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Herding Scientists
- A Story of Failed Reform at the CDC
- Andrew B. Whitford
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- Published online:
- 11 April 2022
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- 12 May 2022
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- Element
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When politicians reshape public health agencies, scientists resist changes and, if possible, leave. Those shifts make it harder for agencies to fight future public health threats. This Element focuses on the tension between scientists and managerial control in the policy process, both conceptually and empirically. It centers on a failed attempt to reorganize the United States Centers for Disease Control and Prevention. Because many of the gains in longevity and health quality result from the work of public health agencies, public health scientists and practitioners are the frontline producers of public health.
The Structures of Interest Coalitions: Evidence from Environmental Litigation
- Andrew B. Whitford
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- Journal:
- Business and Politics / Volume 5 / Issue 1 / April 2003
- Published online by Cambridge University Press:
- 20 January 2017, pp. 45-64
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This paper addresses the intersection of coalition formation, judicial strategies, and regulatory politics. Coalitions are a low-cost means for assembling minority interests into more powerful blocs. However, in most cases in regulatory politics, judicial strategies are high cost efforts. I argue that coalitions among interests form one basis for judicial participation, but that participation manifests in an array of coalition “microstructures.” For any one event, the microstructure of the interest group coalition varies, but across events the coalitions take on general forms. The paper offers evidence for a variety of coalition microstructures in interest group participation as amici curiae (“friends of the court”) in cases before the United States Supreme Court. The evidence is drawn from the case of the Group of Ten, a stable, long-term coalition of environmental interest groups that operated from 1981 to 1991.
Preface
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Book:
- Above Politics
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- 05 May 2016
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- 23 May 2016, pp vii-x
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Summary
From the redistributive societies of ancient Egyptian dynasties through the slavery system of the Greek and Roman world to the medieval manor, there was persistent tension between the ownership structure which maximized the rents to the ruler (and his group) and an efficient system that reduced the transaction costs and encouraged economic growth. This fundamental dichotomy is the root cause of the failure of societies to experience sustained economic growth.
(North, 1981, 25)The state, like Janus, has two faces: one benign and one malevolent. The creation of the state facilitates the provision of public goods that would otherwise be absent, but it also allows a degree of hierarchical exploitation that would have been impossible before the existence of the state. Trying to design a set of governmental institutions that will encourage the benign aspects of the state while limiting its capacity for exploitation has been a persistent puzzle throughout history.
The state was the first form of social organization, of ten thousand people and more, for the purpose of supplying public goods. The action of the citizens under the coordination of the state generated benefits that would otherwise never have existed. The defining good for the emergent state was food storage. When food could be stored to tide people over in difficult times, social organization could exist on a scale otherwise impossible. However, any state that is strong enough to protect a large store of food and to direct the productive activities of the many also has the capacity to direct the benefits toward (or impose costs on) the few. Individuals did not come to build large irrigation systems or serve in the army by a happy coincidence of individual self-interest and the needs of the state.
It is not hard to understand why humans were reluctant recruits to the new state. It is not because they had no interest in the alluring goods and benefits made possible by the creation of states. Rather, it was the quite obvious realization that most citizens of the state were not going to be significant beneficiaries of the new regime. The creation of the state did not follow the invention of a perfect incentive system that made everyone better off than they had been in the pre-state systems.
Works Cited
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 239-260
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Acknowledgments
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp xi-xii
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9 - The Financial Crisis and Reregulation
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 201-219
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Summary
The only case for an independent central bank in a democracy is that it can take a longer-term view and do what is in the interest of the people in ways that elected politicians cannot.
– Wessel (2009, 271)“It's laissez faire until you get in deep shit”
– Gutfreund quoted in M. Lewis (2010, 264)MERRILL LYNCH
Merrill Lynch was a financial firm known for its “thundering herd” of brokers – a herd of up to 15,000 brokers that made Merrill Lynch the brokerage firm for the general public. These brokers allowed Merrill Lynch to sell directly to the public the stock offerings that it underwrote. As an organization, it also had a strong “family-style” culture that helped keep its large work force motivated and loyal.
