Tuesday, September 23, 2008

Guarding the guardians

The June 2008 issue of the American Economic Review has a nice set of articles in political economy that are an interesting read with the current presidential election in the backdrop. I will be writing about them over the next few days.

The three lead papers are dedicated to the Nobel Prize lectures and give a good overview of mechanism design. I found the one by Leonid Hurwicz, entitled But who will guard the guardians? particularly interesting giving the recent failures of the safeguards in the US government. It turned out that the US Constitution could not prevent abuse of power when the executive and the legislative (and some argue also the judiciary) are dominated by the same party. Hurwicz's point is that whenever somebody may misbehave, you need a guard, and also somebody guarding the guard, etc.

Luckily, in the political arena, there is an ultimate guard: the people. But one needs to put an institution in place that actually lets people guard their government. This is currently not the case in the United States, as it is very difficult to recall a president or congressman. Tell this to Connecticut who seems to regret very much electing Lieberman, for example, but is stuck with him for another four years.

And a recall is not necessary in fact, as long as the people have a way to overturn a decision the government has taken. In this respect, I am a big fan of direct democracy, where people can take the initiative and put measures on the ballot. This is currently the case in several US states, most prominently in California. The champion in direct democracy is Switzerland, where every decision taken by the government is fair game with a relatively low hurdle in terms of support before it goes to a ballot. This means that the government needs to be awfully careful in its decisions. In fact, the Swiss constitution specifies that some laws face mandatory referendums.

Now imagine direct democracy applied at the federal level in the United States. People would be much more involved in politics, as they now have the power to overrule the politicians. Politicians become much more careful in they policy making. Long standing issues, like gun control, abortion, gay marriage, immigrant rights, public health care, size of the military, and the role of government in general could be settled once for all. Everybody could then finally move on and leave these poisonous issues behind.


T-Bone said...

I can't imagine direct democracy (referendums) being a solution for making better policy decisions. I think the bigger problem is information (or misinformation). Politicians seem easily swayed by public opinion. But public opinion is often based on faulty information or logic. Or policy details that they might object to will just go under the radar.

Look at the suggestion for opening up the last protected offshore areas to oil drilling. People think it would actually significantly contribute to oil independence and lower gas prices, but how many would be surprised to hear that their savings would be more like 3 or 4 cents? Heck, this whole presidential campaign season has been a battle of truth versus misinformation.

So the more important question for me is how do you get reliable information to people and expose lies for what they are? Politicians can be comically disingenuous because it actually works. Improve the quality of the information that people get, and you'll naturally improve the candidates.

Independent Accountant said...

I have been asking this question for over 30 years.

Economic Logician said...

t-bone: I agree that currently politicians can mislead people, offshore drilling is a good example. But this is because Americans are not used to decide this kind of issues. Referendums gives them this habit of thinking about issues that makes them more immune from political cheap talk, because they feel more in charge and thus inform themselves better.

I have no hard data to corroborate this, but this is my experience of observing the political debate in several states and countries.

Economic Logician said...

I forgot something. Direct democracy would settle once for all these long standing issues like abortion and gun control that poison the political debate in the US. In this regard, people are already well informed and know how they would vote. Let them vote!

T-Bone said...

Yeah, I think when people don't really know the more complicated issues like economic policy, they just vote for the "easy" stuff of social issues. It would be nice to get these wedge issues out of the way.

On misinformation, I just read this shocking article linked to over at Freakonomics:


Now, I can understand somewhat how hearing some misinformation can sway people's opinions to negative on something. And then upon hearing that it wasn't true, some people might still keep a negative opinion. Perhaps they have doubts that the correction was true. For example, if someone is accused of a crime and then exonerated, people still have doubts.

But for people to believe something more after hearing a refutation, that makes no sense. I mean, I could understand if the source of the information was the National Review or Daily Kos, you might expect that the fact that they claim something makes it more likely that the opposite of that claim is true. But it seems insane to hear a friendly source claim something and it leads you to believe the opposite.

Maybe rather than just trying to promote truth and information, we instead need to promote self-awareness about these cognitive problems... I dunno.

Anonymous said...

I found this discussion a bit one sided so let me attempt to balance it:

I am against direct democracy and believe that it would lead to worse policy outcomes (yes, it is possible to have worse policy than we currently have).

I believe the constitution was (rightly) designed to protect minority opinion, to protect against a tyranny of the majority. Indeed the electoral college system was designed as such a compromise and it is, I believe, a pity that our citizens seem to forget that we do not directly elect the president.

I find it ridiculous to believe that "issues, like gun control, abortion, gay marriage, immigrant rights, public health care, size of the military, and the role of government in general could be settled once for all." Citizens have fundamental disagreements on these issues that go beyond the quantity of available quality information. Sure we could pass national referenda to settle such issues at any given time, but this in no way settles the issues ``once and for all.'' It simply settles them until someone decides to bring up another referendum overturning the previous one. Since there is no ``correct'' belief on these issues, citizen's opinions are bound to change over time rather than converge to some ``correct belief''.

Also, note that Switzerland is far more homogeneous and much smaller than the U.S., making the comparison moot.

What we need, instead of direct federal democracy, is less federal government period, and more state and local government. We need to remember that we are republic comprised of sovereign states that created the federal government.