Corruption, reform, and institutional change: Public choice in nineteenth century urban America. The Municipal Reform Movement and street sweeping in 1903. The municipalization of American waterworks from 1800 to 1925

Richard Alan Levitan, University of Pennsylvania

Abstract

This dissertation contains two essays on American municipal governments and the political corruption and reform efforts of the late nineteenth century. The first essay, on street sweeping, presents a model that incorporates features of two different forms of public corruption. Each has its own fiscal signature, allowing us to distinguish patronage from graft-seeking behavior on the basis of available fiscal information. Exogenous factors are identified to have dual, independent structural effects on the production technology and the aggregate demand for street sweeping services, calling for a simultaneous equations public goods equilibrium approach. The estimated structural equations provide modest support for the theoretical predictions: reform activity is seen to reduce some of the technical inefficiencies associated with patronage but at a cost to society in reduced public employment and increased graft. I conclude that the apparent responsiveness of political machines to reform opposition indicates not a diminution in corruption but a continuation of corruption in a modified and perhaps more insidious form. The theme of the second essay is asymmetric information in the design of institutions, specifically the municipalization of waterworks. Identifying an exact sense in which public ownership is superior to private ownership yields an explanation for why municipalization occurs and for the rate of adoption for this form of institutional change. Presented is a single period principal-agent model in which a private firm is the sole supplier of water for all public purposes; municipalization occurs if city officials become sufficiently convinced that the firm is a less-than-perfect agent for the city. The basis for a city's decision is the observed death rate from typhoid fever. Since the distribution of this random variable depends on decisions both public and private, the model demonstrates how the actions of the firm combine with public policy to influence the process or timing of municipalization. Using methodology borrowed from the literature on technological innovations, I show that public decision-makers in the aggregate respond rationally to expectations of “profit,” appropriately defined. ^

Subject Area

History, United States|Economics, General|Economics, History|Political Science, General

Recommended Citation

Levitan, Richard Alan, "Corruption, reform, and institutional change: Public choice in nineteenth century urban America. The Municipal Reform Movement and street sweeping in 1903. The municipalization of American waterworks from 1800 to 1925" (1999). Dissertations available from ProQuest. AAI9926162.
https://repository.upenn.edu/dissertations/AAI9926162

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