The structure of bureaucracy is investigated in terms of public-choice perspective. In addition, the concept of efficiency concerning the supply of public services is extended in order to consider the change of structure of bureaucracy.
Bureaucrats are roughly classified into two classes. The first bureaucratic class consists of elite bureaucrats whose positions rank a manager. The second bureaucratic class consists of elite bureaucrats who are not promoted to higher positions than manager and non-elite bureaucrats. The second bureaucratic class is supervised by the first bureaucratic class.
In existing literature on bureaucracy, the output of public services and fiscal surplus are considered to be political resources for bureaucrats in budgeting process. In this paper, it is assumed that the second bureaucratic class determine the output of public services in order to maximize net benefit derived from the output of public services. The net benefit is defined as benefit from the output of public services minus the cost of advocating the increase in the output of public services. The objective of the first bureaucratic class is assumed to maximize fiscal surplus. Moreover, the first bureaucratic class assesses bureaucrats who belong to the second bureaucratic class according to their contribution to the efficiency concerning the supply of public services. In order to maximize fiscal surplus, the first bureaucratic class can change the out-put and cost of public services by manipulating the strength of assessment.
In order to achieve the efficiency concerning the public services, the following policies are needed. First of all, the cost of advocacy should be raised by the achievement of political reform. Particularly, it is important to control the activities of Diet members who belong to a specific interest group or clique. At the same time, non-elite bureaucrats should be assessed more severely according to their contribution to the efficiency concerning the supply of public services. Secondly, the mid-term hiring of officials should be promoted.

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Pension program provides income distribution between younger workers and older retirees who would otherwise live in poverty on inadequate savings. The changing demographic structure of the population will result in a higher proportion of retirees to workers. The pay-as-you-go method of financing public pension is a crucial aspect of the current program and of its financial problem. If nothing were done to change the current program, it is likely that the social security tax rate would have to rise very rapidly in the years ahead, which might cause a public distrust in the program itself.
Public management of the program has been justified in the view of“market failure”of social security in economics, however, it is apparent that“welfare state”has increased fiscal deficits among democratic countries. It is paradoxical that a demographic change is preventing the public management of social security attain the economic goal of not only efficiency but also equity because of financial difficulties.
On the other hand, the public choice theory has pointed out that democratic decision making process results in income distribution through majority rule since its early stages. Now it is time that the basic structure of the public pension program has to be reexamined and reshaped to fit the economic conditions of today.
The World Bank proposed how to reform social security programs. The proposal restricts the roll within minimum standard of living, while privatize its management into market mechanisms, which inspired various arguments the reform in Japan. The purpose of this paper is to examine the idea of constitutional reform to evaluate their performances, and propose the rules within the reform in order to prevent any rooms of government failure.

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[in Japanese]

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