Research note. Above Politics: Bureaucratic Discretion and Credible Commitment

Research note by Gary J. Miller and Andrew B. Whitford

We make four observations in this book. First, government is integral for long-term economic growth and stability in markets. Second, given time-inconsistent preferences, politicians’ promises are often not credible. They are expected not to intervene on the behalf of specific market actors adversely affected by government’s actions in the markets via regulation or management of the money supply. Third, agencies are central to understanding the relationship between government and markets because delegation from politicians to bureaus solves a broader problem of credible commitment – but only if bureaus (like politicians) “tie their own hands”. Finally, this implicit agreement is two-sided: that politicians could violate this agreement by intervening in the markets – by pushing bureaus to take actions that do not pursue social welfare or by acting in ways to circumvent the actions of bureaus. Likewise, bureaus could violate this agreement if they use their positions for ill, for the good of the bureau alone, or for the good of specific market actors. We argue that professionalism is a form of social delegation to groups – of perhaps economists, engineers, lawyers, or doctors – that are bound by agreements to serve “higher goods”.

Just as Djankov, Glaeser, La Porta, Lopez-de-Silanes, and Shleifer (2003) note, we see this agreement as a kind of tradeoff – as a possible outcome that results from a dilemma about minimizing both the social costs of disorder and the social costs of dictatorship. The benefits of having independent regulators and central banks staffed by professionalized bureaucrats is an outcome that was largely unanticipated by their designers. Indeed, even debates in political science and public administration about accountability and responsibility mostly focus on the role of hierarchical control by elected political principals of their unelected bureaucratic agents. We believe our focus on both the “principal’s problem” and the “bureaucrat’s burden” presents political science and public administration with an opportunity to help answer questions asked by economists like Estache and Wren-Lewis (2009) when they observe regulatory independence and credible commitment in market settings around the world, such as “which [mechanisms] are likely to be more important and which are likely to have the greatest risks”.

We believe there are inherent risks in a “delegation to professionals” arrangement. We recognize that there are no perfect mechanisms – that all management strategies and all organizational arrangements are themselves a set of interlocking dilemmas (Miller, 1992). We call one such risk “the campaign against bureaucrats”. In the long run, professionals are more credible than their political overseers. Of course, smart politicians probably know this – thus the incentive for “bureau-bashing”.

The campaign against bureaucrats is by no means unprecedented. As Kaufman (1981) reminds us, hostility towards “unelected bureaucrats” has been present throughout much of history. The point of such initiatives was often clear: those that were not elected should be made responsive to the electoral majority through the spoils system. But consider the incentives here for politicians. A legitimate concern for bureaucratic accountability can become a belittling of bureaucratic professionalism and expertise, and hostility toward bureaucratic independence and bureaucrats themselves. Bureaucrats are always going to create enemies. These enemies can use the incompleteness of bureaucratic solutions as evidence supporting an anti-bureaucratic political stance: “bureaucrats are inept but power-hungry; don’t give them the autonomy they desire.” This would be of little concern, except that this kind of politicized attack on bureaucracies deprives them of the independence that allows them to contribute to the credible commitment of the state to the kind of economic conditions that are requisites for economic development.

The problem is worse when bureaucrats are charged with solving technical problems for which ultimate resolution is unlikely or impossible. Issues of sufficient complexity and subtlety often cannot be articulated in the language of politics.

More disturbing, perhaps, is if large parts of society draw what we think is exactly the wrong conclusion – that “experts” are the problem, and the less we support them, listen to them, or defer to them, the better off society will be. But economic development requires a level playing field in the form of contract enforcement and transparency in property rights. We fail to imagine how majority-rule politicians with short-term election goals can supply these requirements.

If professionalized bureaucracies were just as volatile as legislative politics, then there would be no reason to write this book. However, there are good reasons to think that decision-making is different in professionalized bureaucracies. This does not mean that bureaucratic decision-making is untouched by the politics of legislature and politicized members of the executive. But it does mean that political decisions are often different. And the differences are not so much biased toward business, as they are biased toward a stability that comes from expertise itself. Credible commitment requires professionalized bureaucracies, with enough resources and respect to get their job done.

 

This is an abbreviated version of the concluding chapter of Above Politics: Bureaucratic Discretion and Credible Commitment by Gary J. Miller and Andrew B. Whitford, published by Cambridge University Press in 2016.

 

Works Cited

  • Djankov, S., Glaeser, E., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2003). The New Comparative Economics. Journal of Comparative Economics, 31(4), 595-619.
  • Estache, A., & Wren-Lewis, L. (2009). Toward a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont’s Lead. Journal of Economic Literature, 47(3), 729-770.
  • Kaufman, H. (1981). Fear of Bureaucracy: A Raging Pandemic. Public Administration Review, 41(1), 1-9. doi: 10.2307/975718
  • Miller, G. J. (1992). Managerial Dilemmas: The Political Economy of Hierarchy. New York: Cambridge University Press.