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Grandy2009

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  • 1. Christopher Grandy University of Hawaii The “Efficient” Public Administrator: Pareto and a New Ideas for Improving Public Well-Rounded Approach to Public Administration AdministrationThe New Public Management movement was only alternatives which produces the largest result for the Christopher Grandy is an associate professor of public administration atthe latest demand that public organizations promote given application of resources” (Simon 1976, 179). the University of Hawaii (Manoa). Afterefficiency by adopting business methods. There again Herbert A. Simon (1976, xxviii–xxxi) softened the im- completing a doctorate in economics atfollowed reactions from those arguing that other values, plied dictate to public administrators by recognizing the University of California, Berkeley, he taught in the economics departments ofsuch as equity, citizen participation, and democracy, are the bounded, rather than full, rationality of human Barnard College and the University ofas important as efficiency. This article suggests that an beings and by acknowledging the appropriateness of Hawaii before working for six years aseconomic rather than business perspective on efficiency satisficing, rather than optimizing behavior. Yet, as an economist for the Hawaii Department of Business, Economic Development, andmay usefully contribute to the scholarly conversation. It observed by Hendriekje van der Meer and Mark R. Tourism. He specializes in public policy andalso suggests that it is “efficient” to identify the public Rutgers, technical efficiency still dominates the field: public finance issues, particularly taxationvalues in play within any given situation. “The most encompassing or general meaning of ef- and public budgeting. He was a member of the 2005–2007 Hawaii State Tax Review ficiency as used in the public administration literature Commission.A lmost from the beginnings of the field, ef- is represented by the term ‘technical efficiency.’ Tech- E-mail: grandy@hawaii.edu ficiency has been a source of contention in nical efficiency can be defined as the ‘ratio between public administration. As George W. Downs input and output’” (2006, 3). The difficulty withand Patrick D. Larkey observed two decades ago, applying this definition to the public sector is that the“Efficiency ranks with motherhood, apple pie, citizen “problem” can rarely be framed so easily. Instead, endsparticipation, and balanced budgets as a fundamental are multiple and shifting.American value” (1986, 237). And yet, fairly quicklyin public administration’s his- This article began as antory, challenges to efficiency as a economist’s reaction to theprimary public value were artic- The suggestion by those critique of efficiency central toulated by those acknowledging skeptical of [New Public the arguments of those criticalother values such as equity, citi- Management’s] orientation that of the New Public Manage-zenship, and public deliberation. ment (NPM) paradigm. To a efficiency is only one of severalIn concluding a review of the new member of a small public“rational model” of public or- values that public managers administration program, the ef-ganizations, Robert B. Denhardt might appropriately pursue ficiency focus of NPM seemedobserves that, despite decades of [seems] . . . odd, at best. For a sensible, if somewhat obvious,challenges, the model’s emphasis the view implies that a manager goal for public organizations.on “technical rationality (often might sacrifice efficiency in The suggestion by those skepti-translated as ‘efficiency’)” (2004, cal of NPM’s orientation that order to advance other values.87) continues to dominate as a efficiency is only one of severalprimary criterion for the evalua- Yet given a particular goal, values that public managerstion of public organizations. wouldn’t one always want to might appropriately pursue pursue it efficiently? appeared odd, at best. For theMuch of the controversy over view implies that a managerefficiency within public admin- might sacrifice efficiency in or-istration revolves around a definition that Downs and der to advance other values. Yet given a particular goal,Larkey term “managerial efficiency” (1986, 6) and wouldn’t one always want to pursue it efficiently?Denhardt calls “technical rationality” (2004, 25). Thisnotion of efficiency envisions managers pursuing the The literature on efficiency within public administra-least costly means of achieving given ends.1 Or, from tion has modified these initial reactions, and, usinganother direction, “efficiency dictates that choice of an unconventional focus, this article argues that an The “Efficient” Public Administrator 1115
  • 2. economist’s notion of Pareto efficiency can be useful in the debate. Another source of suspicion came from efficiency’s association withIn the words of Van der Meer and Rutgers, “a more limited inter- private—that is, business—administration (Waldo 1952, 83–84).pretation of efficiency as technical efficiency will not do” (2006, 9). Businesses, in a competitive environment, must be primarilyIronically, Pareto efficiency’s usefulness lies in a direction that many, concerned with maximizing profit. Being efficient implies pursu-suspicious of economic thinking in the public sector, advocate— ing activities that are most likely to increase profits. Besides beingbecoming clearer about values. somewhat distasteful, many within public administration simply found this notion of efficiency inappropriate for public institu-Efficiency in Public Administration tions. The analogy was inapt. Public agencies do not have a single,Efficiency was privileged at the beginnings of the field as Progressive well-specified objective that all agree they should pursue. Instead,Era reforms sought to systematize and rationalize the administration as discussed later, public agencies face multiple objectives reflect-of the public’s business.2 The Progressive movement that ushered in ing multiple values. In this context, it is not even clear what publicthe notion of professional public management was, in large part, a efficiency would mean.4reaction against the inefficiencies of the spoils system that had comebefore (Hood 1995, 94; Waldo 1952, 86). Appeals to efficiency The controversy over efficiency reemerged with respect to the Newjustified the centralization of public functions, the rise of bureaucra- Public Management and reinventing government movements. Incies, and executive budgeting. spite of Waldo’s (1952, 88) suggestion that, 50 years ago, public ad- ministrators were rejecting efficiency as a criterion for public action,Two early public administration writers