Bureaus and the Principal-Agent
Problem
Jamie Monogan
University 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 Presidential
Congressional
Influence
Influence
•Use power
•Appoint
andofremove
the purse
agency
to grant
leadership
and restrict agency funding
•Instructlegislation
•Create
agencies on
thatinterpretation
describes what
andthe
implementation
agency should
of do,
lawsand
through
also expand
signingor
statements
limit
and other
agency jurisdiction
directives
•Hold congressional hearings to oversee agency action and to limit bureaucratic drift
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