As the largest brokerage, it could also make risk-free money through financial advice and commissions. Unfortunately, when it did take risk, it generally seemed to fail. It had gambled on trader Howie Rubin and almost went broke when Rubin lost hundreds of millions of dollars on mortgage bonds (Gasparino, 2009, 177). It convinced Orange County to buy mortgage bonds in 1994, and Orange County went bankrupt. It lost more hundreds of millions with the failure of Long Term Capital Management (LTCM), the elite firm that relied on Nobel Prize-winning economists, mathematical models, and a lot of leverage. “In all of these cases, the firm's response was to drastically scale back on risk and miss out on the subsequent bond market rally, only to get back into the market near its top, when the bubble was about to burst once again” (177).
By 2003, Merrill Lynch still had a family-style culture, and it had one of the lowest leverage rates on Wall Street, with just $16 in borrowed funds for every dollar of its own (Gasparino, 2009, 178). In that year, however, change came to Merrill Lynch in the form of Stanley O'Neal, CEO and chair. O'Neal set out to transform Merrill Lynch into another Goldman Sachs, complete with a large trading desk of its own, a willingness to take big risks in pursuit of high-reward investments, and a greatly expanded leverage rate. To do this, O'Neal fired a large number of employees, and instilled a much more hard-driving, competitive culture. His rule was increasingly autocratic; he made it clear that he did not want to hear dissenting opinions.
5 - “Above Politics”: The Separation of Powers and Bureaucratic Autonomy
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 100-119
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What is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.
– James Madison in Federalist No. 51 (Madison, 1788)DELEGATION AND STALEMATE
The possibilities for credible commitment, especially in response to morally hazardous incentives for politicians, were discussed in Chapter 3. Chapter 4 discussed the inevitability of moral hazard. We concluded that bureaucratic autonomy may play a constructive role in the creation of credible commitment in a range of policy areas. However, we did not explain why self-interested politicians, infused with moral hazard, would cooperate in the creation of autonomous bureaucracies. After all, it is through their control over bureaucracies that politicians hope to satisfy their electoral and other preferences. Must we then assume that, at the moment of creation, legislators stand down from their selfish interests and make a public-regarding sacrifice of political control to bureaucratic agencies?
The typical explanation for delegation argues that legislators make a calculation about the benefits of gaining expertise in exchange for a loss of authority (Bawn, 1995). There is no doubt that professionalized bureaucracies frequently can bring to bear a degree of expertise that legislators themselves lack. However, Bawn assumes that the delegator is a unitary political actor with no perverse preferences that may distort the tradeoffs chosen by him. This is an unrealistic assumption because, clearly, the separation-of-powers system means that multiple interests are involved in the delegation decision and that the degree of political stalemate in that system may be the determining factor about how much delegation actually takes place. In particular, when conflict is high, there may be more delegation taking place than would be implied by an optimal tradeoff made by a unitary actor between the availability of expertise and the loss of control.
As Moe (1989) argues, the legislative process is much more messy and parochial than the standard model of delegation suggests.
4 - Political Moral Hazard and Bureaucratic Autonomy
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 77-99
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From the redistributive societies of ancient Egyptian dynasties through the slavery system of the Greek and Roman world to the medieval manor, there was persistent tension between the ownership structure which maximized the rents to the ruler (and his group) and an efficient system that reduced transaction costs and encouraged growth.
– Douglass North (1981, 25)BRACKED
May 13, 2005, was known as “BRAC Friday” around the country, as the Pentagon revealed the selection of 33 major military installations to be closed. These closings, together with significant reductions at 29 other bases, would result in a net loss of more than 10,000 military positions and 18,000 civilian positions. Many of the bases had a Cold War mission; others were just outdated or had missions that could be accomplished more effectively elsewhere. The Department of Defense (DoD) regarded these closures as a boon to operational efficiency and essential to its goal of shifting resources in such a way as to get the most national security benefits for the buck. With the security challenges posed by 9/11, wars being waged in Iraq and Afghanistan, and threats from Iran, North Korea, and other hot spots, providing an adequate level of national security required the efficient use of every dollar.
