Trust and the competition delusion: A new frontier for political and economic reform

The Griffith Review has just published a substantial essay of mine that I’ve been working on for some time. It begins with some basic economic ideas, but broadens out to much wider political matters – comprehending our interest in sortition. I reproduce the introductory section below after which you’ll have to hightail it to their website to finish. But it would be good to see you back here for comments which aren’t provided for on the Griffith Review website.

Designing institutions to force (or nudge) entirely self-interested individuals to achieve better outcomes has been the major goal posited by policy analysts for governments to accomplish for much of the past half century. Extensive empirical research leads me to argue that instead, a core goal of public policy should be to facilitate the development of institutions that bring out the best in humans.

Elinor Ostrom, Nobel Lecture, 2009

SINCE ADAM SMITH, economists have marvelled at competition’s capacity to improve our world – not by fostering virtue, but by harnessing the opposing self-interest of buyer and seller in a market. As Smith himself famously suggested, instead of trusting his wellbeing as a consumer to the benevolence of the butcher, baker or brewer, he’d rather rely on their regard for their own interests in competing for his custom.

There’s a lively debate today about how to inject greater competition into Australia’s notoriously oligopolistic industries – like finance, retail, fuel, energy and telecommunications – not to mention our new global digital overlords like Facebook and Google. And there’s a more ideologically charged debate about whether competition will drive better or worse outcomes in sectors where non-market values are important – like health, education and social services.

Having offered some thoughts on those issues elsewhere, in this essay I discuss something more fundamental and, because of that, widely overlooked. We’re falling for the ‘competition delusion’ by which I mean this: In our embrace of private competition as a goal, we mostly pass over a prior issue – which is the terms on which that competition takes place. That’s undermining trust in a remarkably wide range of institutions in our economic and public life.
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Defending independence in the age of deep spin

If you know anything about the latest State of the Union Address, you know that after Donald Trump had handed Nancy Pelosi his speech as if she were his secretary when she held out her hand to him to shake hands, Pelosi tore up his speech. Didn’t look particularly well-judged politically to do that to me but there you go. What would I know?

Trump operatives have now released the video (above) of Pelosi tearing up his speech spliced interleaved with Trump’s comments praising heroes like aged soldiers. Facebook have agreed to take down the video as obviously misleading.

(Only kidding. Facebook wasn’t interested in getting in the way of its profits). On the other hand, Twitter has said that the Tweet violates policy that will be enforced when they’re ready to do so on March 2.

I can imagine it’s a scary call for Twitter to say so to the Gangster in chief. Rage will ensue and Donald Trump has a lot of power including the power of his mob. In those circumstances if I were Twitter, I’d be wanting to distance myself from this process, whilst having a decent approach.

I’d do it with a standing citizens’ assembly. If I were Twitter I’d recruit a demonstrably objective selection of ordinary American citizens using the same kinds of methods we use to recruit juries (in which I’d include random selection and representative random selection of various kinds.)
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The framing wars: Have the elites gone off on frolics of their own unsupported by the community?

Are you pro-choice or pro-life? Language like this shows us how fundamental framing has become to political combat. Political debate isn’t just ‘dumbed down’ or simplified. There’s a geography to the ground on which it’s fought and those with an eye to victory head for the high ground.

There’s much talk these days about the divide between political elites and ‘ordinary folk’. It’s tearing western democracies apart. I think that the elite lack respect for the hoi polloi and their view of the world. Hence my frequent reference to the ancient Greek political principle of isegoria or equality of speech.1

In Sam Roggeveen’s response to my review of his essay Our Very Own Brexit (which I recommend by the way), he isn’t the first to argue that I do my cause no favours by “aligning it so closely with causes that our political elites would endorse (e.g. welcoming of immigrants and refugees; against Brexit)”.2 This is definitely sound political advice if one ventures among the red meat folk at Quillette.

