Bureaus and the Principal-Agent Problem

Jamie MonoganUniversity of Georgia

October 8, 2014

Objectives

By the end of this meeting, participants should be able to:•Describe the principal-agent problem and apply it to understanding bureaucratic governance.•Explain mechanisms elected officials use to control the bureaucracy.

Principals and Agents in the Executive Bureaucracy• Elected officials (Congress and

the president) are principals; bureaucrats are agents

• Two primary principal-agent problems in bureaucracy:– Agencies tend to drift from their

defined missions– Conflicting motivations of

bureaucrats and elected officials

Bureaucratic Drift and Coalitional Drift

Bureaucratic Capture

• Agencies can also be influenced by organizations/corporations

• Often these are the very industries they are trying to regulate

• Agencies may care more about the industries than the principals they work for

Motivations of Bureaucrats• Bureaucrats want autonomy and

resources• Build coalitions to help bring

about policy change• Possess information and

expertise

Bureaucrats as Lawmakers• Administrative law is made

within the executive bureaucracy• Chevron v. Natural Resources

Defense Council (1984)–Established legal standard for

upholding an agency’s authority to write law in a specific area

Political Influences on the Bureaucracy• Presidents appoint the top

positions at almost all executive branch agencies–More difficult to get appointments

through under divided government

• Congress appropriates money for the bureaucracy

CONCEPT MAP

Sources of Congressional Influence

•Use power of the purse to grant and restrict agency funding

•Create legislation that describes what the agency should do, and also expand or limit agency jurisdiction

•Hold congressional hearings to oversee agency action and to limit bureaucratic drift

Sources of Presidential Influence

•Appoint and remove agency leadership

•Instruct agencies on interpretation and implementation of laws through signing statements and other directives

Political Influences on the Bureaucracy: Oversight• Fire-alarm oversight

– Administrative Procedures Act of 1946 established guidelines

– Freedom of Information Act of 1966 requires disclosure of information

– Sunshine Act of 1976 requires open meetings

• Police-patrol oversight– Congress routinely inspects agencies

Political Influences on the Bureaucracy: Interest Groups• Interest groups lobby agencies

– Influence those writing administrative laws

–Complain when their interests are threatened

• The iron triangle– Includes interest groups,

congressional committees, and bureaucratic agencies

An Iron Triangle

Assignments

• For Friday: Read Bullock & Gaddie, Chapter 14

• For Monday: Read Kollman pp. 263-280– Note that October 13, 15, and 20 have been

shuffled.– October 20: Guest speaker, Prof. Randy

Beck

• October 15: Chapter 8 Concept Map due