Legislators saw these base closings differently from the DoD. One base scheduled for closing was Portsmouth Naval Shipyard in Maine. Senator Olympia Snowe of Maine, not someone known for purple prose, called the recommendation a “travesty and a strategic blunder of epic proportions on the part of the Defense Department” (CNN, 2005). Other bases scheduled to be shut down were Ellsworth Air Force Base in South Dakota and Pascagoula Naval Station in Mississippi; legislators from these locations were equally vehement in their opposition to the plan.
Base closings are an example of political moral hazard: the incentives for political actors to take actions that aggregate to inefficient outcomes. National security is the classic example of a public good. Effective protection against external and terrorist threats is non-exclusionary – everyone gets the benefits of an effective national security apparatus if anyone does. Although the benefits of national security go to all, the costs of closing useless military bases are local.
Other books in the series (Series List Continued from page ii)
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 23 May 2016, pp 272-273
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Frontmatter
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp i-iv
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10 - Conclusion: The Unraveling of Dodd-Frank
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 220-238
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Dodd-Frank is full of imperfections – “no bill is ever perfect,” as Senator Dodd put it. Its principal authors revealed their own imperfections as they steered their versions of regulatory reform toward final passage. Their huge “piece of legislation”…will have unintended consequences – every big bill does. The effects of many of its provisions won't be known until regulatory agencies write and apply “rules” under which they will enforce the law. Those rules will be challenged in court and altered in practice. Eventually Dodd-Frank will be amended by additional legislation. Only the next big financial crisis will fully test the new law, if it remains in effect when that crisis arrives. In Washington, nothing is forever, no argument is ever finally resolved.
– Kaiser (2013, xviii)Section 716 of Dodd-Frank prohibited federal government bailouts of financial entities involved in the business of credit default “swaps.” These were the complex instruments that in 2002 investor Warren Buffett had presaged as being “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal” (Berkshire Hathaway Inc., 2002, 15). Swaps involving complex arrangements were often the main problem in the crises engulfing so many financial entities during this time period. AIG, for instance, guaranteed the coverage of losses for many banks or funds that had invested in mortgage-backed securities, often of the subprime variant.
As Kaiser notes about the negotiations over Section 716, “regulating derivatives in some fashion was part of the broad consensus on the need for regulatory reform” (Kaiser, 2013, 169). But certain financial institutions challenged the “broad consensus” on regulatory reform and sought to weaken Section 716 in particular, so that they could take higher risks with federal funds covering those risks.
The debates over Section 716 were especially divisive, often pitting representatives from the same party against one another. The stakes had everything to do with all of those bailouts of the large firms, because the problem was how to cordon off risk in banks to ensure that there was no federal backstop for this highly risky market segment. Many considered one early position, pushed by Senator Blanche Lincoln, the new chairman of the Senate Agriculture Committee, to be too soft on derivatives.
2 - The Moral Hazard of Bureaucrats and Politicians
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 24-52
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The “political master” finds himself in the position of the “dilettante” who stands opposite the “expert.”
– Max Weber (Weber, Gerth, & Mills, 1958, 232)The fact that when there are asymmetries of information, markets are not, in general, constrained Pareto efficient implies there is a potentially important role for government.
– Joseph Stiglitz (Stiglitz, 2002, 516)PICKING WINNERS AND LOSERS
In 2008, Andimuthu Raja, then Indian Minister for Communication and Information Technology and Member of Parliament, was charged with the task of allocating licenses for companies to use those parts of the electromagnetic spectrum that are capable of carrying radio frequencies – specifically, the spectrum that could support 2G mobile telecommunications services. The stakes were enormous. Consumers would benefit through text messaging, and digital encryption of calls meant that more people could be served (Qi, Zysman, & Menkes, 2001). The growing demand for data services and an expanding market base meant that providers would also gain. Many expected India to be the world's second largest mobile broadband market by 2016 (ASA & Associates, 2012).
