This chapter discusses the policy-relevant characteristics of hierarchical direction. In the real world, well-functioning hierarchical coordination seems in fact to be quite rare, and the impression is that it is getting to be more difficult. The chapter considers the welfare-maximizing potential of "hierarchical coordination." In substantive policy analyses, by contrast, the hierarchical mode of interaction seems to be implicitly or explicitly considered most desirable since it reduces the transaction costs of concerted action and thus offers the potential of coordinating policy choices from an inclusive, welfare-maximizing perspective. More generally speaking, the problem of containing and controlling the hierarchical power of the state has been the central issue of post-Hobbesian political philosophy. In other words, under conditions of divided government political competition is likely to undercut the capacity of governments to deal effectively with societal problems. From the perspective of actor-centered institutionalism, the public-choice approach appears theoretically deficient in its exclusive focus on the dangers of self-interest in the political process.