Cleaning the stables

This blog is a meditation on the old truth stated by Lord Acton: “All power tends to corrupt; absolute power corrupts absolutely.”

Governments that have been in power for more than about eight years begin to smell – rather more slowly than fish left on the counter, but with equal certainty. Heads of government (or heads of state where this office is not just an empty symbolic box) embody this political putrification process, regardless of how bright and shining the light in their eyes when office was first gained.

In the UK there are many examples, even in recent times, of what goes wrong when an incumbent prime minister or incumbent party holds office/power for the equivalent of two full terms of office or more. Margaret Thatcher went funny – some would say bonkers. She developed delusions of grandeur and displayed an increasingly imperious personal manner – to the point of talking about herself in the third person (“we have become a grandmother”). Her growing paranoia about all things German became a threat to the UK’s standing in Europe and in the world.

Tony Blair ‘s fresh-faced idealism and enthusiasm had decayed into the cynical routine use of deceit by the time account had to be given of the reasons for invading Iraq a second time, and during the Hutton Inquiry into the death of Dr. David Kelly in 2003.  The assault on civil liberties, under the fig-leaf of anti-terrorism, that started on his watch continues under the leadership of Prime Minister Brown today.

Intolerance of dissent, paranoia, corruption and abuse of power

The longer a government or party are in office, the stronger are the manifestations of growing intolerance for dissent, the paranoia about conspiracies to unseat it, the corruption (both personal and political), and the abuse of power.

As regards intolerance of dissent, the standard progression is (1) disagreement becomes viewed as disloyalty to leader or party, (2) disloyalty to leader or party is seen as disloyalty to country or nation – unpatriotic behaviour; and (3) unpatriotic behaviour is depicted as treason. The US political system is extremely prone to this. To have had a House Un-American Activities Committee is cause for lasting shame and embarassment. But Britain and other European nations are by no means immune to this virus.

For paranoia, which motivates intolerance and abuse of power also, the evidence is before us daily. Not all of it is of the ‘the last days of Adolf in his bunker’ variety.  Some of the paranoia is perfectly justified, indeed is probably not paranoia at all. The incumbent has the power; much of the rest of the polity is undoubtedly out to get it and the incumbent. That’s what political competition is supposed to be about. But what we see and read in the memoirs of politicians and their spin doctors goes well beyond rational recognition by the ‘ins’ that the ‘outs’ are trying to replace them.

The most acute forms of paranoia tend to involve perceived opponents within the ruling government, party or coalition. If all conspiracies suspected by No. 10 Downing Street against the incumbent Prime Minister had indeed existed, none of the Parliamentary Labour Party would have been able to sleep a wink for the past six months.

As regards corruption, the progression is predictable and apparently inevitable. Government is in command of the state.  The state has the monopoly of the legitimate use of force or coercion.  It can prescribe and proscribe behaviour.  It can regulate, tax and spend on a large scale.  There are few checks and balances, in the UK fewer than in any other parliamentary democracy.

The government therefore controls the largest cookie jar in the land and has significant discretion in what it does with the cookies.  Even if members of the government don’t personally stick their fingers into the jar, rent-seeking members of the private sector, of civil society and of  the public at large, will try to use whatever influence and inducements they have to get the government to push some of these cookies/rents their way.

Some of this rent-seeking is legitimate (special) interest representation or lobbying.  It is conducted in public, through the proper channels, including Parliament, and is open to scrutiny by accountable bodies.  But some of this rent-seeking is immoral and illegitimate.  Quite a bit of it is illegal also.  Individual members of government or parliament who take bribes or gain compensation for representing undeclared interests is one example.  Quite often party finances rather than individual politicians are the beneficiaries of corrupt practices.  The sale of honours in the UK has been a well-established source of finance for many centuries, first for the monarch and since the establishment of parliamentary democracy, for of the incumbent party and/or its leadership.

Sometimes the corruption is merely unethical rather than illegal.  Relatives who free-ride on a the influence and power of a family member – spouse, sibling  – holding high office  is a common blot on the landscape.  The late Billy Carter, younger brother of Jimmy Carter, endorsed Billy Beer in 1977, thus capitalizing upon his image as a beer-swilling Southern good old boy developed in the press while his brother ran for President in 1976. Recent UK examples are also not hard to find.

