Shifting and Shirking: political appointments for contracting out services in Israeli local government

Abstract

Principal-agent models in public administration concentrate upon policy drift-when agencies allow policy to drift away from the bliss point of executive politicians. We distinguish two types of policy drift: policy shifting and agent shirking. The first occurs when agents' political bliss points are located differently from those of their principals. The second occurs when agents do not competently carry out their principals' wishes. One response to policy shift is to appoint agents who share the bliss point of the principal, allowing the reduction of costly monitoring. Through 10 cases in three Israeli cities where political appointments were made to push through structural changes to contract out services, we show that political appointees are less effective than career bureaucrats, so that solving shifting often increases shirking, especially when monitoring is reduced. The agency problems thus created were only solved by increasing monitoring and returning to career civil servants.