Saturday, September 12, 2015

Democracy - only to solve the agency problem

The stupid explanation of democracy is that the public is smart. it definitely isn't.

The problem with dictatorship is the agency problem. The king cares only about himself.

Democracy fixes this agency problem. If the premier is managing the country badly he will likely be replaced. This serves as a fix, and as a deterrent / motivator to act for the best of the citizens.

How much democracy?
here we have a complex question.

How do we best align the interests of public servants with that of the public?

Naively, electing every single representative individually is most democratic. But is it most efficient?

It is much easier for the public to asses a whole government, than to asses the functionality of each representative.

Thus, a single MP can go for all kind of populist yet irrational policies and get popular without paying on the costs involved.

A party as a whole, however, will be punished on budget bankruptcy etc.

Thus, a party system without primaries might be more aligned with the interests of the electorate than by electing each and every MP.

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