who held a broad view “efficiency” has hung on. David Osborne and Ted Gaebler’s popularof efficiency were Morris Cooke and Frederick Cleveland. Citing book (1993), and the wave of writings known as the New PublicHindy Lauer Schachter’s (1989) work, Van der Meer and Rutgers Management, raised again the call for government to “get more(2006, 10) note that Cooke and Cleveland thought of efficiency as bang for the buck”—that is, to be more efficient.5 The New Zealanda means of promoting public responsiveness to citizen demands in a reforms that ushered in the NPM discussion, and the U.S. federaldemocracy. Curiously, however, both Schachter (1989, 76, 99) and government’s reinvention efforts, even harked back to the businessVan der Meer and Rutgers (2006, 10) interpret this perspective as metaphor of efficiency that had appealed to the Progressives.6 Inimplying that efficiency is a secondary, rather than a primary, value. response, many in public administration have reacted with skepti-One might instead note that the Cooke/Cleveland view implies that cism to the call for greater efficiency.7efficiency is a basic value—one that undergirds and supports thebroader values of government activity. This interpretive difference is Multiple Values and Paretodiscussed more fully later. Perhaps the primary objection to “efficiency” as a guiding principle of public administration is that it seems soPublic administration scholars came to ques- narrow. Being efficient suggests selecting one, Perhaps the primarytion the preeminence of efficiency as they or at most a handful, of values at the core ofchallenged the Progressives’ separation of objection to “efficiency” as a public agencies. It connotes single-mindedlypolitics from administration. That separation guiding principle of public pursuing an objective with little attention towas a defining feature of the first phase of administration is that it seems external effects. Thus, Waldo suggested thatprofessional administration. As Dwight Waldo so narrow. Being efficient economy and efficiency are about “getting(1952, 87) noted nearly 60 years ago, sepa- suggests selecting one, or at things done” (1952, 93–94), with little at-rating politics from administration did not tention to how they are done. Yet how things most a handful, of values at thesquare with the observation that agencies were are done—and, in particular, how people areas much enmeshed in political maneuvering core of public agencies. treated as they get things done—is of princi-as were legislatures. Thus, if administrators pal interest to many. One can imagine a mod-effectively make value decisions, then they cannot be seen as simply ern Taylorite suggesting to the manager of a state tax departmentchoosing the “optimal” method of implementing policy decisions. that he or she measure the number of returns processed, with the implied goal of maximizing that number per unit of time. SkepticsThese critiques of efficiency also objected to separating means from might worry about the values sacrificed in pursuing such a goal.ends (Waldo 1952, 90–91). Critics noted that “means are relative toends,” that administration is not an end in itself, and that students The prescriptions of reinventing government and the NPM litera-of public administration must abandon the notion that “efficiency ture seem similarly narrow. In several places, Osborne and Gaeblerand economy are objectives superior to any others that may be (1993, 35–36, 77, 79) focus on lowering the costs of public servicessought” (Kingsley 1945, 89). This directly challenged the technical and minimizing waste (78, 81, 119). In advocating “mission-driven”meaning of efficiency as finding an “optimal” method of advancing public organizations, the authors (14, 113) attacked public agencygiven ends. If, as Aaron Wildavsky (1966, 292, 298, 299–300) sug- rules that stifle effective delivery of services. Osborne and Gaebler’sgested, means and ends are jointly determined, then in what sense book talked of putting the customer first; of making public manag-is a criterion of “efficiency” well specified that focuses on the many ers more entrepreneurial, presumably with the intention of findingmeans by which an end could be attained?3 Moreover, as Denhardt innovative ways to provide services—perhaps on a paying basis; andobserves, concentrating on efficiency alone draws attention away of eliminating rules that lead to higher costs. The authors did notfrom ends, and in doing so, “we might fail to fully examine and explicitly advocate a single goal. Indeed, in some places, they recog-participate in decisions that are of importance to us, thus failing to nized that there may be multiple goals. But the overall sense of theirmeet our democratic obligations” (2004, 150). prescriptions was to weed out the “inefficiencies” of public activity1116 Public Administration Review • November | December 2009
  • 3. by refocusing on something like “core” values. Similarly, the federal rather than business. For example, if society values citizen partici-government’s reinvention efforts, reflected in the National Perform- pation, the fulfillment of minimal physical requirements for all,ance Review (1993, chap. 3-2), urged Congress to simplify the universal education, and economic growth—to propose a necessarilyresponsibilities of public agencies in order to enable management ac- abbreviated list—then an efficient use of resources would requirecountability. In general, Denhardt (2004, 140) notes, NPM sought that it be impossible to advance some of these values without reduc-to impose a new set of values, coming from the business sector. ing others. If such advancement is possible, then currently society is not using resources efficiently—some of society’s goals could beCritics of NPM point out that the efficiency prescriptions of furthered without reducing the levels of others. Those familiar withgovernment reinventors excluded important, but not necessarily economic welfare analysis will recognize this as a particular applica-measurable, public values. Thus, Demetrios Argyriades (2003, 523) tion of the Pareto efficiency principle.8 Rather than being applied toargues that the rise of efficiency in the hierarchy of public organiza- the allocation of goods and services, however, the suggestion here istion values has been accompanied by a lowering of the rule of law that the public administrator apply the criterion to the public valuesand of due process. In his view (526–27), privileging efficiency at play in a particular issue. Notice that the definition does not re-undermines debate, consultation, and public deliberation. Linda quire specifying the overall objective to be advanced—it is sufficientdeLeon and Robert B. Denhardt (2000, 93–95) see the reinvention to list the component elements (in this case, public values) thatmovement as devaluing collaboration, the public interest, and citi- contribute to the objective. Of course, there may be much discus-zenship. Suzanne J. Piotrowski and David H. Rosenbloom (2002, sion about that list.646) note official concern with efficiency well before the New PublicManagement ideas took hold, quoting a 1972 U.S. Supreme Court Pareto efficiency differs substantially from how “efficiency” isdecision that observed that the due process clause may be inter- commonly used in the public administration literature. Thus, itpreted as a mechanism to protect citizens from the overly rigorous is offered here not as a refutation of the concerns about technicalpursuit of efficiency by competent public servants. Rita Mae Kelly rationality raised by critics of NPM so much as a way of looking atasserts that others go further, arguing that “[p]rocedural due process, efficiency that is both consistent with a broad perspective on publicsubstantive rights, equity, and protection of minority rights . . . are management and, ironically, more consistent with efficiency’s stand-values that have precedence over efficiency” (1998, 201). Michael ard definition in economics. As noted earlier, technical efficiencySpicer (2007) argues that NPM advocates ignore the intended role (also known as technical rationality and managerial efficiency) isof politics in managing conflict over values and thereby threaten the usual efficiency concept in public administration, understoodharm in promoting simplistic solutions to complex problems. as pursuing “given objectives with the least cost,” or as a ratio of output to input.9 Moreover, many express concerns about proposals,Denhardt (2004, 8–9) provides a useful example of efficiency- such as those implied by NPM advocates, to focus on efficiency be-motivated, narrow goals. Two experienced managers were tasked cause “efficiency is a value chosen from among a larger set of valueswith quickly establishing a housing loan program. As the supervi- and . . . the adoption of the value of efficiency precludes attentionsor, John was under considerable pressure, both from within the to any other, such as equity and participation” (Denhardt 2004,organization and from potential clients, to process applications 105). In contrast, the concept of Pareto efficiency leaves goals andrapidly. His co-manager, Carol, recognized the need for quick action their underlying values unspecified, explicitly allowing for multiplebut also had more direct contact with potential clients. To speed goals and values. Pareto efficiency is attained only if it is impossiblethings along, John asked Carol to have clients sign blank applica- to advance any of the goals without impairing at least one of thetion forms, which could later be filled in as information arrived. others. In this sense, Pareto efficiency is value neutral, or, as LutherCarol objected, wanting to provide clients full information and Gulick (1937, 192–93) implied, it is efficiency as meta-value. As ap-concerned about potential illegality. Denhardt observes that John plied here, Pareto efficiency is therefore broader than the concept ofseemed “most concerned with the efficient completion of the task” technical efficiency commonly used in public administration.(9). Here, Denhardt uses efficiency to refer to the quick processingof loan applications. Implicitly, getting “work out the door”—that The difference may be illustrated by returning to the example of theis, loan applications completed and filed—is the agency’s primary housing loan program. John’s suggestion to have clients sign blankwork. Anything that interfered with that task threatened to make forms advances one goal: getting applications into the pipelinethe program look inefficient. as quickly as possible. But if John and Carol applied the Pareto efficiency concept, they would explicitly consider whether otherIn the “real world,” public decision makers face multiple values, goals exist. There may be trust-building and education functionsand these values come from multiple sources. Assuredly, legisla- fulfilled by communicating frequently with clients and in goingtive bodies give public agencies a variety of marching orders. But over information submitted on their housing applications. Signingthe executive (mayor, governor, president) may take a somewhat blank forms may advance the goal of getting applications processeddifferent perspective on these instructions, urging movement in one quickly, but it impairs the communication and trust-building goals.direction rather than another. Moreover, the media and constituents From this perspective, an exclusive focus on fast processing does notexpress their own views and demands—sometimes requiring the advance (Pareto) efficiency because it promotes one of the agency’sadministrator to respond in ways that differ from what the executive goals while reducing others.10or legislators might choose. Public administration scholars have occasionally commented onThe point of this article is that the existence of multiple values is Pareto efficiency, but usually in a cursory fashion. For example, inconsistent with a definition of efficiency that comes from economics his deconstruction of efficiency, David John Farmer (1995, 199) The “Efficient” Public Administrator 1117
  • 4. briefly mentions the Pareto concept and notes that it does not denying the claim; the value of upholding the authority of the legis-guarantee a just allocation of goods and services. While Patria D. lative mandate overrides the claim of the business manager.de Lancer (1999, 536) uses the term in her description of a specifictechnique for evaluating efficiency in public organizations, the The contest over values also evolves. At one point, public deci-concept of Pareto efficiency is much broader than the technical sion makers deemed it appropriate to expend resources segregatingapplication she presents. Van der Meer and Rutgers suggest that public facilities by race. Today, most people would consider such abecause a Pareto-efficient, or Pareto-optimal, allocation of resources use of resources inappropriate—that is, illegitimate (not to mentionmeans that it is impossible to improve the welfare of one person illegal). This reflects an evolution of values toward the “universalwithout reducing that of another, the “welfare of society is at its equality framework” that Kelly (1998, 203) notes took nearly 200maximum” (2006, 5). They unfortunately characterize the concept years to achieve. Similarly, decisions made in the aftermath of theas a synonym for “optimality,” which thereby falls outside the scope 9/11 terrorist attacks that conflict