Avoiding short-term thinking in politics

Posted by Eoin O’Malley (7th January, 2013)

One of the most common complaints about democracy is that it shortens our rulers’ time horizons to an extent that damages our interests. If you are a hereditary absolute monarch, presumably you take a very long view, as you care about the inheritance you leave your children and grandchildren. But if you’re an elected politician you tend to think in terms of the next election.

Political scientists tend to assume that all politicians care about is re-election, and while this might be an oversimplification, it is hardly a controversial assumption. Then politicians think in four or five year cycles. Internationally there is some evidence, though it’s hardly overwhelming, to link the economic cycle to the electoral cycle. There were also suggestions that governments used powers to set interests rates for short-term electoral gain to the detriment of the long-term national interests. We can point to examples of political decisions which seem to have been influenced by electoral politics that were not in Ireland’s interests. The SSIA – a savings scheme – poured money into an already booming economy around the time of the 2007 election.

While no one would seriously think that this is a reason to advocate absolute monarchy we do need to think about how to incentivise politicians to consider the long term interests of the country. This is a problem that is mirrored in business, where arguably the incentive structure tends to be even more short-termist – if shareholders are concerned about the share price and the dividend and not the company’s long term sustainability. There are suggestions that in banking and other financial services bonuses should only be paid in company shares, and that these should not be convertible to cash for five to ten years.

How can elected politicians be incentivised to think beyond the electoral cycle? Given that Irish politicians tend not to be very wealthy on entering politics and don’t usually have an opportunity to amass a fortune on retirement in the same ways that retired politicians can in some other countries, politicians actually do rely on their pensions.

There was a suggestion in the Irish Times this week that public sector pensions should be variable and linked to Ireland’s economic performance rather than fixed, or reviewable only upwards. TDs and ministers’ pensions could be similarly linked. But in order to concentrate their minds, TDs and ministers pensions could be subject to more strenuous requirements. Perhaps a proportion of their pensions could be payable only when the country runs a surplus, that is the government cannot borrow to pay TD and ministerial pensions. Presumably the impact of this would be that politicians will want to leave the country’s finances in rude health.

6 thoughts on “Avoiding short-term thinking in politics

  1. While the idea of incentivising long-term thinking is a good one, there is an underlying assumption that the task of politicians is to ensure economic growth and financial stability. In the long run, yes maybe, but without taking into account environmental and social costs, this is a potentially dangerous path to follow.

    • Yes – fair point. But presumably you could link it to a number of measurables, such as crime rates or Gini coeff. that might reflect other societal factors we think important.

  2. I like this type of alternative thinking. It’s important and valuable to society to debate and explore different options. It occurred to me though, is the political party not designed to counteract the short term view? But has it in fact actually worked in the opposite way – as a vehicle for individuals with a view to short term gains to align themselves with a long term political structure without really embracing the principles of that structure? Do people really know or care what political parties’ fundamentally stand for (other than their stance on the irish free state!)? Society also needs to embrace principles for the type of country we want and demand quality long term goals.

    • Eoin,

      The thing about those absolute hereditary rulers is that their rule was never quite as ‘absolute’ as it appeared to be.

      History is littered with the claims to fame, and might and power of any number of mass-murdering tyrants, from Henry VIII in the 16th century to Hitler and Stalin and Mao in the last one. But there’s a smattering of rulers who also thought they were ‘absolute’ and came unstuck due to this delusion.

      Arguably, on the evidence of history, most so-called absolute rulers either survived by brute force or were as nervous of being deposed as any 21st century democratically elected public representative if they made too many mistakes, or failed to exercise appropriate political judgement (short as well as long-term), or foster political alliances amongst elite groups in their own society and abroad. The difference being that the old fashioned despot found himself at the wrong end of an axe, whereas failed democratic leaders these days qualify for a pension; in our case in Ireland, a disproportionately large pension.

      I would argue that most democratically elected leaders, espcially in larger more powerful states, but also in smaller democracies like our own, look to their own legacy as well as indulging in short term decision making to bolster their chances of remaining in power long enough to effect some change for which they will be remembered. In Garret FitzGerald’s case, for instance, he was committed to a ‘Constitutional Crusade’ of social modernisation. On the nuts and bolts of it, he may not have got very far, but he certainly laid the foundations for significant social change. Bertie Ahern sought to make his mark for posterity with the Northern Peace Process (in which his predecessor as leader of FF, Albert Reynolds, had a similar scale of ambition, but ran out of domestic political rope too quickly). Ahern was able to concentrate on the Northern issue because the Irish economy was humming along, at least for the first five years or so of his term in office, so there was no great distraction to deflect him from his task.

