Dilemmas of Institutional Reform

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Dilemmas of Institutional Reform
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Understanding the Logic of Our Institutions of
Government

• Governmental institutions are biased.
• The question that is critical, however, is
  whether their biases are cumulative, imposing
  overarching biases on the entire political
  system.
• It the system is biased, how should we approach
  ideas regarding change?
• If we decide change is needed, what can we do to
  bring it about?

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The Bias of American Institutions

• While the political system remains wide open to
  competing influences, pluralism does not by
  itself guarantee that institutional biases will
  offset one another to achieve a roughly equitable
  balance.

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The Bias of American Institutions

• Collectively, American political institutions
  display at least two broad, enduring, systematic
  biases.
• American politics favor those groups that are
  better able to overcome their own collective
  action problems and thus have better resources
  for pursuing political objectives.
• Generally a class bias.
• The American system also is fundamentally biased
  in favor of the status quo.
• The status quo bias inherent in the U.S.
  Constitution is abnormally strong.

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The Bias of American Institutions

• American institutions are biased against adopting
  new institutions and policies in favor of
  preserving old ones, regardless of their
  ideological or class tenor.
• The framers of the Constitution designed it to
  keep transaction costs high in order to keep
  conformity costs low the systems powerful
  status quo bias is an enduring legacy of their
  work.
• Can you think of examples of the barriers to
  change?

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The Bias of American Institutions

• This biased system regulates the political
  transactions of the most dynamic society the
  world has seen. It is perpetually under attack
  due to social, economic, and technological
  innovation.
• Capitalist market economy
• Permeable borders
• Social fluidity
• Technological change
• Innovation often demands institutional changes.

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The Tricky Business of Institutional Reform

• Institutional shortcomings become targets for
  reform the reinvention of government.
• Reform may come from those who want to reform
  government for the betterment of society or from
  those who want to promote their self-interest.
• And it is difficult to predict the outcomes.

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The Tricky Business of Institutional Reform

• Regardless of the motivation, reform often has
  unintended and unwanted consequences.
• Examples campaign finance reforms in the 1970s,
  abolishment of the Interstate Commerce
  Commission.
• Potential consequences must be examined Example
  independent counsel law.
• However, some consequences can be anticipated.

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The Tricky Business of Institutional Reform

• Madison would have predicted that unchecked
  authority would eventually be abused.
• Any reform that alters individual incentives
  changes behavior in predictable ways, because in
  politics most people, most of the time, are
  engaged in pursuing transparent goals.

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The Tricky Business of Institutional Reform

• Proposals for change that do not anticipate at
  least the obvious strategic responses to them are
  fundamentally misguided.
• Example Congressional term limits -- what are
  the implications?

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The Tricky Business of Institutional Reform

• While advocates wish to remove career
  politicians who are often considered captured
  by special interests, the introduction of term
  limits might actually reduce representation even
  more.
• What quality of service should principals expect
  from agents destined to lose their jobs by a
  certain date no matter what? Ignoring the wishes
  of constituents would not be as costly.

• Members of Congress might try to impress future
  principals--their future bosses.

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The Tricky Business of Institutional Reform

• Any institutional reform whose success requires
  political actors to routinely ignore their own
  interests is certain to disappoint.
• Those who wish to redesign institutions to bring
  about better outcomes (as they define them) must
• map out how proposed changes would change
  incentives and thus, the strategic behavior of
  political actors.
• Effective institutions also acknowledge the
  centrality of politics and the value of allowing
  political entrepreneurs to do their jobs.

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The Tricky Business of Institutional Reform

• In doing politics, experience and talent help,
  but appropriate institutional rules and practices
  are even more important.
• Examples of changes backfiring
• Sunshine laws requiring political business to be
  done in public -- meant to weaken lobbyists --
  actually inhibits the give and take required to
  reach compromise agreements. No one wants to be
  the first to sell out.
• Presidential nomination process currently in
  place allows outsiders with little Washington
  experience and few political ties to win the
  White House. Sometimes they are not prepared for
  the responsibilities have rocky on the job
  training.

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The Tricky Business of Institutional Reform

• Tradeoffs are unavoidable.
• Arrangements that make it easier to achieve some
  goals make it harder to achieve others.
• This does not mean that institutional rules and
  practices should not be reformed.
• It is an argument for weighing reform proposals
  carefully for the soundness of their political
  logic.

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What Can Individual Citizens Do?

• Politics is the domain of institutions, but what
  of individual citizens?
• Citizens are collectively mighty but individually
  almost powerless.
• But collective action is often difficult.

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What Can Individual Citizens Do?

• Why is collective action difficult?
• Because so much of politics is about the
  provision of collective goods, each individual
  has an incentive to ride free on the efforts of
  others.
• But if everyone follows the same logic (and why
  not?) there are no efforts on which to ride free,
  and no collective goods are obtained.

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What Can Individual Citizens Do?

• The paradox of individual participation is that
  people can provide themselves with collective
  goods through politics only if they work for
  their provisions for reasons other than enjoying
  the goods.
• While there is no instrumental payoff, because no
  single participants contribution will have a
  decisive effect on the outcome one way or the
  other.

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What Can Individual Citizens Do?

• But moral or other individual incentives
  (noninstrumental) are rarely enough. They may
  discourage free riding, but they cannot fully
  stop it.
• So why do so many actually participate?
• Politics can be fun it is an opportunity to
  express identities, morals and values it is
  taking part in history, because it is often easy
  to do, since institutions often make it easy
  (cheap) for individuals to participate.

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What Can Individual Citizens Do?

• And because when enough individuals convince
  themselves, against reason, that their personal
  participation makes a difference, collectively
  they DO make a difference.