Today's politicians have not changed all that much since Marie Antoinette (Source: here)
I present a three-step programme for making politics in wealthy democracies work far better than it does today.
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 have become 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 to most of us that the French revolution was not only inevitable, it was entirely justified.
We will never again allow ourselves to be ruled by useless charlatans.
Or will we?
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In reality, the world of politics has not changed all that much since Louis XVI.
We still place politicians at the very bottom rungs of trust ratings. 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, even those in the highest echelons of public office, to operate with shocking levels of impunity.
Why?
Why do we give politicians so much leeway?
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 change looks like.
Until now.
In this post, I will offer my exciting and, as far as I know, genuinely innovative ideas for how to improve democratic accountability.
At first sight, some of my ideas may seem radical, but I believe they will soon become the norm.
Tomorrow’s politics will be unrecognisable from the shambles we have today.
Those, who witness the transformation, will, as they look back on our time, shake their heads with incredulity exactly as we do when we think of Marie Antoinette. They will ask how we could ever have allowed our politicias so much power, yet so few constraints!
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And they would be entirely right!
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 can change laws, so they can literally alter every other aspect of our lives too, 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 keeping politicians in line, one that has barely changed since democracy was first introduced.
Basically, we only require politicians to seek re-election every few years. That’s it!
But the act of voting is little more than an expression of wish.
And ballot papers are not linked to specific election commitments, so they do not bind politicians to their promises in any way whatsover.
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.
The ongoing General Election campaign in the United Kingdom is a great example. In recent weeks, both Labour and the Conservatives have gone out of their way to promise – live on television – that they will not increase taxes.
Yet, every serious economist in Britain knows taxes must rise due to the terrible state of the public finances.
In other words, Labour and the Conservatives are openly lying to our faces.
And there is nothing we can do about it, because nothing they say in the campaign is in any way binding.
Nor do the dark arts of politicians end once politicians are elected. Once they have taken office, politicians will waste no time in wiggling out of their most unrealistic of their election promises. This, too, they will do with near-perfect impunity.
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17th Century economists in the English insurance industry invented a term to describe the techniques used by our politicians to escape accountability: Moral hazard.
In the health insurance industry, moral hazard is a term used to describe the lies people tell, say, about their smoking habits, failure to exercise, and poor diet in order to pay lower insurance premiums.
Moral hazard all-pervasive in politics.
A time-honoured example of political moral hazard is when politicians blame their failures 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. Usually, they point fingers at minorities – single mothers, benefits claimants, Muslims, or asylum seekers – as the cause of society’s ills.
“The NHS is not failing due to government orchestrated spending cuts”, they say, “but due to excessive immigration”.
Yet, vulnerable groups are never to blame for the true underlying problems of declining productivity growth, rising inequality, and crumbling infrastructure.
Peak moral hazard is reached when politicians hook up with the media organisations to control the news agenda.
By constantly feeding the media’s insatiable demand for “new news”, politicians are able to divert attention away from their previous commitments and particularly difficult issues they hope will go away or at least not blow up on their watch.
In short, moral hazard enables politicians to neglect their duties.
And that is precisely the point.
By severing the link between campaign promises and what politicians actually deliver in office, moral hazard practces set politicians free to pursue their own private agendas, free to work on re-election or enrich themselves by serving the interests of generous lobbyists.
Voters are left 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.
By failing to clamp down on dishonesty, the electoral system gives an edge to politicians who are prepared to use dishonesty. And it disadvantages those who insist on being honest.
Similarly, by not offering explicit rewards to capable and assiduous politicians, the system favours incapable and lazy politicians, who – by dint of not wasting time on actually working for voters – have more time to court them than politicians who feel they must work for voters.
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The twin problems of political moral hazard and adverse selection get worse over time, because bad politicians tend to beget bad outcomes.
Ultimately the economy therefore comes under threat, which only encourages even more populism.
Over time, the cycles of over-promise and under-delivery against the backdrop of economic stagnation create disillusioned voters, who may even resort to authoritarian types of government, putting democracy itself at risk.
Britain has been stuck in a vicious cycle like this since the Brexit vote of 2016. Europe now appears to be entering into a similar cycle, judging by the results of the recent European elections. America may follow, if Trump is elected.
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It is therefore imperative that we begin to address the problem of dysfunctional democratic accountability in earnest.