But for the record, while I think Brexit makes lousy economic policy and statecraft, I wouldn’t just respect the will of the British people if they chose the course they are embarked upon with open eyes. I’d be awestruck with admiration. I’d think it was a fantastic development in which people decided that there were more important things than money and power to live for. But I don’t think any of that. I think they’ve been sold on a particular framing of the story in which the EU is an elite project gone mad, and so something which is coming after their nationhood and something on which they can heap their rage.

Roggeveen’s response goes on:

The problem I identified in the book is that the party-political class in Western democracies has become a separate caste with few connections to a social or economic base; Brexit shows what happens when the policy preferences shared by that caste runs too far ahead of the public.

I’ll call this the ‘frolic’ school of analysis. The elites have just kept doing what elites do – pursuing various hubristic agendas until the inevitable Wile E. Coyote moment comes and they realise that they have, in their zeal, arrived at a place where there’s no ground underneath them. Now it has to be admitted that the EU has major flaws. It seemed to me that its treatment of Greece was and continues to be a disgrace, and even if you disagree with that – as Paul Frijters does – the whole Euro project was ill-conceived and devastating.  Continue reading

My review of ‘Our very own Brexit’

In good bookstores everywhere – at a very reasonable price

Here’s a review of a book recently published in Australia on the ‘hollowing out’ of democracy.  Cross-posted from the Lowy Institute Blog.

Instead of munching popcorn at the political theatre, citizens’ assemblies would give the community a chance to reflect.

In what we now see in retrospect as something of a political “golden age” – say from the early 20th century through to the 1980s or so – political parties were the institution through which the political aspirations of different sections of the community were articulated and conveyed to the commanding heights of government. Millions of members joined those parties, which were embedded in the community alongside churches, unions, and business associations.

Yet as Sam Roggeveen has described in Our Very Own Brexit, “hollowing out” has now inverted that process. Senior officers of the parties now comprise a political caste, the majority of whom secured their parliamentary position within their party’s career structure with scant achievements elsewhere.

Each party manages their “brand”, and politics has become a Punch and Judy show. We barrack for our side if we have one – or our point of view in innumerable improvised or staged culture-war skirmishes. We cheer and boo, tweet and retweet.

The governance that emerges from this is an uncanny mix of stasis and instability. Stasis because, at least when seeking their votes, each party hews to a small target strategy on policy while probing for ways to misrepresent and catastrophise their opponents’ policies and purposes. Instability because “we the people” so hate it all.

We tell ourselves that the pollies are only in it for themselves. There’s truth in that. But also evasion. They’re victims too. The lead players in the show could be living much more prosperous, happy lives out of the madhouse. We fancy we deserve better than this as we sit in the stalls munching our popcorn. Indeed we do. Yet our clicks and our tweets – above all our votes – drive the whole system. Ultimately we decide who represents us and the terms on which they do.

The most significant achievement of Australian voters’ emphatic decision at the 2013 election was the abolition of carbon pricing, which had taken a decade of political struggle to be absorbed into the apparent political security of bipartisan consensus.

Whenever a political party offers a skerrick of leadership – whenever they depart, however cautiously, from their traditional “small target” or “comms” strategies of relentless manipulation and tendentious evasion, they’re easy meat for the scare campaigns and outrage machines of their party political and ideological opponents.

Roggeveen’s definition of what constitutes “a Brexit” for his purposes is situated within his own, and the Lowy Institute’s focus on Australia’s external relations. I would characterise the UK’s Brexit moment and the US’s Trump moment more generally as the point at which the electorate perpetrated some action that the overwhelming bulk of the political class regarded in their heart of hearts as crazy.

If that’s your definition, then just as Australia led the world in various aspects of economic policy – such as income-contingent loans, community strategies on AIDS, and the strengthening and targeting of welfare – our rendezvous with political crazy predates its moment elsewhere in the Anglosphere by three years.

