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Busy Doing Nothing – Why Politicians Implement Ineffcient Policies

Anders Gustafsson ()
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Anders Gustafsson: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

Authors registered in the RePEc Author Service: Anders Kärnä

No 321, Ratio Working Papers from The Ratio Institute

Abstract: A substantial body of literature suggests that politicians are blocked from implementing efficient reforms that solve substantial problems because of special interest groups or budget constraints. Despite the existing mechanisms that block potentially efficient reforms, real-world data show that a large number of new programs and policies are implemented every year in developed countries. These policies are often selective and considered to be fairly inefficient by ex post evaluation, and they tend to be small in size and scope. With this background, this paper studies the reasons why a rational politician would implement an inefficient public policy that is intended to obfuscate the difficulties in achieving reforms. The paper uses a simple competence signaling model that suggests that if an effective reform is impossible, engaging in strategic obfuscation through an inefficient program increases the probability of winning a re-election compared to doing nothing at all. This is because an inefficient reform does not lead voters to believe that the politician is incompetent, which a lack of action risks doing. Intentional inefficiency aiming to obfuscate the difficulty of efficient reforms can therefore complement the previous theories’ explanations of political failure.

Keywords: Special Interest Groups; Reforms; Inefficiency; Strategic Obfuscation (search for similar items in EconPapers)
JEL-codes: D72 H11 L82 P16 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2019-05-13
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
References: View references in EconPapers View complete reference list from CitEc
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