Property Rights within Government, and Devices to Increase Governmental Efficiency

Numerous devices to increa e governmental efficiency have been tried or advocated. Examples include cost-benefit analysis, program budgeting, the tax-expenditure budget, reorganizations, stock and industrial funds, contracts with private firms instead of in-house government production, and the volunteer army. All of these devices can have desirable effects, and I wish to emphasize that I am not opposing their use. The magnitude of their impacts, however, depends crucially on the issue: What do these devices do to the property rights or appropriability of rewards-and therefore to the incentives-of individual officials in government? In order to appraise the significance of these devices, one should look critically at the capturability of rewards confronting voters, legislators, top officials, and other government personnel. If a device has little impact on appropriability, one should not expect dramatic impacts on behavior and decisions. Few economists believe that mere exhortation will greatly influence private firms, yet many persons seem to have a curious faith in exhortation when they turn to government agencies. In this paper I wish to summarize the significance of property rights and appropriability, review the connection between appropriability and efficiency, and then reassess the probable impacts of several efficiency-promoting devices.