Thursday, March 02, 2017

Metropolitan Cooperation and Administration in Mexico

The Role of Metropolitan Cooperation and Administrative Capacity in Subnational Debt Dynamics: Evidence From Municipal Mexico


Heidi Jane M. Smith, Allyson Lucinda Benton

First published: Full publication historyDOI: 10.1111/pbaf.12155View/save citationCited by: 0 articles
  • Heidi Jane M. Smith (corresponding author) is at the Departamento de Economía [Economics Department], Universidad Iberoamericana, Prolongación Paseo de Reforma 880, Lomas de Santa Fe, México, 01219, Ciudad de México. She can be reached at
  • Allyson Lucinda Benton is at the División de Estudios Políticos [Political Studies Department], Centro de Investigación y Docencia Económicas, AC (CIDE), Carretera México-Toluca 3655, Colonia Lomas de Santa Fé México, Ciudad de México 01210. She can be reached at


Research on subnational capital markets in developing nations has tended to focus on designing regulatory frameworks that compensate for structural economic, fiscal, and political factors. However, research on public investment in the United States shows that functional factors, like administrative capacity and metropolitan cooperation, are also important. Using a panel dataset of Mexican municipal debt (2005–2012), the study examines whether metropolitan cooperation and administrative capacity affect subnational debt decisions in this developing nation. Cross-sectional time-series analysis of different types of municipal debt (public development bank loans, private commercial bank debt, bond emissions, and trust instruments) reveals that municipalities in metropolitan areas avoid costlier credits but that they do not cooperate to access cheaper loans. The research reveals that administrative capacity plays little to no role in municipal debt decisions.

