Trust and Policy Capacity - Strategic Bureaucrat Appointments under Electoral Incentives

Abstract

We investigate the determinants of states' policy capacity, defined as the ability of states to craft effective policies. Our model shows that the interaction between politicians' implementation decisions and bureaucrats' motivation to design effective policies can lead to the coexistence of high-trust and low-trust equilibria. Without electoral concerns, politicians favor high-trust equilibria and hire capable bureaucrats. In a polarized society, electoral concerns may prompt more policy-skeptical politicians to appoint less capable bureaucrats to diminish policy capacity and ensure low-trust equilibria. This strategy shifts future implementation decisions in disfavor of interventionist politicians. Moreover, it reduces voters' demand for interventionist decision-making.