Academic journal article Journal of Comparative Politics

Who Decides in Times of Crisis? a Comparative Examination of Bureaucratic Delegation in 4 Eu Countries (2008-2010)

Academic journal article Journal of Comparative Politics

Who Decides in Times of Crisis? a Comparative Examination of Bureaucratic Delegation in 4 Eu Countries (2008-2010)

Article excerpt

The paper presents the results of a study of policy instrument form choice in four Western European countries. Based on an analysis of major pieces of legislation during the period, it is argued that various forms of institutional change in the form of delegation were the policy of choice for decision-makers in mitigating the effects of the financial crisis. Newly created agencies and funds enjoyed a significant degree of bureaucratic autonomy. In a parallel process, a gradual transformation of extant financial regulation contributed to an upheaval in the ideational structure that underpinned these policy areas for almost three decades. In this, a shift from price and fiscal stability to financial stability signalled a new set of goals for decision-makers, and a realignment of policy instruments duly followed. The results indicate that exogenous shocks-such as financial crises-initiate policy change with distinct policy instrument choices and delegations.

Key words: financial crisis, comparative political economy, bureaucratic delegation, Western Europe.

"For since in some Governments the Law-making Power is not always in being, and is usually too numerous, and so too slow, for the dispatch requisite to Execution; and because also it is impossible to foresee, and so by laws to provide for all Accidents and Necessities that may concern the public; (...) therefore there is a latitude left to the Executive Power, to do many things of choice, which the Laws do not prescribe."

John Locke

INTRODUCTION

The importance of the theoretical problem of bureaucratic delegation is larger than ever.2 The cost of the bailouts of financial services firms in the aftermath of the financial crisis of 2008-2009 resulted in multi-billion dollar checks for the taxpayers of the United States, Britain and many other countries. The management of these funds was mostly delegated to government bureaucracies and independent agencies, such as central banks. This is important because the institutional structure in which these financial restructurings are undertaken provides strong incentives for and restricts the agency of individual legislators, officials of the executive branch and bureaucrats. Therefore, the "quality of state regulation of the economy should depend on the institutional design of state institutions" (Przeworski 2003, 214).

During their respective crisis situations the legislatures and governments of advanced industrialized countries (heretofore AICs) created new bureaucratic structures that do not pass the eyeball test established by the dominant, rational choice-inspired literature on delegation.3 A cursory look at the political debates surrounding the bailout legislations in AICs in 2008 will show that the level (or degree, I use these terms interchangeably) and structure of delegation (taken together: the dependent variables of this article) are shaped by a number of considerations that are not closely related to the rational choice inspired variables related to party politics. These outcomes are in a stark contrast with the extant theoretical literature that postulates that both the level and structure of bureaucratic delegation is defined by factors associated with divided/unified government (or the institutional /ragmen tation of government), here defined by the parties in charge of the separate branches of government.

This article is but a first step towards outlining a general comparative framework of bureaucratic delegation that offers a solution to this puzzle. In this respect, this is more of an exercise in theory building than theory testing. I undertake this task in four steps. First, I present a baseline rational choice institutionalist model of bureaucratic delegation as well as an alternative rooted in the concept of trusteeship and bureaucratic delegation. Second, I present a small-n comparative case study design that is applicable to the investigation of major pieces of legislation. …

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