Federalist No.

10: Are Factions the Problem in Creating Democratic Accountability in

the Public Interest?
Author(s): Jack H. Knott
Source: Public Administration Review , December 2011, Vol. 71, Supplement to Volume
71: The Federalist Papers Revised for Twenty-First-Century Reality (December 2011),
pp. S29-S36
Published by: Wiley on behalf of the American Society for Public Administration

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 Jack H. Knott

University of Southern California

Federalist No. 10: Are Factions the Problem in Creating

Democratic Accountability in the Public Interest?

Federalist No. 10 contains an optimistic view of the rights of minorities or that pass legislation that would Jack H. Knott is the Erwin and lone

Piper Dean Professor in the School of Policy,

national government's ability to fulfill its obligations not benefit the broadly defined public interest.
Planning, and Development at the Univer-
in the midst of what was, at the timey a small but sity of Southern California. His research

challenged nation. This essay Madison believed that the interests center on the impact of institutions

suggests that the founders did United States would have two and decision making processes on public
Madison believed that the policy, governmental and bureaucratic
not anticipate the pernicious interconnected advantages over
United States would have two other countries in control-
reform, and public management. He is a

effects of rent seeking corruption , fellow of the National Academy of Public

and repression of minorities, interconnected advantages over ling the potentially repressive
Administration.

E-mail: jhknott@usc.edu
and they failed to anticipate the other countries in controlling acts of majority factions. The
calamities associated with slavery. the potentially repressive acts first advantage is a republican
The essay asks about the role of form of government, in which
of majority factions. The first
government as a party machine, the legislative body consists
advantage is a republican of a small number of elected
a business , a policy process , and
a contractor and examines a form of government, in which representatives of the people.
variety of contemporary theories the legislative body consists The second advantage is that a
for explaining government of a small number of elected republican form of government
performance. representatives of the people. allows for a much larger size
country. Madison argues that
The second advantage is that a
elected representatives are more
republican form of government
the problem in public likely than the general popula-
Are the administration? political Inproblem
administration? Fed- factions in public In allows for a much larger size tion to include people who have
eralist No. 10, James Madison country. an interest in the public good.
addresses the issue of factions He also makes the case that
in a democratic republic. His the number of elected officials
argument consists of two parts: First, he argues that in a large country will be a smaller proportion of the
the causes of faction cannot be removed. Factions are population than in a small country, and hence each
rooted in the self-interests of individuals and groups. representative will represent a larger number of people
When self-interest is combined with the limited and and interests, giving each representative a broader
faulty rationality of human beings, political factions political perspective. But Madison thought that even
emerge that do not serve the broad public interest or if the representatives did not have the public inter-
that cause harm to the rights of other groups (Carey est in mind, the broad diversity of interests in a large
1995, 9-11; Epstein 2007, 64-66). Madison also country would make it difficult to aggregate interests
believed that the unequal distribution of property into a countrywide faction to repress minorities.
is the main source of factions, which, in turn, is a
major determinant of the political power structure of His analysis has two important limitations for answer-
a state (Ostrom 2008, 81). Madison argues, however, ing the question of this article. First, he could not
that the consequences of factions can be controlled. address the question of the importance of factions
In colonial America, he worried less about minority for public administration because, at the time of the
factions than majority ones. He reasoned that while a founding of the country, the federal government
minority faction might frustrate and delay the actions played a minor role in the economy and society, with
of the majority, it cannot prevent the majority from few public servants and a small bureaucracy. Sec-
working its political will. Consequently, his primary ond, while Madison's analysis profoundly predicted
concern focused on majority factions that repress the the potential success of a democratic republic in a

