Comparative Public Administration PAD 5355Central QuestionsDEVELOPMENT AGENTSGovernment FunctionsGovernment’s RoleThe MarketSociety’s GoalMARKET & GOVERNMENTGOVERNMENT & SOCIETYMARKETS & SOCIETYTHE CIRCULAR FLOW MODELMARKET & SOCIETYSlide 13Comparative Public AdministrationPAD 5355INTRODUCTIONCentral Questions What is the role of government in the development process across nations?What is the role of the market in the development process? How are collective decisions made? What is the “right” balance between the government and the market? How are the private and public interests balanced?DEVELOPMENT AGENTS GOVERNMENTMARKETS SOCIETYBureaucracyGovernment Functions The Government undertakes seemingly contradictory functions such as promoting efficiency and equity, growth and redistribution.The Government is also perceived as the agent in charge of balancing the public and private interests.The Government also faces the dilemma of being proactive or adopting a laissez faire approach.Government’s Role FACILITATOR: Overcoming bottlenecks that hinder the development of a market economy by investing in physical and social infrastructure. ACTIVIST: Complementing or competing with markets in the provision of goods and servicesTHE MANAGERIAL GOVERNMENT: Administering the macroeconomic variables for the market to operate efficiently.The Market The market is an allocation mechanism.Prices in the market reflect the opportunity costs of producing goods and services. The market is the best mechanism to avoid shortages or surpluses of goods and services.The market offers choices to people.Society’s Goal“We the people of the United Governments, in order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the blessing of Liberty to ourselves and our Prosperity, do ordain and establish this Constitution…”MARKET & GOVERNMENT1. The Government as a “solution” to market failuresPublic goods (education, law, etc.) Externalities (positive and negative) MonopoliesAsymmetric information2. The Government as replacement or substitute of the marketGOVERNMENT & SOCIETY1. LEGITIMATE REPRESENTATION Democratic Undemocratic 2. REDISTRIBUTION & GROWTH Fiscal policy Laws (protect safety, health, welfare, morals, etc.) 2. SAFETY NET Social security Welfare programsMARKETS & SOCIETY1. THE NEO-CLASSICAL PERSPECTIVE• The market is the best method for society to reveal its tastes and preferences to obtain goods and services •The individual is perceived as a factor of production (labor) •The market rewards each member of society according to his contribution to the economy•The relationship is a positive-sum-gameTHE CIRCULAR FLOW MODELHOUSEHOLDSBUSINESSESGOODS MARKETFACTOR MARKETGOVERNMENT/BUREAUCRACYMARKET & SOCIETY 2. THE KEYNESIAN PERSPECTIVE Society is perceived as an aggregate demand function (consumers) Aggregate demand is the most important factor of economic growth Welfare is needed to mantain aggregate demand (multiplier effect)MARKETS & SOCIETY3. THE MARXIST PERSPECTIVE The relationship between markets (capital) and society (labor) is a negative-sum gameMarkets de-humanize society Markets are socially constructedThe government is an agent of