Monday, February 20, 2017

Postmodern Theory

Postmodern public administration theory can be most easily understood as the antithesis of positivism and the logic of objective social science.
Organizational Humanism and Postpositivism
The core ideas in postmordern public administration
1.       Public administrators and public agencies are not and cannot be either neutral or objective.
2.       Technology is often dehumanizing
3.       Bureaucratic hierarchy is often ineffective as an organizational strategy.
4.       Bureaucratic tend toward goal displacement and survival
5.       Cooperation, consensus, and democratic administration are more likely than the simple exercise of administrative authority to result in organizational effectiveness.
6.       Modern concepts of public administration must be built on postbehavioral and postpositivist logic—more democratic, adaptable, and responsive to changing social, economic, and political circumstances.
Postpositivism is not thought to be primarily antipositivist. The positivist notion that the social world is orderly; that this order can be understood, described, and explained; and that accumulated knowledge thus attained can form the basis of theory is, in the view of most postpositivists, simply wrong.
Postmodern Perspectives in Public Administration
To attempt to understand postmodern public administration, one must begin with the postmodern characterization of modernity or high modernity:
×            To postmodernists, modern public administration based on enlightenment logic is simply misguided
×            Postmodernists describe modern life as hyperreality, a blurring of the real and the unreal.
×            Modernity is also characterized in postmodernity as particularly authoritarian and unjust
×            Modernity, in the postmodern perspective, is primarily concerned with objective knowledge and its development.
×            Farmer describes modernity as expressions of the limits of prticularism, scientism, technologism, and enterprise. Form the postmodern perspective, criticisms of modernist public administration include:
Its over reliance on the logic and epistemology of objective rational social science
The implicit support it gives to authoritarian, unfair, and unjust regimes
Its bias toward American particularism
The too great attachment it has to functional management and organization technologies
Its willingness to be overly influenced by the capitalist logic of enterprise
Looking for Postmodern Public Administration Theory
×            Postmodern public administration theory looks rather like a combination of the sense making logic described in Chapter 7 on decision making theory, many of the modern elements of institutional theory described in Chapter 4, and public management theory described in Chapter 5.
×            Following farmer, postmodern public administration can be understood to include dialectic, a return to imagination, the deconstruction of meaning, deterritorialization, and alterity.
Feminist Perspectives on Public Administration
×            The service or helping perspective of process approaches to bureaucratic functioning is thought to be feminine.
×            The feminist professional distinction: female reformers of the time developed their own understanding of science, one centered not around objectivity and rigor but around connectedness. The day-to-day work of the settlement involved an intimate understanding of the circumstances of others, sympathy and support, advocacy, and anything but disinterested neutrality
×            Feminists see leadership differently. The feminist perspective looks a lot like the logic of democratic administration found in postpositivist public administration—group decisionmaking, consensus, team work, deliberation, and discourse. In its most extreme form, it would favor the leaderless organization or the logic of leader rotation.
×            From the feminist perspective, the images of the public administrators as guardian, hero, or high-profile leader are masculine. The application of fairness, compassion, benevolence, and civic-mindedness are thought to be more feminine. The administrator as citizen rather than leader is also associated with feminist logic.
Postmodern Theory and Imagination
×            Postmodernists base their quest for greater imagination in public administration by rejecting rationality and rationalization.
×            Imagination is important to postmodern public administration theory because of the view that metaphor, images, allegory, stories, and parables play a central role in how people think. Gareth Morgan refers to imaginization as the art of creative management, which resembles the standard humanist management training/interventionist menu of improving abilities to see things differently, referred to as thinking outside the box, finding new ways to organize, encouraging personal empowerment, and finding new ways to self-organize.
×            A second version of the postmodern imagination perspective is associated with leadership and strategic management. This is the call for public administrators to improve their capacities to see around the corner, to have great vision, and to take risks
The Antistate Charactereristics of Postmodern Theory
×            The postmodernists are most attuned to the weakness of the nation-state and to an open and direct criticism of the state. Postmodern public administration theory comes the most closest to thoughtful perspectives on one of the most important contemporary issues facing the field: the declining salience of the state.
×            Postmodernists argue that in the modern world all the characteristics of the state are in play. The modern nation-state is “too remote to manage the problems of our daily life…and too constrained to confront the global problems that affect us”.
×            Public administration in the postnational world will move subtly away from the logic of state or nation building and the concentration of ever more economic capacity or sovereignty toward the search for multi-institutional compatibilities, attempts to find cross-jurisdictional convergence, and, above all, searches for procedures that will aid the development of generally acceptable decision processes and rules.
×            American approaches to postmodern public administration theory tend to be less bold, choosing to emphasize improved discourse and more humane and democratic administration.
×            Postmodern public administration theory emphasizes teamwork and conformity.
×            The postmodern condition is described as increasingly fragmented jurisdictionally, more and more small jurisdictions emerging.
Methodological Perspectives and the Contributions of Postmodern Approaches to the Field
×            Postmodern approach to field research
×            The methodological approach in operational naturalistic inquiry is as follows: natural setting; human interest; utilization of tacit knowledge; qualitative methods; purposive sampling; inductive data analysis; grounded theory; emergent design; negotiated outcome; case study reporting mode; ideographic interpretation; tentative application; focused-determined boundaries to the inquiry “on the basis of the emergent focus”; special criteria for trustworthiness.
×            Scholars working from the postmodern public administration theory perspective have provided thoughtful and provocative analyses of the problem of administrative responsibility, trust, gender, legitimacy and a wide range of other issues in the field.
×            Postmodern research and theory is highly influential among the members of the Law and Society Association.
×            The postmodern methodological perspective is associated with deterriorialization, an analytic approach that seeks to break down the structural territories found in all organizations.
×            The postmodern methodological perspective also includes the logic of alterity, or a forthright concern for the “moral other” on the part of public admin.

Theories of Public Management

Public management is taken to mean the formal and informal processes of guiding human interaction toward public organizational objectives. The units of analysis are processes of interaction between managers and workers and the effects of management behavior on workers and work outcomes.

Traditional Management Theory Thrust Forward
×            Traditional management theory has its origins with Frederick W. Taylor and his influential The Principles of Scientific Management.
×            Luther Gulick applied scientific management to government and introduced the most famous mnemonic in the field—POSDCORB, which represents his theory of the seven major functions of management: planning, organizing, staffing, directing, coordinating, reporting and budgeting.
×            Based on field research, Chester Barnard, the Hawthorne experiments, and Douglas McGregor conducted behavioral work.
×            One important and different approach to management theory is the sociology of Max Weber, who founded the formal study of the large-scale complex organizations he labeled bureaucracy.

