Public Management

Lecture 1

Chapter 2 “the traditional model of public administration”

What is public administration?

• The public sector is engaged in providing services (and in some cases goods) whose scope and variety are determined not by the direct wishes of the consumers, but by the decision of government bodies, that is, in a democracy, by the representatives of the citizens” p.21 Textbook (Hughes, 2012)

Functions of government

1. Providing (economic) infrastructure (institutions, rules of the game and arrangements)

2. Provision of collective goods and services (public goods, typically non excludable and indivisible)

*Ex. National defense, bridges and roads, aids to navigation etc.

3. Resolution/Adjustment of group conflicts (Assumption of heterogeneous interests)

*Ex. Child labor laws, minimum wage legislation or workers compensation programs.

4. Maintenance of competition

(Avoiding cartels, restricted access or fix prices)

5. Protection of natural resources (Interest of future generations, externalities)

6. Minimum access by individuals to goods/ services of the economy 
(Alleviating poverty or unemployment)

7. Stabilization of the economy (Monetary policies, control of wages, taxes, prices)

Instruments of the government (to achieve the functions)

• Subsides: where the private sector provides a particular good or service, but with some assistance from the government. Provisions are very widely.

Examples: subsides to farmers or industry, or to private bus companies or private schools, trains, airlines, or health insurance…

• Provisions: where government provides goods and services thought its budget (tax money). Most government activities occur throughout direct provision and are set out on the budget.

Examples: roads, defense, education, health and some social welfare schemes.

• Production: takes place outside the Gov. budget, and users are charged in the same why as if the service where provided by the private sector.

Example: Gasoline...