January 22, 2017

QotD: Conflict of interest

Filed under: Bureaucracy, Government, Quotations, USA — Tags: , — Nicholas @ 01:00

I am not sure that this is a suitable subject for a blog post, probably more a project for an aspiring PhD student, but with all the discussion of conflicts of interest in the Trump cabinet, it strikes me that the most glaring conflict in the public sector is ignored: The CoI between state and local politicians elected with the support of public sector unions who then participate in compensation negotiations for the members of those unions. Here the temptation of the politicians to buy the support of the unions with public money is overwhelming. The impact of this is potentially trillions when public pension liabilities are included.

This is such an obvious conflict that I have looked to see if there are laws preventing this, but my initial research shows nothing.

It would be interesting to see if there is a statistical relationship between union support and subsequent pay rises. I would expect this relationship to be especially strong with deferred compensation (such as pensions) since this is very difficult for voters to monitor and can be easily gamed with unrealistic assumptions about, for example, investment returns.

Roger Barris, quoted by Tyler Cowen, “Understudied conflicts of interest in American government”, Marginal Revolution, 2017-01-11.

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