Middle-range theories
From the late 1950s through the mid-1980s, much of this work was in the so-called middle range theories, particularly group theory, role theory, and communications theory.
Group Theory
In group theory, the effective group will develop shared goals and values, norms of behavior, customs, and traditions. Effective management in the context of group theory nurtures, cultivates, and supports group goals and norms that are compatible with and supportive of institutional purposes and missions.
Role Theory
In role theory, each office or position is defined in its relationship to others and to the organization as a whole, and often to the organization’s purpose.
Henry Mintzberg used the concept of roles to identify the three primary managerial roles: interpersonal roles, informational roles, and managerial roles.
Communication Theory
The theory of communication argues that most downward communication emphasizes task directives and organizational policy and procedures, while often neglect the communication of agency mission and performance feedback, which result in the low morale, preoccupation with routine tasks, and indifference to agency performance.
New Public Management
×            The positivist decision-theory founded by Simon appears to have had little effect on the day-to-day practices of public management, and the language, arguments and influence of the principles of management in public organizations remain surprisingly “proverbial”.
×            As a way to distinguish between public management principles that are scientifically verifiable and principles that are simply understood and accepted, Hood and Jackson suggest that the principles are better understood as doctrines.
×            These doctrines have been name as “New Public Management”, and its principles are widely accepted in the modern practice of public administration.

Leadership as Public Management
×            Bureaucratic politics came to be a preferred way to theorize about the role of public managers in making policy, certainly preferable to theorizing about the day-to-day management of a bureau or an office. Bureaucrats, in high policy, are understood to be leaders, a very legitimating perspectives.
×            The study of management in the policy schools has come to be the study of what leaders do, rather than the study of management theories

Managing By Contract
×            Through the analysis of contracting for capital projects, large-scale projects and contracting of social service, the authors study the difference between contract management and ordinary public management.
×            By contracting out, governments exports some management issues such as day-to-day direction of activities, contracts with clients or customers, the organization of work, the motivation of workers, and the issues of leadership. Contracting redefines administrative discretion by delegating it to buyers. And contracting appears to decrease public management responsibility for orderly and reliable institutions and increase the long-range probability of instability.
×            How can government be an effective and smart buyer?
A smart-buying government must have more frontline bureaucrats trained, hired, and rewarded to do contract management. Governments should avoid contracting for core government functions, because contracting weakens a manager’s capacity to manage directly by delegating management.

Public Institutional Theory

Institutional Theory
×            The organization and management of contained and bounded public institutions, now generally comprehended by institutional theory.
×            Institutions include states and other governmental jurisdictions and subjurisdictions, parliaments, bureaucracies, shadow and contract bureaucracies, nongovernmental organizations, universities, and corporations or private companies having clear and distinct public purpose.
×            The “big tent theory of institutions”