Are Factions the Problem? S29

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very large country, it was overly optimistic about the potential for
controlling the deleterious effects of factions on public policy. His
argument predicted accurately that America would avoid democratic
dictatorship on a grand scale, such as a Napoleon Bonaparte, but
underestimated the variety and severity of rent seeking, corruption,
and repression of minorities perpetrated by majority and minority
political factions over the next two centuries. It also failed to foresee
the calamitous impact of the system of slavery, which overwhelmed
the plurality of other property interests and human rights (Epstein
2007, 102-3).
The principles on which Madison based his thinking about de-
mocracy and the public interest, however, offer a guide to how he
would understand the role of public administration in a democratic
republic, including the importance of political factions. His idea
that the countervailing interests in a large country could check each
other, especially in a republic with a separation of powers system,
is particularly relevant today. He also hinted that there could be a
group of officials who have the public interest in mind more than
the special interests or the general citizenry, thereby acting as a
counterweight to political faction (Epstein 2007, 87-88).
How Important Are Factions to Public Administration?
Over the course of its history, the United States has had an uneasy
relationship between politics and public administration. Unlike
France and Germany, which were established with strong central
bureaucracies and executive power, America began with a weak,
decentralized government and a small bureaucracy. France and
Germany build their constitutions and state authority on public
and administrative law, derived from the Napoleonic Code, which
defines the public interest and public administrative practice. The
political philosophy of the Federalists, reflected in the U.S. Consti-
tution, focused almost exclusively on the legislature and secondarily
on the chief executive, with a particular interest in restricting execu-
tive authority. In addition, the United States adopted the British
common law legal system, which contains little formal guidance for
public administrative practice. As a consequence, the relationship
between politics and public administration evolved politically over
time, often in different directions, depending on the political coali-
tion in power, or the dominant political movement in the country
able to exercise influence over institutional choices (Knott and
Miller 1987).
Public Administration and the Political Party: Government as
Party Machine
The election of President Andrew Jackson in 1 829 began the perva-
sive influence of political factions on public administration in the
United States. While access to federal employment expanded to a
much broader class of citizens, beginning in this period and contin-
uing into the post-Civil War era, party factions dominated public
administration through the patronage system, which affected public
administration in significant ways. Congress and state legislatures
ostensibly established public agencies to serve the public good, but
in practice, administrative agencies often served party loyalists much
better than the general citizenry. Public goods were private benefits
for party members, groups, and businesses that supported the party.
Even basic services at the local level, such as fire and police, were
readily available for party-dominated areas of the city but underpro-
vided to those areas held by the party out of power. During much
S30 Public Administration Review • December 2011 • Special Issue
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of the nineteenth century and extending in some measure into the
twentieth century, public administration served as an arm of party
patronage and public subsidy to political supporters.
The failure of the Constitution and the Federalists to address the is-
sue of slavery eventually led to the breakdown of the political system
and civil war. Madison asserted that property is the primary cause
of the rise of factions that threaten the common good and violate
the rights of individuals and minority groups. Federalist No. 10
maintains that a republican form of representation and a large, di-
verse country would protect against these deleterious effects. Slavery,
however, represented a system of property rights that dramatically
reduced pluralism and diversity and divided the country into slave
and free states (Epstein 2007, 103-5). The attempt by the major-
ity faction in the slave states to secede from the Union precipitated
the Civil War. In the South, public administration served as the
arm of repression of the enslaved minority, and during the war, the
demands of the military dominated public administration. Despite
these violent and calamitous events, in the immediate postwar pe-
riod, public administration remained an arm of political patronage
and corruption by the political party in power.
The Separation of Politics and Administration: Government as
Business
By the 1 880s, public opposition to the extensive corruption, vio-
lence, and inefficiencies of the political machines brought together a
coalition of political interests that advocated a separation of politics
from administration. This coalition consisted of religious moralists,
self-interested small business people, and Progressive Reformers
who wanted good, fair, and effective government (Knott and Miller
1987). From the 1880s to the 1940s, the Progressive and manage-
rial movements in the United States and similar reform movements
in Europe sought to drastically reform the party patronage system.
While Progressive reform focused on political processes such as the
secret ballot and at-large electoral districts, it also sought to reform
public administration. Indeed, it saw the removal of the influence
of political factions on public administration as central to its reform
goals. The Progressives established the Civil Service Commission,
which introduced rules for merit hiring, promotion, and review. It
argued for neutral competence and the separation of politics and
administration (Wilson 1887). At the local level, city councils estab-
lished independent commissions to oversee local economic develop-
