Bureaucratic Capacity, Delegation, and Political Reform JOHN D

American Political Science Review Vol. 98, No. 3 August 2004 Bureaucratic Capacity, Delegation, and Political Reform JOHN D. HUBER Columbia University NOLAN MCCARTY Princeton University e analyze a model of delegation and policymaking in polities where bureaucratic capacity is low. Our analysis suggests that low bureaucratic capacity diminishes incentives for bureaucrats W to comply with legislation, making it more difficult for politicians to induce bureaucrats to take actions that politicians desire. Consequently, when bureaucratic capacity is low, standard principles in the theoretical literature on delegation no longer hold. We also use the model to examine the issue of political reform in polities with low bureaucratic capacity. The model indicates that politicians in such polities will be trapped in a situation whereby they have little incentive to undertake reforms of either the bureaucracy or other institutions (such as courts) that are crucial for successful policymaking. he central tension motivating contemporary the- corruption. For a variety of reasons, then, it may be ories of delegation from politicians to bureau- very difficult for bureaucracies to implement policies Tcrats lies in the potential conflict between the effectively, even when leaders within the bureaucracy value of bureaucratic expertise, on one hand, and the have sufficient expertise to understand which policies desire for political control, on the other. This tension will yield desired outcomes. The problem for politi- is well-known, and has been debated at least since cians in such contexts is not how to create appropriate Weber’s classic work on bureaucracy. Modern bureau- incentives for high-powered bureaucrats. Instead, the cracies are staffed with individuals who, by virtue of problem is how to make policy when bureaucracy is “rational” bureaucratic organization, are highly skilled known to lack capacity. policy experts who in principle should be able to We develop a model of delegation that can help help less knowledgeable politicians achieve their goals. understand policymaking processes when bureaucratic However, the very skills and expertise that bureau- capacity is lacking. A central feature of our approach is crats enjoy create the possibility that bureaucrats will to distinguish the problem of information (knowledge usurp the rightful role of politicians in policymaking about the consequences of different actions) from the processes. Because the way this tension is resolved de- problem of capacity (the ability to accomplish intended termines the ultimate compatibility of democracy and actions). The information problem has dominated the bureaucracy, existing theories of delegation typically existing delegation literature, whereas the capacity is- focus on understanding how and to what extent politi- sue has been essentially ignored. We argue that the cians can resolve it.1 problems of information and capacity are conceptually In many contexts, particularly developing democra- distinct. Senior bureaucrats, for example, may have pol- cies, bureaucracy does not fit the “Weberian” charac- icy expertise but, because of the problems described teristics that are assumed in the existing delegation in the previous paragraph, be unable to execute re- literature. The bureaucracies may be staffed with in- liably the policies they intend. By disentangling the dividuals who lack the personal capacity to execute effects of expertise and capacity on delegation, we can orders effectively. The organizational structure may achieve important insights into policymaking in situa- lead to breakdowns within bureaucratic hierarchies, tions where bureaucratic capacity is low. making it difficult for senior administrators to control Specifically, we use the model of delegation to low- their subordinates. Departments and ministries may capacity bureaucracies to explore three substantive lack basic budgets and resources to undertake imple- issues. First, we examine how low bureaucratic ca- mentation actions. They may suffer from incentives for pacity diminishes the ability of politicians to achieve their policy goals. Our main argument is that although John D. Huber is Professor of Political Science, Department of Po- low bureaucratic capacity reduces the general qual- litical Science, Columbia University, New York, NY 10025 (jdh39@ ity of bureaucratic outcomes though a straightforward columbia.edu). efficiency loss, it also changes policymaking in a less Nolan McCarty is Professor of Politics and Public Affairs, Woodrow Wilson School of International and Public Affairs, Prince- obvious way. In particular, it diminishes incentives for ton University, Princeton, NJ 08540 ([email protected]). bureaucrats to comply with legislative statutes. Put dif- We would like to thank John Carey, David Epstein, David Lewis, ferently, bad bureaucracies are not only inefficient (i.e., and Eric Schickler for comments on early versions of the manuscript. less successful at implementing the policies they in- We are also grateful for feedback from participants in seminars at UC—–Berkeley and the University of Michigan and from participants tend), but also harder to control because their incom- in conferences on the Macropolitics of Congress and Brazilian Po- petence diminishes their incentives to implement the litical Institutions in Comparative Perspective. Huber is grateful to policies politicians describe in legislation. For this rea- Princeton’s University’s Center for the Study of Democratic Politics, son, politicians can often induce more desirable ac- where he was a visiting fellow during work on this project. tions from highly competent “enemy” bureaucrats (i.e., 1 Influential works include informal arguments by McCubbins, Noll, and Weingast (1987), the formal model in Bawn 1995, and the for- bureaucrats with policy preferences that differ from mal model and empirical tests in Epstein and O’Halloran 1999. See the politician’s) than from less competent “friendly” Huber and Shipan 2002, chap. 2, for a recent review of the literature. ones (who share the politician’s policy preferences). 481 Bureaucratic Capacity, Delegation, and Political Reform August 2004 Importantly, however, politicians need some level of public-sector salaries that are sufficiently high to attract policy expertise to take advantage of bureaucratic com- skilled individuals into public service (e.g., Besley and petence. Without it, competent bureaucrats can often McLaren 1993), the nature of social networks among work successfully to achieve outcomes that politicians bureaucrats (e.g., Carpenter 2001), insulation of agency oppose. budgets from excessive political influence (e.g., Geddes Second, we use the model to understand how delega- 1994), and training programs (e.g., McCourt and Sola tion strategies in situations of low bureaucratic capacity 1999). differ from delegation strategies that have been de- Importantly,low bureaucratic capacity can exist even scribed in previous research on high-capacity bureau- when high-level bureaucrats know what they would cracies. Our model suggests that when bureaucratic like to accomplish. A senior administrator in a depart- capacity is low, well-established principles in the ex- ment of education, for example, may have a clear idea isting literature no longer hold. In models that assume of which curriculum for students will yield the best test high-capacity bureaucrats, for example, politicians typ- scores, but implementation of this curriculum may be ically delegate more discretion to bureaucrats when difficult and uneven given variation in the quality of the bureaucrats are ideological allies and when ex post school principals and teachers. Or it may be the case monitoring possibilities are most effective. We find that a senior bureaucrat charged with administering a the opposite in low capacity systems. Thus, predictions pension system can establish a clear set of rules about about discretion in legislative statutes may not apply in eligibility and payments. But this bureaucrat may be political systems where bureaucratic capacity is low. unable to enforce adequately the application of these Finally, we use the model to understand incentives rules, as subordinates may favor particular individuals for political reform in polities with low bureaucratic over others, refuse pensions where they are deserved, capacity. We argue that politicians in such polities are or provide them to individuals who are ineligible. Or trapped in a situation where they have little incen- a senior bureaucrat may be assisted by international tive to reform not only the bureaucracy, but other development agencies regarding how to build a water institutions as well. The incentives of politicians to project but be unable to motivate subordinates to get reform low-capacity bureaucracies increase as politi- the job done right. We want to focus, then, on problems cians gain more policy expertise, for instance, but the that senior bureaucrats often face when attempting to incentives of politicians to gain policy expertise are have their subordinates implement policy and, there- smallest when bureaucratic capacity is low. Similarly, fore, to separate this problem of “capacity” in imple- incentives to reform low-capacity bureaucrats increase mentation from the problem of “expertise.” when enforcement of statutes—–which is often done Our approach to modeling policymaking in the pres- by courts—–becomes more effective, but incentives to ence of capacity and expertise problems is as follows. create effective

Load more