Against the Profit Motive: The Salary Revolution in American Government, 1780-1940

Nicholas R. Parrillo’s "Against the Profit Motive: The Salary Revolution in American Government, 1780-1940," published by Yale University Press, 2013.

Posted: 4 Dec 2013

Date Written: October 22, 2013

Abstract

In the United States today, a public official’s lawful income consists of a salary. But until a century ago, American law frequently provided for officials to make money on a profit-seeking basis. Prosecutors won a reward for each defendant convicted. Tax collectors received a percentage of each evasion uncovered. Clerks deciding immigrants’ pleas for citizenship took a fee for each application granted. Numerous other officers were likewise paid according to the tasks they accomplished. This book is the first to analyze American government’s for-profit past, which has received little attention in the study of American political development, state building, and bureaucracy.

The book identifies two forms of profit-seeking payment for public officials: the facilitative payment and the bounty. Lawmakers became disillusioned with each form of payment (replacing it with the salary) for a distinct set of reasons.

Part One of the book focuses on the facilitative payment. This was a sum that an officer received for performing a service that the affected person wanted. The money caused the officer to treat the service recipient as a customer. Lawmakers ultimately rejected this customer-serving incentive because of (a) its tension with principles of civic republicanism and liberalism arising from the American Revolution, which warned against officers’ monopoly power and identified officer-layman bargaining as corrupt, and (b) the rise of mass interest-group rivalry, which made it unacceptable for government to cater to a single “customer class.” Part One tells this story through a legal history of bribery and extortion doctrine, as well as case studies of public officers’ incentives and behavior in the fields of immigrant naturalization, veterans’ disability pensions, and public lands (the Homestead Act and related laws).

Part Two of the book focuses on the bounty. This was a sum that an officer received for performing a task that the affected person did not want. It was an incentive to enforce government initiatives unpopular with people affected. Legislators of the 1800s enacted more ambitious and intrusive programs than ever before -- particularly in fields like taxation, liquor and gambling regulation, and imprisonment -- so they relied upon bounties to an unprecedented degree. But this experience made them realize that such rewards were poisonous to the officialdom’s legitimacy, corrosive of popular trust in government, and therefore counterproductive in building a workable state. Part Two traces these developments through case studies of officers’ incentives and behavior in the fields of state and local property taxation, federal customs duties (tariffs), criminal prosecution (both state-level district attorneys and U.S. attorneys), incarceration (jails and penitentiaries), and naval warfare.

You may visit the book’s Yale University Press webpage and click “Excerpts” to read the introductory chapter.

Keywords: compensation, incentives, salaries, American political development, state building, public administration, bureaucracy, Max Weber, privatization, outsourcing, legitimacy, trust, corruption, naturalization, veterans, taxation, prosecutors, United States navy, naval prize money

JEL Classification: H26, H71, H83, J33, K14, K34, K37, K42, L33, N41, Z13

Suggested Citation

Parrillo, Nicholas R., Against the Profit Motive: The Salary Revolution in American Government, 1780-1940 (October 22, 2013). Nicholas R. Parrillo’s "Against the Profit Motive: The Salary Revolution in American Government, 1780-1940," published by Yale University Press, 2013., Available at SSRN: https://ssrn.com/abstract=2358995

Nicholas R. Parrillo (Contact Author)

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

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