The Basic Idea
×            Institutionalism could be said to account for how institutions behave and how they perform.
×            Institutionalism sees organizations as bounded social constructs of rules, roles, norms, and the expectations that constrain individual and group choices and behavior.
×            Institutionalism also includes core ideas about contemporary public administration: results, performance, outcomes, and purposefulness.
×            Institutionalism is not limited to formal governmental organizations, also concerns the full-range of “third sector” organization and fully recognizes the fuzzy distinctions between public and private institutions.
From Organizations to Institutions
×            Organizations in the private sector are not ordinarily thought of as institutions. Institutions that are also organizations, found primarily in the public sector.
×            Organization theory: emphasis on formal structure and management
×            Institutional theory: emphasis on patterns of collective behavior exogenous to the formal organization, and patterns of interaction between institutions and their broader social economic, and political contexts
×            Hierarchy is usually thought to be something that needs to be replaced with better forms of organizing.
×            The explanation of the persistence and no other alternatives is ,first, that work is organized by task, and tasks are increasingly complex and tend to separate into discrete categories of increasing complexity; and, second, the mental work of management increases in complexity and also separate into discrete categories.
Alternatives to Hierarchy
Transaction cost analysis; information asymmetry; principal agent theory; models of rational choice.
High-Reliable Systems
×            Features: tightly coupled physical technologies, fixed and rigid standard procedure, extensive and constant technological training, fund guarantee high efficiency, highly redundant, highly networked, high-functioning public-private partnership, error reporting is encouraged and not punished, hierarchical organization.
×            These failure-free systems reveal how remarkably effective modern public and private organizations can be if they have adequate resources and are well managed.
Comparing Institutional Forms
×            Scholars compared institutional and constitutional designs at the level of the nation-state. But national states are hard to compare. American cities are much easier to compare and they exhibit many of the same institutional design characteristics as national states.
×            The municipal reform movement was a remarkably success of institutional redesign for the purpose of changing the allocation of power and policy outcomes of American cities.
×            Reallocating power and changing institutional behavior was accomplished by changing the institutional rules and altering institutional roles.
System Fragmentation
×            Tiebout Thesis, an argument that multiple small jurisdictions in a metropolitan area aid market-like individual choice, competition, and public service both in separate jurisdictions and in entire metropolitan areas.
×            A systems fragmentation versus a consolidated systems argument
×            David Lowery’s critique of fragmentation theory: greater racial and income segregation; a spatial mismatch of need and fiscal capacity among poor and minorities and wealthy whites; policies that minimize sorting by race and income and maximize redistribution and generalized economic growth.
Garbage Cans and Rent Seeking
×            In the garbage cam one can finds order, but this order is neither sequential nor consequential and turns much of the rational logic of decision theory on its head.
×            Public problems in the garbage can seek solutions; at the same time, public institutions may be attracted to particular problems. Problems, solutions, can decisionmakers are temporal phenomena simultaneously available and can form a temporal order. “You often do not know what the public policy question is until you know the answer”. Rather than the answer to a particular public policy question, in the garbage can an appropriate answer is most likely
×            Rent can be thought as a surplus in a completely efficient public sector. While public sector institutions have to do with institutional structural factors that may be inefficient. Redistribution of goods and service can been used to seek the greatest social surplus.

The Diffusion of Innovation
×            Everett M. Rogers found that innovation or reforms spread in diffusions, which exhibit a common pattern: the S-curve.
×            Patterns of diffusion are explained by a series of attendant hypothesis:
The association between the presence of a perceived crisis and the propensity to adopt a change
The importance of the compatibility between the purposes of a change or reform and the dominant values in a social system
Spatial proximity is important in diffusion theory
The mass media play a crucial role in amplifying and editing the diffusion of collective action
Change agents are often the carriers of change, the agents of diffusions
Closely associated with the media and with diffusion change agents is the matter of fashion setting
Both individuals and institutions tend to change so as to acquire prestige, status and social standing

Wednesday, August 24, 2016

Bond Rating and Fiscal Capacity

Bond Rating and Fiscal Capacity
I.                    Introduction

Different jurisdictions have different credit liabilities. Various evaluations of municipal bonds. Large spread of interest rates for individuals (0-25%) but for municipal bonds its NOT So

1.      Frank’s law of big numbers

80,000,000 city of Miami bond to clean up roads
1% of that is 800,000 (80k)
average maturity is 15 years
15x80k=1,200,000 over life time of bond

2.      S&P/Moody’s/Finch people listen big operations

They are nonpartisan/ when speak, people pay attention. Lower rating on an a government makes increase cost of borrowing money/ with high interest rates

3.      Bond Evaluators look at:
a.       Economic base
b.      Management practices
c.       Political climate
d.      Better side of capitalism—look for objection of credit worthiness
e.       Databases with/between jurisdictions

4.      Fiscal capacity—to receive a bond/how to rate it
a.       Linear programming, regression approach, point system, overlap and GO vs. other
b.      Most municipalities have  “toolbox of taxes”

Property taxes
Utility taxes
User fees (fire, selective services, etc. Garbage)
Misc. (cell phone taxes, light, water, gas)

Fiscal Capacity

City A (Miami)
City B (Adventura)

Property taxes
Utility taxes
User fees


Mill is 1$/? For what?
Every jurisdiction can draw on political systems
Some areas can draw move on these than other
So bond ratings change with the age of a city.  Miami is older and has more debt than Adventura which is younger and has lower ratings…

5.      socio-physiological/look at how much poverty relates to economic base
20/30% below poverty line
how much can a county’s dept accrue?

