- practice that attempts to establish a political advantage for a particular party or group by
manipulating district boundaries to create partisan advantaged districts
Politicians and Responsibility
- Goals? To do what is best for society, to take junkets overseas, to have power and
prestige, to be wealthy
o Primary goal: to be re-elected
o Consequently… support policies that majority of people are supporting, spending
money on campaigns, high discount rate (engage in projects that have short
E.g. reforestation (lots of money now, but benefits won’t rise till 70 years
- Iclicker: 50 richest members of Congress have wealth of $1.6 billion; China’s People’s
Congress – 50 richest has wealth of $95 billion.
- GOVERNMENT - Not just single entity Assistant Deputy Minister
- Point of contact to influence government
- Deputy Minister - Direct bureaucracy
What do Bureaucrats Want?
- Power and prestige
- Salaries, benefits, other perks (e.g. carpets, etc)
- Shirk (avoid duty or responsibility)… lead “the quiet life”
- Tenure (not going to be fired)
Similar to business executives, there may e a principal-agent problem:
- Principal: the Minister
- Why might it be worse? Than in private sector?
o Bureaucrats stay even if government changes
o Not same measure of success (firms – make profit), but in government – not
o Affects everybody has stake, the public
Shareholders – achieve profit or you’re out; incentive to be involved
Here, free-riding problem may be worse
Consequently they may: - Maximize their agency’s budget
- Maximize slack
- Unreasonably swayed by pressure groups
- Total benefit at Qc = total area under demand curve
- Niskanen – politician “knows” Qc, but cannot observe MC.
o Bureaucrat knows MC
o Asks for (almost all of) ACQc0, then provides Qc.
o This maximizes slack = ACPc
- Have “market power” (even if output not priced)
- Maximize slack = ACQc0 – PcCQc0: end up taking more of the consumer surplus than a
- They get the slack: High salaries, perks, inefficiency, etc
- Then what happens?
o Cost will rise, x-inefficiency
- Deciding whether or not government pays for drugs o Both cases, voted YES
o But those with financial ties to industry – voted for (9:1)
o On panel, but may be paid to vote, like working on another drug
- Focusing on C – transfer - Transf