      As for political short-termism on the economic front, and its destructive potential, I think it’s all a bit more complex than some newspaper analyses tend to suggest. First, the notion of ‘national sovereignty’ is overblown. It’s arguable that no such thing exists anymore, nor has it existed for a very long time. Economically and politically, most states are subject to a connectivity of external forces and regulatory powers beyond their immediate control ( and to which they have, in the main, voluntarily signed up) that was unimaginable a century ago. North Korea and Cuba are examples of traditional ‘national sovereignty’ in motion, but who’d want to live in them?

      Having a governance infrastructure in place is very important for long term stability, especially on the economic front, and Ireland has committed many errors in that respect since the foundation of the state, and especially in more recent decades. But again, I would argue that we need to look more deeply at our general political culture and processes before arriving at any conclusions as to who is to blame, or how they should be punished by society.

      Politics is always a mix of short term decisions and other decisions that have long term implications, all sorts of which must be implemented over relatively short political cycles. And short termism is not necessarily a bad thing in some areas of policy – especially on the economic front, where long term unquestioning adherence to a particular form of macro-economic ideology can have disastrous consequences, as we’re finding out to our cost. Besides, the beauty of the short cycles of parliamentary democracy is that you can always boot the b**tards out, once you’ve found them out.

  3. “How can elected politicians be incentivised to think beyond the electoral cycle?”
    Surely the exercise of power is what incentivises politicians?
    So the question might also be phrased, how can we ensure that these incentives promote the common good in a sustainable way

    Given the crisis that our present way of governing ourselves has wrought upon us, I suggest that we need to
    a) enhance the possibilities of what the late David Thornley called “mutual education of the democratic process”; and
    b) to design governing institutions to minimise what Dr. Niamh Hardiman termed “The net effect is that Ireland’s reflexive learning capacity is low – political actors display a weak ability not only to learn from past mistakes but also to anticipate future adaptive needs and to act on them in a timely manner…Irish political institutions display very poor adaptive efficiency.”

    1) we separate the Rialtas (Government, Cabinet, Executive) from the Dáil (Legislature, Representative Assembly);
    2) the TDs being elected from multi-seat constituencies under our present electoral system – with elections being held every 3 years;
    3) the Taoiseach being directly elected (using our existing electoral system, as we do for the President) for a single term of seven (yes, 7 years);
    4) with provisions that
    – all transactions between the Dáil and Rialtas are open to the public;
    – both have to work together to ensure both policy effectiveness and democratic legitimacy;
    – that minimise the possibility of gridlock:
    5) The Dáil being much better resourced to monitor the Rialtas;
    6) The Taoiseach, as head of the Rialtas, having the right to pick members of the Government from whoever, provided that if they are TDs, they resign from the Dáil (with the resultant vacancy being filled by the last person eliminated during the count at the previous general election). no subsitutes or alternates as is done for MEPs at present;
    7) coupled with other checks and balances some of which are written into the Constitution eg.
    – Swedish style Freedom of Information, (see https://politicalreform.ie/2010/06/21/freedom-of-information-and-corruption/ and
    http://www.thejournal.ie/readme/column-cronyism-and-corruption-–-one-quick-change-would-help-fight-them );
    – Swiss -style direct democracy, see here http://www.humanrights.ie/index.php/2012/10/15/shadow-constitutional-convention-17-o-brolcain-on-direct-democracy/
    – independent commission for revising constituency boundaries

    In this way, we give our Rialtas (led by the Taoiseach) the means to pursue policies/undertake projects that may take longer than the current 5 year cycle. By having only one term, it focuses the mind on issues beyond getting re-elected!!!

    At the same time, by having elections for the Dáil every three years, we ensure that there is a strong link with the public sentiment which can change.

    Note that
    a). In the 90 years since the 1992 general election, the average life of a Dáil has been just under 3 years, given that the current Dáil is the 31st;
    b) our 1937 Constitution provides that the maximum length of any Dáil is 7 years (Article 16.5), although legislation may provide for shorter periods.

  4. I think this is a very interesting proposal although there is a risk pensions will consequently be seen in the same manner as c-level executives view their share options, with multiples being awarded by the executives to themselves just to ensure their risks are addressed. One idea might be to tie pensions to other factors as well, such as emigration rates, level of public debt or even subsequent public approval ratings of their administration time, based on some form of electronic polling technique.

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