Incentivizing politicians

There’s a link between two of the biggest political stories of the last few days: David Davis’ admission that he hasn’t yet done a calculation of the costs of the UK leaving the EU without a trade deal; and George Osborne’s getting a £200,000 a year payoff from a Russian oligarch. Both pose the question of how better to incentivize politicians to act in the public interest.

What I mean is that Davis’s failure to do basic due diligence probably owes more to him pursuing his private interest – a desire not to hear evidence that discorroborates his beliefs – than to the national interest. And whilst Osborne’s career as Chancellor was an abject failure - he wanted to clear the deficit and keep the UK in the EU, failed in both and the two failures are related – he has not suffered financially as a result. Quite the opposite. These are not isolated examples. Brexiters polluted the public realm with lies and racism and suffered no sanction for doing so.

Hence the question: can we better incentivize politicians by ensuring that they suffer penalties for incompetence and dishonesty?

The standard answer here is that elections do this: liars and idiots should suffer a loss of office. This sanction, though, is insufficient. Brexiters gained from their lies, Osborne has profited from being sacked. And the main losers from Labour’s defeat in the 2010 election were not so much Labour ministers as workers who have suffered pay freezes and benefit recipients who have been hounded to death.  

Nor, of course, do the media discipline politicians adequately. This isn’t just because of partisan bias. It’s also because of their hideously warped priorities. Hammond’s “U turn” on raising NICs has been variously described as embarrassing, humiliating and a disaster. And yet it seems to me to be just what policy-makers should do: swiftly correct what is (only arguably) a mistake before it does real damage. What Hammond should be castigated for instead is pursuing continued austerity in the face of weak expected growth. Yet he gets a free pass here.

I’ll grant that there’s truth in the old cliché that politicians are motivated by a sense of public service; intrinsic motivations do matter. But can we ensure that extrinsic motivations buttress these?

Frankly, I don’t see how institutional tweaks could greatly improve things. Banning ministers from taking jobs after leaving office would risk deterring competent and younger people from politics. And making them personally liable for bad policy would raise tricky problems of distinguishing between bad luck and bad judgment, would run into Campbell’s law, and would disincentivize radical policies, as ministers would prefer to fail conventionally.

Instead, perhaps we should just recognize that our problem here is exacerbated by two forces.

One is tribalism. We give a free pass to incompetent or dishonest politicians as long as they’re in our tribe. Brexiters aren’t slating Davis for his lack of due diligence, just as lefties overlook Corbyn’s personal incompetence and laziness.

The other is capitalism. High inequality means there’s big money to be made outside parliament for a privileged few. And the desire of financiers, businessmen and oligarchs to ensure that politicians do their bidding means they’ll be happy to pay such money. Lebedev and BlackRock aren’t paying Osborne for his talents, which are scant, but rather to show current and future politicians around the world what riches are available to them if they play nicely.

This poses the questions. Is it possible to remove the influence of money from politics and thus shore up politicians’ sense of public spirit? Given the distorting impact of the media and cognitive biases and errors among voters, would there even be a great gain from doing so? Or might it be that our actually-existing capitalist democracy militates against honest competent politics? Never mind the personal failings of men like Osborne and Davis. The issue here is the very structure of politics.

Comments

[Patrick Kirk]

A real issue is that people like GO can make far more money if they stay out of politics. I can see that people who inherit millions, like Cameron and Osbourne, are free to take badly paid work as politicians. I can't see how I can then complain that they make big money after leaving office. The irritation of GO is that he is still in parliament and at the same time he is being paid to influence how it votes. There is no public service rationale I can think of for his doing that.

[Luke]

Isn't there a benevolent Sudanese(?) billionaire who gives large sums of money to African leaders who leave government quietly after being voted out? I think the idea is (a) to encourage orderly transition of power and (b) to discourage corruption- why risk it if you're going to get a few million anyway?

I have no idea how successful this has been, or how much/often he has paid out.

[Luke]

Right - I was lazy above. It's Mo Ibrahim - https://en.m.wikipedia.org/wiki/Mo_Ibrahim_Foundation

It's $5 million, plus $200,000 pa for life for excellence in African government. Seems to have been awarded three times since 2007.

[Staberinde]

A good start might be to reform the Lords.

Use the jury service principle and select members at random from the electoral roll, using quotas for sex, age, region, ethnicity and permanent disability.

Create 300 such members and pay them a good sum to work for 2 years.

Onboard them over the summer recess.

Accept that you will have whores and former prisoners, chavs and illiterates in the mix.

Embrace the rapid turnover - for this is what injects dynamism into the chamber and ensures pluralism.

What we might see is a weakening of the PPE-crowd's grip on politics, forcing them to engage with people and views they otherwise ignore.

We might also, in this structure, see a weakening of the partisan system and its voting blocs.

And we might even see some Neo-Lords alumni seek election, who otherwise might have no chance of securing party backing or of having sufficient profile to win as independents.

Worth a shot, surely?

[Britonomist]

To be fair to Lebedev, while he is a wealthy Russian 'oligarch', as far as I know he's not a particularly shady character, even though The Independent has become a clickbait rag. I've seen his son speak on television a few times and he seemed fairly down to earth kind of guy.

[nicholas]

Perhaps it might be possible to recast the law so that politicians were in a position to be sued if they could be shown to be either knowingly acting against the national interest, or neglecting to take proper account of the national interest, or willfully misleading the public.
Suddenly all politicians statements might become more measured and realistic. If the damages were limited to being out of some level of future earnings above a threshold, then it should be possible to avoid dis-incentivising talented people from entering politics.

