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

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  • Gratton, Gabriele
  • Guiso, Luigi
  • Michelacci, Claudio
  • 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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  • Gratton, Gabriele & Guiso, Luigi & Michelacci, Claudio & 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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    References listed on IDEAS

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    1. Daniel Diermeier & Michael Keane & Antonio Merlo, 2005. "A Political Economy Model of Congressional Careers," American Economic Review, American Economic Association, vol. 95(1), pages 347-373, March.
    2. Elliott Ash & Massimo Morelli & Richard Van Weelden, 2015. "Election and Divisiveness: Theory and Evidence," Working Papers 542, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    3. Sascha O. Becker & Katrin Boeckh & Christa Hainz & Ludger Woessmann, 2016. "The Empire Is Dead, Long Live the Empire! Long‐Run Persistence of Trust and Corruption in the Bureaucracy," Economic Journal, Royal Economic Society, vol. 126(590), pages 40-74, February.
    4. Stefano Gagliarducci & Tommaso Nannicini, 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives From Selection," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 369-398, April.
    5. Craig Volden, 2002. "Delegating Power to Bureaucracies: Evidence from the States," Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(1), pages 187-220, April.
    6. Thomas, Scott & Grofman, Bernard, 1993. "The Effects of Congressional Rules about Bill Cosponsorship on Duplicate Bills: Changing Incentives for Credit Claiming," Public Choice, Springer, vol. 75(1), pages 93-98, January.
    7. Massimo Morelli & Richard Van Weelden, 2013. "Ideology and information in policymaking," Journal of Theoretical Politics, , vol. 25(3), pages 412-439, July.
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    Cited by:

    1. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.
    2. 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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