ment, and the city councils hired professional city managers.
Intellectually, during this period, public administration emerged
as a profession and academic discipline (Kaufman 1967; Mosher
1982), with the watershed establishment of the Bureau of Municipal
Research in New York City in 1905. This was also the period of the
development of masters degrees in public administration at major
universities, starting with the University of Southern California in
1928, followed by Syracuse University and then Harvard University
shortly thereafter. Parallel with the emergence of public admin-
istration, the scientific management movement in business and
engineering contributed to the growth in managerial studies and
operations research (Willoughby 1927). During the presidency of
Franklin D. Roosevelt and the postwar era, several administrations
worked to establish unitary lines of command, greater managerial
coordination, and organization of departments by function (Gulick
and Urwick 1937). Through the Office of Management and Budget,
the president sought to integrate management, planning, and
budget processes (Schick 1966).
The Politics of Bureaucracy: Government as Policy Process
In the postwar period, several developments, both intellectually
and in practice, produced a strong reaction against the separation
of administration from politics. Politically, the parties came to view
public administration differently based on two separate political
coalitions that sharply disagreed over the role of government and
public administration in society. The dramatic expansion of public
agencies under Democratic administrations during the Great De-
pression and World War II, followed in the 1960s by the Great Soci-
ety expansion of the domestic role of the government, from health
care to social security to welfare, thrust public agencies and officials
into the center of the political debate over "big government." Re-
publican administrations under Presidents Richard Nixon, Gerald
Ford, and Ronald Reagan sought to increase the control by political
appointees of public agencies and reduce the federal government s
domestic public bureaucracy, viewing federal public administrators
as advocates for big government. The growth in public administra-
tors and public agencies shifted to state and local government, while
the federal government concentrated on regulation, benefits pay-
ments, tax collection, macroeconomic policy, and the military.
Intellectually, the behavioral movement in the social sciences at-
tacked the mechanistic, structural, and legally based theories of pub-
lic administration (Simon 1947). Academics and practitioners came
to recognize that public administration helped both to formulate
as well as to implement policy and budgets and that these processes
inevitably involved political factions and coalitions (Allison, 1971;
Pressman and Wildavsky 1973; Rourke 1984, 1992; Wildavsky
1964). While illegal forms of corruption and patronage diminished
and violence subsided as a result of Progressive reform, the practice
of public administration incorporated political goals and imple-
mentation as before (Seidman 1970; Warwick 1979), illustrated
dramatically by the account of the administrative leadership of Rob-
ert Moses in the development of New York City (Caro 1975). Yet
the focus remained on the role of expertise and professionalism in
the political process (as opposed to separate from it). The significant
role of the bureaucracy became a topic for extensive research and
academic discussion, with tensions shifting between agency capture
by interest groups (Bernstein 1955; Stigler 1971), the importance
of bureaucratic routines (Downs 1967; Wilson 1989), bureaucratic
domination in the budget process (Niskanen 1971), bureaucratic
representation (Meier 1975), bureaucratic leadership (Lewis 1980),
and the impact and performance of public management (Meier and
OToole 1999).
The Hollow State: Government as Contracting
Eventually, both parties came to an anti-big government stance in
varying degrees, with Republicans and Democrats supporting de-
regulation, welfare reform, and efforts to "reinvent government" in
a less bureaucratic, more "market-like" form (Milward and Provan
2000). Administrations of both parties expanded the contracting of
services to nonprofit and for-profit organizations for broad areas of
government, from mental health services to military construction.
As a consequence, the distinction between the public and private
sectors blurred considerably, with all three sectors involved in many
areas of societal problem solving. Both parties also expanded the
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number of political appointees, leading to politically top-heavy
departments, which, when combined with extensive contracting, led
to demoralization and decline in the federal service (Light 2008).
At the same time, while labor unions have declined precipitously
in the private sector, public sector unions have grown and strength-
ened. In many states, they represent a powerful political faction of
their own that influences local political races for election to school
boards, city councils, and state legislatures (Moe 2005). In this
sense, public administration in the twenty-first century has evolved
into the inverse of public administration as the arm of the political
machine in the nineteenth century. Today, the political party is, in
part, an arm of public administration.
Despite the tremendous growth in public administrative agencies
and the huge intellectual interest in government and bureaucracy in
the twentieth century, there has been a weakening of public admin-
istration as a profession and an academic discipline (Kelman 2007).
As the understanding of public administration encompassed policy
process and cross-sector governance rather than public government,
public administration programs faced growing competition from
the fields of business administration, political science, law, econom-
ics, public policy, and urban planning.
How Important Are Factions Today?
Today, the most powerful theories on political factions and repre-
sentative government are found in political science and economics.
This research has provided a convincing theoretical basis for criticiz-
ing the representation function of the Congress as an effective way
