Public Goods, Not Political Goodies: When Democracy Undermines Accountability


Español What is good governance? What criteria should we use to asses the stewardship and policies undertaken by our elected leaders?

Mohamed Ibrahim, a wealthy Sudanese-British mobile communications entrepreneur and philanthropist, established the Prize for Achievement in African Leadership in 2006 to be awarded each year to a democratically elected African head of state who governs well, raises living standards, and leaves office voluntarily at the end of his or her term.

The Mo Ibrahim Foundation cash award includes an initial payment of five million dollars followed by US$200,000 yearly for life. The prize was created to support good governance and august leadership in Africa.

Regrettably, the prize has not been awarded in four of the last five years, as the foundation has been unable to identify a leader meeting its good governance criteria.

The foundation’s good governance criteria is measured on a wide-ranging index that assesses a leader’s ability to offer the citizenry- safety and security, political freedoms and participation, rule of law, transparency, accountability, human rights, and sustainable economic opportunity. This emphasizes the question of how do we evaluate the governance of our leaders?

Unfortunately, everywhere the appraisal of political stewardship seems to be highly focused on a leader’s ability to deliver not public goods, but political goodies. Democratic states thus develop a proclivity for excessive social expenditures — a politico-fiscal pathology analogous to what economists call “market failure.”

It turns out that electoral processes make it more politically rewarding to legislate policies that channel large benefits to small interest groups than to enact policies that confer minor benefits to large, politically amorphous groups. Public support is thus created not through exceptional public service, but through patronage. In this context, the quality of a state is often measured by the amount of “social expenditures” that it incurs. The more the state spends on social subsidies and patronage, the more compassionate the state is presumed to be.

The rationale is that social tasks must be assigned to government to correct market ineffectiveness. However, public choice economics has shown that government programs are even more prone to ineptitudes than markets. The government’s supply of “public goods” is itself subject to quantity and quality considerations. Thus, public provision of goods and services is just as susceptible to failures as private markets. This was spectacularly illustrated by the recent rollout of the Affordable Care Act website.

Moreover, when a special interest group succeeds in securing a public good through the state, the state bears the financial cost. That is to say, the special interest groups that campaign for state-provided public goods do not bear the cost of the goods. The costs, through taxation or other coercive mechanisms, will be passed on to society at large who are unlikely to participate in the publicly financed goodie.

This perverse social goods logic holds that the more the state spends on social subsidies the more compassionate the state is.  It is a form of exegetical acrobatics that flips the premises in mid sentence.

Good governance should promote socioeconomic systems where most citizens are able to provide adequately for their own needs so that most social expenditures become unnecessary. Accordingly, the quality of the state should be measured in reverse proportion to the social expenditures that are required to assist the citizenry.

Social expenditures depend on contributions from other sectors of society via taxation and other mechanisms. In the end, wealth is not created, just redistributed. Margaret Thatcher phrased it succinctly “The problem with socialism is that you eventually run out of other people’s money.” And Irish rock star Bono, lead singer of the group U2 and advocate extraordinaire for African good governance, conceded “Aid is just a stopgap. Capitalism takes more people out of poverty than aid.”

Good governance is, above everything else, what will improve the lives of the citizenry. The Mo Ibrahim index is one example of a more inclusive measure of how to asses the quality of governance. To protect our democratic way of life and our pursuit of happiness we need to evaluate the stewardship of our leaders more responsibly.

Alternatively, and I am not making this up, we could emulate Venezuela’s President Nicolas Maduro who, to deal with that country’s fiscal pathology, has dictated the creation of a new government agency headed by a Vice Minister of Supreme Social Happiness.

This article first appeared in the Miami Herald.

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