Historically, government agencies with very broad authority and mandates have fared poorly, like the FTC before 1980. After abusing its broad rule-making authority, the agency was criticized as the "national nanny" and came within one vote of being shut down. Then Congress narrowed its authority and the agency began using benefit-cost analysis to guide its law enforcement activities (see testimony by Howard Beales
, a former colleague of mine, on the history of the FTC).
Today, the US government creates agencies with narrow mandates or goals so it is easier to monitor and control the agency. And while this does make it easier to develop performance evaluation metrics for each agency, it also creates conflicts between agencies whose narrow mandates run at cross purposes to one another.
At the absurd end of the spectrum, incentive conflicts may occur between divisions of the same agency. This weekend, the NY Times ran a funny story
about how the Department of Agriculture's Dairy Management Program was encouraging cheese consumption, while the Department of Agriculture's anti-obesity drive was encouraging the opposite
Consider the Taco Bell steak quesadilla, with cheddar, pepper jack, mozzarella and a creamy sauce. “The item used an average of eight times more cheese than other items on their menu,” the Agriculture Department said in a report, extolling Dairy Management’s work — without mentioning that the quesadilla has more than three-quarters of the daily recommended level of saturated fat and sodium.
The first job of senior management in an organization is to ensure that its divisions do NOT work at cross purposes to one another. It seems that the Department of Agriculture would benefit from reading Chapter 22 of our texbook
, "How to get Divisions to work in the Best Interests of the Organization."