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Intergenerational governance

SASAKIDan

Governance,despiteitspopularityasoneofthemostfashionablecontemporarykeywords, is far frombeingdefinedunanimouslyandunambiguously.Theconcepttends tobemore frequented inspecificcontexts suchascorporategovernance,than inmoreabstract general frameworks.Thismakes itnontrivial to extractthe transversalconceptualisationofgovernance. Itdoesseem,however, that thefollowingbasic features tend tobecommonlyobservedwhenever, inwhatevercontext,governance isdiscussed.Firstly, it is typicallyanorganisation involvingmultiple individualswherein governancebecomes the subject of substantivediscussions.Accordingtothestandardmicroeconomictheory,anindividualdecisionmakeris identifiedbyher/his idiosyncraticpreferences.This inevitablymeansthatconflictsof interestarisewhenevermultiple individualsare toengage incollectivedecisionmaking.Inotherwords,collectivedecisionsaremadepossibleexclusivelythrough interpersonalutility comparability. Secondly, unlike typical collectiveoptimisationdecisionsineconomictheory,governanceofttimesreferstoaproblemwherein theobjective iseitherunknownorambiguous.Viewedmoreprofoundly,collectivedecisionmakingcommenceswith the taskofestablishing theobjectivefunctionperse.

Whethertheconflictemergesinthechoiceofthecollectiveobjectiveorintheactualactiondecisionsafterhavingagreedupon theobjective,ourconventionalsocialchoicemethodssuchasdemocracytendtosuffertwocommonshortfalls.

One is the inaccuracy inaggregating thepreferencesof thepeople,possiblyresulting inasocialdecisionwhich fails tooptimise thesocial totalsurplus.Thiscanariseevenwheneveryoneaffectedbythesocialdecisionisrepresentedinthe

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decisionmakingprocedure. Theotheristhepossiblemisrepresentationofthoseinterestgroupswhocannot,forvariousexogenousreasons,participate inthedecisionprocess. Inotherwords,evenwhencollectivedecisionsaremadedemocraticallyamongst thosewho takepart inthedecisionprocess,theycanspillexternalitiestowardthosestake-holderswhoarenotdecisionmakersthemselves.

The former, the aggregationproblem, typically ariseswhendemocracy isostensiblyequatedwith thesimplisticmajorityrule (whichneednotbeconfinedtothesimplemajority —a.k.a.50percent —rule).Themechanical "onepersononevote" scheme typicallyabstracts theorderofperference, referred toas theordinalutilityineconomictheory,awayfromthestrengththereof,referredtoasthecardinalutility.Suchaschemecanachieveaggregateutilitymaximisation if,andonlyif,each"pro"voteandeach"con"voteareequallyserious.Otherwise,onthoseissueswhichaffectminoritygroupsfarmoreseriouslythantherestofthepolulation,themajorityrulecanbestunninglyoppressiveagainsttheaggregatewellbeingofthesociety.ThispredicamenthaslongbeenknownsinceNazi'ssupposedlydemocraticascention topower in the1930sWeimarRepublicand thesubsequent (andverymuchconsequent)oppressionofethnicandreligiousminorities.Foralargemajorityofvoterswhohadnoclosenon-Aryan friends, the treatmentofminoritieswasnotan imminentpersonalconcern,whichwaswhymanysuchvotersweremoreattracted to the "socialist"partof theNSDAP than repulsedby the "nationalist"part.Meanwhile, for theminoritygroups, the latterwas literally life-threateningand thusmuchmoredisagreeable than thepossibleallureof socialism, thoughtheir life-bettingvotesweremuchtoofew.Anditwasnothingbut theheadcount,withoutregardtotheseriousnessofeachballot,thatwasthesoledeterminantinthe"democratic"arena.

Whatalternativeschemecouldpossiblyaccount for theseriousnessofeachballot?Presumably themost familiar is thebiddingsystem.Thekeydifference isthatconventionalvotersmakenocommitmentinthattheydonotpromisetopayforwhatevertheresultofthedecisionmaybe,whereasbidderspreparetopaythebidpriceincasetheywinthedeal.Whilstonemightspontaneouslyfrownattheideaof

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price-taggingthecivilrights,would itactuallybesuchacorruptsystemto imposeasmallfeetovote?Or,tosecuritiseacertainnumberofvotestotradetheminanopenmarket?Amodestvoting fee justenough todetermanyof those ignorant,uneducated, joblessandnearlypennilessWeimarRepublicansbutaffordable forwell-heeledJewishintellectuals,couldpossiblyhavesalvagedthehumanracefromtheThirdReichandWorldWarIIaltogether.AmodernJapaneseruleofthumbtellsthatarainydayofelectionfavours theCommunistParty, implyingthatmorerainona fewnationalelections tocomemayserveasadivineKamikazeprovidencetoprevent theLDP (in spiteof thePartyname, the JapaneseLibDemsareadowngradedversionof theTorieswithoutLords,Sirs,Dames,andMBEs) ledbyDishonestAbefromlaunchingtheFourthReichandWorldWarIII.

Viewed fromthe flipside,voters'participationratesarenotalways thebestqualitymeasureforelections,inthesensethatcountingmoreoflessseriousballotsmightevencontaminate theotherwiseappropriateaggregationofpublicopinions.Dependinguponthepolicy issues inquestion,somevotersaremore importantasstake-holdersthantheremainderoftheelectoralbody,yetcounted"onepersononevote" in lieuof "oneReichsmarkstakeonevote," running theriskofallowing theunimportantmajoritytopersecutetheimportantminority.

