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16 Rev. L & Econ. 1 (2020)

handle is hein.journals/rvleco16 and id is 1 raw text is: Diego G. Pardow* Political Insulation, Technical Expertise and the Technocrat's Paradox https://doi.org/10.1515/rle-2016-0056 Abstract: It is generally assumed that independent agencies reflect the Congress' willingness to deal with two different sources of risk that complement each other: political uncertainty regarding the policy implemented, and technical uncer- tainty regarding the outcome that would be achieved with that policy. This paper claims that such complementariness is true only when the Congress is expecting to capture the benefits of a sound technical decision. If this is not the case, for example when there is a large possibility of a political turnover in the near future, institutional design should follow a dynamic of entrenchment. Here politics and expertise substitute each other, thus reducing the optimal choice of agency inde- pendence. This paper illustrates these ideas by comparing the two waves of institutional reforms that occurred in Chile in the 1920's and the 1980's. The vari- ance in the level of insulation achieved by each process responds to a key political difference: the first one was conducted through a democratic consensus that was meant to last several decades, whereas the second one was conducted during an authoritarian regime aware that its tenure in power was coming to an end. Keywords: independent agencies, delegation, Administrative Law 1 Introduction What is the goal pursued by an institutional designer when increasing the level of independence for government agencies? Insulating the agency from polit- ical pressure? Improving the agency's technical expertise? Most of the literature assumes that political insulation and technical expertise complement each other (e. g. Gersen, 2010). This is the traditional argument of technocracy when advoc- ating in favor of agency independence.1 Both goals would be simultaneously 1 See, e.g. OECD (2014) at 47, including as one of the organization's guiding principles that establishing the regulator with a degree of independence (both from those it regulates and from *Corresponding author: Diego G. Pardow, Facultad de Derecho, Universidad de Chile, Pfo Nono 1, Providencia, Santiago, Region Metropolitana 7520421, Chile, E-mail: dpardow@derecho.uchile.cl DE GRUYTER Rev Law Econ 2020; 20160056