with understandings of civil liber-of the concepts of efficiency with which public administration ties may be seen as wholly inappropriate 20 years from now.13 Thisdeals.11 observation is consistent with Charles E. Lindblom’s (1959) incre- mental model of public decision making, which stresses the complexPeter Self stands out as a sustained public administration critic of and varying nature of promoting public values.what he called the “absurdly revered ‘Pareto principle’” (1985, 70) asa criterion for public decision making. It is important to understand Lindblom’s (1990) later work expands on the idea of evolvingthat Self addressed the Pareto concept as it is usually applied in values. In Lindblom’s framework, individuals in society are, toeconomics—that is, as a criterion of proposed policy that affects the one degree or another, engaged in probing their world in orderdistribution of goods and services in an economy. Instead, this ar- to figure things out. Such probing may be impaired in variousticle proposes that public administrators apply the Pareto efficiency ways—including by professional social scientists. Yet he sees aconcept to the public values that are at play in a particular situation. society in which many (all?) members participate in the processSelf ’s critiques, and this distinction, are elaborated on later. of advancing knowledge and understanding; Lindblom calls this a self-guiding society. This guidance presumably applies to all aspectsAs discussed in the next section, a positive consequence of using the of knowledge—including the identification, modification, andPareto efficiency concept is the implied need to be clear about which acceptance or rejection of legitimate values. Exploring the processvalues are legitimately “public.” by which such values are agreed upon lies beyond the scope of this article. However, as discussed later, the public administrator is in aPareto Efficiency as Necessary, but unique position to participate in such prob-Not Sufficient, Meta-Value ing and, indeed, to advance or hinder values When an administrator makesWhen an administrator makes a decision in by his or her decisions. The Pareto efficiencythe multiple-value environment, he or she a decision in our multiple- criterion, applied as suggested here, providesmay be hard-pressed to explain the process. value environment, he or she public administrators with a conceptualThe political and economic forces that emerge may be hard-pressed to explain framework that can improve the quality offor a particular problem are varied and com- the process. The political and their decisions in ways that are consistentplex, and the values put forward come from economic forces that emerge with Lindblom’s vision.many quarters with differing intensities. Thus, for a particular problem arethe administrator of a tax compliance unit, From the Pareto efficiency perspective, to sayattempting to determine whether a business varied and complex, and the that an agency acts inefficiently is to say eithertax credit should apply in a specific case, may values put forward come from (1) that it pursues some values that are not le-face several sources of influence: legislators many quarters with differing gitimate, or (2) that it neglects to pursue somewho voted for the credit on the grounds of intensities. legitimate values that it can affect. Thus, thediversifying the local economy; legislators who tax compliance administrator who approvesopposed the credit with concerns about the the application of the business tax credit tofiscal implications; businesses who may qualify for the credit; busi- his brother’s firm, despite having rejected similar claims by others innesses who clearly do not qualify and wonder where their tax break the past, is acting inefficiently. The inefficiency lies in promoting ais; and taxpayers who are concerned about the upward pressure on value (the support of his brother’s company) that is not legitimaterates that might result from the negative revenue implications. The from a public perspective. Similarly, should Carol, the housing loanvalues implicit in these perspectives are legitimate, and the adminis- program co-manager, make no effort toward moving applicationstrator who ignores many of them will find life unpleasant.12 along, then she would be acting inefficiently.However, to say that an agency faces the task of managing multiple Of course, the word “efficiency” is often part of the contest overvalues does not imply that all values are legitimate. In a general the legitimacy of values. Downs and Larkey observe a tendency tosense, one can imagine values put forward to cover as many interests label as “inefficient” the pursuit of goals “that differ from one’s own”as there are people in the community. Clearly, not all can receive (1986, 13). “Efficiency” is a powerful word, whose use can bestowequal weight when allocating public resources. The businessperson legitimacy on the ideas to which it is attached. Thus, the early publicwhose activities obviously fall outside the scope of a tax credit’s leg- administration writers who sought to incorporate business methods,islative intent may argue that all businesses—including his—should such as formal hierarchical organization, into the public sphere didget a break. But the administrator is not likely to have much trouble so in large part by appealing to efficiency (see, e.g., Denhardt 2004,1118 Public Administration Review • November | December 2009
  • 5. 77). As has been noted, promoters of NPM, explicitly utilizing busi- defined relative to other values, the concept takes the superordinat-ness concepts, made similar appeals to efficiency. Downs and Larkey ing status of meta-value rather than a subordinating, second-orderobserved that “efficiency is [often] less a goal of reorganization than status. For the Pareto proposition is to “efficiently” pursue the set ofa justification for it” (1986, 186). values deemed relevant in a particular situation (where this means taking actions that advance at least one value without impairingVirtually all of the critiques of NPM prescriptions can be seen as others). In this interpretation, efficiency is not a second-order valueexamples of the contest over which values to include in the “legiti- as a result of its relationship to other values, nor can efficiency bemate” set. For example, Argyriades’s implicit critique of the “3Es seen as merely one of many values without priority, because it makes(economy, efficiency, and effectiveness)” (2003, 523) is a defense no sense to think of trading off Pareto efficiency for another valueof the values of rule of law, due process, debate, and public delib- over which it is defined. Rather, the notion of Pareto