Updated chapter1.txt

pperez authored
revision 4d6f30d7c1f480758b22655ef9896544d8cd0410
# Section 1: The Public Management Context

## Government is the Problem

_Friedman, M. (1993). Why government is the problem. Hoover Press._

Author: Uk, Bolary; Editor: Sears, Kicia Kimberly

The article was adapted from the 1991 Wriston Lecture, which was presented in New York City. It argued that the government is the reason behind all of the major social problems in the United States.

Friedman argues that there are 10 major social problems created by government.

First, the US government’s expenditure on education is the second big social spending after military and it has tripled after adjusting to inflation in the last 30 years; however, the schools have been deteriorating.

Second, the lawlessness and crime in society. There are many laws to break, and a "[large] fraction of the laws fail to command the allegiance of the people." The government can enforce only laws that most people believe to be good laws, meaning the laws that most people would follow even if the laws did not exist. The issue here, the author asserts, is that there are too many actions rendered illegal that people generally believe to be "moral and proper," and this makes them difficult to enforce without resulting to brute force. Friedman argues that a major problem is the prohibition of drugs. He believes these laws end up doing more harm than good.

Third, homelessness made by government actions, such as rent control, empty mental facilities and turn people out on the streets with few options. Additionally, he argues "urban renewal and public housing programs have destroyed far more housing units than they have built."

Fourth, the collapse of family values such as increased "teenage pregnancies, illegitimate births, and one-parent families" were caused by "mistaken and misdirected" governmental policy.

Fifth, the high cost of housing and the destruction of housing is a problem. He argues this was caused by rent control policies in cities such as New York as well as expanded regulations for building. The costs of obtaining permits and building within regulations is too high.

Sixth, the high cost of Medical Care: the cost was 26 times as high in 1989 as it had been in 1946. Most of the increased cost after 1965 mostly pay for personnel the author views as ineffective.

Seventh, the savings and loans crisis produced by government, "first by the accelerating inflation in 1970s, which destroyed the net worth of many savings and loan institutions, then by poor regulation in the 1980s, by the increase in the amount covered by deposit insurance to $100,000, and...[the recent] heavy-handed handling of the crisis."

Eighth, the highway congestion. The government is unable to produce an adequate highway system compared to the increasing needs of automobile drivers.

Ninth, air control facilities run by the government are unable to effectively handle the number of airlines, planes, and personnel demanded by the airline industry.

Finally, Friedman mentiones miscellaneous issues such as the botched economic policies of the Bush Administration that contributed to the 1990-1991 recession, the over-regulation of industry, and agricultural policies that end up wasting food.

Friedman argues that the basic fucntions of governemnt are to "defend the nation against foreign enemies, to prevent coercion of some individuals by others within the country, to provide a means of deciding on our rules, and to adjudicate disputes."

Further, Friedman argues against his critics by attacking what he calls their best evidence that capitalism and private enterprise is the major cause of problems: pollution. He argues that in countries where industry is run by the government, pollution is far worse. In the United States, pollution is not as bad because private enterprise has found it more profitable to avoid pollution and therefore, the market adjusted and pollution did not get too bad. He argues that government does play a role in pollution regulation, but that the U.S. has created policies that are expensive and ineffective.

Friedman goes on to explain why he believes the government is the problem:

The influence of special interests which favor a few and impose small costs on many. Friedman uses the example of taxi regulation in New York City. Although the market would seem to support an increase of taxis in operation, the current drivers do not wish to compete and decrease their slice of the pie. Therefore, they lobby city hall to ensure governmental limitations are continued. This is an example of a deeper truth: the pursuit of self-interest. Friendman argues that this quality is in all people, whether they run private companies or governmental agencies.

"Self-interest is served by different actions in the private sphere than in the public sphere." An enterprise in private sector may succeed or fail. So their bottom line is to either make the enterprise work or to shut it down. However, the enterprise in the government sector has a very different bottom line. When it does not work, nobody likes to admit the mistake. Instead "they argue that the enterprise initially failed only because it was not pursued on a large enough scale." Friedman argues that this fundamental difference has caused failing governmental programs to spin out of control, as more money is pumped into them.

