Political accountability in Western democracies: A proposal for reform

Today's politicians have not changed all that much since Marie Antoinette (Source: here)

Marie Antoinette is alleged to have uttered the words “Let them eat cake”, when she was told Parisians were starving due to bread shortages. Her words became symbolic of the arrogance, ineptitude, and corruption of France’s rulers in the days leading up to the French Revolution. With hindsight, it is obvious the French revolution was both inevitable and entirely justified. We will never again allow ourselves to be ruled by useless charlatans. Or will we?

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The truth is that politics has not changed all that much since Marie Antoinette. We still rank politicians at the very bottom rung in terms of trust. We still dislike them intensely. We believe they lie and cheat.

The five least trusted professions (Source: here)

Yet, curiously, we continue to allow our elected representatives, especially those in the highest echelons of public office, to operate with shocking levels of impunity. Why do we give politicians so much leeway, when we - rightly - regard them as base charlatans?

The answer is we feel powerless to change to the system. We want a better politics, a politics in which elected officials work for us rather than for themselves or for lobby groups. But we have no idea how to bring it about. We don’t even know what a better politics looks like.

In this post, I offer a set of genuinely innovative ideas for how to improve democratic accountability. At first sight, some of the proposals may seem radical, but then omelettes are never made without cracking some eggs.

Tomorrow’s politics can be made to perform radically better be than the omni-shambles we have today. If implemented, the political reforms presented here will enable future generations to look back on our time with incredulity at how we accepted status quo for so long. They will look back on us and our politics exactly how we today look back at pre-revolutionary France and Marie Antoinette; how could we ever have allowed our politicians so much responsibility yet so little accountability?

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Today’s politicians have enormous power. They manage about half of the economy’s annual output through the government budget, a far bigger slice than Louis XVI and his lot ever controlled. In addition, they have powers to change laws, which means they can literally alter every other aspect of our lives, if they wish. It stands to reason that we - the voters - should be able to hold them to account.

Yet, modern democracies are stuck with a deeply dysfunctional system for holding politicians to account, one that has barely changed since democracy was first introduced. Basically, we require them to seek re-election every few years. That’s it!

Moreover, the act of voting is little more than an expression of wish. Ballot papers are not linked to specific election commitments, so they do not bind politicians to their promises in any way whatsoever. Unsurprisingly, politicians have become highly adept at exploiting the leeway afforded by our lackadaisical electoral system to their own advantage. For one, lying has become routine in practically all election campaigns.

In the recent General Election campaign in the United Kingdom, both Labour and the Conservatives went out of their way to promise – live on television – that they would not increase taxes. Yet, every serious economist in Britain said that taxes had to rise due to the terrible state of the public finances. And when Labour won and took over the reins of power they raised taxes. Politicians openly lie to our faces. And there is nothing we can do about it, because nothing they say in their election campaigns is in any way binding. Nor do the shenanigans end after the politicians take office. Once elected, they waste no time ensuring all attention goes away from their erstwhile promises. This, too, they can do with perfect impunity.

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Economists in the 17th Century English insurance industry coined a term to describe the techniques used by politicians to escape accountability: Moral hazard. Moral hazard refers to the lying people do to get lower premiums. For example, they may fail to disclose their smoking habits, failure to exercise, and poor diet in order to pay less for health insurance.

Moral hazard is all-pervasive in politics and takes several forms. A time-honoured example is to blame failure to deliver on election promises on exogenous shocks, such as geopolitics, or the vagaries of the business cycle.

“Inflation is not caused by excessive government spending”, they say, “it is the war in Ukraine”.

“The economy is not sick because of Brexit”, they say, “but due to a slowdown in China and Germany”.

Scapegoating is another type of moral hazard widely practiced by politicians to escape accountability. Vulnerable groups are almost never to blame for major fundamental economic problems, such as declining productivity growth, rising inequality, and crumbling infrastructure. Yet, it is usually the most vulnerable at whom politicians point their fingers to explain society's ills: single mothers, benefits claimants, Muslims, or asylum seekers.

“The NHS is not failing due to government orchestrated spending cuts”, they say, “but due to excessive immigration”.

Moral hazard gets turbo charged when politicians enter into coalition with media organisations to control the news agenda. By constantly feeding the media’s insatiable demand for “new news”, politicians can divert attention away from their prior commitments and particularly difficult issues they hope will go away or at least not blow up on their watch.