to control factions. These political economy studies do not focus
specifically on public administration but on interest groups, political
parties, Congress, and the presidency, congruent with the focus of
the Federalist Papers. However, the implications of these theories
for achieving an efficient and effective public administration are
significant.
Majority Rule Incoherence: The Arrow Paradox
The work of Arrow (1963) demonstrates that it is impossible to
aggregate the disparate interests of a population in a way that satis-
fies basic coherence and efficiency criteria. Different aggregation
or voting rules will present different problems. Policy deliberations
in Congress are accomplished by variations of majority rule, which
introduces the problem of intransitivity in policy choice - there nor-
mally will be a majority in Congress that prefers some other policy
to any policy actually selected by Congress.
Intransitive choice is most inevitable in high-dimensioned policy
spaces. Distributional issues such as pork barrel spending, tariff
policy, weapons acquisition policy, military base closing, and taxa-
tion are examples: each member of Congress may evaluate any given
proposal on the basis of its distributional impact in his or her own
district. This means that the House of Representatives will have
435 dimensions of policy evaluation - and inevitable cycling. Every
policy worked out by a given coalition can be attacked by a differ-
ent coalition that can woo pivotal members of Congress to the new
coalition by more generous offers. What is more, this structure is so
transparent that every member of Congress is aware that any coali-
tion is vulnerable. The implication, of course, is that the legislation
that is produced in distributional cases, and sent to the bureaucracy
Are Factions the Problem? S31
for implementation, is the more or less arbitrary result of an inco- Moral hazard refers to the incentives that individuals have to engage
herent process. in actions that reduce the overall efficiency of the organization.
Members of a production team work together to produce a surplus.
Committee Influence: The Sen Paradox For example, the different branches of the military and its numerous
contractors mutually determine the level of benefits from the provi-
One implication of intransitive choice is that the agenda is extreme-
sion of the public good of defense. Holmstrom asks whether there
ly influential in determining the outcome. The fundamental agenda
control mechanism in Congress is the committee system, whichis any way to distribute the benefits from public good production
so that the benefits are exactly allocated among the team members
gives subgroups of Congress extraordinary ability to block or enact
legislation in particular domains of policy. This latter feature is a(budget balancing), and so that each team member finds that its
self-interest leads to a Pareto-optimal Nash equilibrium. Holmstrom
manifestation of decentralized decision making that makes it impos-
demonstrates that budget balancing is inconsistent with a Pareto-
sible to guarantee Pareto optimality in choice. Sen (1970) argues
optimal Nash equilibrium. The only way to eliminate moral hazard
that when aggregating individual preferences to the organizational
level, a decentralized organization must give up either coherenceamong
or team members is to pay the productive members of the team
and then allocate the residuals to passive actors outside the produc-
efficiency. The aggregation of decentralized power sometimes must
be an outcome that everyone agrees is inferior to one that couldtive process. This solution is institutionalized in the firm in the
be achieved by a more global administrative perspective (Ham-separation of productive members of the firm from owners (stock-
holders and members of the board of directors, who receive the
mond and Miller 1985, 8). A persistent example of inefficiencies
surplus in the form of profits). It is institutionalized in democratic
generated by decentralized agenda control is the agriculture price
forms of government in the separation of productive members of
support logroll, in which a variety of constituencies share benefits
the bureaucracy from the general citizenry, who receive the residual
that, unfortunately, do not exceed the costs imposed on a diffuse
and passive public. There can be little doubt that the system of benefits
farm of public good production.
price support programs has benefited from a decentralized system of
agenda control in which the self-interest of a variety of actors isEswaran
at and Kotwal (1984) show, however, that while this separa-
odds with the general welfare. tion of ownership makes efficiency possible, it does not eliminate
moral hazard altogether. The obstacle is now moral hazard in the
Biases in Representation form of rent seeking by subgroups of owners (in the case of firms)
Societal interests are not equally represented in the legislature. or citizens and interest groups (in the case of democracies). There
will be inevitably collusive arrangements between residual owners
Individual members of large group interests also cannot be excluded
(say legislators and particular interest group constituencies) and
from the benefits of the public good once it is provided by the legis-
productive members of the defense production system (say, contrac-
lature, which creates an incentive for free-riding (Olson 1977, 13).
Consequently, large, diffuse interests have a much more difficulttors) that will allow them to distribute more residual rents among
themselves at the expense of overall efficiency (Arnold 1979, 96). A
time organizing for political action than smaller, concentrated inter-
variety of actors are made better off by this rent-seeking behavior -
ests. This difficulty of organizing for political action can be over-
but the public benefits of military defense are diminished. There is
come in smaller groups by a privileged cluster of members whose
no natural alignment of interest between the residual owners and
gains from the good exceed the total cost (Olson 1977, 28). Large,
overall efficiency. It will always be possible to earn more rents from
diffuse groups also can overcome this collective action problem by
creating organizations that provide "by-products" to members in an the
inefficient scheme than from an efficient incentive scheme.