Back in the Whig and Tory days, people made or inherited their fortunes before they went into politics – often indeed using these fortunes to buy appointed or elected office.  Today, it is increasingly common for penniless politicians to establish a network of connections and mutual obligations while in office, which they subsequently use, together with whatever reputation they may leave office with, to make their personal fortunes.

A prime example is the former German Chancellor Gerhard Schröder.  While Chancellor, he was a strong advocate of the Nord Stream pipeline project, which aimed to supply Russian gas directly to Germany, bypassing transit countries like Belarus and Poland. The agreement to build the pipeline was signed two weeks before the German parliamentary election on September 18, 2005, which  Schröder’s SPD lost. On 24 October 2005, a few weeks before the end of Schröder’s term as Chancellor, the German government guaranteed to cover 1 billion euros of the Nord Stream project cost.  Soon after stepping down as Chancellor, Schröder accepted Gazprom’s nomination for the post of the head of the shareholders’ committee of Nord Stream AG, the consortium created for the construction and operation of the planned Nord Stream submaring pipeline. The shareholders of Nord Stream AG are: Gazprom – 51%; Wintershall – 20%; E.On Ruhrgas -20% and N.V. Nederlandse Gasunie – 9%.  A nice case study of potential conflict of interest for a Law School course, or for a course on ethics in government-business relations at a Business School or Public Affairs School.

Former Prime Minister John Major used his massive experience in private equity to join the Carlyle Group’s European Advisory Board in 1998 and became its European chairman in 2001, a position he held until 2004. He waited just under a year after standing down as Prime Minister on May 2, 1997, before taking on a position with Carlyle in April 1998.  That well-established international financier, former Prime Minister Tony Blair, felt even less of a need for a substantive  ’garden leave’ or  ’purdah period’ between leaving the highest public office and getting his snout in the trough in the private sector.   After leaving office on 27 June 2007, it was announced on January 10, 2008 that he had taken a part-time position with JPMorgan Chase, and on February 10, 2008, that he had taken a part-time advisory position with Zurich Financial Services.

Former President Bill Clinton and former Prime Minister Tony Blair (and his wife) are on the international lecture circuit, amortising their political and reputational capital.

Just how does power corrupt?

It is rather rare, I believe, in well-established parliamentary democracies, for the process through which power corrupts to be a direct and conscious one:  “I have power.  I control this license that you want; I can give you a tax break; I can make sure government procurement favours your company; I can acquit your useless son on manslaughter while DUI charges.  Here is the number of my Swiss bank account. ” 

It may happen, but more common and possibly more insidious and dangerous is the gradual transformation (I would say, distortion) of both the value system and the world-view or perception of reality that afflicts those elected or appointed to high office.  This occurs through a gradual re-socialisation of those in power, which results in them gradually identifying with different peer groups and with different reference groups for benchmarking normal or acceptable behaviour.

I believe that the gradual desensitisation of high office holders to what is proper, ethical and moral behaviour is all but inevitable.  Power corrupts gradually.  It takes someone with the rather unworldly qualities of a Jimmy Carter to escape the erosion of his original ethical standards and morals, that comes with the exercise of power.

The vast majority of the people that our political leaders have any extended and repeated contact with (other than their families) after assuming high office  are the high, the mighty, the powerful, the beautiful and the very very rich.  By a process of osmosis they absorb the values, worldviews, fears and aspirations of this small, unrepresentative and often morally and esthetically challenged group.

The gradual identification of what is right and in the public interest with what serves their party’s and their personal interest is inexorable.  And they have the unequalled resources and coercive powers of the state at their disposal.  This is a dangerous brew – dangerous for personal liberty, for freedom of speech, freedom of assembly and the right to use established democratic procedures to get rid of the incumbents.

Those who are chosen to play the roles if not of Gods, than at least of demi-gods for a time, soon become extremely loath to give up that power.  And only the odd saint can contemplate losing power and going back to a lowly paid (by the standards of their newly acquired peer group) life on the backbenches, or whatever the local equivalent of the political wilderness is.  Therefore, many of our political leaders decide that, if and when they lose power, they will at least be rich.  And rich they do become.