And escaping commitments that is precisely the point. By severing the link between campaign promises and what politicians actually deliver in office, moral hazard frees politicians to pursue their own private agendas, to work on their own re-election, or to enrich themselves by serving the interests of generous lobbyists, leaving voters without effective representation. Unhappy. And increasingly disillusioned with democracy, because seemingly nothing can be done to end this deplorable state of affairs.

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But it gets worse. Moral hazard leads to another serious problem, which has also been given a name by economists, namely adverse selection. Adverse selection is process in which political charlatans gradually take the place of capable elected officials. When the political system fails to punish dishonesty, it actually gives an advantage to those politicians, who are willing to make use of dishonesty to gain an edge. Needless to say, this disadvantages politicians who insist on being honest. Similarly, when the political system does not offer specific rewards to capable and assiduous politicians, the system ends up favouring the incapable and the lazy politicians, who – by dint of not wasting time on actually working for voters – have more time to serve their own interests.

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The twin problems of political moral hazard and adverse selection tend to worsen over time, because bad politicians beget bad outcomes. Ultimately the economy comes under threat from neglect of reforms and myopic and ineffective policy decisions. And a worse economy only further encourages political populism. Over time, cycles of over-promise and under-delivery against the backdrop of economic stagnation produce more and more disillusioned voters, who eventually start looking for a strongman in the hope that an all-powerful leader can finally fix things. But history shows that authoritarian leaders not only put democracy itself at risk, they also end up inflicting enormous economic and humanitarians costs on society. 

Britain has been stuck in a vicious cycle like this since the Brexit vote of 2016. Some European countries now appear to be entering into a similar cycle, judging by the rise of the populist Right. And America is certain to follow suit following the election of Donald Trump for the second time (see here).

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It is imperative to begin to address the problem of dysfunctional democratic accountability. But what can be done? How can politicians be made to do better jobs for us?

The key to a solution is to realise that moral hazard thrives on large discrepancies between what voters can hear and see about their politicians and what their politicians actually do. Better information about what politicians do is therefore a critical part of any solution. Sharper incentives for politicians to act in the interest of voters is essential. And, lastly, politicians must be held personally accountable for their performances. They cannot be allowed to hide their own personal failures behind general government weakness. There must be no ‘I was just taking orders’ in politics.

A new system of democratic accountability must ensure that the risks arising from politicians' failings are borne by politicians, not by the voters, as this is the only way that individual politicians can be made more sensitive to their successes or failures with respect to election commitments.

Provision of information and the establishment of effective incentives can generate dramatic improvements in political culture. Politicians will fight tooth and nail against such reforms, because the current system allows them to have their cake and eat it too.

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To get around the resistance to reform from politicians, reform must proceed one step at a time, from the grass roots up. The first step is to put in place a system for naming and shaming individual politicians. A civic organisation – call it the Voter Empowerment Network (VEN) – is formed by ordinary concerned voters to act as the eyes and ears and the memory of the electorate.

VEN assigns volunteers to collect information on politicians’ election promises and tracks their performances with respect to those promises in the post-election period. VEN scores each individual politicians with respect to his or her performance, publishing performance rankings of all politicians in league tables on a regular basis with the best performing politicians at the top and the worst performing politicians at the bottom.

The league tables are sent to the press, pro-democracy advocates, voter representatives, the business community, the international community, and politicians themselves.

Ahead of each election, VEN publishes a flagship report with league tables to remind voters what their MPs promised at the last election, and what, if anything, they delivered during their in office.

League tables do two things. First, they enable voters to see how their MPs have performed, both in relation to their own promises and compared to other MPs. This enables voters to see clearly if their MPs have delivered, or been a total disgrace.

Second, league tables increase political competition, because aspiring politicians can use performance rankings to attack useless incumbents.

Everyone wins. Except useless politicians.

It is critical that VEN is run by ordinary citizens, who are motivated by the desire to improve political accountability and who are independent of government. VEN acts on behalf of all voters, never individual political parties. VEN is funded like other non-governmental organisations by concerned citizens (except those running for office), pro-democracy organisations, and businesses without links to government.

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As soon as the benefits of naming and shaming individual politicians are becoming obvious to voters, who therefore begin to demand political reform from politicians themselves, the second step towards a better politics can begin. In step two, backed by progressive politicians who begin to support reform in response to voters' demands for change, a formal Ombudsman for Democratic Accountability (ODA) is introduced into the institutional framework of government. Remarkably, no one has – as far as I am aware – proposed an Ombudsman with a specific mandate to look after the general interest of voters vis-à-vis politicians.

