How to get policy right, in spite of democracy

The social democrat solution is to provide everybody with at least the minimum conditions that will enable them to compete in the market if they can and survive decently of they cannot. Sometimes that involves giving money, but principally providing some basic services in the form of public goods, equally accessible to everybody without their having to pay individually for their usage of them. Certainly there will be some freeloaders, but there are ways of minimising them.

This solution had some spectacular successes, especially in relatively homogenous communities, but it ran into difficulties. The services it provided are very labour-intensive and grew relatively more expensive than manufactured goods, putting a strain on the available resources. At the same time expected standards of education, health care and other social services continue to rise. Universal provision increasingly involved rationing. Ever more complex regulations to eliminate waste and fraud, squeezing the professionals involved and increasingly ad hoc political decisions made the system less and less attractive.

The way forward.

There are two main lines that must be developed. One is to recoup from those who can afford it the costs of the private benefits that they get from the system. That principle is already accepted, for example in the HECS scheme for tertiary graduates. Applying it is in its infancy, and it is certainly not easy. It must be extended to recognise that it is not just a matter of individuals but also of many partial communities, commercial interests, cultural activities and so on, who are specially advantaged by their use of services derived by the public sector.

We are familiar with the practice of subsidising specific industries by providing special infrastructure they need or subsidies to enable them to survive a crisis. When they go on to flourish the public purse rarely recoups its investment. We have to find ways of reversing the maxim: Socialise the losses, privatise the profits. The same applies in other areas.

The other line is to improve political decision-making. If my analysis of politics is sound, the solution is to put decisions about specific matters in the hands of those who have a substantial stake in the outcome. Wherever possible the decision-making body ought to be statistically representative of the various interests involved. Some of those interests may be antagonistic to each other, some indifferent and others harmonious. It is important to realise that each of us often has antagonistic interests in a particular matter, and that usually individuals can only resolve those conflicts from their own point of view in the light of particular proposal that have to take account of the interest of others. It not in my interest to push the solution that I would prefer if it means getting a much worse decision instead of a more acceptable one. So the same individual might score well as being representative of different interests.

Like the market, we should build up general decisions by interrelating more specific ones. A community is like an ecosystem in which the good functioning of the whole depends on the health and adaptability of its components. Where decisions in different areas need to coordinate, that calls for another level of negotiation.

Such bodies cannot be brought to life by legislation, even if legislation is necessary to legitimize them. Getting them accepted and working in practice has to be an evolutionary process working on existing institutions. There is already in Sydney the New Democracy Foundation, dedicated to promoting such initiatives, which has attracted the support of experienced politicians like Nick Greiner and Geoff Gallop. But the few attempts that have been made by politicians to introduce what I call demarchic bodies have been dismissed out of hand as simply a ploy to evade responsibility for hard decisions.

Perhaps the most promising possibility at this stage is for a political party to introduce them as a means of settling its policy decisions in specific areas of concern. Consultation in the form of surveys of what people are inclined to answer off the top of their head may tell you what they ideally would like, but not what they would choose if the looked hard and clear at the practicalities. If the ALP wants to re-establish itself as the dominant force in Australian politics, it should commit itself to policies that have been worked out not by factional power-play but by serious discussion among those most affected by those policies. It might even commit itself to introducing demarchic decision-procedures in certain specific areas when it regains power.