efficiencyeration. DeLeon and Denhardt’s (2000) critique of reinvention’s with respect to public values raises “efficiency” to meta-value, evenmarket, customer service, and entrepreneurial orientations empha- beyond where Van der Meer and Rutgers (2006, 15–16) place theirsizes the values of collaboration, the public interest, and citizenship. concept of “substantive efficiency” (defined as a general assessmentHere, “efficiency” is seen as one value that is advanced at the expense of well-functioning administration) as equal with other values.of others. And yet, this article does not propose that Pareto efficiency can beYet these critiques apply to the technical, or managerial, efficiency relied on as a sole guide for managerial action. Many combinationsconcept of Denhardt (2004, 87), Downs and Larkey (1986, 6), of public values may be consistent with the Pareto criterion. More-and Van der Meer and Rutgers (2006, 3) rather than to the Pareto over, public managers must often make decisions that violate theconcept. The objections come down to insisting that pursuing Pareto criterion. That is, they are compelled to make decisions that(technical or managerial) efficiency neglects other, valued goals that advance some legitimate values at the expense of others. Makingan agency might legitimately pursue. In contrast, Pareto efficiency those decisions is not a matter of efficiency as defined by the Paretocharacterizes a relationship among values: given the set of legitimate criterion. It lies beyond efficiency. That is, the concept of Paretovalues, efficiency is defined in terms of whether some must be sacri- efficiency gets the administrator only so far as a guide to action. Itficed in order to advance others. tells the administrator to be on the lookout for the multiple values in play in a given situation. But the likely course of action will haveStated another way, the trade-off among values cannot apply to the to be taken on grounds other than efficiency itself.14concept of (Pareto) efficiency. If by “efficiency,” one means “tech-nical rationality” or “managerial efficiency,” then such a trade-off Given that managers must make decisions that choose among val-makes sense: one could imagine consciously incurring higher than ues, it seems desirable that as many legitimate values as possible beminimum costs in order to advance another value, such as due included in the decision maker’s calculus.15 Otherwise, the managerprocess. But Pareto efficiency is defined in terms of trade-offs among will make decisions that neglect some legitimate values. For exam-values: administrators have acted efficiently if it is not possible ple, the tax compliance manager who focuses only on the number ofto advance any of society’s legitimate values without accepting a returns processed each month may neglect the values of fairness andreduction in another. If all legitimate values are considered, then it accuracy in taking more time with particularly complicated cases.would be tautological to propose a trade-off of Pareto efficiency for Similarly, John’s proposal to have clients sign blank applicationanother value. This point emphasizes the very different meanings forms may have been made without regard to the trust-building andbetween technical rationality or managerial efficiency (a value that communication goals of the unit. For these reasons, a grounding incan be conceptually weighed against other values, as in Jorgensen common knowledge and shared values, to which Kelly (1998, 202)and Bozeman 2007, 367), and Pareto efficiency (a statement about a refers, ensures that, within a specific context, the manager does notparticular set of values). exclude important values in play. Schachter (2007, 807) notes that acquiring such a grounding requires that theVan der Meer and Rutgers (2006, 9–10, 14) public manager engage with the community’sdiscuss related issues that serve to emphasize . . . the notion of Pareto citizens.the meta-value status of Pareto efficiency rela- efficiency with respect to publictive to other definitions. The authors (9–10) values raises “efficiency” to Of course, literally considering all valuesnote that Dwight Waldo famously observed is impossible, and an attempt to do so is meta-value, . . . yet this articlethat it does not make sense to advocate “being likely undesirable. Again, Lindblom’s (1959)efficient” in the abstract. To be operational, ef- does not propose . . . that Pareto work is relevant in that he argued against anficiency must be related to the pursuit of some efficiency can be relied upon analytical model that attempts a completeparticular value or goal. Because efficiency as a sole guide for managerial listing of alternative methods for achievingcan only be understood with respect to other action. a given end. Lindblom’s apt objection is thatvalues, Waldo (1984, 193) concluded that constructing such a list is impossible in mostefficiency could not be fundamental to public cases and undesirable to the extent that valu-administration. Van der Meer and Rutgers adopt this perspective able resources are used in constructing a list, most of which wouldwith respect to technical efficiency, arguing that “[e]fficiency can be irrelevant to the actual decision made.be seen as a second-order value” (2006, 14). Yet, as suggested inthis article, if one instead adopts the Pareto efficiency criterion with Thus the set of “all” legitimate values must be read as all values thatrespect to public values, then, although efficiency continues to be the administrator, upon self-reflection and in consultation with The “Efficient” Public Administrator 1119
  • 6. colleagues and the public, can reasonably identify as being related to Second, and more importantly, the public manager’s utilizationthe question at hand. The goal of such reflection (a form of Lind- of the Pareto principle as applied to the public values at play in ablom’s probing) is to cut short the urge to quickly identify a course particular issue compels explicit consideration of those values. Inof action at the cost of negative unintended consequences. If the this sense, conscious application of the Pareto principle can promoteadministrator takes the time to identify relevant values in play, then a transformative, value-regarding approach to public administration.he or she is more likely to be prepared for challenges to the policy As mentioned, such an approach is consistent with Lindblom’s callproposal and to anticipate further developments. Acting in this way for “probing” societal issues. The application of the Pareto principleis consistent with acting (Pareto) efficiently. by public managers is a concrete step toward ensuring that public managers engage in, and support, such probing either within theIt