Depends on the property tax base-met 1 to 10% of property value or the per capita income
In FL—cities and counties increase % per capita debt comparison states and cities

Ratings System
Junk Bonds
D –bond is not paying on interest or principal
6.      Per Capita Debt
In FL-slightly below median income
Biotec company hub sets up in Dade county 2 times and still will not move in, why? Politics

So S&P/Moody/Finch looks at per capta income
Not just dept in absolute terms but who can pay

Aviation bonds=A ratings on Revenue Bonds
Dade County have General Obligation bonds=A/or AA

II. Municipal bonds is a “generic term” issued by state, local, governments, aviation, world trade center, port authority, school boards, etc

·         ** Interest on these Bonds is free from Federal income tax or interest

·         Example: MDS (Miami Dade Expressway) bond interest income free of federal income tax or interest (this is a Revenue bond because it uses user fees to pay for the loan)

·         **Government borrow at a discounted interest rate

·         1986 LAW/regulation? Efforts to chip away at this subsidy. Over used and some wanted it to be more regulated.

·         Local government needs to decide if the pay as you go system or how much you go into debt with pay as you use system

·         Most county and states are in debt
·         Keep debt service over time makes it level and therefore you don’t see hikes in your taxes if there is a new bond set.
·         So then you pay interest over larger periods of time (which makes it cost more)
·         Yet says Americas are Mobile and so you should pay fir it as you use the item. Average American moves 7/8 times during their life
·         Pay as you use -1% cent sales taxes to pay for jail and pay out of the pocked

7.      Huge divides-- General Obligations Debt Vs. Revenue Bonds

General Obligations Debt
Revenue Bonds
Public schools
City halls

Must have public referendum

Life insurances companies hold lost of municipal bonds, they love to keep payments strong for their future claims
75% bonds today are RB
government subsidize principal and interest, which are paid with user fees
landing paying feeds for MIA
tolls for roads/bridges or
ports fees for docking

should use discounted cash flow analysis.
Mostly rated as AAA because they will have $ to pay off the loan

8.      COPS Certificate of Participation

Cities go to private banks to get loan so they don’t have to go through private referendum

Interest rates at the GO bonds—not high enough more risky
Why? School boards culture will not let them default/ default taint is bad so it is rare and atypical
Payback with special tax revenue/ $ coming out of general revenues
Bond for schools, super markets? EPA clean up/superfrund?
Which types are okay?

9.      Tax Reform Act of 1986- when taxes are too much benefit to the private sector
1.      decreasing federal revenues
2.      fiscal debt availability too much competition for government borrowing rates where increasing

people interest rates limited and credited other types of bonds with state port tax free
tax rates by broadly defined tax base.

10.  Tax increment financing

Development districts—create districts to do its own improvements in a community development districts, they pay taxes not in theory don’t pay??
Subdivisions of cities to pay its own repairs, then after the “turn around” it goes back to parent/city
City may think they are loosing part of tax rate, but with quasi government and a concentrated effort to do economic development for a subdivision of a city

11.  Make a buck become a bond underwriter

How are they paid?
General obligation must go to management of funds sources and auctioned off
Revenue bonds are negotiated
Bids 5to10,000 or more

GO put an add in the bond bidder though a public journal
Revenue bonds most sold directly with bidders (insurance agencies)

Underwriters take 1to4 cents to everything sold. Wachovia /Merrill Lich /City Group
They accept the risk from cities and turn it into profits from reliable individual investors

12.  Municipal bond insurance --Good Stocks to have

AMBAC/ MBIA are municipal bond insurance which are good stocks to have because they are very secure with steady stream of principal being paid back by cities. Insurance to make sure they get money in a timely manner

Metropolitan Cooperation and Administration in Mexico

The Role of Metropolitan Cooperation and Administrative Capacity in Subnational Debt Dynamics: Evidence From Municipal Mexico Authors ...