Another example in international sphere is the International Monetary Fund (IMF) and the World Bank. The IMF was established to administer a system of fixed exchange rates. After President Nixon closed the gold window in 1971, the fixed exchange rate system was replaced by a system of floating exchange rates. Instead of closing down, the IMF changed its function and expanded to be a relief agency with greater financial support from its sponsors.

After WWII the US had wage and price control. In order to recruit employees, many employers began to offer health care as a fringe benefit to attract workers. "As a new benefit, it took years for the Internal Revenue Service to require the cost of the medical care to be included in the reported taxable income of the employees." Later the wage and price control were eliminated, but the tax exemption of health benefits continued and employers providing benefits to workers has been normalized as an essential right.

Overall, Friedman argues the issue is that the government is spending too much on the wrong things, public officials are "led by an invisible hand to serve private interests," and people have no voice in governmental institutions. According to James Payne’s study of 14 different government hearings dealing with spending issues, "of the 1,060 witnesses who appeared, 47 percent were federal administrators, and another 10 percent were state and local officials...and 6 percent were congressmen". In short, the spending programs are shaped by government officials.

Friedman argues that there are many ways to correct these problems. The one that he emphasizes is creating term limits for government officials, particularly in Congress. He believes this would eliminate the conflict of interest that positions representatives as direct beneficiaries of very large governmental bodies. Further, he argues the people would support term limits, as they have in several state elections. Though he understands this would not eliminate the multiple problems he delineates, he thinks this would be a huge step in the right direction.

## Reinventing Government

_Clark, CS, “Reinventing Government: Two Decades Later.” Government Executive: April 26, 2013._

Author: El Ayachi, Youssef; Editor: Sarawat, Fariha

## Is Public Management Unique?

_Boyne, G. A. (2002): Public and Private Management: What’s the Difference, in: Journal of Management Studies, 39:1, pp. 97-122._

Author: Creedon Jr, John Thomas; Editor: Hamlin, Madeleine Rose

In Public and Private Management: What's the Difference, Arthur Boyne argues that there is a lack of evidence to support the thesis that public and private sector organizations are too different to apply private sector managerial practices to. The article statistically analyzes and critiques 34 empirical studies by critics of New Public Management (NPM). While much of the evidence supports that they are very different on the surface, Boyne argues that few of them are statistically significant.

Boynes breaks down the analysis of the studies under four theoretical interpretations of publicness on the differences between public and private organizations:
- Publicness an organizational environments
- Organizational goals
- Organizational structures
- Values of managers.

Under each of these theoretical concepts, Boynes evaluates the statistical analyses of empirical evidence and claims assumed by the research in a number of subcateogries. Boynes analysis for each will be briefly summarized below:

**Publicness an organizational environments**
- Complexity
- Permeability: All studies support that publiv orgs are more open to environmental infuences but statistical results provide weak evidence of this.
- Instability
- Absence of competitive pressures

**- Organizational goals**
- Absence of equity and accountability in private sector: Results are mixed.
- Multiple goals and stakeholders in public sector: No tests to support one way or the other.
- Goals of public organizations more vague

**Organizational structures**
- Public organizations more bureaucratic: Majority of studies find strong support but there is no statistical controls of organizaitonal size.
- More red tape in public organizations: If red tape is interpreted as procedural delay then there is some support but the evidence is not always consistent with the conclusion.
- Lower managerial autonomy in public organizations: Statistical results mixed and inconclusive.

**Values of managers.**
- Public sector less materialistic: Strong evidence that public sector managers are less materialistic than their private sector counterparts.
- Public sector ethos: Evidence is partly consistent with the view that managers are driven primarily to serve the public interest.
- Less organizational commitment in public sector: 3/5ths of studies consistent with hypothesis that organizational commitment is weaker in public sector.