is instructive to understand Self ’s critique of Pareto efficiency walls of a public institution or in the broader community. Thus, asand why it has less force in the context suggested here. For Self, the John and Carol develop the habit of asking themselves what publicmajor objection to Pareto efficiency as applied to goods and services values are at play in a given situation, and whether some of thoseis that it essentially conserves the status quo.16 If adopted as a policy values can be advanced by actions that do not impair others, theycriterion, Pareto efficiency requires permitting only changes in the continuously remind themselves of the larger context of their work.distribution of goods and services that make at least one person bet- And they regularly remind themselves of the boundaries at whichter off and no persons worse off; thus, implicitly, the existing distri- further pursuit of some values requires accepting the diminutionbution of goods and services is privileged (Self 1977, 26, 143; 1985, of others. The managers thereby open themselves to the option of70; 1993, 248–49). Moreover, strict application of the criterion to seeking public input about those choices and of participating inpublic policy would virtually guarantee that nothing gets done— dialogue about both the set of relevant values and how their con-because the criterion essentially gives veto power to anyone who may stituents weigh them.claim harm from a change in policy (Self 1985, 76; 1993, 249). Finally, the Pareto efficiency approach envisions a role for publicWhile these are strong arguments against the adoption of Pareto administrators that is philosophically distinct from that of NPM’sefficiency as a general criterion for public policy decisions, they have advocates. Vice President Al Gore is quoted in the National Per-less force in the context suggested here of an administrator’s con- formance Review with respect to values as follows: “There has to besiderations of the relevant public values in a specific issue. A public a clear, shared sense of mission. There have to be clearly understooddecision maker can be said to be acting efficiently with respect to a goals. There have to be common values according to which deci-public issue if he or she has reached a point where it is impossible to sions are made. There has to be trust placed in the employees whofurther at least one public value relevant to that issue without im- actually do the work” (1993, chap. 3-2). While these might be desir-pairing other relevant public values. Once that point is reached, the able features of a well-focused public agency, getting to this pointadministrator will have to make decisions that involve trading off is nontrivial. In the real world of most public agencies that manageat least one value against others, and so those decisions lie beyond complex issues with multiple facets, the costs of seeking value con-efficiency. If society forbade the administrator to act beyond the sensus should be weighed against the likely success. Alternatively,Pareto efficiency criterion, then Self ’s critiques would apply here; if managers are imbued with the mind-set to consider the range ofthen, Pareto efficiency would be of little help to the administrator. public values raised by a particular issue, then the sense of sharedHowever, once an administrator has exhausted efforts to advance mission and values becomes an ongoing, negotiated process withinrelevant public values where no impairment of others is implied, and among agencies and the public. This description of process maythen the requirements of efficiency have been satisfied. The admin- be a more realistic guide for public managers than the end-stateistrator may then move on to consider the (probably more difficult) envisioned in Vice President Gore’s remarks.issues of which public values to advance at the expense of others andby what criteria to make those choices.17 It is worth noting characteristics of the public decision-making process that are likely to be consistent with, if not necessary to,The adoption of this application of Pareto efficiency by public the use of the Pareto principle proposed here. First, the approachdecision makers offers both (1) a modest improvement in the presumes the existence of a degree of openness to discussion andimmediate allocation of energies by administrators with influence issues exploration (Lindblom’s probing) within the public agency.on public policy, and (2) a significant step forward in the quality In an autocratic, closed organizational environment, it may beof public decision processes. First, in the short run, to encourage impossible to even pose the question of which values are in playpublic managers to take actions that will advance some goal(s) that in an issue—because the question suggests that other values mightdo not impair the attainment of others seems common sense. The be considered. Of course, there are different degrees of openness,more frequent, and more difficult, problem facing an administrator and even in strongly hierarchical organizations, it may be possibleinvolves choosing among actions, all of which require sacrificing for managers to find ways to pose thought-provoking (thought-some desirable goals in order to advance others. Thus, the problem promoting?) questions in the guise of loyalty to the organization:facing John and Carol is not simply how to minimize processing for example, “How should we expect constituent group X to reacttime—it is how to get the housing loan program going quickly to our proposed course of action?” Such questions at least open thewhile promoting the trust-building and educational goals of the door to a strategic, and possibly substantive, discussion of otheragency.18 Application of the Pareto principle at least satisfies the goal values in play.19of using available resources efficiently—making sure that actions areundertaken that promote some values which do not threaten other A second institutional feature implied by the explicit adoptionvalues. of Pareto efficiency with respect to public values relates to public1120 Public Administration Review • November | December 2009
