| Independence, Transparency,
and the Federal Reserve |
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As the federal government's influence in the U.S. has grown, so too has the modern administrative state. Elected representatives — members of Congress and the President — create bureaucracies in order to enforce laws. Customarily, leading experts in each department's policy area are chosen to enforce the will of the state. But once these powers have been given to bureaucrats, there is debate over the degree to which bureaucrats control their own destinies. The issue is one of agency. Principals (in this case, the state) delegate authority to agents (bureaucrats), who either act according to the wishes of the elected officials or according to some other calculus.
Governments generally have incentive to closely oversee their bureaucracies, since those who are in a position of power will want to ensure that policies are written and enforced in an effective manner.
But elected officials possess only a limited amount of time, energy, and expertise. And bureaucrats may have incentives not to comply with the dictates of their principals. Bureaucrats may have different policy preferences than the President or members of Congress. They may also prefer to maximize their own power and budgets rather than maximize efficiency or comply directly with policy desires of those in government. Furthermore, bureaucrats tend to enjoy an informational advantage over the state. If Congress and the President don't or can't observe the actions of their administrative agencies, they will find it more difficult to influence that behavior.
Go To Monetary Policy and Motivations:
Incentives for Fed Independence
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