POLITICAL ECONOMY AND PUBLIC ADMINISTRATION
20:834:541.90
Syllabus, Winter 2014
School of Public Affairs and Administration
Rutgers University- Newark
* This syllabus is subject to change
Instructor: Bokgyo Jeong, Ph.D.
Course Dates and Times: December 23, and January 2 – 17
Class Hours and Location: online course
Office Hours: Online office hours will be announced (I will also be available via email)
Office: TBA
E-mail: jeong@rmu.edu (my Rutgers e-mail will be announced soon.)
Course Description
This lecture begins with the simple question: can we apply economic principles to public
decisions? We will explore this question in theoretical perspectives and apply subsequently
proposed answers to real public policy issues. In other words, this course offers microeconomic
and macroeconomic frameworks and tools to analyze and understand public administration,
including both the public and nonprofit sectors.
This course differs from other courses in economics and political science departments as it pays
attention to the political constraints that exist in public policy and administrative decisions. The
discipline of political economy provides a prism that takes political constraints into account
when applying economic theories to real world practice. Public administration is concerned with
implementation of government policy and management of public organizations, including
government agencies and nonprofit organizations. In nature, public administration connotes
political process, as well as scientific management. By applying principles of political economy
to public administration, this lecture intends to provide comprehensive and practical tools to
analyze complex public policy issues and public management tasks.
In this course, students will apply the lessons from this course to their own areas of interests
including but not limited to: foreign/security policy, education policy, health policy,
financial/fiscal policy, labor market policy, housing policy, environment policy, information
technology policy, and emergency management policy. The lessons from this course apply to
comprehensive public administration sub-areas including human resource management,
performance management, leadership management, strategic management, financial management,
nonprofit management and management ethics.
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Learning Objectives
The main objective of this course is to offer a theoretical framework and practical tools to
conduct economic analysis to political and public policy issues. At the end of the course,
students will be able to answer to the following questions:
1. What is the major difference between private sector and public sector decisions?
2. How can political constraints be taken into account as measurable factors in public
decisions?
3. Which actors are more effective in solving social problems (federal and local government
agencies, private companies, and nonprofit organizations)?
4. How can we compare varied public service delivery options in terms of efficiency and
equity criteria?
5. What kinds of policy interventions can government use as public policy tools?
6. How can government complement the shortcoming of market system as defined as
market failure?
7. What are the limits do government interventions have or what kinds of unintended
consequences do government interventions bring?
8. Are there any factors that are not reflected in the market price system of services and
goods (entitled externalities)? If so, how can public decision makers take these factors
into account for their decisions?
9. What are the main characteristics of public goods that are different from those of private
goods?
10. How can we compare public policy alternatives represented by cost-benefit analysis?
11. How can we characterize behaviors of government agencies from the standpoint of
political economics?
12. Is the political economy of the nonprofit sector characterized differently because of the
different nature of voluntary organizations?
13. How has a globalized market affected public administration?
COURSE REQUIREMENTS AND GRADING POLICY
Reading assignments (40%)
Students will have to submit minimum 10 daily reading comments on respective daily readings
among the 13 sessions. The comment of each session should be between 300 and 500 words. The
comments may include student’s critique of the readings, his or her understanding and interpretation
of corresponding week’s theoretical concepts, his or her application of the theoretical concepts to
practical policy or administrative issues. This daily assignment will be evaluated by the criteria of
critical thinking, comprehensive understanding, creative thinking, and clear and logical arguments
in writing. Each session’s (10 sessions except the first introduction part and the Blackboard
discussion leading session of each student) reading assignment will constitute 4% of total final
grade (10 session x 4 points = 40 points). Students are not required to submit comments on the first
session and session(s) in which he or she serves as discussion group leader. Students can still submit
comments voluntarily even on the session for his or her discussion leading. In that case, the top 10
higher scored comments will be counted for the final grade. For example, if one student submitted
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11 comments and if 9 comments received 4 points and 2 comments received 3 points, then the
student will get the total (9 sessions x 4 points + 1session x 3 points= 39 points).
Blackboard Discussion Leading & Participation (25%)
Students are required to lead discussions at one (or two) of the sessions on the black board. The
discussion leaders will summarize the main topic and lessons, and discuss applicability and
implications of the topic of that session not earlier than 6:00 pm of the prior day of the session and
not later than 11:59 am in the morning on the corresponding session date. Discussion leaders must
post two to three discussion topics of the session. Students other than the discussion leader are
requested to respond to the posted discussion questions and post their answers to the blackboard at
least in two sessions during the class. The answers and discussions will be evaluated by their
substance of contribution as well as their actual number of posts. The substance of contribution
checks whether the post contains actual arguments or evidence beyond repetition of existing
discussions on the board or just perfunctory expression of agreement or disagreement.