form of private goods (Olson 1977, 132).

Members of the legislature engage in this kind of political moral
Legislatures thus are more responsive to lobbying groups that (1) hazard when they allocate rents to firms or groups in their districts
that provide campaign funds and other assurances of reelection
further the interests of relatively small groups (e.g., auto producers),
(2) represent the interests of concentrated groups (e.g., farmers or
orthe potential for monetary reward upon leaving office. Interest
labor unions), and (3) provide "by-products" to its members ingroups
or- recognize the potential for receiving rents from the legis-
lature, and both sides succumb to this moral hazard by seeking to
der to channel pressure on particular issues (e.g., the National Rifle
maximize rents at the expense of social efficiency. There always will
Association). As a result, we cannot presume that elected officials
legislate in a way that best serves the public interest as a whole; be
ona private demand for government rent seeking: the short-term
the contrary, legislative outputs will systematically tend toward rent from government officials selling monopolies, licenses, access
gains
extraction by the most organized interests at the expense of the to public goods, and favorable regulation to private market actors
less
organized. are immense and benefit both public officials and private market
forces. In this sense, rent seeking in fact cannot be thought of as
Rent Seeking: The Political Moral Hazard Problem public or private - it is a transaction between public and private
actors.
While Olsen focuses on the incentives that private actors have to
lobby and seek benefits from government, Holmstrom (1982) and
Eswaran and Kotwal (1984) provide us with a way of thinking Holmstrom (1982) and Eswaran and Kotwal (1984) thus pr
about the mutual interaction between private interests and public an answer to the question posed at the beginning of this art
officials. The impossibility result by Holmstrom (1982) in "Moral Why are political factions an important problem for public a
Hazard in Teams" is an analysis of team production in firms; it can istration? The answer: political moral hazard inevitably accom
be applied broadly to any interactive social production, including the ability to extract rents from public goods production. D
public good decision making (Miller 2000). fair and open electoral system, political elites do not find it i

S32 Public Administration Review • December 2011 • Special Issue

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interest to do what is efficient for producing public goods in the of President Reagan as increasing accountability of the bureaucracy
political system that they manage. to the public.

