Who will bring about political reform, and what are the political incentives for doing it? The question comes from an earlier post. Is there a road-map for exiting from a sub-optimal equilibrium in the way political institutions function? I don’t know the answer.
In Ireland, parties in opposition seem to agree that the lack of accountability of the executive to parliament is a problem. But why would they voluntarily cede the advantages of executive autonomy when in power themselves?
In Greece, the question as to who will introduce real reform is more serious because the problems are so much more pervasive. Behind the massive improvement that has been achieved in the primary fiscal balance, many would still hold that the political system often works badly (inefficiently, ineffectively) and that corruption is a pervasive feature of everyday life. People don’t have much confidence that the institutions of state will act impartially (the keystone of good governance, as Rothstein and Teorell tell us), or even that the rule of law will prevail in the justice system. But individuals can’t change the perverse institutional incentives by themselves. They are stuck with their decidedly dysfunctional political culture, trying to work through it as best they can.
These are problems of different degrees of severity and intractability.
In the Irish example, we could think of it as a problem of time-inconsistent preferences. Governments could bind their own preferences for more power now in order to secure a better outcome later (better-quality policy or better regulation for example). But there will still be specific costs to the reforming actors now, since the immediate change will benefit their political rivals rather than them; and the eventual gains may be uncertain and hard to estimate anyway. We could perhaps imagine a deeply unpopular government that knows it’s heading for opposition status after the next election. It might try to enact political reform now in order to make life in opposition more bearable for itself. But it’s still a tricky calculation.
In the Greek case it’s hard to think where the leverage point might be. Formal and informal institutions interact to sustain mutually reinforcing incentives for suboptimal practices, in ways that Douglass North has helped to make familiar. Bo Rothstein argues that the best option may be a ‘Big Bang’ approach to reform, where everything has to change simultaneously and over a concentrated period of time. The aim would be to change the institutional incentives that shape people’s expectations about how other people will behave.
But we still have the problem of who would take this on and how it would be sustained. In Greece, the economic crisis may have intensified the pain caused by the present system, but it hasn’t noticeably increased political leaders’ commitment to change. Pressure from international agencies, for example in the form of loan conditionality, isn’t directed at institutional reform: budgets, it seems, are ‘technical’ matters, while bureaucratic practices are ‘political’. And the time-frame is likely to be challenging, say between ten and twenty years – short in historical perspective, but spanning several electoral cycles.
So it seems we’re back to piecemeal reform. I’m less pessimistic about this than Rothstein seems to be, if we think of it in sectoral terms. It’s probably a lot easier to get a new set of priorities going amongst the top cadre in some key institutions than across the whole political system. I’m thinking of, for example, the tax administration, or the courts service – agencies that can be given operational autonomy from political interference, and in which new sets of incentives can be set up and protected throughout changes of government. It’s the kind of ‘middle-range’ reform practice where expert assistance from international agencies may well be useful. Self-reinforcing ideas about professional best practice might well become institutionalized (see for example the Center for Excellence in Finance in the Balkans), and policy diffusion could then make a real difference. Or so we may hope.