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.