Public Administration and Democratic Accountability Flawed Agents and Conflicting Principals
In the process of studying biases in congressional representation that While principal-agent theory has advanced the study of Con-
lead to factions, the obvious but less familiar deduction from these gress and the bureaucracy in significant ways (Bendor, Glazer, and
theories - that public agencies may serve as an Hammond, 2001; Epstein and O'Halloran
alternative form of representation, and a check 1999), it unfortunately ignores the decades
In the process of studying
on imperfections in the legislative process - is of administrative reform from the Progres-
examined infrequently. Yet this role for public
biases in congressional sives through the mid-twentieth century, in
agencies is central to the understanding of the representation that lead to which a professional public bureaucracy was
historical relationship between factions and factions, the obvious but less viewed as a partial solution to the problem
public administration in the United States familiar deduction from these of social inefficiency caused by rent seeking
and the role of public agencies today. and corrupt politicians. The extent to which
theories - that public agencies
Congress fails to represent the public per-
may serve as an alternative
Principal-Agent Theory fectly, or has its own agenda of rent seeking,
The dominant political economy model is form of representation, and a increasing bureaucratic accountability to
derived from principal-agent theory, in which check on imperfections in the Congress exacerbates rather than mitigates
public administrators are the agents of legisla- legislative process - is examined the problem. Principal-agency theory thereby
tors and the president, who act as principals infrequently. Yet this role for is also inconsistent with the spirit of the Feder-
on behalf of the citizenry. The highly signifi- alist Papers , which went out of their way to
public agencies is central to the
cant work of McCubbins, Noll, and Wein- explain how majoritarian, national legislatures
understanding of the historical
gast (1987) and of Weingast (1984) defines were unstable and dangerous and should be
principal-agent relationships in government
relationship between factions checked by other branches of government and
in terms of the responsiveness of the bureauc- and public administration in federalism.
racy to elected officials. Bureaucracy is viewed the United States and the role
as an obstacle to democratic accountability, of public agencies today. Conflict between Congress, the president, and
which occurs primarily through elected leg- the courts can make delegation to professional
islators but also through the president. They bureaucracies more credible. Once in place,
see elected legislators as the legitimate agents of the public and the professional bureaucracies can serve as a semiautonomous check
controlling determinants of bureaucratic behavior. Elected officials on other institutional actors in the Madisonian system of divided
play this central role because the U.S. Constitution has imposed government and leverage the capacity of legal-constitutional govern-
"institutional safeguards and incentive structures" that "make ment to constrain rent seeking and corruption. Political economy,
elected representatives responsive to citizens" (McCubbins, Noll, and principal-agency theory in particular, implicitly dismisses the
and Weingast 1987, 243). possibility that a bureaucrat could serve the public by defying Con-
gress or the president. But rent seeking and corruption were most
Principal-agency theory thus equates accountability to Congress rampant in the eighteenth century, when administrative agencies
with accountability to the public. Elected officials are assumed to were highly responsive to congressional and state legislative parties
act in the public interest, which makes the power of public admin- and interest group constituencies.
istrators the fundamental threat in the system. McCubbins, Noll,
and Weingast write that the central problem of democratic respon- Trustee Theory and Public Agency Discretion
siveness is "how - or indeed, whether - elected political officials In several areas of economic policy, Congress has established
can reasonably effectively assure that their policy intentions will be independent commissions and regulatory agencies that act more
carried out" (1987, 243; emphasis added). And as McCubbins and like "trustees" of the public interest than as agents of congressional
Schwartz add, "Whatever the original intent, it is no longer plausi- principals. The difference is that trustee agencies are expected to
ble in most cases to suppose that the public interest is best served by protect the public interest, even in opposition to the wishes of
a bureaucracy unaccountable to Congress and, therefore , unaccount- specific congressional committees or majorities. Their mandate is
able to the electorate" (1984, 169; emphasis added). similar to the legal basis for setting up trustees and trusts for minor
children until they reach adulthood or for heirs in estate planning.
Works by Moe (1985) and Wood and Waterman (1991) discuss In the area of trade, for example, the widespread public disgust of
multiple principals, including the president and the Congress, but Congress's tariff policies resulted in a movement toward agency
tend to view the president as the primary principal for the bu- delegation. The Tariff Commission was created so that something
reaucracy. This literature is similar to congressional principal-agent other than the vagaries of an unstable coalition process in service of
studies in viewing accountability as flowing from the public to the narrow legislative reelection interests could be injected into trade
president (Golden 2000, 3-9). The main object of study is how to negotiations (Goldstein 1989, 64). Other major agencies that Con-
tighten presidential control over bureaucracy, what tools are used to gress has established with "trustee" authority include the National
control the bureaucracy, and what conditions make political control Labor Relations Board (NLRB), the Federal Reserve Board (Fed),
more likely to occur (Gormley 1989). Principal-agent studies of the and the Securities and Exchange Commission (SEC), among other
presidency have looked favorably on the "administrative presidency" regulatory agencies. In each case, the agency heads and commission