As an ombudsman, ODA must be independent of and separate from the Legislative, Executive, and Judicial branches of government to ensure its freedom of operations. It must have statutory funding. ODA's mandate will be similar to VEN, but with additional powers to investigate complaints, issue recommendations, and even initiate legal action against elected representatives. Selection of a Chief Ombudsman should be transparent and independent to strengthen credibility.

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Step three starts once the ODA is up and running. Step three is root and branch modernisation of entire system of democratic accountability. The central idea is to transform the act of voting from a non-binding expression of wish to an actual contractual relationship between voters and elected officials, with rewards to politicians who perform and punishments for those who do not.

Rewards can take the form of cash bonuses, pension contributions, or other types of remuneration, while punishments can be fines, or, in particularly gratuitous cases of breach of trust, prison sentences. 

ODA will be vested with powers to issue bonuses and punishments, with the associated costs borne by tax payers.

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It is important to stress that politicians are entirely free to choose their own election commitments under the new contractual relationship between politicians and voters. The promises become legally binding the moment the politician is elected. Election commitments should be listed on ballots alongside the names and party affiliations each candidate.

The technology for such a contract-based voting system already exists (see here). Open Transaction Network (OTN) technologies, such as the Beckn Protocol, can easily be adapted to handle contract-voting. Beckn operates on all major electronic devices, including simple mobile phones, regardless of network or platform.  

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Legally binding election commitments will transform politics as we know it. For one, political culture will change radically. Over-promising and under-delivering will be replaced by far more realistic election commitments and the focus of politicians will be post-election delivery. Politicians will also have strong incentives to cooperate with each other, with coalitions possibly being formed prior to elections rather than afterwards in order to reduce delivery risk in the post-election period.

Voters will also understand that election alliances are more likely to deliver results, so politics overall should become far less confrontational. Blame-shifting, the exploitation of exogenous shocks and other manipulative practices designed to get out of election commitments will disappear, since the new incentive system provides zero leeway for elected officials to escape commitments through moral hazard.

As a result of these changes in incentives, we will 'discover' an entirely new type of politician. The prospect of large bonuses in politics – similar in what, say, senior bankers make – will encourage highly competent risk-loving technocrats to run for office on ambitious but achievable platforms. On the other hand, the current crop of immoral charlatan politicians will choose either not to run, or, if they run, risk jail.

Still, there will be plenty of variation among politicians, because competent politicians tend to specialise in specific areas of professional expertise. Hence, we should see more technocratic and competent government overall.

Society as a whole will benefit greatly. Greater democratic accountability improves delivery, which should reduce voter apathy and raise participation rates. Government waste and white elephant projects will drop off sharply. The economy should also become more stable, because politicians no longer use exogenous shocks as ‘get out of jail’ cards. Politicians who fear exogenous shocks have no choice but to tone down their election promises accordingly, because they now take the risk associated with not delivering on their election commitments.

It shoud also be possible to design voting contracts that discourage myopic policy-making, for example, by using bonuses with future vesting, which can be made subject to clawbacks under certain conditions. Thus, the contracts can be used to disincentivise politicians from entering into international commitments solely for the purpose of announcement effects, without follow up.

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To conclude, wealthy democracies have made great strides in bringing prosperity to their societies.  They have entrenched rule of law, constructed powerful and relatively effective institutions to deliver public services, and made massive investments in infrastructure. These achievements have been pivotal in facilitating the emergence of a diverse, competitive, and dynamic private sector that in turn produces the wealth upon which high standards of living now rest.

Given all these advances, it is deeply incongruous that the system of political accountability in Western democracies has barely evolved since democracy began. Politics is holding us back. But it need not be so. Change is possible and this note has illustrated how information and reform of political incentives can radically improve how democracy works.

The process of reform must almost inevitably begin without the involvement of politicians, at grass roots level. Once the idea catches on, reform-minded politicians will advocate for change and eventually institutions can be reformed. The technology to make legally binding voting contracts happen already exists. The reforms put forward here do not in any way infringe on democratic principles or voters’ rights.

Voters are no longer powerless. We have a road map for change. The upside arising from better democratic accountability is enormous. It is time to finally guillotine our Marie Antoinette-style politics.

The End