prestige, reducing their personal workload, and making them look more powerful.
Technological Status Symbols: Purchasing top-of-the-line, cutting-edge tech infrastructure, even if the current mission does not strictly require it.
This is the most illuminating way of looking at the problem, I think. It is important to appreciate that the bureaucrat can't take anything home. The things you list, and there are many more, all have in common that they contribute to output, but there is a maximum contribution, after which the bureaucrat could consume more fun inputs but the owner of the bureau could not consume more output. Which combination the bureaucrat chooses depends on his incentives, which in turn depends on information asymmetries as indicated by David.
The bureaucrat's indifference curves depend on the probability of getting caught wasting. So a bureaucrat will normally waste some. In a bureaucracy collecting a salt tax it can be posited that the probability of getting caught is very high, so that the bureaucrat will act more like a sole proprietor. NASA doesn't. If the owners are complete dolts, the bureaucrat can use the fun input to produce all of output. [This sounds like the Niskanen bureaucrat, a special case, but that's a guess. I haven't tried to formalize.]
This also demonstrates the similarities between private bureaucracies and public bureaucracies. There is plenty of of information asymmetry in private firms, too. They have their own governance problems as well -- many stockholders in private firms and many stakeholders in government.
I think I got this way of looking at the world from Gordon Tullock, but I was able to draw some diagrams. :-)
Exactly. This is public choice theory at its core.
PS—There’s a brilliant book by Peter Leeson, The Invisible Hook, which looks at the economics of piracy in the 17th and 18th centuries. Leeson shows how pirates, using rational choice theory, addressed many of the asymmetrical problems and free riders in particular. I also believe that Leeson and David with one other economist wrote a book together—Legal Systems Very Different from Ours.
Amusingly, my feed reader showed this post immediately preceding the xkcd comic - https://xkcd.com/3249/ - "How much trouble do you think we'll be in when they find out we used the Neutrino Project grant money to throw a huge pool party instead?"
For a while, I've been thinking of moral mission in institutional jobs. The evidence shows that police officers who are focused on youth reform undergo a sea change in thinking. They are less likely to invoke the 'let the courts decide' fatalism, instead choosing to claim accountability and responsibility for actively reforming youth. Youth reform tends to work better than reform more generally, which tends to have pretty dire outcomes over the long-range, especially if one looks at the best metric, employment levels 10 years out. Youth reform is particularly effective when it is paired with vocational training by a male mentor in better paid, higher status, blue collar roles.
My broader point was that one cannot change embedded institutional bureaucracies through incentives alone. One has to look to moral mission, or psychic profits. If a political movement which came to power with a list of three highly desirable and popular public policy aims, would the promise to the bureaucracy that a portion of savings would be allocated to these goals, and making the savings would result in both promotions, but more importantly prestige, be enough to reprogram the priorities of the bureaucrat? It's my instinct that incentives alone won't cut it.
The key is prestige. Social status is a primary driver of human motivation. It's a dangerous game, though. Introducing morality into government has a nasty habit of producing dystopias, as well as the ubiquitous, undesirable and unsavoury strain of Fabian elite managerialism with which we've all become so familiar.
An idea which just came to me is some variation of dividing an apple, one divides it, the other gets first choice. Is there a multi-slice variation?
Aside from the technical workers who do have to pretend to know something, assume that mid-level bureaucrats are interchangeable pencil pushers. Have each bureaucrat outfit an office, then assign them randomly.
Wouldn't help with travel costs and other perks. Probably wouldn't help much at all. But mayhaps it would lead to some better related ideas.
My intuition is that sometimes having a large budget for a sake of a large budget is desirable even when only wasted on stuff like paper because it's more prestigious. For example, at a dinner party, you can brag about how big your budget is or how many people you direct.
But other times certainly you are right and the bureaucrats are more concerned with massaging the budget to get themselves more direct perks.
Don't forget the career-advancement motive. A larger budget (but not a larger surplus) shows you're "capable" of handling a larger agency - you may get promoted to a more prestigious position.
When a bureaucrat cannot pocket government money as direct personal profit, they maximize their utility through non-pecuniary benefits—often referred to in economics as "bureaucratic fat" or "perquisites" (perks).