Some criticisms of the empirical evidence is that they were primarily done in the United States which possesses unique characteristics that define the public and private sectors when compared to many other coutnries. Additionally, the studies were all performed between 1960-1999, with most being from the late 1970's and early 1980's before NPM and a strong movement to apply private sector practices to public sector organizations. Moreover there were omissions of explanatory variables, little control, and few multivariate analyses. Boynes notes that all of these factors may have skew results.

Boynes utilizes a support score of 50% or higher to indicate whether instances would occur by chance or alone but argues this number should really be higher. The author concludes that there is little statistical significance that their are differences so fundamental between the public and private sectors that private sector management practices could not effectively be applied to public organizations. Only three studies met Boynes statistical threshold of significance: Public organizations are more bureaucratic, public managers are less materialistic, and organizational commitment is weaker in the public sector. Boynes concludes that that this not to say there are not differences but there remains little empirical grounds support that theory and oppose NPM's utilizaiton of private sector practices.

## Managing Government, Governing Management

_Mintzberg, H. (1996). “Managing Government, Governing Management.” Harvard Business Review, May, 75-83. _

Author: Dorries, Joshua Wayne; Editor: Checksfield, Molly Wentworth

## Managers Not MBAs

_Moynihan, Donald P. (2007) Review of Managers not MBAs, by Henry Mintzberg. Public Management Review 9(1): 155-158. _

Author: Washington, Layvon Q; Editor: Perez, Philip A

Donald Moynihan, provides an introspective review of Henry Mintzberg’s book, _Managers, not MBAs_. Moynihan explores and concurs with Mintzberg’s criticisms of MBAs today and the impact that it has on management.

Moynihan argues that current MBA programs do not resemble “actual management,” but rather “creates illusions” about what management ought to be. ArticulatMoynihan articulates the poingt that while MBA programs teaches critical skills, such as analytics, ithey neglects the craft based on experience. As a result, graduates are overly analytical and/ or engage in a "heroic pretense" that they are managers. Mintzberg and Moynihan looks toview MPA programs as the best options for managers because ithey drives individuals to create a social impact. The clear separator between MPA and MBA programs, as stated, is the corrupting influence of money. MBA programstudents often comes with the notion that fortunes will be made after graduating because of the promise of high-paying jobs. Given that MPA candidates cannot expect to make a huge fortune, it is often the motivating force for them to become active public servants, which is a trait that is absent from individuals who hold MBAs, Mintzberg and Moynihan argues.

Given the benefit of professional experience in public administration, Mintzberg proposes the creation of a Masters Program in Practicing Management (MPM). This model would be for individuals between the ages 35 and 45, who have significant management experience. The MPM would require individuals to leave their jobs for intensive two-week periods. However, Moynihan argues that this would exclude most of the population of current MPA programs because the MPA “provides different benefits to students at different periods of their careers” (p.157). As students with more professional experience have a head start and opportunity to understand “relevance of concepts and analytical skills as a balance to managerial craft” (p.157).

The benefits of the MPM proposed by Mintzberg are stem from classroom pedagogies that emphasize practical experience and participation. "Faculty should lecture less, facilitate more, enlarge participation, defer to the experience of their students, and encourage them to learn from one another" (p. 157). Based on Mintzberg's proposal, Moynihan suggests MPA programs should make it clear to students that analytics are a small part of management, and that the "true art and craft of management" can only be developed through learning soft skills such as effective communication, teamwork, the ability to negotiate, ethics, and leadership. Furthermore, faculty at MPA programs should assign work that is less theoretical and more relevant and digestable for students. Mintzberg offers strategies in his book that can be utilized by individual professors, while others would necessitate an overhaul of professional education programs.

Mintzberg critiques of MBAs and proposal for MPM are attempts to make individuals more cognizant of the social impact that they can create. Social impact is the crux of public administration and managers ought to be driven by the need to make an impact, rather than fortune!