ECONOMY

206 the new separation-of-powers approach
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1 2 M=R 4 C 5
Fig. 11.4 Regulatory board implementing regulatory policy, R
identity and policy preferences of the elected officials. Suppose, for example, that the
new president is on the right, replacing the old one on the left. The new president and
Senate bargain to form a new compromise between their ideal points, say in between
board members 4 and 5 at policy C.
Most independent regulatory agency board members serve for a fixed term rather
than at the pleasure of the president, and can only be removed under circumstances of
gross misconduct. Thus, a president–Senate combination that wants to move policy
to C cannot do so by firing members from the current board. Instead, they must wait
until current members resign, die, or complete their term.
This model makes predictions about how every appointment will affect the
median—move to the right, stationary, or to the left. Suppose that board member
4 is the first to leave the board. No matter what a nominee’s preferences are, the
president cannot move the median to the right: the three leftmost board members
are fixed, implying that so too is the median. If, instead, member 2’s term is up, then
the elected officials can move policy from the current median to the ideal of member
4 by appointing a new board member to the right of 4. This is illustrated in Figure 11.5
If elected officials appoint a new member at A to the right of 4,then4 becomes the
new median board member, and regulatory policy will move from the old policy, R, to
the new policy 4. Elected officials can move policy to their target policy of C when they
have the opportunity to replace one of the now three leftmost members—members 1,
old M, or 4—with someone to the right of C. In general, after three appointments on a
five-member board, a president–Senate combination can move the median anywhere.
This implies that after three appointments, the model predicts that the president and
Senate have reached their target policy so that further appointments need not be used
to move the median.
Snyder and Weingast apply this model to the National Labor Relations Board
(NLRB), a major agency making labor regulatory policy. They test this model’s
predictions by examining every regulatory appointment from 1950 through 1988,
a total of forty-three appointments. Given some assumptions about presidential–
Senate preferences, the model yields a prediction about how a new appointment will
move the median—to the left, none, or to the right.
1 old M 4 C A 5
=R
Fig. 11.5 Change in regulatory policy following a new appointment