Tuesday, July 22, 2008

Market reform in politics

One reason why politicians have fallen in public esteem is because they are not seen to be operating in an open market, I argue in this article, "Market reform in politics", published in the Mint, on 22 July 2008.

The run-up to the trust vote has been as exciting as a Twenty20 (T20) game of cricket. Fortune is fluctuating every hour. It is a cliff-hanger!

But rather than enjoy the political game, commentators are lamenting that high principles of parliamentary democracy have degenerated to lowly bazaar bargaining.

It’s time our politicians took a leaf out of the T20 experience and created a legitimate market for politics.

Indian Premier League’s success was not in the T20 format. Beginning with the private ownership of teams to auctioning of the players, branding and marketing, cricket was commercialized as never before. It produced quality entertainment for the paying public and unearthed new talent.

In contrast to cricket, parliamentary discourse is handicapped by accusations of horse trading as if hard-nosed political bargaining is somehow unparliamentary.

One reason why politicians have fallen in public esteem is because they are not seen to be operating in an open market. This is in contrast to a regular scene of a street market, where the rich and poor rub shoulders, bargain over a product and go their separate ways without rancour.
If only politicians could operate in an open and competitive market-like environment, Parliament would be able to redeem itself.

If we are disgusted by closed-door political dealings and rumours of cash for votes, then we must allow our politicians to publicly and legitimately bargain over political ideology, negotiate electoral prospects, and be allowed to be persuaded by cash or kind if necessary.

When politicians are free to debate matters of ideology and strike bargains over public policy, the quality of parliamentary debate will enrich the country. But for this to happen, we have to scrap the most undemocratic element of our Constitution, the anti-defection law, which has stifled debate and endangered democracy itself.

In the marketplace, offers of cash or kind are tools for influencing potential customers. So, if a politician believes that ideology or policy is not adequate to further his political interest and, by extension, of his constituents, he should legitimately open himself to political auction.

Transparent and public bidding will remove insinuations of cash stuffed in suitcases. Since politics is an important way of organizing and sustaining free society, the amount raised by political auctions or contributions should be tax-free and without limit — the condition being that it be open to public audit.

If an MP were to auction his vote for Rs100 crore, his voters would legitimately ask for a share of the windfall. If unsatisfied, the voters could remove the leader at the next ballot. A political leader who can’t get elected is unlikely to command a high price. Then it will dawn on all that while money is necessary, it is not a sufficient condition for getting elected. Party, policies, performance, too, are required.

These two reforms in politics — marketization and transparency— will drastically reduce corruption and improve the quality of political discourse and unleash new talent.

Given the range of discretionary power in the hands of the government over a large number of economic issues, it’s possible that despite these political reforms, there could still be some element of undercover dealing in exchanging favours.

Having reduced the scope of political corruption, we will greatly enhance the capacity of law enforcement agencies to vigorously pursue the remaining instances of corruption. With increased competition and prospect of change of governments, the fear of getting exposed by rivals will act as a deterrent.

The true strength of a democracy lies in its people. With increased transparency, information about political leaders will freely flow. Empowered with information, citizens will be able to hold their elected representatives accountable. With economic reforms, we have begun to enjoy the benefits as consumers. With market reforms in politics, we the people will finally begin our reign as sovereign.

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