Public Choice and the Government Bureaucracy

Abstract

While civil servants have been the object of many more studies than the managers of state-owned enterprises, much of the conventional wisdom regarding civil servants’ attitudes towards privatisation is not accurate, at least not in this case. Civil servants are commonly perceived as the obstacle to the reduction of any government agency or programme, and especially to privatisation. This view is reinforced by the public choice arguments set forth in the budget-maximising model. Budget-maximising theories assume (mostly from American experience) that bureaucrats not only want the power and status that comes with bigger governmental departments, but the pecuniary benefits that come through bigger budgets. The theory predicts that bureaucrats always demand bigger budgets and search for new means to create bigger departments (Niskanen, 1971; Goodin, 1982; Mueller, 1989; Peltzman, 1980; Melzer and Richard, 1978). In the post-war period, departmental budgets have mostly grown, providing some prima facie evidence that these assumptions could be correct. The specific evidence, however, is thin.