Four proposals to make democracy work in the 21st century

Mon, 20 Mar 2017

Over the past couple of years, I’ve read quite a bit about the challenges of democracy and capitalism in the 21st century, and I accept that the status quo is unsustainable.  I do believe we will be able to make things better, not just because I’m an optimist, but because after all, it is ultimately in all of our interests (dystopia is not fun for anyone!).  

I’m encouraged that so many thinkers and activists are getting engaged, promoting ideas.  The solution is inevitably going to be involve community discussion and experimentation, and ultimately lots of different solutions that will all build on each other,.  

In this post I wanted to raise four ideas that I believe would go a long way to making democracy fit for the 21st century.  

Government by Lottocracy

My first proposal is to replace elected representatives with randomly selected representatives, similarly to how we do it with jurors and how it was done in ancient Athens.

Firstly and most importantly, I don’t think most people believe we are well represented.  The electoral system and party system make it difficult to be elected, and arguably the skills to get selected and elected don’t correlate with the ability to represent the wider public (this is especially the case in the US where the cost to get elected significantly changes the dynamics of power).  In particular, the lack of diversity (particularly with respect to economic background) makes it harder to counter the argument that they fail to understand the perspectives and values of the wider population.

Secondly, I believe that if we knew that people were going to be selected at random to make political decisions, we would all have a vested interest to make the system fairer to everyone.   I’m not suggesting that that company executives are sitting in board rooms plotting how to take advantage of the public, safe in the knowledge that they can lobby the government and help them get elected, but I do believe that giving greater power to the wider public would change their interests.  And I believe we would improve education to everyone if we knew that anyone could be governing us.

This proposal could be introduced incrementally.  For example, we could set up a citizen’s forum, with real power over certain aspects of government, and then gradually extend and improve it.  This would also allow us to explore questions of implementation: how many representatives there should be, their ability to be refuse to serve, how long they would represent for, how they would interact with the executive and public service.  

 Public Commissioning

My next proposal is for public commissioning, of research, development, production and creative output.  

Since the 1980s, there has been a marked reluctance for governments to plan and supply goods and services, with a preference for the market to perform these functions.  In many cases this is a good thing, increasing innovation and individual freedom.  Unfortunately, there are some things the market struggles to provide, particularly goods and services with a small marginal cost relative to their fixed cost.  Examples of this include research, journalism, works of culture, and environmental assets.  

I don’t believe we want to go back to a world of relying on philanthropists to provide these, nor of an all-powerful government deciding everything in our lives, but I do think there is space for communities to pool resources and collectively decide to allocate them for collective benefit.

 Wealth Tax

My third proposal is to make more use of a wealth tax, and reduce reliance on income and consumption taxes.

Your wealth determines your political power and your control of resources.  It also has a destabilizing effect, increasing the cost of maintaining a rule of law and reducing democratic legitimacy.  That said, I wouldn’t want us to prevent or disincentivise saving and investment totally.  It seems that we should be able to come up with a balance -  allowing those who invest successfully to benefit, while forcing them to pay some of the wider costs of the inequality this creates and reducing the ability to benefit indefinitely from initial wealth.

I believe that our current income and consumption tax laws attempt to achieve this, but do a poor job of it.  For example, the nature of income has become more complex - different sources have different rules, and require an entire tax industry to keep on top of and to optimise (either for the taxpayer or the government).

We are now at a point where it would actually be simpler to determine your wealth than your income, and it would be fairer.  For example, I think replacing existing taxes with a flat 5% annual tax on any net wealth over £80k would get a better balance and avoid many of the distortions that occur today.

There is still a question about how to measure wealth - but that is already a challenge, for example when calculating capital gains.  My favorite idea for this is through self-reporting, with the government having the option to buy any asset for a 10% premium over your reported value.

Another concern relates to people being forced the challenges of illiquid assets - for example, if you own outright a million pound property, you might not have the cash to pay your annual wealth tax.  Again, this is already an issue - for example with inheritance tax - where you are required to pay 30%, or where the pensioners are trying to live off their property value.  But there is already a reasonably effective financial market that allows people to borrow on the value of their property, and I foresee that we’d create markets that allow people to sell a part of their house, but continue to live there.  

Other challenges relate to how we should tax foreign citizens and wealth held overseas.  I am confident that we can come up with a fair way of doing this that treats them fairly, but avoids putting them at an advantage over domestic citizens.

Basic Income

My final proposal is the one that has received the most widespread attention, and is one that I’ve blogged about previously:  a Universal Basic Income, paid to all citizens.  

We live in a world where growing numbers struggle to gain a living wage in the jobs market.  It is inhumane and ultimately unproductive to stigmatise those that fail - we are far better to keep them supported and validated, encouraged to contribute in whatever ways they can: for example through caring for others, community work, education or otherwise enriching society.  

A basic income has the advantage over benefits that it doesn’t create a disincentive to work (it doesn’t disappear as you start earning), prevents the sense that the working poor are worse off than the unemployed, and has considerably cheaper to administer than a traditional welfare system (no monitoring people applying for an arbitrary number of jobs each week).

There are objections to a basic income.  Some worry that it will increase the size of the state - on the contrary, I consider that handing money to citizens to spend as they see fit is an example of shrinking the state.  Others worry that people won’t work without the threat of starvation or stigma - in fact studies show this not to be the case (I believe a sense of hopelessness is actually more likely to reduce desire to work).  

Some worry that the unpleasant jobs don’t get done without desperate people to do them - yes, some we will decide we don’t need that much, but for the things we really need done, pay will have to go up to attract people, and technological innovation will develop ways to significantly reduce the amount of labour required.  Finally, there is a concern about whether we can afford everyone to have a basic income -  I’d argue that unless we’re planning on killing off the unemployed or forcing them into workhouses, a basic income will prove no more expensive than unemployment benefits.