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 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 –Note that October 13, 15, and 20 have been shuffled. –October 20: Guest speaker, Prof. Randy Beck October 15: Chapter 8 Concept Map due