As I already hinted at in the previous paragraph, all this matters more than would a simple morality tale of an individual using all the means at his or her disposal to gain riches, even by unethical or possibly illegal means. The persons involved have their hands on the levers of state power.  Abuse of state power by incumbents becomes a growing threat as the incumbents (a) view their incumbency as right rather than a temporary trust granted them by the people; (b) acquire a better understanding of and ability to use both the brutal and the subtle instruments of compulsion available to the state and (c) grow more afraid, rightly or wrongly, that their days in office are numbered if the political game is played according to the rules.

What is to be done?

For all these reasons, poltical competition and turnover of incumbents are essential.  The rascals must be thrown out on a regular basis.  This is recognised widely, and in some countries this recognition of the dangers of protracted incumbency has found constitutional expression in the form of term limitations.  After FDR’s four Presidential election victories, the (Republican-dominated) congress started a successful move to limit the US Presidency to two terms only.  In Costa Rica, a constitutional amendment  in 1969 limited presidents and delegates to one term, although delegates were allowed to run again for an Assembly seat after sitting out a term.  In 2003, the constitutional ban on multiple presidential terms was reversed, permitting President Oscar Arias to run again (and win) in 2006.

I go back and forth on the issue of term limitations.  The argument against it is: why should the people be deprived from the right to elect or re-elect, appoint or re-appoint anyone they want?  But incumbency itself creates a non-level playing field – one that gets more uneven as the duration of the incumbency increases.   At least with individuals, death evens things out in the long run, but for political parties this constraint does not apply.  One-party rule, even in electoral systems with free or technically free elections (in Japan, in Mexico, in Italy (where the Christian Democrats for decades were at the heart of every governing coalition)) can be the death of democracy and freedom.

I also have no idea how I would impose term limitations on parties rather than on individuals.  There are some intriguing partial examples.  In Switzerland, the Federal Council is the formal chief of state and head of government whose council members, rotating in one-year terms as Federal President, represent the Council.  Council members may not serve more than one consecutive term as Federal President, although they can, after at least a year’s interruption, serve again.  The rotation is not ‘mechnical’ however; subject to the ‘no two consecutive terms as Federal President’ constraint, the Federal President is chosen by the Council from among its members.  This can become, and has recently been, a party-political issue.

Term limitations on political parties would, for better or worse, be as easily avoided as regulatory fnancial constraints on an off-balance-sheet vehicle.  Through ’political arbitrage’   parties can abolish themselves and reconstitute themselves under a different name, as the main Islamist political party in Turkey has done before and may do again, if the Supreme Court rules against it.

The late Seymour Lipset argued that competition between political elites could be sufficient to sustain democracy. I am not so sure about the sufficiency of competition. I am convinced that effective political competition, with scope for entry and exit among the contestants, is necessary for the preservation of  liberty.  We cannot trust anyone or any political party not to abuse political power.  Our ability to restrain abuse decreases as the duration of incumbency increases.  Therefore it is essential that the electoral Hercules cleans out the political Augean stables periodically by throwing the rascals out, whatever party they belong to, whatever their political colour or ideology and regardless of their technocratic competency in managing the functions of the state.

The time to throw the incumbents out has arrived in the US and in the UK.  From a purely domestic political perspective, the urgency is even greater in the UK.  First, because New Labour has been at it for 11 years as opposed to the Republicans’ seven years; second, because the executive in the UK always has an automatic majority in the House of Commons, while in the US the President is regularly faced with a Congress dominated by the other party.  This means that in the UK there are no checks and balances between elections, other than the blessed bloody-mindedness of the British people; as a result, the corrupting influence of power can operate more freely and swiftly in the UK.

The reason I want Labour to lose the next general election has nothing to do with ideology.  As regards ideas, values and ideology, there is not much to choose between New Labour and New Conservatism.  But New Labour is cursed with the dark spot of excessive incumbency.  Sorry, boys and girls, but you just have to go.  It’s time for someone else.  Anyone else really.

Based on what I have seen of UK politics and on my reading of history, there is little doubt in  my mind that the UK government following the next general election – most likely a New-Conservative Government under David Cameron – will, should it succeed in hanging onto office for eight years or more, be as sorry a sight then as the current New Labour crew was after eight years in office.  I can only hope that the need to make a comparison of a New Conservative government with New Labour after 11 years will never have to be made.

Maverecon: Willem Buiter

Willem Buiter's blog ran until December 2009. This blog is no longer active but it remains open as an archive.

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

Willem Buiter's website