To improve their quality of living and status, the bureaucrat will deploy the $1 million on:
Physical Comforts: Upgrading to luxurious office spaces, buying high-end ergonomic furniture, or installing premium interior decor.
Professional Luxury: Upgrading travel arrangements to first-class, booking expensive multi-day conferences at resort destinations, and hiring personal drivers or security details.
Empire Building: Hiring more staff and assistants. While this increases output marginally, its primary utility to the bureaucrat is elevating their prestige, reducing their personal workload, and making them look more powerful.
Technological Status Symbols: Purchasing top-of-the-line, cutting-edge tech infrastructure, even if the current mission does not strictly require it.
This is the most illuminating way of looking at the problem, I think. It is important to appreciate that the bureaucrat can't take anything home. The things you list, and there are many more, all have in common that they contribute to output, but there is a maximum contribution, after which the bureaucrat could consume more fun inputs but the owner of the bureau could not consume more output. Which combination the bureaucrat chooses depends on his incentives, which in turn depends on information asymmetries as indicated by David.
The bureaucrat's indifference curves depend on the probability of getting caught wasting. So a bureaucrat will normally waste some. In a bureaucracy collecting a salt tax it can be posited that the probability of getting caught is very high, so that the bureaucrat will act more like a sole proprietor. NASA doesn't. If the owners are complete dolts, the bureaucrat can use the fun input to produce all of output. [This sounds like the Niskanen bureaucrat, a special case, but that's a guess. I haven't tried to formalize.]
This also demonstrates the similarities between private bureaucracies and public bureaucracies. There is plenty of of information asymmetry in private firms, too. They have their own governance problems as well -- many stockholders in private firms and many stakeholders in government.
I think I got this way of looking at the world from Gordon Tullock, but I was able to draw some diagrams. :-)
Exactly. This is public choice theory at its core.
PS—There’s a brilliant book by Peter Leeson, The Invisible Hook, which looks at the economics of piracy in the 17th and 18th centuries. Leeson shows how pirates, using rational choice theory, addressed many of the asymmetrical problems and free riders in particular. I also believe that Leeson and David with one other economist wrote a book together—Legal Systems Very Different from Ours.
Amusingly, my feed reader showed this post immediately preceding the xkcd comic - https://xkcd.com/3249/ - "How much trouble do you think we'll be in when they find out we used the Neutrino Project grant money to throw a huge pool party instead?"
For a while, I've been thinking of moral mission in institutional jobs. The evidence shows that police officers who are focused on youth reform undergo a sea change in thinking. They are less likely to invoke the 'let the courts decide' fatalism, instead choosing to claim accountability and responsibility for actively reforming youth. Youth reform tends to work better than reform more generally, which tends to have pretty dire outcomes over the long-range, especially if one looks at the best metric, employment levels 10 years out. Youth reform is particularly effective when it is paired with vocational training by a male mentor in better paid, higher status, blue collar roles.
My broader point was that one cannot change embedded institutional bureaucracies through incentives alone. One has to look to moral mission, or psychic profits. If a political movement which came to power with a list of three highly desirable and popular public policy aims, would the promise to the bureaucracy that a portion of savings would be allocated to these goals, and making the savings would result in both promotions, but more importantly prestige, be enough to reprogram the priorities of the bureaucrat? It's my instinct that incentives alone won't cut it.
The key is prestige. Social status is a primary driver of human motivation. It's a dangerous game, though. Introducing morality into government has a nasty habit of producing dystopias, as well as the ubiquitous, undesirable and unsavoury strain of Fabian elite managerialism with which we've all become so familiar.
Adam Smith aptly describes the Salaryman, whom I define, idiosyncratically, as a person whose sole economic contribution is to draw a salary.
An idea which just came to me is some variation of dividing an apple, one divides it, the other gets first choice. Is there a multi-slice variation?
Aside from the technical workers who do have to pretend to know something, assume that mid-level bureaucrats are interchangeable pencil pushers. Have each bureaucrat outfit an office, then assign them randomly.
Wouldn't help with travel costs and other perks. Probably wouldn't help much at all. But mayhaps it would lead to some better related ideas.