(Discussion leading 15 points + discussion participation 10 points= 25 points)
Final public policy brief: cost-benefit analysis (35%): Each student will write a short policy brief
(between 3 and 5 pages, single spaced) based on public policy analysis or cost-benefit analysis.
Students will assume that they are a policy advisor or professional consultant to a specific ministry
of one country. Each student will pick one public policy issue that needs special attention to provide
multiple solutions to address the introduced problems. The hypothetical social problems and public
policy issues should be based on actual information based on real world data. Please use the
following website for the actual public administration system and situation in each country.
Students should use the following data source on public administration profiles provided by the
United Nations. This list contains 147 countries’ most recent public administration profile. Students
are strongly encouraged to find additional sources including but not limited to government websites,
academic journals, and media channels.
<Resources for public policy meme>
United Nations Public Administration Country Profiles - Division for Public Administration and
Development Management (DPADM) & Department of Economic and Social Affairs (DESA) of
the United Nations
http://www.unpan.org/DPADM/ProductsServices/ThematicPortals/PublicAdministrationCountry
Profiles/tabid/677/Default.aspx
Main contents of the public administration country profile include:
1. General Information (People, Economy, Public Spending, Public Sector Employment and
Wages)
2. Legal Structure (Legislative Branch, Executive Branch, Judiciary Branch, Local
Government)
3. The State and Civil Society (Ombudsperson, Civil Society)
4. Civil Service (Legal basis, Recruitment, Promotion, Remuneration, Training, Gender)
5. Ethics and Civil Service (Corruption, Ethics)
6. e-Government (e-Government Readiness, e-Participation)
Students are required to conduct the following tasks:
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1) Please choose one country that you are most familiar with or you are most interested in.
2) Look into the United Nations Public Administration Country Profile of your selected
country and describe the main characteristics of the public administration system of your
selected country compared to those of other countries in the profiles (Minimum 300
words and maximum 500 words)
3) Which public policy issues are currently discussed and debated without major consensus?
Choose one public policy area and its corresponding ministry in that country that is
currently causing public debates over public policy options or alternatives (e.g. United
States, health care reform or gun control). Please introduce the main public policy
debates over policy alternatives. (Minimum 300 words and maximum 500 words)
4) Assess and describe the major policy decision making, service delivery or policy
implementation system in regards to the selected public policy issue within selected
country and selected ministry (Minimum 500 words and maximum 750 words)
5) Please perform a cost-benefit analysis on the suggested policy options. You may have to
include the following information, though not all elements will apply to your paper
(Minimum 1,250 words and maximum 1,500 words).
a. Develop alternatives
b. Determine the scope of the decision
c. Determine the costs of each alternative
d. Determine the benefits of each alternative
e. Quantify the costs and benefits of each alternative
f. Evaluate the costs versus the benefits
g. Evaluate the equity impacts
6) Summarize your cost-benefit analysis and provide policy implication as a policy advisory
proposal to the Minister of your selected country (Minimum 250 words and maximum
300 words).
Course Readings
There is no one text book for this course. However, chapters and sections from the following
books will be used as main sources of readings for this course.
Blais, André, and Stéphane Dion. The Budget-Maximizing Bureaucrat: Appraisals and Evidence.
Pitt Series in Policy and Institutional Studies. Pittsburgh, Pa.: University of Pittsburgh Press,
1991.
Dollery, Brian, & Wallis, Joe. (2003). The Political Economy of the Voluntary Sector: A
Reappraisal of the Comparative Institutional Advantage of Voluntary Organisations.
Cheltenham, UK ; Northhampton, MA: Edward Elgar.
Drazen, Allan. (2000). Political economy in macroeconomics. Princeton, N.J.: Princeton
University Press.
Ferguson, Thomas, and Joel Rogers. The Political Economy: Readings in the Politics and
Economics of American Public Policy. ME Sharpe, 1984.
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Fuguitt, Diana, and Shanton J. Wilcox. Cost-Benefit Analysis for Public Sector Decision Makers.
Westport, Conn: Quorum, 1999.
