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From Weber to Kafka: Political Instability and the Rise of an Inefficient Bureaucracy

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  • Guiso, Luigi
  • Michelacci, Claudio
  • Gratton, Gabriele
  • Morelli, Massimo

Abstract

A well functioning bureaucracy can promote prosperity, as Max Weber maintained. But when bureaucracy gets jammed—a Kafkian situation—it causes stagnation. We propose a dynamic theory of the interaction between legislation and the efficiency of bureaucracy. When bureaucracy is inefficient, the effects of politicians’ legislative acts are hard to assess. Incompetent politicians thus have strong incentives of passing laws to acquire the reputation of skillful reformers. But a plethora of often contradictory laws can itself lead to a collapse in bureaucratic efficiency. This interaction can spawn both Weberian and Kafkian steady states. A temporary surge in political instability, which increases the likelihood of a premature end of the legislature, exerts pressure for reforms, or results in the appointment of short-lived technocratic governments can determine a permanent shift towards the nightmare Kafkian steady state. The aggregate experience of Italy in its transition from the so-called First to the Second Republic fits the narrative of the model quite well. Using micro-data for Italian MPs, we also provide evidence consistent with the claim that when political instability is high, politicians signal their competence through legislative activism, which leads to the overproduction of laws and norms.

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  • Guiso, Luigi & Michelacci, Claudio & Gratton, Gabriele & Morelli, Massimo, 2017. "From Weber to Kafka: Political Instability and the Rise of an Inefficient Bureaucracy," CEPR Discussion Papers 12081, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12081
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    2. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.
    3. Asriyan, Vladimir & Foarta, Dana & Vanasco, Victoria, 2018. "Strategic Complexity When Seeking Approval," Research Papers 3615, Stanford University, Graduate School of Business.
    4. Margherita Negri, 2017. "Good Politicians' Distorted Incentives," Discussion Paper Series, School of Economics and Finance 201713, School of Economics and Finance, University of St Andrews.

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