«The Politician and the Judge: Accountability in Government Jean Tirole∗ Eric Maskin First version, April 2001 Revised, March 2004 Abstract We build ...»
The Politician and the Judge:
Accountability in Government
First version, April 2001
Revised, March 2004
We build a simple model to capture the major virtues and drawbacks of making
public oﬃcials accountable (i.e., subjecting them to reelection): On the one hand,
accountablity allows the public to screen and discipline their oﬃcials; on the other,
it may induce those oﬃcials to pander to public opinion and put too little weight on minority welfare.
We study when decision-making powers should be allocated to the public directly (direct democracy), to accountable oﬃcials (called “politicians”), or to nonaccount- able oﬃcials (called “judges”).
Keywords: Accountability, pandering, separation of powers, constitutional de- sign, redistributive politics, minority rights. (JEL: H1, H7, K4).
The premise behind democracy is that public decisions should reﬂect the will of the people. But in most democracies, comparatively few decisions are made directly by the public.1 More often, the power to decide is delegated to representatives. And there is a good reason for this delegation: representatives are usually expected to do a better job.2 As specialists in public decision-making, they are more likely than the average citizen to have the experience, judgment, and information to decide wisely.3 In any case, they have greater incentive than the citizen to try to do so. After all, in any large society, a 2 lone citizen will have strong temptation to free-ride, since her chance of actually aﬀecting policy is almost negligible.4 Another potential advantage of representative government is that it reduces the risk of “tyranny by the majority.” Noting the dangers of direct democracy5, Madison (1787) writes: “It is of great importance...to guard one part of the society against the injustice of the other part. Diﬀerent interests necessarily exist in diﬀerent classes of citizens. If a majority be united by a common interest, the rights of the minority will be insecure.” But if representatives decide for the public, what induces them to act in the public interest? In this paper we focus on two motivations in particular.
First, we suppose that an oﬃcial wishes to leave a legacy, i.e., she wants to be re- membered for great things. Indeed, in our set-up, it is not enough for the oﬃcial that great things be done; she wants to be the one who does them (although we allow for the possibility that her conception of what is “great” may diﬀer from that of the average citizen, that is, she may be noncongruent with society).6 But the desire to use power to achieve certain ends is not the only motive we ascribe to the oﬃcial. We also assume that she values being in oﬃce for its own sake, perhaps because she enjoys the perquisites that come with the job, perhaps because she simply has a taste for wielding inﬂuence.7 The public can harness these two motives by making the oﬃcial accountable, that is, by requiring her to run for reelection every so often. Holding reelections creates two major potential beneﬁts. First, it may induce an oﬃcial who is otherwise inclined (because she is noncongruent with society) to act in the public interest. Because the electorate may not always be able to evaluate the oﬃcial’s actions directly, this can be called the “moral-hazard-correcting” beneﬁt of accountablity. Second, reelections may allow the electorate to “weed out” the noncongruent oﬃcials altogether This can be viewed as the “adverse-selection-correcting” eﬀect.
But accountability also carries with it two serious possible drawbacks. In order to get reelected, an oﬃcial may choose an action, not because it is right for society, but because 3 it is popular. That is, she may pander to public opinion. Although some might call such pandering “responsiveness,”8 it is in clear conﬂict with the rationale for representative democracy discussed above: that representatives can make better decisions than ordinary citizens.9 Furthermore, if minority rights are a concern, the ability to remove oﬃcials from oﬃce through elections may give the majority too much power to shape the government.
A constitution–a speciﬁcation of who gets to decide what–should strike a balance
between these considerations. In this paper, we compare constitutions from the standpoint of public welfare. We focus mainly on three diﬀerent modes for making decisions:
(i) direct democracy, in which the public itself decides through a referendum; (ii) representative democracy, in which an oﬃcial subject to reelection (a “politician”) decides;
and (iii) judicial power, in which a nonaccountable oﬃcial (a “ judge”) decides.10 We also show that, in our admittedly extremely simple basic model, the welfare-maximizing constitution generally reduces to one of these three modes (or a combination thereof).