  • 7. forums. If public administrators begin to practice the accounting of the multiple, legitimate values at play. Their decisions may notfor public values that the Pareto principle requires, then they will be explainable in terms of maximizing a well-defined function thatfind themselves compelled to seek direct information about such indexes the component legitimate values. But if the administratorvalues in conversations with constituents, meetings with community can provide a coherent explanation of why some values are pursuedgroups, public hearings, legislative committee meetings, and so on. more fully than others, and can do this for the relevant legitimateEfforts to seriously identify public values in play demand such in- values, then she has succeeded in implicitly weighing those values input. And the conversation goes both ways. For the public adminis- some way. This approach may be thought of as an extension of thetrator must also be able to articulate his or her reasoning in arriving “let managers manage” philosophy—by adding the requirement thatat a decision. If such reasoning explicitly acknowledges public values managers be prepared to explain their choices.21 And the managerthat are relevant, but that have not been advanced by a particular has satisfied the economic definition of efficiency: using availabledecision, then the administrator may have at least signaled aware- resources so that it is not possible to advance some values withoutness of those values and accepted their relevance. That may not impairing others.22appease the ardent activist, but it may prove helpful in subsequentencounters. Thus, adoption of this application of Pareto efficiency Denhardt (2004, 153) argues that practitioners want a publicboth contributes to an improved (inclusive) decision-making proc- administration theory that provides them understanding fromess and it provides a framework within which to legitimate decisions which new approaches to their work can be constructed, as well asonce made. a conceptual framework within which to interpret their experience. In this light, the long-standing public administration debate aboutWe should note here Lindblom’s (1990, 109–14) concern about efficiency must be particularly frustrating. The approach suggestedpublic officials using their position and authority to impair the here may offer the practitioner some clarity that is consistent withprobing process. The public administrator described here is one of an important version of efficiency:many who have some decision-making authority with respect topublic issues. Lindblom expresses concern that the official might Accept that you will be placed under demands from manychoose to make his or her life easier by suppressing discussion and sources and that you will have to weigh the values implied.conflict over values. Yet this would violate the maintained assump- Some of these values will carry more weight than others,tion that the administrator wishes to act efficiently; if that is not the and these weights will shift over time. When presented withcase, then the implied management issues lie beyond this article’s the (probably rare) opportunity to advance some valuesscope. In the framework described here, the administrator must without impairing others, pursue it vigorously. Most of theexplicitly consider other views and values in order to act efficiently. rest of the time you will have to choose among competingMoreover, that consideration by the administrator may be the most values; do so with awareness for what is being advanced andconstructive result of her effort to be efficient. what is not.Herein lies the value of adopting the Pareto definition of efficiency If this advice does not seem particularly startling, that may be ain public administration: it forces the decision maker to identify good thing. For it suggests an approach to administration that isthe values in play.20 This may lead to recognition that some of the consistent with the view that an important part of the work ofvalues are not legitimate, in which case the course of action becomes public managers is to “express the values of our society” (Denhardtrelatively clear. In cases in which many conflicting values are legiti- 2004, 192).mate, explicit identification may help the decision maker embarkon a process that will determine a decision. But the administrator The argument offered here is not that efficiency is unimportant, norwill not be able to justify that decision on the basis of efficiency. In that some values are more important than efficiency. Indeed, themost cases, all the administrator can do is to start from a position in concept of Pareto efficiency places it in the position of meta-value.which he or she is using resources well (Pareto efficiently) and then The argument here is that managers need not run the risk of beingmake decisions in awareness of the value trade-offs. accused of inefficiency when they entertain contending values. Pareto efficiency requires that they do so. Nevertheless, manag-In the housing loan example, ultimately, John’s direction to sign ers will often have to justify decisions on grounds that go beyondblank forms might be defensible. If John was well aware of the efficiency. In this sense, efficiency is a necessary, but not sufficient,potential negative impact on client trust and, in light of that, still condition for sensibly and responsibly carrying out the work offelt the overriding need to get some applications processed immedi- public organizations.ately, then the decision might not be gainsaid. Perhaps more likely,reflecting on the negative impact on client Acknowledgmentstrust and the possible long-term impairment The author is especially grateful to Dick Prattof the client base, John might look for ways to This article has argued that public for his patient guidance and suggestions dur-ameliorate those effects—perhaps by making ing the writing of this article. For extensivethe signing of blank forms temporary. administrators act in ways that comments on earlier versions, thanks go to are consistent with “efficiency” Roger Blair, Jim Mak, Jim Roumasset, andConclusion when they make decisions Sumner LaCroix. Valuable suggestions wereThis article has argued that public administra- while aware of the multiple, made by Jill Tao, David Nixon, and Tsedevtors act in ways that are consistent with “effi- legitimate values at play. Damiran. Mark Rutgers kindly shared his un-ciency” when they make decisions while aware published work. Finally, the author gratefully The “Efficient” Public Administrator 1121