In such situations economists and politicos may have different goals. Granting access to the spectrum can be financially rewarding for politicos. For economists, in contrast, the goal is to allocate access to the spectrum in a way that reveals its true price when there is no natural market. Usually, they suggest that auctions be held to set the price and, as a consequence, maximize the revenue the government receives from sharing access to that scarce resource. Most of the robust debate about designing and implementing auctions focuses on ensuring that the public benefits from the private use of a public good (Klemperer, 2002).
Economists know a lot about designing efficient institutions for granting access to the spectrum, largely from the experiences of the United States and other countries. For instance, economists such as Ronald Coase argued for radio spectrum auctions as early as 1959. The Federal Communications Commission has held auctions since 1994, and many other countries auctioned access to the electromagnetic spectrum throughout the early 2000s. Economists have come to believe that most problems can be solved through good market designs – that “good auction design is mostly good elementary economics” (Klemperer, 2002, 170).
3 - Political Moral Hazard and Credible Commitment
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 53-76
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If control of my decision is in the hands of an agent whose preferences are different from my own, I may nevertheless prefer the results to those that would come about if I took my own decisions.
– Vickers (1985, 138)Bernanke, like Greenspan and Volcker before, subscribed to the view that the best way to protect a democratic society from undesirable rates of inflation was to keep control of interest rates and the supply of money away from elected politicians.
– Wessel (2009, 271)BUILDING IN AUTONOMY
Innovation in the creation of new organizations is often associated with FDR and his “alphabet soup” of New Deal agencies. But the Federal Home Loan Bank Board (FHLBB) was an accomplishment of the previous Hoover administration, desperate to find a solution to the collapse of the housing bubble that accompanied the Great Depression.
Housing starts had boomed in the 1920s, increasing from around 100,000 new starts in 1918 to a high of more than 550,000 new starts in 1926 (Wheelock, 2008, 135). The upshot was a bubble to rival the recent housing crisis – complete with land and construction booms in Florida (Allen, 1931) and speculation that the bubble came from lax lending standards and the growing use of securitization of debt for new construction (Gordon, 1974).
In a 2009 article, economists Steven Gjerstad and Vernon L. Smith argued that this early housing bubble precipitated the Great Depression: “The standard explanation of the precipitating factor in the crash of 1929 has been excessive speculation on Wall Street. Speculation does appear to have been a factor, but then, as now, we believe that mortgage and consumer finance growth were also at the core of the problem” (Gjerstad & Smith, 2009, 287). And as Ernest M. Fisher pointed out in 1950, “The general economic expansion of that period found no more dramatic expression in any area than in that of mortgage lending. The expansion of mortgage lending was, in turn, a manifestation of a rapid expansion of our urban real estate inventory” (Fisher, 1950, 307). Construction surged, home ownership rapidly increased, indebtedness jumped by 174%, and mortgage bond issues rose from $300 million in 1920 to between $5 billion and $10 billion in 1935 (309).
8 - The Politicization of Financial Regulation
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 168-200
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But the truth is that the United States managed to avoid major financial crises for half a century after the Pecora hearings were held and Congress enacted major banking reforms. It was only after we forgot those lessons, and dismantled effective regulation, that our financial system went back to being dangerously unstable.
– Krugman (2010, 27)PECORA'S CIRCUS
The stock market crash occurred in 1929, followed by several years of continuing economic deterioration. By 1933, the economy was in a tailspin, and the Senate Banking Committee was looking for someone to revive its lethargic investigation of the financial industry. Committee chair Peter Norbeck (R-SD) hired Ferdinand Pecora, the assistant district attorney of New York County. Michael Perino sets the scene for Pecora's activities in his excellent account, The Hellhound of Wall Street: How Ferdinand Pecora's Investigation of the Great Crash Forever Changed American Finance (Perino, 2010).
Even as Pecora prepared for his first committee hearing, the economy took a new plunge as a run on the banks led to a wave of closures. This crisis put renewed pressure on the committee to deliver both an explanation for and a solution to the problem. Pecora made news, not only for the information he gathered in the hearings he organized but also for the prosecutorial style he evinced in handling men who, during the previous decade, had been the lords of the financial universe.
