Agency Problems and Policy-Making

Congress has immense power. Why? Because we, as voters, have given it to them. They are our agents in Washington. This means that they have a fiduciary duty to represent our best interests, the reason we elected them into office. The difficult thing is, however, is that they have a dual allegiance: to their constituents and to their country. This could put certain Congresspeople in a difficult position, where voting for something that might hurt their state could possibly be the right thing for the country. This is why they get the glory. It doesn’t come cheap from an ethical and moral perspective.

But what happens when Congresspeople cease to take these factors into account, and act in ways that reflect, say, the interests of lobbyists that have donated thousands of dollars to a campaign or done favors in order to influence voting records? In these cases, the principles of agency break down. No longer is it by the people, for the people, it rapidly becomes by the people, for me. With the millions that are spent on lobbyists and special interests, it is sometimes hard to know how our Congresspeople, and, in fact, our President, arrived at their particular policy positions. Good policy or merely good (personal) economics? The fact that we can have these doubts highlights a major flaw in our system of government.

When bankrupt companies are spending millions on influencing key policy-makers while their destiny hangs in the balance, something is terribly wrong. When hundreds of billions are spent by those in positions of authority whose positions are potentially conflicted by their personal affiliations (see Paulson, Hank), the system is sorely broken. There needs to be transparency, clarity and honesty among our legislators and their appointees: without this, how can we ever know their true intentions and understand whose interests are foremost in their minds? Times are too tough to constantly be second-guessing the motives of our Government officials. Problem is, they’ve given us no reason to believe that their motives are pure and unfettered by payola and favoritism. When we can root out this kind of conflict from the system, a new day will be upon us, a day when we can trust our elected and appointed officials and be less cynical as to their motives. But until that day is here, caveat emptor. Their record of reform thus far is extremely poor. Let’s make sure we aggressively work towards change.

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