Of course, the requirement that oﬃcials run for reelection is not only the only form of accountability in political life. After all, most appointed oﬃcials are accountable to their supervisors. Electoral accountability, however, is more straightforward to analyze;
it avoids the need to model the motivations and beliefs of the supervisors.
I. Overview A. Outline In section II, we set out a two-period model with a homogeneous electorate. In each period, there is a decision to be made between two possible actions. One action is “popular” in the sense that the electorate believes it to be optimal with better than fair odds.
The electorate will either decide itself (direct democracy) or delegate the decision to an oﬃcial, who knows which action is optimal. Each oﬃcial is either congruent (i.e., she has the same preferences as the electorate) or noncongruent with society, although ex ante the electorate does not know which case holds. She also places some weight on holding oﬃce for its own sake. In the case of delegation, the ﬁrst-period oﬃcial will either stand for reelection just before period 2 (in the case of representative democracy), or remain 4 in oﬃce automatically for the second period (the case of judicial power). There may be some chance that, before period 2, the electorate learns whether or not the ﬁrst-period decision was optimal.
In section III, we analyze this model for the case in which there is no chance that the electorate learns about the optimality of the ﬁrst-period decision before period 2. For this “no feedback” case we show, in subsection III, A, that the comparison of our three modes of government turns on the strength of oﬃcials’ oﬃce-holding motive. When this motive 11 is strong, politicians always pander to public opinion (choose the popular action), and so the best form of government (among the three) is either direct democracy or judicial power (depending on how much the electorate knows ex ante about the optimal action).
When it is weak, then politicians always act on their legacy motivation, and elections oﬀer some possibility to screen out noncongruent oﬃcials. Hence, in that case, representative democracy dominates judicial power (but still could be inferior to direct democracy if the public has a good idea ex ante of the optimal action). These considerations suggest that decisions of suﬃciently great importance (ones for which the legacy motive is likely to dominate) are best taken by politicians rather than by judges (although these may also be decisions for which direct democracy fares better still).
In subsection III, B we expand the set of possible governmental systems to include any scheme in which the decision on whether to retain a ﬁrst-period oﬃcial depends on the ﬁrst-period action. We argue that when the oﬃce-holding motive is strong, no mechanism in this broader class dominates judicial power or direct democracy (assuming that the public cannot commit itself to a random election). When it is weak, however, a “hybrid” mechanism in which an unpopular oﬃcial is replaced by direct democracy could be optimal.
Subsections III, C - III, F consider several extensions. Subsection III, C makes it costly for an oﬃcial to ﬁnd out which action is best for her or for society and argues that a politician is less likely to incur that expense than a judge. We conclude that highly technical decisions are best taken by judges. Subsection III, D examines the issue of 5 term lengths and points out that optimally they should balance the transition costs of replacing oﬃcials (which make longer terms desirable) and the electorate’s risk-aversion (which argues for shorter terms). Subsection III, E asks whether politicians or judges should have more discretionary power, and suggests that politicians should have the edge because their decisions convey useful information to the public, unlike those of judges.
Finally, subsection III, F takes up the possibility of campaign promises and argues that, depending on how badly oﬃcials want to hold oﬃce, this can be either a boon or a bane.
In section IV, we consider the case in which, with positive probability, the electorate learns whether or not the ﬁrst-period decision was optimal before period 2. We show that, if the oﬃce-holding motive is strong, there are two (mutually exclusive) alternatives to the full pandering equilibrium we obtain in section III: either (i) oﬃcials always choose the optimal action in the ﬁrst period (if the probability of feedback is suﬃciently high), or (ii) there is some chance that a noncongruent oﬃcial will pander (a good thing) but otherwise oﬃcials act on their legacy motive (if the probability of feedback is moderate).
