The Economics of Scapegoating Mike Rappaport

Bryan Caplan, one of my favorite economic bloggers, argues that putting pressure on a leader to fire one of his subordinates for doing something that the leader actually ordered can be socially beneficial: 

What happens when a leader throws an obedient follower to the wolves? It reduces the incentive to follow orders. That makes it harder for the leader to commit further crimes, because his followers have to weigh the costs of disobedience against the costs of being scapegoated. Once the people at the top start giving these bad incentives, moreover, they trickle down throughout the hierarchy.

While Caplan argues that it can be socially beneficial to force the leader to scapegoat someone, his analysis also suggests a different point, one I think he might be less happy about:  Leaders should be extremely reluctant to sacrifice one of their subordinates.  Leaders like George Bush, who seem to have extreme loyalty, may actually know something.  By not sacrificing his subordinates, Bush provides them with less incentive to ignore his Administration’s goals and to take actions that will allow them to protect themselves in case there is public uproar or a scandal.