Pecora made the National City Bank the first target of his hearings and its chairman, Charles “Sunshine Charley” Mitchell, his first witness. The National City Bank (now Citibank) was the second largest bank in the United States. It had grown since Mitchell had become its chairman, in large part by engaging in activities far beyond the usual commercial banking model – taking deposits from investors and making loans to businesses – and becoming deeply involved in underwriting stocks and bonds.
National City began to underwrite entire securities offerings, on the gamble that it could make a profit by selling them to investors (Hoffmann, 2001, 113). Its depositors, whose deposits were uninsured, were in effect taking the gamble as well. In carrying out this strategy, Mitchell showed a preference for high-return investments even though they also inevitably carried more risk. In 1929, Carter Glass, then a Democratic senator from Virginia, described Mitchell as being “more than any 50 men” responsible for the stock crash (Appelbaum, 2009).
Contents
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp v-vi
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1 - Introduction
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 1-23
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CONFRONTATION
Many public officials regard U.S. senators as powerful individuals – especially so mid-level bureaucrats whose agencies are subject to oversight by those senators. On April 9, 1987, when four bureaucrats from the Federal Home Loan Bank Board (FHLBB) were summoned from their San Francisco office to Washington, DC, to face five U.S. senators, it should have been a simple matter of those elected officials flexing their senatorial muscle. Once the senators made their wishes clear, they would obviously expect the bureaucrats to defer readily to their requests on behalf of a constituent.
Moreover, the FHLBB, responsible for regulating savings and loans, was in an especially vulnerable position as the scope of what came to be called the “savings and loan (S&L) crisis” became clearer. Ed Gray, chairman of the FHLBB and the boss of the four summoned bureaucrats, had shown a great deal of deference to the same group of U.S. senators during a meeting held a week earlier. When asked later why he had accommodated the senators by flying the bureaucrats across the country for a second meeting, Gray answered simply, “Because they were senators. And I considered senators to be pretty powerful people” (Goldin, 1990). A close examination of the context reveals numerous reasons for the bureaucrats to be at least as deferential as Gray had been.
CONGRESSIONAL WEAPONS
The congressional dominance approach assumes that congressmen – or, more specifically, particular congressmen on the relevant committees – possess sufficient rewards and sanctions to create agencies that pursue policies of interest to the current committee members; those agencies that fail to do so are confronted with sanctions.
– Weingast & Moran (1983, 768)First of all, the senators were in a position to control critical funding for the FHLBB. The agency had sought funds from Congress for recapitalization of the Federal Savings and Loan Insurance Corporation; in the face of unprecedented thrift failures, the FHLBB would be hamstrung if Congress did not replenish the fund. To guarantee passage of the recapitalization bill, Chairman Gray had recently agreed to House Speaker Jim Wright's demands that Gray force beneficial S&L debt restructuring for a bankrupt borrower named Craig Hall. Gray acquiesced, and Wright, in return, allowed the recapitalization to come to a vote (Black, 2005, 96–97).
6 - The Control Paradox, Trust, and Leadership
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 120-140
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Summary
Any fool can make a rule. And every fool will mind it.
– Henry David Thoreau (Thoreau and Shepard, 1927, 327)RULES FOR FOOLS
On July 10, 2014, the U.S. House Committee on Financial Services held hearings on H.R. 5018, the Federal Reserve Accountability and Transparency Act of 2014, a bill sponsored by Representative Bill Huizenga (R-MI)
to amend the Federal Reserve Act to establish requirements for policy rules and blackout periods of the Federal Open Market Committee, to establish requirements for certain activities of the Board of Governors of the Federal Reserve System, and for other purposes.
