Two Problems of Fiduciary Governance

Two distinct governance problems arise whenever individuals surrender their autonomy to a collective decision-making process: a principal-agent problem and a tyranny-of-the-majority problem. But fiduciary law – both public and private – often conflates the two, speaking of the duties that the majority owes the minority in the same terms as the duties that agents owe their principals. This chapter for a collected volume of essays on Fiduciary Government attempts to tease these two problems apart and show that they require different legal and structural responses. For example the classic tools of the duty of loyalty (e.g., avoiding conflicts of interest) are designed to address the principal-agent problem and have far less traction on the tyranny-of-the-majority problem where such conflicts are inevitable. Understanding the differences between these problems is critical to any attempt to translate ideas from private law into a fiduciary conception of government.