For the most significant achievement of Australian voters’ emphatic decision at the 2013 election was the abolition of carbon pricing, which had taken a decade of political struggle to be absorbed into the apparent political security of bipartisan consensus. It’s demise has plunged our energy sector into crisis and dysfunction. And it’s rarely noted by the commentariat (why am I not surprised?), but it’s also costing our budget more than $10 billion annually and rising.  Continue reading

Democracy without political parties: the case of ancient Athens George Tridimas

Here’s the abstract of a recent article by George Tridimas in the Journal of Institutional Economics:

Democracy without political parties: the case of ancient Athens

Political parties, formal, durable and mass organizations that inform voters on public policy issues, nominate candidates for office and fight elections for the right to govern, are ubiquitous in modern representative democracies but were absent from the direct participatory democracy of ancient Athens. The paper investigates how the political institutions of Athens may explain their absence. The arguments explored include voter homogeneity; the conditions at the start of the democracy, characterized by single constituency configuration of the demos, simple majority voting and lack of organized groups; the irrelevance of holding public office for determining public policy; appointment to public posts through sortition; and voting on single-dimension issues. The paper then discusses how in the absence of parties voters became informed and how political leaders were held accountable by the courts.

I’ve not yet read it. If you want to email me on ngruen at gmail, I might be able to help you out with access to the article.

On the unrepresentativeness of representatives stretching back through time

Who Becomes a Member of Congress? Evidence From De-Anonymized Census Data
Daniel M. Thompson, James J. Feigenbaum, Andrew B. Hall, and Jesse Yoder #26156

Abstract:
We link future members of Congress to the de-anonymized 1940 census to offer a uniquely detailed analysis of how economically unrepresentative American politicians were in the 20th century, and why. Future members under the age of 18 in 1940 grew up in households with parents who earned more than twice as much as the population average and who were more than 6 times as likely as the general population to hold college degrees. However, compared to siblings who did not become politicians, future members of Congress between the ages of 18 and 40 in 1940 were higher-earners and more educated, indicating that socioeconomic background alone does not explain the differences between politicians and non-politicians. Examining a smaller sample of candidates that includes non-winners, we find that the candidate pool is much higher-earning and more educated than the general population. At the same time, among the candidate pool, elections advantage candidates with higher earnings ability and education. We conclude that barriers to entry likely deter a more economically representative candidate pool, but that electoral advantages for more-educated individuals with more private-sector success also play an important role.

An unpublished column on sortition and Brexit

From around January this year I’ve tried to get the column below published – in the Guardian UK where my previous column was published. Unfortunately, and even after endless cajoling via the Guardian at this end, I couldn’t get a reply which is piss poor but there you go. Martin Wolf tried for me at the FT. At least they responded – but with a ‘no’, which is fair enough given the oversupply of articles on Brexit. Anyway as it fades into irrelevance and the Brexit Brouhaha Burbles on I thought I’d pop it up here.

The result of the 2016 Brexit referendum looms over the career politicians assembled in the Palace of Westminster as the black monolith loomed over the apes in the movie 2001.

It’s taken over thirty months of thrashing through actual options – as opposed to the wild partisan imaginings in the campaign – for a ghastly, if entirely foreseeable realisation to dawn. Despite the people’s clear instruction to Leave, any specific way of doing so would command far less than the 48 percent vote for Remain.

In the teeth of the greatest crisis of British statecraft since World War II, the institutional imperatives of political combat ensure the politicians perform rather than deliberate. Not only Corbyn, but extraordinarily enough, May has clung to fantasies about getting a better deal, though the end game will presumably see her change her tune.

How did it come to this? Continue reading

When is a conversation not a conversation? When it’s a political conversation.

Violence in Bahrain as Democracy Protesters Take to Streets

This essay is cross posted from Quillette

I

It looks like liberal democracy is falling apart. But we can put it back together if we take democracy seriously enough—as seriously as the ancient Greeks.