Finally, in section V, we introduce the possibility of conﬂict between majority and minority preferences and show that representative democracy may do a better job than either direct democracy or judicial power when the probability that minority preferences should prevail is only moderate, but that judicial power is superior if the risk of minority oppression is suﬃciently large. We interpret the U.S. Constitution as a device for switching control from elected to appointed oﬃcials when minority rights are jeopardized.
B. Related literature This paper borrows from several literatures. Our analysis of representative democracy builds on the theory of elections as a disciplining device (Barro 1973, Ferejohn 1986, and chapters 4 and 9 of Torsten Persson and Guido Tabellini 2000). These are models of political agency, in which voters are ex post indiﬀerent about whom they vote for,12 and in which the reelection motive may induce elected oﬃcials to behave in congruence with the electorate’s wishes. Our departures are the introduction of (i) pandering, which is possible because the electorate has only imperfect knowledge of the optimal policy, 6 and (ii) adverse selection which arises from oﬃcials’ legacy motive and the possibility of noncongruence.
The role of citizens’ initiatives as a form of direct democracy is studied in Besley and Coate (2000a,b) and Matsusaka (1992). The latter paper provides an empirical analysis of 871 Californian ballot propositions and shows that politicians tend to leave distributional issues to the public and to tackle “good government” issues themselves.
Speciﬁc points made in this paper relate to disparate parts of the political economy literature. The notion that representative democracy gives rise to dynamic screening of politicians is reminiscent of Juan Carrillo and Thomas Mariotti (2001)’s more general study of dynamic selection of leadership within a party. Papers by Jean-Jacques Laﬀont and David Martimort (1999), Laﬀont (1999), Persson et al (1997), and Mathias Dewatripont and Tirole (1999) present arguments for separation of powers that diﬀer from our pandering argument.
Work on the rationale for unaccountability (as opposed to unaccountability’s consequences) is sparse. Much of the literature starting with Kenneth Rogoﬀ (1985) emphasizes the beneﬁt of having independent central bankers with preferences diﬀerent from those of the electorate as a commitment device vis a vis markets. Antione Faure-Grimaud and Denis Gromb (2000) show that agency independence stabilizes policies when bureaucracies are captured by the industry. Matthew McCubbins et al (1987) stress the ex ante control of agencies.
In its emphasis on welfare analysis, constitutional choice, and length of tenure, our paper is perhaps most closely related to the literature on posturing in corporate ﬁnance.
This literature has argued that the threat of takeovers, liquidation, or replacement induces managers to adopt short-termist attitudes. They accordingly select ineﬃcient investments that pay oﬀ quickly (e.g., Ernst-Ludwig von Thadden 1995, Dewatripont and Maskin 1995, and Jeremy Stein 1989) or induce income and dividend smoothing (e.g., Drew Fudenberg- and Tirole 1995). The analysis of intraparty competition in Bernard Caillaud and Tirole (2002) also stresses the impact of entrenchment and competition for leadership 7 in a mechanism-design framework. Christopher Avery and Margaret Meyer (2000) study the reliability of recommendations by an evaluator who may be biased in favor of the agent to be evaluated and hired. An evaluator with career concerns may want to be tough to preserve her reputation vis-a-vis the principal. While career concerns always beneﬁt the principal in the basic model, Avery and Meyer identify conditions, in particular on the correlation of the evaluator’s preferences over time, under which reputational incentives are harmful.13 A phenomenon somewhat akin to pandering arises in Stephen Morris (2001), who examines a model in which an informed advisor is supposed to provide information to an uninformed principal with the same preferences. Morris shows that, despite the coincident preferences, the advisor may refrain from conveying her information truthfully if doing so might jeopardize her reputation with the principal (e.g., increase the possibility that the principal thinks that she is a “racist”). As in our model, this has the adverse welfare eﬀect of possibly destroying useful information.