The Effects of Bureaucracy on Political Accountability and Electoral Selection

Abstract

This paper examines how bureaucracy affects political accountability and electoral selection, using a three-tier political agency model with voters, politicians and bureaucrats. In the model’s hierarchy, politicians are constrained by election while bureaucrats are controlled by the budget. Bureaucrats’ discretion provides them with political power to force politicians to make compromise. If voters and bureaucrats prefer different types of politicians, i.e., they have a conflict of interest, incumbents pass an over-sized budget to prevent bureaucrats from strategic behaviours that damages incumbents’ reputation. If, instead, voters and bureaucrats prefer the same type of politicians, i.e., they have an alignment of interests, bureaucrats send voters a credible signal regarding an incumbent’s type, which improves electoral selection. This paper also shows that a political appointment system mitigates bureaucrats’ political power. Although a system of political appointees enables politicians to implement the first-best policy in the case of the conflict of interests, it leads to the persistence of the inefficient government in the case of the alignment of interests.