The chaos of Donald Trump was unimaginable just a decade ago. Brexit was a similar humiliation for Britain’s political class, leading to its bewildered paralysis ever since. How do such things happen? Perhaps because I admire economists’ deployment of very simple ideas to powerful effect, I’ve come to an approach to these problems that I think is simple and compelling.

First, democracy is government by conversation. A political conversation should often be competitive—to sharpen ideas and measure their support. Yet, to remain a conversation rather than a parody of one, it must also be a co-operative search, if not for agreement, then at least for mutual understanding of where positions differ. However, this co-operative foundation for our politics has been largely extinguished by the weaponisation of political communication by professionals operating on the mass media, and, more recently by “trolling” on social media.

Second, where elections bake competition into the operating system of representation, there’s another, even more time honoured way to represent the people. The ancient Greeks built their democracy around it and it hides in plain sight today whenever a jury is empanelled in a court of law. And, whether it concerns legal or political matters, deliberation within such bodies nurtures the collaborative aspects of conversation. Giving citizens’ juries and assemblies chosen by lot a role within our beleaguered democracy could see it renewed.

II

To become a politician you compete for election. You then join party colleagues competing against their opponents. Yet democracy implies limits to competition. We remain safe for now that no substantial political grouping perpetuates extra-legal violence. Yet something more fundamental is afoot.

Though it apes the form of conversation, political communication has become as professionalised, as optimised to the competition to win votes as McDonald’s use of salt, fat, sugar and advertising is to win customers. Meanwhile, responding to similar competitive imperatives, the informational foundations of our democracy were being shorn away by mass media news values long before the internet arrived. Between 1968 and 1988, the length of presidential sound bites on US network news went from 43 to 9 seconds.1
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Democracy For Young People: a provocative podcast

Democracy For Young People is, in my opinion a very compelling analysis of the ills of our democracy. It’s a very simple idea – which is that electoral democracy massively underrepresents three classes of people whose influence on democracy the great anti-democrats of the ancient world (i.e. all the thinkers whose work has come down to us in any substantial form) were most hostile to. The young, the poorly educated and the poor.

I thought the ‘solutions’ section would end up at selection by lot, but it moved right along from that to lowering the voting age (dramatically!). But then the conclusion on what to do was an afterthought, and not really the focus of the podcast. The analysis was compelling. It’s good points are that the ideas are very simple, clearly important. They’re also clearly right to some extent, though of course there could be very wide reasonable disagreement on that extent.

So I recommend it.

Citizens’ chambers: towards an activism of selection by lot

In a paper, previously linked to on this blog, James Fishkin identifies some potential shortcomings of citizen’s chambers which justify his own preference for ad hoc, and temporary citizens’ panels. I think he makes some good points. I think his arguments need further exploration which I do in the first half of this post before articulating a more general unease at where Fishkin and many protagonists of sortition are coming from.

His central concerns with a citizen’s chamber are that it might:

  • have insufficient technical expertise
  • be susceptible to corruption and
  • not maintain the high quality “conditions for deliberation” that have been achieved in more ad hoc citizens’ juries.

These are legitimate concerns. But they have a ‘theoretical’ ring to me. Firstly Fishkin doesn’t provide much evidence that these problems would arise or if they did how bad they’d be. Secondly, he also fails to compare the likely problems with existing similar problems in the existing chambers. I’ll go through these arguments regarding each of the claims in a little more detail below before proceeding to my more general concern.

Technical expertise

If someone can suggest a means by which one or two hundred people can represent the polity and not lack expertise in all the functions of government, I’ll be interested to hear it. Perhaps a random selection from the great unwashed will be less technically expert than elected representatives. For instance, in wealthy countries today, over 90 percent of elected political representatives are university educated compared with around half the population. But that greater level of education comes with its own blind spots as we’re discovering. Moreover, a university graduate in law or psychology won’t be much help in steering fiscal policy and in that regard, the people’s elected representatives often rely in such matters on delegation to independent experts and being advised by experts. But this comes with the territory.
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