Bureaus and the Principal-Agent
Problem
Jamie Monogan
University of Georgia
October 7, 2015
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/corporat
ions
• Often these are the
very industries they
are trying to regulate
• Agencies may care
more about the
industries than the
principals they work
for
Banks and pharmaceutical firms are two
industries where this is common.
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
Political Oversight of the
Bureaucracy
• 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
Interest Groups & Bureaus
• Interest groups lobby
agencies
– Influence those writing
administrative laws
– Complain when their
interests are
threatened
• An iron triangle
– Includes interest
groups, congressional
committees, and
bureaucratic agencies
Assignments
• For Friday: Read Bullock & Gaddie, Chapter 14
• For Monday: Read Kollman pp. 263-280
• October 14: Chapter 8 Concept Map due
Additional Material
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