Saturday, January 18, 2020

Principal-Agent Theory and the Trump Administration: No Principals, Heaps of Agency

This tweet got me thinking, and since I am at an airport, I have plenty of time to ponder:

A caveat before I begin: I desperately avoided P-A theory in grad school as it was all the rage among the Americanists in my grad program (McCubbins saw himself as, well, either the Emperor or Darth something and I didn't disagree).  Alas, I succumbed when working with David Auerswald on the NATO and Afghanistan book because it was entirely about delegation.  Since then, well, I see P-A everywhere, including the movies.  Plus I assign it in my civ-mil class as a better way to think of civilian control of the military (thanks to Debbi Avant and Peter Feaver).

Once again, the core idea is that whenever a principal (a boss) hires an agent, the agent knows more about what the agent is doing than the principal does.  This information asymmetry means that the agent can do more or less than what the principal desires (tis called shirking either way).  One manages the P-A problem by selection agents carefully, granting more or less discretion depending on trust and risk, overseeing through a variety of strategies (police patrols, fire alarms, community policing), and incentives/sanctions.

How does this apply to the Trump Administration?  Well, of course, the first assumption is that the principal wants to control the agent. Not really sure this is the case here since Trump likes chaos among his advisers and playing them off against each other in the dumbest possible imitation of FDR.   The problem here for any agent of Trump is that one cannot tell what Trump is going to do since he has no principles---yep,  a principle-less principal. One core aspect of being an uncertainty engine is that Trump has no coherent, consistent preferences or values except ego gratification, greed, misogyny, and white supremacy.  His short-attention span, his refusal to read or to do any of the real work of a Presidency means that the agents are both confused and confusing.  While this gives Trump some plausible deniability ("I am too stupid or ignorant to know what I am doing and what my agents are doing"), it does mean control is problematic.

One way to handle the P-A problem is to pick highly qualified, like-minded agents who are loyal.   Hmmm, it seems that Trump's circle of trust is very narrow and not based on quality. Picking folks like Dershowitz and Guiliani suggests that tis far more about fealty than anything else.  While these guys seem quite loyal, Trump's abuse of them and their inherent tendencies suggests that they will turn on him just as quickly as Trump turns on them.  See all of the folks exiting the administration, with Scaramucci being a, um, model.  I keep referring the bottom of the barrel being thoroughly scraped, and the folks Trump/Giuliani used to get Ukraine to throw dirt at Biden exemplify this quite well.  The stream of text messages screams this scene from the Wire (NSFW):

To be fair to Trump, he didn't just hire bunglers.  He also hired the worst possible people, some of whom are way too competent in doing bad stuff. Bill Barr comes to mind.  Stephen Miller as well.  So, among the barrel of awful, there are some who are really good at doing harm, at engaging in arson.

Ok, the agent selection of this administration is, um, problematic but perhaps works for Trump.  What about discretion?  Does Trump grant wide discretion or does he give specific orders with narrowly defined "arcs of fire"?  Um, damned if I know.. but I would guess that Trump does not give well-defined instructions.

Oversight?  Definitely fire alarm.  That is, he relies on pitting his staff against each other and on watching the competitive leaking on Fox.  These are not the most reliable fire alarms as each agent competes to be the favored one at the expense of others.  Not all competition is healthy or productive.  So, stories get planted to make the other agents look bad, and Trump does not possess the information or the energy or the critical mind to assess the competing claims.  Again, the idea of oversight is to get information to overcome the asymmetry problem, and that requires inquisitiveness and critical thinking.  Ooops.

Incentives? Ah, here's the primary way that Trump controls his agents.  As long as one is in the administration, one has carte blanche to earn money at the expense of the taxpayer.  Corruption is not a bug in this administration but a feature.  As long as you serve Trump loyally (or Trump perceives as such), you can extract rents in a variety of ways.  This administration will go down as the most corrupt ever because Trump, the projection machine that he is, thinks that the only real motivation that gets people to do stuff is personal monetary interest.  Machiavelli might have warned that Trump is merely renting support and loyalty rather than buying it, but since Trump has a short attention span, I don't think he cares about that distinction. 

The problem with this tool is that Trump does not have a sophisticated system of controlling the graft--it is really access or no access, in or out.  Which means it is not very good for controlling the agents.  

Together, all this means that the people in the Trump administration are mostly out of control.  This does not mean that Trump is not responsible for what they do.  It means he is very responsible for creating this climate.  He owns all of it, even as he denies responsibility for anything that is reality-based. 

If we survive, the next couple of generations of political scientists are going to puzzle through the debris to determine the dynamics that shaped US domestic and foreign policy in the Age of Trump.  I think a common starting point for these folks will have to be realizing that there is not only no strategy (which requires information and some effort to understand the adversary's preferenes), but there is also little control.  The agents are amok as their boss ruthlessly avoids having information about what they are doing and is quick to throw them under the bus.  So, the key is to get as much cash as possible, commit as much arson as one can before one gets tossed.  And then write a book to make more money and see if one can find a fellowship at Harvard.

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