But what can be done? How can we make politicians do better jobs for us?
The key to a solution is to realise that moral hazard only thrives when there are large asymmetries between what voters can hear and see about their politicians and what 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 interests of the electorate are also essential.
And, lastly, politicians must be held personally accountable for their performances. They cannot be allowed to hide 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 the politicians' failings are borne by the politicians, not by the voters.
Individual politicians must be made far more sensitive to their successes or failures with respect to election commitments.
As we shall see, the good news is that provision of information and incentive reform can generate dramatic improvements in political culture.
On the other hand, today’s politicians will almost certainly fight tooth and nail to oppose reform to a system that currently allows politicians to have their cake and eat it too.
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To get around the expected political resistance to reform, we must proceed one step at a time.
Our first step must be to put in place a system for naming and shaming politicians. A civic organisation – call it the Voter Empowerment Network (VEN) – should be formed to act as the eyes and ears and the memory of the electorate.
VEN's job is to collect information on politicians’ election promises and track their performances with respect to those promises in the post-election period.
VEN will publish performance 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 will be sent to the press, pro-democracy advocates, voter representatives, the business community, the international community, and politicians themselves.
Ahead of elections, VEN will publish a flagship report to remind voters exactly what their MPs promised at the last election campaign, and what, if anything, they delivered while in office.
League tables do two things.
First, they enable voters to see how their MPs have performed, both in relation to their promises and compared to other MPs. Has my MP delivered? Or been a total disgrace?
Second, league tables increase political competition, because aspiring politicians can use the performance rankings to attack useless incumbents.
Everyone wins. Except useless politicians.
VEN must be politically neutral and independent of the government. It acts on behalf of all voters, never individual political parties.
VEN should be funded directly from concerned citizens (except those running for office), pro-democracy organisations, and businesses without links to government.
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The second step towards a better politics can begin as soon as the benefits of naming and shaming politicians start to be sink in among voters.
In step two, democratic accountability is placed at the heart of the broad institutional framework of government through the establishment of a formal Ombudsman for Democratic Accountability (ODA).
Remarkably, no one has – as far as I am aware – ever proposed an Ombudsman with the specific mandate to look after the general interest of voters vis-à-vis politicians.
ODA must be separate from the Legislative, Executive, and Judicial branches of government to ensure its independence, with statutory funding.
It’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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When ODA is up and running, step three can begin: Root and branch modernisation of entire system of democratic accountability.
The big 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.
Under the new contractual relationship between politicians and voters, the politicians are free to choose their own election commitments, but they become legally binding the moment they are elected. Election commitments are listed on ballots alongside the names and party affiliations each candidate.
The technology for a contract-based voting system already exists (see here). Open network transaction 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 completely 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 much greater focus on post-election delivery.
Politicians will have strong incentives to cooperate, because pre-election alliances lead to lower 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 entirely disappear, because the new incentive system provides zero leeway for elected officials to escape commitments through moral hazard.
It follows that we will also 'discover' an entirely new type of politician.
The prospect of large bonuses in politics – similar in what 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 to either not run, or, if they run, risk jail.
Still, there will be plenty of variation among politicians as candidates specialise in their areas of professional expertise.
Society as a whole will benefit greatly. Greater democratic accountability reduce voter apathy and raises participation rates. Government waste and white elephant projects drop off sharply.
The economy also becomes more stable, because politicians no longer use exogenous shocks as ‘get out of jail’ cards. Any politicians who fears exogenous shocks has no choice but to tone down his or her election promises accordingly.
Finally, it will be possible to design voting contracts such that myopic policies are discouraged, for example, by using bonuses with future vesting.
Similarly, clawback clauses 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, let us return to the big picture.
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 diverse, competitive, and dynamic private sectors that produce the wealth upon which high standards of living now rest.
Given all these advances, it is deeply incongruous that the democratic accountability system has barely evolved since democracy began.
Politics is holding us back.
But not for much longer. Change is now possible.
I have described how information and reform of political incentives can radically improve how democracy works.
Better still, the process of reform can begin without the involvement of politicians.
The potential upsides from better democratic accountability are enormous. And they do not in any way infringe on democratic principles or voters’ rights.
The technology to make it happen exists.
There is no longer any need to live with modern-day equivalents of Marie Antoinette.
We are no longer powerless.
We have a road map for change.
Let go!
The End
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