Discovering the Dark Side of Power: The Principal’s Moral Hazard in Political-Bureaucratic Relations

Principal agent (PA) is among the most prominent concepts for analyzing the relationship between politics and bureaucracy. Nonethelesss, the inherent bias of PA scholars to attribute moral hazard almost exclusively to the agent, usually referred to as “bureaucratic drift”, requires re-examination. Building on the spare literature in which moral hazard of the principal is considered, this paper provides empirical evidence for a neglected aspect of the PA concept. Three cases of German regulatory agencies responsible for drug control, financial services and rail safety are analyzed in critical situations which were largely perceived as bureaucratic failures. The analysis reveals that a good deal of these failures, ranging from negligence to suppressing crucial information, has to be attributed to the political principal. This is called the dark side of power because the intention is to shift blame or to dodge political responsibility. Turning conventional PA reasoning upside down, the conclusion is that the principal’s moral hazard should be considered more routinely as a potential explanation for political-bureaucratic interactions.     

CARICOM states and the WTO dispute settlement system: the case for greater engagement

This paper examines the participation of member states of the Caribbean Community (CARICOM) in the World Trade Organisation (WTO)’s dispute settlement system and its associated negotiations. In so doing, it highlights the dispute settlement system’s important contribution to the WTO and the need for CARICOM member states to engage more actively with this aspect of the WTO’s work. The paper concludes by articulating some of the lessons learnt from CARICOM member states’ experiences to date and offering some concrete suggestions on how the region can improve its current record of engagement.