[nicholas]

Luke, that is really interesting, thanks for posting.N

[Luke]

Nicholas, thanks - as I say, I have no idea what the scheme has accomplished, but it does seem like a genuine attempt to award good governance.

I'd be concerned about your idea of expanding politicians' liability for acting against the national interest- you can guarantee that every single ex-minister would be sued by someone. No cautious person would ever want to be a minister. Is that what we want? (Current law about malfeasance in public office places a very high burden on a plaintiff.)

[Igor Belanov]

"Perhaps it might be possible to recast the law so that politicians were in a position to be sued if they could be shown to be either knowingly acting against the national interest, or neglecting to take proper account of the national interest"

Surely the whole concept of 'the national interest' is completely subjective. I think a referendum was organised last year that proved this.

[Bill Posters]

Can anybody here define the national interest. I'm sure young GO thinks he has been acting in the national interest at all times.

Perhaps if we up the number of supreme court judges from a dozen to fifty or a hundred they will have enough brain power to figure it out.

Never mind the national interest. Get interested in The National. I'm backing DEFINITLY RED currently 14/1

[rogerh]

They have power, we don't.

Perhaps we could require all ministers, MPs and public servants over say £50K to provide a WikiCV. A complete record of their work that is complete, truthful, honest and up to date. All public hires to take account of this CV and any defects to be grounds for dismissal.

Apart from the obvious control provided there is an additional advantage - public servants would be less willing to go along with a daft ministerial edict. This is because today there is a strong risk that a public sector manager will go along with a daft edict knowing that when it all blows up a new job will be available long before the critical report is produced and shelved.

[Dave Timoney]

Perhaps the fundamental assumption of economics - that incentives matter - is right in particular but wrong in general, and simply shouldn't be applied in this context.

The idea that politicians must be nudged into doing the right thing demotes agency, and it also assumes we can collectively agree what that "right thing" is. Surely what we want from them is a balance between intrinsic motivation and pragmatism, not more extrinsic incentives that will inevitably produce structural biases.

Osborne's career to date suggests a man who doesn't believe in much beyond his own fitness to rule. In other words, his willingness to be subject to the extrinsic incentive of money reflects weak intrinsic motivation. The broader issue here is the neoliberal emphasis on technocracy and the market in human capital (see Tony Blair's praise of Osborne as a "capable guy").

In the case of Davis, I suspect that he has prepared a contingency plan, but he doesn't want to reveal it for two pretty obvious reasons: first, as a signal to the EU27 that the UK doesn't fear a "no deal" outcome; and second, because it would be seized on as a prediction by those opposed to Brexit.

[William Meyer]

Given the significance of government policy to a modern "capitalist" economy--which is simply overwhelming--the amount spent on politicians' pay is ridiculously low. This of course makes it very likely that politicians can easily be bribed on leaving office, or leaving politics.

How about a simple idea: high annual politicians salaries--e.g. multiple millions a year--and a lifetime ban on moneymaking activity thereafter. In other words, serve in Parliament or Congress and you are set, reasonably, for life. This might not pull in too many large corporate CEOs, but so what--they constitute maybe 1% of the talent pool that could handle the job of being a national-level politician. Combine that with public funding for elections (again, a trivial sum)and a ban on private donations, and one could reasonably isolate politics from inappropriate financial interest, at least for the purpose of incentiving politicians to stop doing the "wrong" thing that one wealthy interest or another wants to see happen,

Seeing the strong empirical evidence from the U.S. that politicians, at present, are only responsive to the opinions of the wealthiest 10% of the population, and only really responsive to the very rich, clearly the present system is not working, and the problem isn't this particular politician or that one, but is obviously a systemic design flaw. Didn't Einstein say that true madness is in continuing to do the same thing and this time expecting a different outcome?

The issue of systemic design flaws in government incentives is overwhelmingly important and ridiculously under-discussed. Either we prepare ourselves to go into the grave still complaining about bad politics or we actually get organized to do something about it.

[Dave Timoney]

@William Meyer,

What would be the minimum qualifying period? If it were a single parliament, then we might find MPs aiming for single-term careers. Why do more if you're set up for life after 5 years? This would incentivise venal opportunists, make them more likely to adhere to centrist policy (to secure initial nomination), and less likely to put in the effort to secure promotion thereafter.

If it were a minimum of (say) 3 terms, then this would incentivise MPs to abolish or undermine deselection (which might jeopardise their chances of reaching the finishing line), avoid rebellion and dissent (as this might lead to them losing the party whip), and would further encourage time-servers disinclined to pursue campaigns from the back-benches.

Incentives matter, but only if you make them material, as campaign financing "reform" in the US has done. Our problem is not that politicians are easily bribed but that they are predisposed to support the worldview of the rich. As the old ditty about that related creature put it:

"You cannot hope to bribe or twist (thank God!) the British journalist.
But, seeing what the man will do unbribed, there's no occasion to".

[SimonB]

The problems today must be largely due to an ineffective opposition. Corbyn may be the cause but he's the symptom of years of party failure: had we chosen better, more diverse MPs then we would have the variety and depth of talent that is so obviously lacking.

[john]

How about ostracism and banishment as per the Greek city states?

[John]

What about increasing MPs' salaries while in office and filling the House of Lords & civil service/local authorities with retired MPs on a comfortable salary + usual perks. The only supplementary income they're allowed must come from academia, perhaps.

Creates a political class but removes the corporate infleunce and might help to beef up Parliamentary capacity (e.g. Crap though GO may have been in decision-making, he has some experience that's useful to future political generations).

Trick here would be making this life enriching enough to be appealing.

Just a thought!