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McCubbins and Noble: Perceptions and realities of Japanese budgeting

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McCubbins and Noble. 1995. Perceptions and realities of Japanese budgeting. In Structure and Policy in Japan and the United States.

SUMMARY:

McCubbins and Noble critique the two prevailing bureaucrat-centric analyses of Japanese budgeting: Ministry of Finance dominance and Iron Triangle dominance. They dismiss the MoF analysis, which holds that the Ministry is both powerful and primarily concerned with balancing the budget, on the grounds that it is inconsistent with the basic empirical fact of budget deficits. They devote more attention to the Iron Triangle theory [Wildavsky], testing and rejecting each of what they call the three primary assertions: fair shares, incrementalism and non-retrenchment. Regarding fair shares, they find that it is never true that the percentage change in budget allocation is equal to the percentage change in the overall budget. In a second test of a derivative of the fair shares hypothesis (that after a crisis, budget share for the affected agency will settle back to its "fair share"), they reject the null across 92 budget items and 15 ministries. In their test of incrementalism (based on the Davis, Dempster, and Wildavsky 1966 forecast model), they reject the hypothesis for 90% of the cases. They test also for "piecewise" incrementalism and reject in 85 out of 107 cases. To test non-retrenchment [not cutting any agency too far], they simply looked for evidence of budget cuts and found them in large numbers and in sensitive policy areas, like agricultural price supports and local subsidies.

WHAT THE LITERATURE SAYS:

I. In most accounts, four factors explain superiority of bureaucracy:

1)highly elite group

2)bureaucrats have near monopoly on knowledge and skill to operate the complex budgetary system

3)bureaucrats are the only actors in the political system who have the incentives and ability to consider the needs and interests of Japan as a whole (Budget bureau as "guardian of logic")

4)bureaucrats have colonized the entire policy-making system: top posts in the party, public policy corporations, advisory councils, private corporations, etc.

II. Iron Triangle vertices:

1.individual, powerful ministry

2.decentralized network of zoku: groups of middle-level LDP politicians headquartered in the committees of the ruling party's Policy Affairs Research Council (PARC)

3.Constituents of groups A and B

III.Iron Triangle analysis: Budget policy is made independently, one issue at a time.

  1. No central coordination of bureaucrats
  2. No party coordination of zoku influence on separate policy clusters

a. recruitment of LDP Diet members is not subject to LDP management; is actually dominated by ex-bureaucrats

b. leadership of the LDP does not have the resources to enforce discipline and to coordinate policymaking

i. Party president is institutionally weak; small staff; few institutional tools with which to control party affairs.

ii. Cabinet wields little control over budget.

iii. No super budget agency to enforce policy coordination.

iv. General Council and Policy Deliberation Commission (exec cmte of PARC) play essentially no part in content of policy making

c. LDP nothing more than a persisting logroll among a set of special interests.

  1. MoF line-item scrutiny of agency, bureau, and ministry budgets impossible.

a. Prisoner's Dilemma: no one will cut spending without assurance that others will.

  1. Through repeated bargaining, the Iron Triangles have developed stabilizing norms of behavior that govern policy change: incrementalism, non-retrenchment, and fair share.