How Bureaucratic Leadership Shapes Policy Outcomes: Partisan Politics and Affluent Citizens’ Incomes in the American States
Unified control of policymaking by a single political party is perhaps necessary, but not sufficient for observing policy outcomes consistent with majoritarian policy preferences. Speaking on the topic of effective governance in Federalist 70, Alexander Hamilton identified the necessity of converting unity of purpose into unity of action. Hamilton’s profound insight recognized that translating unity of purpose among elected officials into specific measures that implement this broader vision requires an effective administrative state led by capable bureaucratic leaders. In practical terms, political institutions are best positioned to enact their most preferred policies when two conditions are met: (1) when a single political party controls major electoral governmental branches, and (2) bureaucratic leaders exhibit high capacity.
We empirically analyze the positive implications of Hamilton’s insight regarding the insufficiency of unified partisan majorities to attain their preferred policy outcomes by focusing on one of the most important public policy problems of the past few decades – income inequality. Political parties in the United States clearly differ on their preferred distribution of income, with Republican (Right Party) governments preferring higher incomes for the affluent compared to Democratic (Left Party) governments. However, the evidence to date remains decidedly mixed regarding whether income inequality is driven by partisan political control of democratic institutions in both the United States and cross-national comparative analyses. In this study, we seek to address these conflicting accounts by asserting that the unified majoritarian partisan governments’ best hope for exerting their preferred outcomes over income inequality rests upon having high caliber bureaucratic leadership formulating and implementing policies on their behalf.
Specifically, we chronicle several important ways that top level administrative officials in U.S. state governments play a determinative role in both shaping policies and their execution. This type of policy influence takes many forms ranging from providing policy expertise in the formulation of public policies to contracting decisions to distributing and managing large sums of federal aid revenue to targeting tax expenditures, just to list a few examples. Based on the critical importance of the caliber of bureaucratic leaders, we hypothesize that incomes for affluent citizens will be rising in the caliber of bureaucratic leaders under unified Republican control of governors and state legislatures, while moving in the opposite direction under unified Democratic partisan majorities.
We test this proposition using panel data on adjusted real gross market income for affluent citizens from six income fractiles covering the top decile of the income distribution in 49 American states during the 1986-2008 period. To measure bureaucratic leadership capacity, we employ data on state executive agency head salary compensation since it is critical for both attracting and retaining personnel in these bureaucratic leadership positions.
Our statistical findings offer null evidence of unconditional partisan differences in income changes between unified Republican and unified Democratic state governments for each of the six income fractiles covering the top decile of the income distribution. Republican unified political institutions, however, are able to produce favorable income gains for affluent citizens in their states only when the leadership capacity of top executive agency officials is sufficiently high. The opposite pattern is sharply attenuated for Democratic unified political institutions as they are not as effective at reducing income for these affluent citizens when they enjoy high levels of bureaucratic leadership capacity. This asymmetric pattern suggests that unified political parties may be more effective at delivering policy benefits to their core constituents than extracting costs for opposing constituent groups. In turn, our evidence may explain why systemic efforts at reducing income inequality by partisan governments have been ineffective — even in the presence of high caliber bureaucratic leadership.
The broader implications of our study are quite simple. Politicians seek to influence policy outcomes consistent with their policy preferences. Yet, they must rely on the administrative state to design policies, as well as implement and enforce them. It is not sufficient to presume that when a single political party controls both the chief executive and legislature that policies and outcomes will be consistent with the dominant majority party. Rather, it also requires capable bureaucratic leadership that can translate policy goals of unified partisan majorities into realized policy outcomes. Similar to unified partisan majority governments, efforts at ‘hollowing out’ the administrative state are often viewed as a means to achieve policy outcomes that are more in line with what voters want by removing layers of government. Ironically, such ‘hollowing out’, in the form of weakening the caliber of leadership within the administrative state, may serve to undermine elected officials’ collective partisan efforts of translating their policy preferences into observable outcomes.
– Daniel Berkowitz and George A. Krause.