Are Factions the Problem? S33

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members enjoy fixed terms in office and greater discretion in policy in power but hurt the country as a whole. An example is the nation-
and rulemaking than mainline departments. The agencies are de- alization of many industries in the United Kingdom by the Labour
signed to employ professional expertise in problem solving as a way government after World War II.
to establish a greater "credible commitment" to sound economic
policies (Knott and Miller 2008). It also begs the question of the enormously important role of public
administration and the dramatic growth of federal, state, and local
Conclusion public agencies. The development of professional public administra-
tion,
The Federalists supported a republican form of government with a the civil service, and administrative laws and procedures played
a significant role historically in reducing corruption and political
system of checks and balances. They sought to make it more diffi-
moral hazard. Similarly, semi-independent regulatory agencies and
cult to put together a winning (more than simple majority) coalition
commissions played an important role in providing problem-solving
and easier to block simple majority coalitions. They believed that
this form of government in a large, complex expertise and credible commitment in many
country would curb the power of majority areas of economic policy making. Even the
coalitions to repress minorities and enact European Union, with its dominance of
The question is whether the
legislation that did not benefit the country as parliamentary regimes, has witnessed a strong
Federalists were right: does a
a whole. The question is whether the Federal- growth in the development of regulatory
republican system of checks agencies, independent commissions, and non-
ists were right: does a republican system of
checks and balances give better results for the and balances give better results governmental organizations to deal with the
public interest than a democracy by majority for the public interest than a problem of credible commitment in economic
rule? The history of the United States as well democracy by majority rule? regulation (Majone 1997).
as theoretical analyses of American politics The history of the United States
support normative arguments on both sides of Thus, there is an inevitable trade-off between
this issue.
as well as theoretical analyses
the benefits (and costs) of majority rule
of American politics support against the benefits (and costs) of constraints
One argument is that the Federalists under- normative arguments on both on majority rule. The challenge, then, is to
estimated the enormous costs of a checks and sides of this issue. adopt the right mix of constraints on and sup-
balances system. Each check, or veto point, in ports for majority rule decision making. With
the system has the potential to block positive regard to public administration, the bureau-
legislation for the country and to promote special legislation for its cratic politics of separation of powers in the United States creates
own interests. This veto power leads to reciprocal agreements among multiple authority structures that yield some degree of bureaucratic
participants to support the demands of other veto players in return independence (Moe 1985; Hammond and Knott 1996). In practice,
for one s own favored legislation. Such reciprocity produces subop- this means delegation to professionals and experts in administra-
timal results for the country, including larger overall budgets than tive agencies. In areas of policy concerned with economic efficiency,
individual legislators prefer. It also involves a complicated system of Congress also has delegated a greater role for semi-independent
accountability, with unclear lines of authority for public administra- regulatory agencies to help government establish credible commit-
tors and the potential for public agencies to form political alliances ment to sound economic and financial policies.
with a subset of veto players against the majority. The long, arduous
road to civil rights legislation, the byzantine system of health care Public agency accountability to the public rests on a checks and bal-
reforms, and "pork barrel" overspending on inefficient projects all ances system. The check on public agencies derives fundamentally
reflect the high costs of a checks and balances system. from their creation by democratic legal statute, the appointment
of public administrators by elected officials, and congressionally
Given this set of real costs, the argument can be made that it would established committees to oversee specific areas of the bureaucracy.
be better to adopt a parliamentary form of government with no Accountability also includes an important role for the courts and
separation of powers, with public administrators accountable to the judiciary through legal suites, regulations, and legal procedures
majority coalitions. Simple majority rule is the goal, and the rest of embodied in the Administrative Procedure Act of 1946 and com-
government should be organized to make simple majority rule deci- mon law practices. In addition, accountability depends on statutes
sive and to guarantee that all of government is responsive to simple and rules seeking to guarantee transparency for operations and data
majorities. The unitary and centralized parliamentary system in the collection and storage, through the Freedom of Information Act of
United Kingdom represents this majority rule form of constitu- 1966, and very significantly, the related independent role of inves-
tional democracy. Until recently, all authority resided in the House tigative reporting by the news media and through the Internet. Fi-
of Commons, with no independent judiciary or executive branch nally, accountability is dependent on merit hiring, professionalism,
and no federal system of checks and balances. The parliamentary the civil services, and an ethical commitment to promote the public
principle is that, in a democracy, the only legitimate rule is by the good (Bertelli and Lynn 2006; Knott and Miller 1987), which was
majority. initially introduced during the Progressive Movement at the end of
the nineteenth century.
The problem is that this normative position ignores majority rule
instability and democratic representation biases in favor of organ- Two new developments in the second half of the twentieth century
ized interests, even with fair and open elections. Majority rule gov- pose challenges to this constitutional basis of democratic account-
ernments also can pass inefficient policies that benefit the majority ability. One development is the extensive system of contracting out