Horn, Murray J. The Political Economy of Public Administration: Institutional Choice in the
Public Sector. Cambridge University Press, 1995.
Miller, Roger LeRoy, Daniel K. Benjamin, and Douglass Cecil North. The economics of public
issues. Prentice Hall, 18 Edition, 2013.
Oatley, Thomas H. Debates in International Political Economy. Longman, 2012.
Richardson, Steven O. The Political Economy of Bureaucracy. Routledge, 2011.
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011.
Stiglitz, Joseph E. Economics of the Public Sector. 3rd ed. New York: W. W. Norton, 2000.
Wolfson, Martin H., and Gerald A. Epstein. The Handbook of the Political Economy of
Financial Crises. New York: Oxford University Press, 2013.
* Student may refer to a textbook on public administration.
Holzer, Marc, and Richard W. Schwester, Public Administration: An Introduction, M.E.Sharpe,
2011
COURSE REQUIREMENTS AND GRADING POLICY
Grading Policy:
A 90 – 100
B+ 85 – 89
B 80 – 84
B - 75 - 79
C+ 70 – 74
C 60 – 69
F Below 60
Academic Integrity Policy:
Students must observe the school’s academic integrity policy:
(Please look into the following page for your information. http://academicintegrity.rutgers.edu/ )
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Properly acknowledge and cite all use of the ideas, results, or words of others
Properly acknowledge all contributors to a given piece of work
Make sure that all work submitted as his or her own in a course or other academic
activity is produced without the aid of unsanctioned materials or unsanctioned
collaboration
Obtain all data or results by ethical means and report them accurately without
suppressing any results inconsistent with his or her interpretation or conclusions
Treat all other students in an ethical manner, respecting their integrity and right to pursue
their educational goals without interference. This requires that a student neither facilitate
academic dishonesty by others nor obstruct their academic progress
Uphold the canons of the ethical or professional code of the profession for which he or
she is preparing.
Please know that plagiarism and cheating will never be excused under any circumstances.
Violation of these policies leads to immediate failure of the course. Be advised that all
assignments will be checked for plagiarism using the online software.
Course Schedule and Main Topics
Section I. Introduction
[Lecture 1] December 23: Introduction of Political Economy and Public Administration
Lecture goals: This lecture introduces the concept of political economy and its main
characteristics. This lecture also overviews the foundations of economics and public
administration for the winter semester.
Drazen, Allan. Political economy in macroeconomics. Princeton, N.J.: Princeton University
Press. 2000. Ch. 1.
Holzer, Marc, and Richard W. Schwester, Public Administration: An Introduction, M.E.Sharpe,
2011
Section II. Market Economy and Market Dynamics
[Lecture 2] January 2: Foundations of Economics
Lecture goals: This lecture introduces principles of microeconomics. Student will overview of
the foundations of economics and learn how market allocates its scarce resources to the
production of goods and services in a society.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Part I.
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Miller, Roger LeRoy, Daniel K. Benjamin, and Douglass Cecil North. The economics of public
issues. Prentice Hall, 18th edition, 2013.
Section III. Government Interventions in a Market Economy
[Lecture 3] January 3: Market Failure and Market Interventions
Lecture goals: This lecture introduces the efficiency criteria and market economy, the concept of
market failures, equity issues, and the rationale of government interventions.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 6.
Wolf, Charles. "Market and Non-Market Failures: Comparison and Assessment." Journal of
Public Policy 7, no. 01 (1987): 43-70.
[Lecture 4] January 6: Welfare Economics and Market Interventions
Lecture goals: Students will learn how major decisions affect the allocation of resources and
well-being among members of society. This lecture starts with the introduction of the concept of
social surplus and perfect competition and it will examine how social surplus is influenced by
market interventions.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 7.
Stiglitz, Joseph E. Economics of the Public Sector. 3rd ed. New York: W. W. Norton, 2000. Part
II.
[Lecture 5] January 7: Public Goods
Lecture goals: This lecture introduces the concept of public goods, which are characterized by
nonrivalry and nonexclusivity of consumption. This lecture explains how determining market
demand in private production differs from determining aggregate demand in public production.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 10.
Montgomery, Michael R, and Richard Bean. "Market Failure, Government Failure, and the
Private Supply of Public Goods: The Case of Climate-Controlled Walkway Networks." Public
Choice 99, no. 3-4 (1999): 403-37.
