Incentive Contracts for Politicians and the Down-Up Problem
Incentive Contracts for Politicians and the Down-Up Problem

Author: Hans Gersbach

Publisher:

Published: 2000

Total Pages: 0

ISBN-13:

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Many efficient policies imply a temporary deterioration of GDP while the benefits accrue to voters later. Such policies have a down-up characteristic. We show that voters cannot motivate politicians to invest in down-up policies by their reelection decision. The incumbent either undertakes short-term policies or sticks with the status quo. We show that adding an incentive element to the reelection mechanism can solve the investment problem of down-up policies. If a politician wants to stand for reelection, he must accept that his future income or his future reelection possibilities are dependent on macroeconomic developments. Finally, we comment on practical issues when such contracts are used in election races.

The Politics Industry
The Politics Industry

Author: Katherine M. Gehl

Publisher: Harvard Business Press

Published: 2020-06-23

Total Pages: 316

ISBN-13: 1633699242

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Leading political innovation activist Katherine Gehl and world-renowned business strategist Michael Porter bring fresh perspective, deep scholarship, and a real and actionable solution, Final Five Voting, to the grand challenge of our broken political and democratic system. Final Five Voting has already been adopted in Alaska and is being advanced in states across the country. The truth is, the American political system is working exactly how it is designed to work, and it isn't designed or optimized today to work for us—for ordinary citizens. Most people believe that our political system is a public institution with high-minded principles and impartial rules derived from the Constitution. In reality, it has become a private industry dominated by a textbook duopoly—the Democrats and the Republicans—and plagued and perverted by unhealthy competition between the players. Tragically, it has therefore become incapable of delivering solutions to America's key economic and social challenges. In fact, there's virtually no connection between our political leaders solving problems and getting reelected. In The Politics Industry, business leader and path-breaking political innovator Katherine Gehl and world-renowned business strategist Michael Porter take a radical new approach. They ingeniously apply the tools of business analysis—and Porter's distinctive Five Forces framework—to show how the political system functions just as every other competitive industry does, and how the duopoly has led to the devastating outcomes we see today. Using this competition lens, Gehl and Porter identify the most powerful lever for change—a strategy comprised of a clear set of choices in two key areas: how our elections work and how we make our laws. Their bracing assessment and practical recommendations cut through the endless debate about various proposed fixes, such as term limits and campaign finance reform. The result: true political innovation. The Politics Industry is an original and completely nonpartisan guide that will open your eyes to the true dynamics and profound challenges of the American political system and provide real solutions for reshaping the system for the benefit of all. THE INSTITUTE FOR POLITICAL INNOVATION The authors will donate all royalties from the sale of this book to the Institute for Political Innovation.

Redesigning Democracy
Redesigning Democracy

Author: Hans Gersbach

Publisher: Springer

Published: 2017-04-07

Total Pages: 251

ISBN-13: 331953405X

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Could democracy do better? This book presents a vision on optimal democracies and a set of new rules to help achieve them. The monograph follows on the author’s successful book “Designing Democracy” from 2005 and further develops its ideas. While liberal democracies are the best systems of self-governance for societies, they rarely provoke great enthusiasm. Democracies have been known to fail in achieving efficient outcomes and fair distributions of wealth. Moreover, many citizens take the democratic system for granted, simply because they have yet to experience an alternative. This book argues that the potential offered by democracies has not yet been exhausted, and that optimal democracies are both the Utopia for societies and the aim that scientists should commit themselves to making a reality. Furthermore, the book suggests a number of insightful rules to improve the functioning of democracies. “We all know what to do, we just don’t know how to get re-elected after we have done it.” This famous quip by Jean-Claude Juncker perfectly encapsulates the challenge this book takes on: how to redesign our democratic institutions to overcome political short-termism and make our democracies more efficient. Several radical but highly relevant proposals are explored, ranging from long-term incentive contracts for politicians, prediction markets over the outcomes of the next election that could be useful for incentive purposes, minority voting, initiative group constitutions, and so on. All these highly innovative proposals are rigorously grounded in standard economic analysis. I highly recommend this book to anyone concerned about the state of our democracies and looking for constructive reforms. Patrick Bolton, Columbia University, USA In a time of reeling democracies, it is urgent to explore how to improve on the electoral system for the benefit of society. Hans Gersbach has developed a most innovative and thought-provoking research agenda at the intersection of political theory, social choice and mechanism design. He uncovers the potentially positive effects of political contracts between candidates and society, of new rules for agenda setting and of mechanisms compensating the minorities. Marc Fleurbaey, Princeton University, USA

Designing Democracy
Designing Democracy

Author: Hans A. Gersbach

Publisher: Springer Science & Business Media

Published: 2005-11-18

Total Pages: 247

ISBN-13: 3540266984

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While liberal democracies are the best systems of self-governance for societies, they rarely invoke great enthusiasm. On the one hand, democracies have been known to fail in achieving efficient or fair allocations. On the other hand, many citizens take the democratic system for granted as they have yet to experience an alternative. In this book the vision we propose is that the potential of democ racies has not yet been exhausted, and that optimal democracies are both the Utopia for societies and the aim that scientists should be committed to. We present a number of ideas for drawing up new rules to im prove the functioning of democracies. The book falls into two parts. The first part examines ways of combining incentive contracts with democratic elections. We suggest that a judicious combina tion of these two elements as a dual mechanism can alleviate a wide range of political failures, while at the same time adhering to the founding principles of democracies. The second part presents new rules for decision-making and agenda setting. Together with modern communication devices, these rules can sometimes transcend the limitations of liberal VI Preface democracies in achieving desirable outcomes. Examples of such rules include the flexible majority rule where the size of the ma jority required depends on the proposal, or the rule that only those belonging to the winning majority can be taxed.