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and privatization of many public agency functions to private and
nonprofit agencies, from garbage collection to national defense. In
this process of privatizing public goods production and delivery, seri-
ous issues of democratic accountability arise outside the system set
up over years to regulate public agencies. Of particular concern is the
ability of private contractors and service providers to engage in politi-
cal lobby activities that seek to influence congressional and legislative
decisions in their favor. This blurring of the differences between the
public and private sectors raises serious questions of democratic ac-
countability and the constitutional role for public administration.
A second challenge is the strong growth in public employee unions
at all levels of government. In some states, public unions influ-
ence the outcomes of local and state elections because of low voter
turnout among the general population in primaries. Unions also
spend millions of dollars on lobbying activities through the news
media and other avenues in support of additional spending on
pensions and budget support for teachers, prison guards, and public
safety agencies and employees. In addition, public employee unions
through seniority protections and other practices breach the norm
of hiring, promotion, and compensation based on merit.
While there are better and worse ways to make the trade-off between
the costs and benefits of majority rule, it is likely that Madison and
the Federalists would support the delegation of authority to public
administrative agencies. They would view public administration as
one of several imperfect agents of the public, best able to serve the
public by being capable of serving as a viable professional check and
balance to the ambitions of an imperfect legislature and executive.
And, at this period of history, the nation will not return to a public
administration without private contractors, government-sponsored
enterprises, or public employee unions. It is essential, therefore, that
these new entities also become better integrated into the constitu-
tional system of checks and balances that regulates the interplay of
political factions and public institutions in government.
Federalist No. 10 Appended
This essay suggests the following appendix to Federalist No. 10:
It is argued that in a decentralized ' pluralistic American system , public
agencies face incentives to become active partners in political corruption
and inefficient behavior through the formation of political alliances
with interest groups and congressional committees. In these arguments,
public administrators gain constituency and interest group support as
well as increased budgets and authority from congressional committees.
But are these alliances between agencies , Congress , and interest groups
social costs attributable to pluralism and the separation of powers? Con-
sider farm price supports , which are common in European centralized
parliamentary systems. Farm price supports as well as other inefficient
policies in all these countries derive from legislative logrolling and
representation biases in favor of organized interests. These inefficient
policies illustrate the costs of majority rule rather than the role of public
administration in a decentralized, separation of powers system.
If public agencies responsively carry out congressional policy in these ar-
eas, they become the reliable implementers of socially inefficient policies.
Members of Congress, when criticized for failed policies, are quick to lay
blame on public administrators as the cause of the policy failure, and
quickly distance themselves from the issue. In numerous policy areas,
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public administrators are likely to be blamed for poor policy outcomes by
conscientiously following the preferences of congressional overseers.
Fortuitously, a separation of power system creates multiple overseers for
bureaucratic agencies, giving them a degree of discretionary power not
easily attained in a unitary system. If this discretion is checked by legal
due process, public transparency requirements, and professional norms,
these executive agencies can better carry out the state's activities and
policies in the public interest and join the overall system of checks and
balances as a protection against the undue influence of political factions.
In economic policy this professional discretionary power is particularly
important. Government needs to be strong enough to intervene to
protect property rights and enforce contracts, but any government strong
enough to do so also is strong enough to confiscate property and violate
contracts to the benefit of factions with political power or to form coali-
tions with economic interests that might benefit from cartels or other
forms of corruption. Hence, for government to pursue sound money,
banking, and economic regulatory policies, it must establish a credible
commitment to protect the money supply and regulate the economy in
the public interest. Such credibility requires professional public agencies
that operate within the broad framework of democratic accountability
but with a degree of discretionary power to base decisions on economic,
banking and financial expertise in order to sustain the trust of the
Congress and the people.
Consequently, the public is better served by a checks and balances system
of competing flawed institutions, including the bureaucracy. Such com-
petition is superior to a system in which any one of those institutions,
such as the Congress, would possess monopoly control over and access to
the bureaucracy. A checks and balances system that includes a role for a
professional bureaucracy would help to mitigate the undue influence of
political factions and their deleterious effects.
-PUBLIUS
Acknowledgments
The author would like to thank Jennifer M. Connolly, a Ph
student in public policy and administration in the School of
Planning, and Development at the University of Southern C
for her excellent research assistance in preparing this article.
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