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Ostrom, Vincent, and Elinor Ostrom. "Public goods and public choices." InPolycentricity and
local public economies. Readings from the workshop in political theory and policy analysis, pp.
75-105. Ed. Michael McGinnis, Ann Arbor.-University of Michigan Press, 1999.
[Lecture 6] January 8: Taxes, Subsidies, and Regulations
Lecture goals: This lecture details how taxes, subsidies, and regulations affect the production of
goods and services in the market. This lecture examines how tax, subsidies, and regulations
affect the allocation of resources in the society.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 7.
Wilson, James Q. "The Politics of Regulation." In The Political Economy: Readings in the
Politics and Economics of American Public Policy, edited by Thomas Ferguson and Joel Rogers,
pp 82-103. Armonk, NY: M.E. Sharpe, Inc., 1984.
[Lecture 7] January 9: Externalities and Imperfect Information
Lecture goals: This lecture introduces the concept of externalities and explains what happens
when actions of consumers or producers impose harm or costs (negative externalities) and when
the actions result in befits for others (positive externalities). This lecture will also show why and
how the perfect information can be broken in the real world. This lecture introduces imperfect
information as part of market failure.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 9 & 11.
Andrew, Brian. "Market Failure, Government Failure and Externalities in Climate Change
Mitigation: The Case for a Carbon Tax." Public Administration and Development 28, no. 5
(2008): 393-401.
Vatn, Arild, and Danielw Bromley. "Externalities - a Market Model Failure." Environmental and
Resource Economics 9, no. 2 (1997): 135-51.
Section IV. Tools for the Application of Economics to Public Administration
[Lecture 8] January 10: Cost-Benefit Analysis I - Methods
Lecture goals: This lecture introduces the methods of cost-benefit analysis. This lecture also
demonstrates how to categorize and quantify costs and benefits and provide a practical tool to
compare alternatives.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 12 -13.
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Fuguitt, Diana, and Shanton J. Wilcox. Cost-Benefit Analysis for Public Sector Decision Makers.
Westport, Conn: Quorum, 1999. Section II.
[Lecture 9] January 13: Cost-Benefit Analysis II - Applications
Lecture goals: This lecture looks into actual applications of cost-benefit analysis in public policy
areas. This will help student understand and learn how to use this analytical method.
Readings:
Steinemann, Anne. Microeconomics for public decisions. Askmar Publishing, 2011. Ch. 14.
Fuguitt, Diana, and Shanton J. Wilcox. Cost-Benefit Analysis for Public Sector Decision Makers.
Westport, Conn: Quorum, 1999.
Section V. Application of Political Economics to Public Sectors
[Lecture 10] January 14: The Political Economy of Bureaucracy and the Government
Sector
Lecture goals: This lecture explores the political economy of bureaucracy and the government
sector. This lecture will help students understand characteristics and behaviors of government
agencies from the standpoint of political economics.
Readings:
Horn, Murray J. The Political Economy of Public Administration: Institutional Choice in the
Public Sector. Cambridge University Press, 1995. Ch. 4.
Richardson, Steven O. The Political Economy of Bureaucracy. Routledge, 2011. Ch. 2 & 6.
Niskanen, William A. "A Reflection on Bureaucracy and Representative Government." In The
Budget-Maximizing Bureaucrat : Appraisals and Evidence, edited by André Blais and Stéphane
Dion. Pittsburgh, Pa.: University of Pittsburgh Press, 1991.
Blais, André, and Stéphane Dion. "Conclusion: Are Bureaucrats Budget Maximizers?". In The
Budget-Maximizing Bureaucrat: Appraisals and Evidence, edited by André Blais and Stéphane
Dion. Pittsburgh, Pa.: University of Pittsburgh Press, 1991.
Egeberg, Morten. "Bureaucrats as Public Policy-Makers and Their Self-Interests." Journal of
Theoretical Politics 7, no. 2 (April 1, 1995): 157-67.
[Lecture 11] January 15: The Political Economy of the Nonprofit Sector
Lecture goals: This lecture explores whether the political economy of the nonprofit sector is
characterized differently because of the different nature of voluntary organizations. This lecture
also highlights the logic of voluntary organizations’ response to market and government failure.
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Readings:
Dollery, Brian, & Wallis, Joe. The Political Economy of the Voluntary Sector: A Reappraisal of
the Comparative Institutional Advantage of Voluntary Organisations. Cheltenham, UK ;
Northhampton, MA: Edward Elgar. 2003. Ch 2-3.
