How to fix the state
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In 1883, the US government promulgated the Pendleton Act. The Act aimed to curtail the influence of politics on public administration by introducing a merit-based civil service system. Before the Act, government appointments were largely determined by political patronage under the ‘spoils system’, where positions were awarded based on loyalty and support rather than merit. The 1883 Act replaced discretionary appointments with rule-based hiring, required competitive exams for civil service positions and protected workers from arbitrary dismissal based on political changes. It aimed to create a more capable and ethical bureaucracy, thereby improving the quality and reliability of public services.
One of these services was the postal system. In a new paper, economists Abhay Aneja and Guo Xu ask whether the Pendleton Act had any impact on the efficiency of the US postal service.1 But how would one measure the effectiveness of these reforms? The authors came up with an ingenious measure: they digitised thousands of historical records from the US Post Office, records that include performance measures such as personnel records, newspaper circulation data and, crucially, service delivery errors. It is these delivery errors they use to test the effectiveness of the civil service reform on public sector performance: if there are fewer errors in those cities after the reform, it must mean that state officials become more competent at their jobs.
The findings are nothing but emphatic: competent government employees matter. The authors document a 19-22% reduction in postal delivery errors in cities that underwent civil service reform. These improvements were most pronounced during election years, suggesting that the reform reduced the politically motivated turnover of postal workers, which had previously contributed to inefficiencies. The reform also led to increased productivity in the postal service, as evidenced by higher volumes of mail handled per carrier and lower costs per unit of mail processed. Most strikingly, the reform also weakened the influence of local politicians by reducing the availability of federal jobs for political patronage, as reflected in a decline in the circulation of partisan newspapers in reformed cities. The Act not only enhanced the effectiveness of the federal bureaucracy but also reduced the entanglement of public administration with politics.
Cadre deployment, South Africa’s form of political patronage, has significantly weakened state capacity by prioritising party loyalty over merit in public sector appointments. What began in the 2000s as an effort to advance the ANC’s strategic and ideological goals has evolved into a system that undermines the effectiveness of government institutions. By installing party activists in key positions within the civil service and state-owned enterprises, cadre deployment has blurred the lines between the state and the ruling party, eroding the principle of an impartial, professional bureaucracy. This has entrenched a culture of neo-patrimonialism, where personal loyalties and political connections outweigh competence and accountability, leading to inefficiency, corruption and declining service delivery. The policy has contributed to the emergence of a ‘shadow state’, where decisions are made to serve party interests rather than the public good, with especially damaging consequences in local government, where deteriorating infrastructure and poor governance have fuelled widespread public disillusionment.
South Africa desperately needs its own Pendleton Act. Indeed, President Ramaphosa, in his Opening of Parliament Address, emphasised that the GNU’s third priority is to ‘build a capable, ethical and developmental state’.2 Yet, there are few concrete plans on how to turn this vision into reality. Why not establish a ‘Civil Service Commission’ to oversee the appointment of public officials based on qualifications and performance rather than political connections? The commission would implement a rigorous selection process, ensuring that only the most capable and skilled individuals occupy key positions within the public sector.
Though transformational, such a reform is unlikely to have a pronounced immediate effect. The Pendleton Act of 1883, for example, was initially challenging to enforce effectively, primarily due to the limited capacity of the Civil Service Commission. As the merit-based system expanded and became more entrenched, however, enforcement improved, and the principles of the Act became more widely respected.
A second reform – to rid Italian municipalities of the mafia – promises a much more immediate impact. Italy has a mafia problem, a problem that emerged a century ago because of, as I explained here, a fall in the price of lemons. The Sicilian mafia today is known for organised crime, like extortion, smuggling and racketeering, infiltrating key government positions to ensure that their illicit activities remain protected and profitable.
But Italians have had enough. Realising that some city councils had been deeply infiltrated by organised crime, the Italian central government took decisive action by dismissing these councils. The impact was immediate. Studying 245 such dismissals between 1991 and 2016, the economists Alessandra Fenizia and Raffaele Saggio found that, in the nine years after dismissals, employment rose by 16.9%, the number of firms increased by 9.4%, and industrial real estate prices surged by 15%.3 These gains were concentrated in sectors like construction – historically dominated by the mafia –and were most pronounced in towns where fewer incumbents were reelected. The message was clear: the Mafia’s influence over local politics had weakened. By dismantling these corrupt governments, Italy began restoring trust in its institutions, leading to a resurgence in economic activity.
The lessons from both the Pendleton Act and Italy’s city council dismissals are clear: sustainable economic growth and effective governance depend on reducing the influence of political patronage. The Pendleton Act of 1883 in the United States, which introduced a merit-based civil service system, substantially improved the quality and reliability of public services by curtailing the spoils system that prioritized political loyalty over competence. In Italy, similar measures, when applied to local governments infiltrated by the mafia, significantly boosted employment, firm creation, and real estate prices by weakening the grip of organized crime.
In both instances, the reforms shifted the focus from personal loyalty to professional competence, strengthening state capacity and enabling public institutions to function independently and effectively. These examples clearly demonstrate that by prioritising competence over loyalty, governments can build a capable and ethical state, laying the groundwork for sustainable economic growth. This is precisely what President Ramaphosa has pledged to focus on.
An edited version of this article was published on News24. Support more such writing by signing up for a paid subscription. The images were created with Midjourney v6.
Aneja, A. and Xu, G., 2024. Strengthening State Capacity: Civil Service Reform and Public Sector Performance during the Gilded Age. American Economic Review, 114(8), pp.2352-2387.
The concept of a ‘developmental state’ in South Africa has unfortunately become tainted by the widespread corruption that proliferated during the Zuma era and continues to linger. Language is powerful, as I will argue below, and when the term 'developmental state' evokes associations with theft and corruption for most people, it is prudent to retire the term in favour of alternatives. The term has accumulated too much negative baggage to be effectively rehabilitated. Rather than attempting to restore its original meaning, it would be more productive to shift the narrative towards building a ‘capable and ethical state’.
Fenizia, Alessandra, and Raffaele Saggio. 2024. "Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia." American Economic Review, 114 (7): 2171–2200.