The separation of powers

perform the oversight functions and thus mitigate the cost of monitoring through “fire alarm oversight”.Fire alarms are typically more efficient, as the principal does not need to expend resources searching for slack where it may not exist, and potentially more effective, as parties harmed by the agent typically have strong incentives to publicize shirking and slippage (McCubbins and Schwartz 1984 cited in Hawkins et al. 2004).

Third, the principal may employ contracting arrangements that include credible commitments to punish or reward the agent for specified behavior. For instance, principals can draft new contracts with the agent, requiring modified behavior to achieve anticipated reward, or insuring punishment if behavior is not consistent with the interests of the principal.

Fourth and finally, principals can construct checks and balances that require coordination or competition between two or more agents. If designed properly, checks and balances can reveal information to the principal about agent behavior and can also inhibit agent behavior that is detrimental to the principal. Such a mechanism is applied to solve the shortcoming of the separation of powers which I will discuss in detail in the following section.

Briefly, scholars applying principal-agent analysis to the study of political science have been interested in why principals delegate to agents, how principals try to control agents and what the consequences of that delegation might be. From reading the literature, I have found that principals may not always perfectly control agents which creates opportunities for agents to develop autonomy and deviate from principal preferences. The principals, in turn, try to establish an efficient constraint mechanism to minimize the opportunistic behavior of the agent. In the next section, I apply these arguments to highlighting how JI can be established under the P - A approach.

III. Separation of powers and Delegation of powers – theoretical bases of JI

Montesquieu (1748 cited in Salzberger, 2001, p. 6), history reveals that this functional division among governmental bodies has always existed, regardless of the era (or at least long before separation of powers was under discussion) and type of regime.

Notably, the doctrine of separation of powers has a long history. We can trace it back to the views of Plato, Aristotle, John Locke and so on to find various arguments relating to this doctrine. But the most influential philosopher who provided a systematic theory of separation of powers is Montesquieu. In the L’Esprit des Lois (1748), Montesquieu wrote:

“When the legislative and executive powers are united in the same person ... there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner. Again, there is no liberty, if the judicial power be not separated from the legislative and executive. Were it joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control; for the judge would be then the legislator. Were it joined to the executive power, the judge might behave with all the violence of an oppressor” (Montesquieu, 1748)

The separation of powers can also be explained in the view of Principal – Agency theory. As mentioned above, P - A theory assumes that due to the coordination problem, citizens (as principals) tend to delegate authority to government (as an agent), and government exercises powers on behalf of its citizens. However, citizens will incur agency costs resulting from delegation of authority to government. As Posner (2001) shows, the problem is that the agent may use its power to pursue its own goals rather than the principal’s. He also suggests that in order to minimize the “agency costs”, the principal sets up laws and institutions designed to monitor the agency and sanction it when it acts improperly (2001, p. 6). This explains why separation of powers should be qualified by the doctrine of “checks and balances” which will be discussed in detail below.

A similar argument can be found in Salzberger (2001). With the classical view of separation of powers, he claims that one way to reduce these agency costs is to divide the agency into separate sub-agencies, creating different incentives for each. In that way, while legislators act to maximize their political powers and chances of re-election, administrators and judges have different incentives, as a result of different institutional arrangements (Salzberger 2001, p. 6).

Furthermore, Macey (1988 cited in Salzberger, 2001) adds that the reduction of agency costs would be more significant if the division of powers would not only be by separation of agencies but also by assigning each agency a different governing function.

Chart 5.1: Separation of powers under PA theory

People Executive

Branch

Judicial Branch Legislative Branch

Under the P - A approach, the principle of separation of powers can be described by relying on Chart 5.1. A look at this chart shows that each branch of the state is granted a certain authority from the people. However, in order to reduce agency slack, these branches are not totally independent in exercising their authorities. Instead, they share powers with other branches through a “checks and balances” mechanism.

In the world today, under the doctrine of the separation of powers, most nation-states have established three separate branches of their governments, namely the legislative branch, the executive branch and the judicial branch. A legislative branch (or legislature) is a governmental deliberative body with the power to adopt law. Legislatures are known by many names, for example parliament, congress, and national assembly. An executive branch is charged with implementing, or executing, the law. The third branch is judicial system with the function of law interpretation and dispute settlement. Regarding the relationship among the three branches, the traditional literature of separation of powers stresses the relation between legislative and executive branches. The relation between the legislative branch and the executive branch depends upon the way in which government is organized, specifically whether it is a parliamentary or a presidential system. In parliamentary systems, the legislature is formally supreme, and appoints the executive. In presidential systems, the legislature is considered a branch of government which is equal to, and independent of, the executive. In addition to enacting laws, legislatures usually have exclusive authority to raise taxes and adopt the budget. The consent of the legislature is also often required to ratify treaties and declare war.

The strict application of the doctrine of separation of powers induces the presidency system in the US, in which the president has a powerful position in the relation with other organs. The president of the US functions in many capacities: head of state, head of government, commander in chief of the armed forces, and leader of the president's political party. The president is thus the most unifying force in a political system in which power is highly dispersed, both within the government, and between the government and the people. It is supposed that the presidential system of the US preserves the doctrine of separation of powers by rigidly following its principle and therefore genuinely protects democracy and liberty. In fact, by examining the historical development of the US presidential system, many scholars have argued that a powerful presidency is harmful to new democracies. For instance, Linz (1990, p. 55) states that a careful comparison of parliamentarianism with presidentialism leads to the conclusion that the former is more conducive to stable democracy than the latter. Rice (1884) presumed that Montesquieu opposed concentrating power in a single person, rather than a single source. He then argued that a parliamentary system, which would not comply with the strict doctrine of separation of powers, would nevertheless be consistent with Montesquieu's philosophy.

As mentioned above, the P-A theory shows that in order to minimize the “agency costs”, it is in need of a system of shared powers known as checks and balances. This is also because separation of powers could not be absolute, otherwise it will lead to abuse of power in each branch of government. It is thus necessary to create a mechanism by way of which actions of state organs will be monitored by other organs which will reduce the overall level of harm (Voigt 2003a, p. 2). Supporting the mechanism of checks and balances, Madison (1788) argues that the three branches should not be so far separated as to have no constitutional control over each other. The system of checks and balances is designed to allow each branch to restrain abuse by each other branch. Some other studies as Brennan and Hamlin (2000) have supposed that the model of checks and balances is, in fact, a set of institutional arrangements differing from the idea of the separation of powers. Such mechanism, which Brennan and Hamlim call “division of powers”, relates to institutional devices that attempt to spread a single power across a number of individuals or bodies while separation of powers serve to unbundle powers and place each power in the hands of different agents or bodies (2000, p.13). Salzberger (2001) argues that an optimal structure of separation of powers would adopt the checks and balances doctrine with respect to the functional level, and the independence doctrine with regard to the personal. From analyzing transaction costs of

making in legislature, creates grim results of cycling or arbitrariness. Therefore, in his view, it is necessary to allow additional bodies to take part in the decision-making. These agents should have different decision-making processes, incentives and representation structures (2001, p. 10). The establishment of independent constitutional review mechanisms in many countries is the best illustration for his view