Steinberg, Richard. "Economic Theories of Nonprofit Organizations." Ch.5. In The Nonprofit
Sector : A Research Handbook, edited by Walter W. Powell and Richard Steinberg. New Haven:
Yale University Press, 2006.
Clemens, Elisabeth S. "Constitution of Citizens : Political Theories of Nonprofit Organizations."
Ch. 9 In The Nonprofit Sector: A Research Handbook, edited by Walter W. Powell and Richard
Steinberg. New Haven: Yale University Press, 2006.
Salamon, Lester M. "Of Market Failure, Voluntary Failure, and Third-Party Government:
Toward a Theory of Government-Nonprofit Relations in the Modern Welfare State." Nonprofit
and Voluntary Sector Quarterly 16, no. 1-2 (1987): 29-49.
Section VI. International Political Economy and Public Administration
[Lecture 12] January 16: Globalization and Public Administration
Lecture goals: This lecture explores how globalization affected the public administration. This
lecture examines how the market affected politics and public administration in the international
level. In addition, this lecture explores the current challenges of financial crisis that have been
sweeping the world market and this lecture examines how this financial crisis has affected the
public administrations.
Readings:
Kettl, Donald F. "The Transformation of Governance: Globalization, Devolution, and the Role of
Government." Public Administration Review 60, no. 6 (2000): 488-97.
Farazmand, Ali. "Globalization and Public Administration." Public Administration Review 59,
no. 6 (1999): 509-22.
Wolfson, Martin H., and Gerald A. Epstein. The Handbook of the Political Economy of
Financial Crises. New York: Oxford University Press, 2013. Ch. 1.
Oatley, Thomas H. Debates in International Political Economy. Longman, 2012.
Section VII. Synthesis
[Lecture 13] January 17: Summing-Up: Political Economy and Public Administration
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Lecture goals: This study will summarize the whole winter session’s learning and lectures.
Student will have a chance to synthesize the individual concepts and lessons.
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Course Schedule:
Below are the schedule, readings and assignments with due dates (*This syllabus is subject to
change)
Readings and Assignments (Due by Midnight Each Day)
Schedule
Lecture 1
(December 23)
Lecture 2
(January 2)
Lecture 3
(January 3)
Lecture 4
(January 6)
Topics
Reading Due
Introduction of Political
Economy and Public
Administration
Foundations of Economics
- Steinemann, 2011. Part I.
Market Failure and Market
Interventions
Welfare Economics and
Market Interventions
- Steinemann, 2011. Ch. 6.
- Wolf, 1987.
- Steinemann, 2011. Ch. 7.
- Stiglitz, 2000, Part II.
- Steinemann, 2011. Ch. 10.
- Montgomery & Bean, 1999.
- Ostrom & Ostrom, 1999.
- Steinemann, 2011. Ch. 7.
- Wilson, 1984.
- Steinemann, 2011. Ch. 9 & 11.
- Andrew, 2008.
- Vatn & Bromley, 1997.
- Steinemann, 2011. Ch.12 -13.
- Fuguitt & Wilcox, 1999. Section II.
- Steinemann, 2011. Ch. 14.
Lecture 5
(January 7)
Public Goods
Lecture 6
(January 8)
Taxes, Subsidies, and
Regulations
Lecture 7
(January 9)
Externalities and Imperfect
Information
Lecture 8
(January 10)
Lecture 9
(January 13)
Cost-Benefit Analysis I –
Methods
Cost-Benefit Analysis II –
Applications
Lecture 10
(January 14)
The Political Economy of
Bureaucracy and the
Government Sector
Lecture 11
(January 15)
The Political Economy of
the Nonprofit Sector
Lecture 12
(January 16)
Globalization and Public
Administration
Lecture 13
(January 17)
Summing-Up: Political
Economy and Public
Administration
- Horn, 1995.Ch. 4.
- Richardson, 2011. Ch. 2 & 6.
- Niskanen, 1991.
- Blais & Dion, 1991.
- Egeberg, 1995.
- Dollery & Wallis, 2003, Ch. 2-3.
- Steinberg, 2006.
- Clemens, 2006.
- Salamon, 1987.
- Kettl, 2000.
- Farazmand, 1999.
- Wolfson, 2013.
- Oatley, 2012.
Assignments Due
Introduce yourself
and your areas of
interests &
academic
background in the
Discussion Board
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Reading comments
Final public policy
brief: cost-benefit
analysis
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