  • 8. acknowledges the careful reading and suggestions offered by three in the sense that the value of a social welfare function has peaked.anonymous reviewers of PAR. Lockwood notes that a particular allocation of resources is only Pareto-optimal “in the limited sense that not everybody can be madeNotes better off,” and for this reason, “the word ‘Pareto-optimal’ has gradu-1. As expressed, for example, in Gulick (1937, 192). For recent sub- ally been replaced by ‘Pareto-efficient’” (1987, 811). In any case, the stantive discussions of efficiency in public administration, see Van Pareto efficiency concept suggested here relates not to the allocation der Meer and Rutgers (2006) and Schachter (2007). of goods and services in society (the usual definition), but instead to2. See Dwight Waldo (1952) for a survey of public administration’s the relevant public values involved in a particular issue. In this sense, origins as part of his call for a theory of “democratic administration.” this article transfers the Pareto efficiency concept from the economic3. Similarly, Denhardt’s (2004, 71–72) discussion of Robert Dahl’s realm to the realm of applied public decision making. early work emphasizes the public administrator’s involvement in 12. For an effort to identify and systematically discuss public values, see both ends and means, making adherence to technical efficiency logi- Jorgensen and Bozeman (2007). cally and ethically problematic. 13. Denhardt defines the field of public administration as the manage-4. This is a time-honored conversation; see Denhardt (2004, 15 and ment of the “change processes” necessary to pursue “publicly defined passim) and Van der Meer and Rutgers (2006, 11) for valuable societal values” (2004, 16). discussions. Downs and Larkey observe that public institutions will 14. Joseph A. Schumpeter observed that Pareto made a similar point: necessarily seem inefficient when goals of due process or redistribu- “Pareto pointed out that welfare judgments that cannot be salvaged tion “consume resources that a private organization would spend on in this manner [i.e., justified by the Pareto principle] must be explic- the primary mission alone” (1986, 242). itly based on extra-economic, e.g. ‘ethical,’ considerations” (1965,5. See Osborne and Gaebler (1993, 15, 35, 80). Kaboolian notes that 131). Here Schumpeter’s phrase “extra-economic” is interpreted as each of the government reform movements labeled as part of NPM meaning beyond efficiency. sought to “maximize productive and allocative efficiencies” (1998, 15. This assertion is consistent with Denhardt’s argument that managers 190). of public organizations “bear a responsibility to examine, under-6. On New Zealand, see, for example, Schwartz (1997, 412, 416). For stand, and interpret public values to the best of their ability” (2004, the United States, see National Performance Review (1993, chap. 2). 124). Lindblom’s discussion of the “method of successive limited7. For example, see Argyriades (2003), deLeon and Denhardt (2000), comparisons” (1959, 81), or incrementalism, makes the important and Spicer (2004, 2007). The emerging public value paradigm in point that it is not possible to identify literally all the values at play public administration shares this skepticism (Moore 1995; O’Flynn in a policy decision. Still, the argument presented here is consistent 2007; Rhodes and Wanna 2007). with Lindblom’s rejection of what he called the “root” approach to8. Named for the Italian economist and sociologist Vilfredo Pareto, the analysis, which would require weighting and aggregating all relevant concept is fundamental to neoclassical economics. See Lockwood values prior to considering alternative policy options. (1987) for a discussion. Economics entertains several notions of ef- 16. Lindblom (1990, 148–49) makes similar points. Although Lind- ficiency, some that appear to go well beyond the conceptual require- blom appears to share Self ’s criticisms of the Pareto criterion, it is ments of the Pareto definition. Still, as Downs and Larkey (1986, 7) interesting that the conserving aspect of the criterion is consistent suggest, the Pareto criterion is the economist’s preferred definition of with Lindblom’s interest in the incremental accretion of knowledge efficiency; perhaps for this reason, these authors label it “economic and policy development. efficiency.” Moreover, Lockwood (1987, 813) observes that within 17. In an article that offers a “public failure” model to supplement the mainstream neoclassical economics, all other concepts of efficiency existing market failure model central to public policy analysis, Barry eventually reduce to Pareto efficiency. This observation suggests Bozeman suggests that Pareto efficiency is equivalent to “conventional an irony in Van der Meer and Rutgers’s (2006, 7, 8) association of utilitarian calculus” (2002, 147). This misstates the Pareto criterion: technical efficiency (a relationship between inputs and output) with rather than promoting the interpersonal comparisons of utility that economics; Pareto efficiency goes well beyond technical efficiency. are a major drawback of utilitarianism, the Pareto criterion specifi-9. See Denhardt (2004, 148) and Van der Meer and Rutgers (2006, 3). cally avoids such comparisons by focusing only on changes that do Also see Denhardt’s discussion of Weber’s view of “technical rational- not reduce any individual’s welfare level. In the context of this paper, ity (i.e. formal efficiency)” (25), emphasizing private ownership the criterion would have the administrator look for opportunities to and managerial control of productive resources, as well as page 43 advance at least some public values without impairing others. (discussing Woodrow Wilson’s businesslike approach), pages 51–53 18. Of course, this example abstracts from the existence of other goals (Frederick W. Taylor’s scientific management), and pages 61–65 (ef- and values that might be at play in the housing loan program. ficiency as the measure of success). 19. Note that National Performance Review’s advocacy of decentralizing10. In the language of welfare economics, John’s proposal is “Pareto in- decision-making power is also consistent with the suggestion here ferior.” A policy that would advance at least one of the agency’s goals to give managers latitude to question and challenge the underlying without impeding others would be called “Pareto superior” relative values promoted (and ignored) by a particular course of action. to the existing situation. It should be noted that in the framework 20. As with Bozeman’s (2002, 150, 157) proposed model of public suggested here, the public administrator identifies public values, failure in advancing values, this approach does not require agreement rather than creating such values, as Mark H. Moore (1995) and oth- on public values—merely attention to them. This point partially ad- ers have advocated. dresses John Bohte’s (2007, 812) question about what an administra-11. Van der Meer and Rutgers correctly observe that the phrases “Pareto- tor is to do when faced with conflict over desired outcomes. optimal” and “Pareto-efficient” are used synonymously; however, 21. See Donald F. Kettl’s (1997, 447) discussion of letting, versus mak- the concept does not imply that society’s welfare is at a maximum ing, managers manage.1122 Public Administration Review • November | December 2009
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