Dr. John B. Taylor, noted Stanford economist, was the first witness – and for good reason. Taylor was famous for his advocacy of the so-called Taylor rule, which holds that central banks should tune the nominal interest rate according to a reaction function (a rule expressed as an equation) that depends on important economic conditions such as inflation. In a series of papers starting in 1993, Taylor had argued that a policy rule could be devised that allowed the federal funds rate to move as inflation increased above its target or real GDP increased above its trend. He noted, “Although there is not consensus about the size of the coefficients of policy rules, it is useful to see what a representative policy rule might look like” (J. B. Taylor, 1993, 202). He went on to show that a simple rule was a nice approximation of actual policy performance.
Since then, economists have done more than treat this rule as an academic exercise, writing hundreds of papers that have sought to elaborate what should go into such a rule, the coefficients or weights for those items, the general value of such a rule, and other important matters. Of course, some economists viewed divining such a descriptive model of the Fed's actions as a way to predict its actions in the future, and so to take market positions that account for that foresight. But for many, taking market positions was not the end-all of the research agenda Taylor started when he tried to describe this “representative rule.” For a number of academic economists and many political interests, the goal was a normative model of Fed behavior – a policy rule that would determine the actions the Fed should take (given the data) that would optimize national economic performance.
Index
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 261-271
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7 - Professionalism and Credible Commitment
- Gary J. Miller, Washington University, St Louis, Andrew B. Whitford, University of Georgia
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- Above Politics
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- 05 May 2016
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- 23 May 2016, pp 141-167
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Professionals are difficult to control, but their behavior is fairly easy to predict. And that, of course, is at the heart of all this. A professional, if given total autonomy and insulated from external pressures, can be counted upon to behave in a manner characteristic of his type. That is what true professionalism is all about. This very predictability ensures business and labor that their mutual interests in stability, clarity, and expertise will be protected.
– Moe (1987, 259)LAWYERS VERSUS ECONOMISTS
In 1969, the United States initiated a lawsuit against IBM, charging that its dominance of the mainframe computer industry made it a monopoly. The government wanted IBM to break itself into several smaller companies. IBM hired 200 lawyers to defend against the lawsuit, which lasted for 13 years (Konrad, 2000).
The Antitrust Division of the Department of Justice (DOJ), which had historically taken a strong position against monopoly, brought the government's suit. Part of the reason for the division's animosity toward monopoly was that it was an agency that was then dominated by lawyers, and their strong professional ties defined its priorities (Weaver, 1977, 1980). Acting as lawyers, they read the Clayton Antitrust Act (1913) as demanding action of this sort. But the position of the Antitrust Division regarding appropriate and inappropriate behavior began to change shortly after the suit was filed. The change was linked to a new infusion of economists into the division, who brought with them a different interpretation of the antitrust activities of government (Katzmann, 1980). They argued that monopoly as such was not necessarily a harmful structure for some industries.
Economists were very critical of the case against IBM. IBM continued to make innovations in the industry; it only began to lose its edge as the industry itself changed during the 13 long years of the government lawsuit. The shift was from mainframe to personal computers, and the suit against IBM may well have contributed to its increasing inability to compete in the new world of PCs.
Many economists argued (in effect) that the social control costs (e.g., IBM's legal expenses and loss of marketing edge) greatly exceeded the reduction in social disorder costs (the possible extraction of monopoly prices in the computer industry) (Djankov et al., 2003).
Above Politics
- Bureaucratic Discretion and Credible Commitment
- Gary J. Miller, Andrew B. Whitford
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- 05 May 2016
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- 23 May 2016
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Economic development requires secure contract enforcement and stable property rights. Normal majority-rule politics, such as bargaining over distributive and monetary policies, generate instability and frequently undermine economic development. Above Politics argues that bureaucracies can contribute to stability and economic development, but only if they are insulated from unstable politics. A separation-of-powers stalemate creates the conditions for bureaucratic autonomy. But what keeps delegated bureaucrats from being more abusive as they become more autonomous? One answer is the negotiation of long-term, cooperative relationships - that (when successful) typically bind subordinates to provide more effort in exchange for autonomy. Even more compelling is professionalism, which embeds its professional practitioners in professional norms and culture, and incidentally mitigates corruption. Financial examples are provided throughout the book, which ends with an analysis of the role played by professionalized bureaucracies during the Great Recession.