Bureaucrats, Legislators, and the Size of Government

Abstract

Some recent theories have blamed the growth of government on budget-maximizing bureaucrats who are assumedly capable of imposing their most preferred budget-output combination on legislatures, subject to cost and demand constraints. However, theoretical examination of the range of bargaining outcomes that might occur between bureau and legislature shows that budget-maximizing behavior does not necessarily lead to super-optimal levels of production, nor do the suggested reforms of competition and privatization necessarily improve the situation. In this bargaining model, the central determinants of governmental growth are not budget-maximizing bureaucrats, but the legislature's decisions regarding mode of oversight and form of internal organization.