Thelatter,theexternalityissue,canalsobeencompassedbyextrapolatingtheabove-mentioned insight. Importantstake-holders, in thesenseof thosewhoareseriouslyaffectedbythesocialdecisioninquestion,maynotalwaysbepresent inthedecisionmakingprocess.This is typically thecasewhentheexternalitiesareintertemporal,or intergenerational.Generally,any legislationorpolicydecisiontakes effect toward the indefinite future, but not retroactively into the past.Whenever thepresentgenerationdecides to launchapolicyor toratifya law, itinevitablyspillsexternalitiestofuturegenerations.Theseexternalities,however,aredifficult to internalisebecause thosestake-holdersexternal to thedecisionmakingprocedureatpresentare the futuregenerationswho,bydefinition,arenotreadyyet toexpress theirpreferences.This implies thatalmostany legislation,evenif establishedviacontemporarydemocracy, inevitablycreates intergenerationalexternalitieswhich,byconstruction,cannotbefully internalised,resultinginover-

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(resp.,under-)establishmentoflawsandpoliciesentailingnegative(resp.,positive)externalitiestowardthefuture.Therelevantresearchquestionhereishow,throughwhatscheme,wecanpossiblyminimisetheseintergenerationalexternalitiesor,putalternatively,maximisetheirinternalisation.

Aprimeexampleofintergenerationalexternalitiescanbefoundintheexplosionofpublicdebts in recentJapan.Politicianswhoproposeheavy taxation tend tobeunpopularamongstvoters in thepresentgeneration, so that the supposedlydemocraticcongress leans in favourofdebtswhichareultimatelyequivalent topostponementoftaxationtofuturegenerations.Thekeyquestioniswhoeventuallybearsthepostponedtaxestorepaythedebts,inotherwords,whoaretheultimatestake-holderscapableof internalising theexternalities. It isnotstraightforwardtotellpredeterministicallyhowlongthesaidpostponementlasts,andmoregenerally,to foretellhowmuchof the externalities is tobebornebywhichgeneration.This implies that,evenamongst thosewhoparticipate in thedecisionmakingatpresent, theyoungeronesaremore important stake-holders than theelderonesin that theyhave longerremaining lifeexpectancieswhichproportionatelyensuretheiropportunities to internalise the futureeffectsof thepresentdecisions. In theexampleofpublicdebts,theoldervotersarelikelytoescapethepostponedtaxationwhilsttheyoungervotersaremorelikelytobearit induetime.Thereforeifthesevotersareallottedwithballotsproportional to their remaining lifetimesreflectingtheirexpectedcapabilitiestointernalisetheeffectsoftheirowndecisions,itmightserve tocurtail theuninhibitedly irresponsiblepostponementof taxationand theconsequentexplosionofpublicdebts.

Democraticpeace,thegeneralhistoricalfactthatawarisunlikelytobreakoutbetweendemocraticcountries,teachesushowimportantitistoreflecttheopinionsofstake-holderson importantdecisions including,albeitbynomeansconfinedto,nationalsecurity.Onlyasmallminorityofpowerfulpoliticiansandindustrialgiantsprofit fromawar,at theexpenseofmillionsof lives.Therefore, if thedecisionmakingprocedure isdemocraticallyaccurate in thatevery stake-holder isdulyrepresentedaccordingto theirstakes, thenthosemillionswhose livesareatstakenever fail tovoteagainst thewar. Inaddition, there isalsoan intergenerational

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aspect: absolutely no countrywould ever opt to fight awar if themilitaryconscriptionagewerenot18but,say,70.Thisisnotbecause70-year-oldsaretooweakorsedentaryorsickorseniletofight;surelytheycandriveandshoot,evenbetterthan18-year-oldsonaverage,andyetthelossof70-year-oldliveswouldincurconsiderably lessdamagesto thenationaleconomythanthatof18-year-olds.Theonlykeyfactorhereisintertemporality,inthatconscriptionatage70willeventuallydrafteveryonepresentlyyoungerwhothereforeholdsalife-staketoobjectthereto,whereasconscriptionatage18willno longerdraftanyof thepresent-generationvoters.Hence,richoldwarmongersconsumeyoungprospectivelives.

Inostensiblydemocraticcountries today, thehigheststake-holders,underagechildren,havenovotes,and thevoting ratesofyoungadultswhoare thenexthigheststake-holderstendtobelow,whilstthoseoftheold,retiredgenerationarethehighesteventhoughtheirstakesaretheleast.Giventhismismatch,neitherthedebtexplosionnortheriseofreactionarymilitarismisasurprise.Itishightimethatweshouldseriouslyreexamine"onepersononevote"andmorebroadlytheconceptofdemocracyaltogether.

There remainanumberof related issuescalling forextensivediscussions.Firstly,whoshouldbeeligible for thestatusof stake-holders?For instance,whyisenvironmentalprotection important? Is itbecauseanimalsandplants in theirhabitatsinquestionarealsostake-holders,orisitsimplybecausetheenvironmentaffects our indefinite future human generations?AndwhyArticle 13 of theConstitutionofJapanprovidesthatthepeopleshallberespectedasindividuals"totheextentthatitdoesnotinterferewiththepublicwelfare"?Isthe"publicwelfare"equaltotheaggregateutilityofthepeopleasdefinedineconomictheory,inwhichcaseshoulditnotsufficethatthepeopleberespected,fullstop?Oristhe"public"anentityon itsown,outsideof thecollectiveutilityof thepeople?Secondly, istheultimatepurposeofgovernance found in theoptimalallocationof resources,itsefficiencyandfairness, justasassumedineconomictheory?Or is thedecisionmakingprocedure itself, suchas "democracy"and "participation,"aself-purpose?Thirdlyandrelatedly, isgovernanceboundwithanypre-imposedvaluesystem?Ifso,caniteverbeavalue-freescience?CollegeadmissioninJapanistypicallydone

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bywrittenexamsonly,andtermsandconditionssuchasconcessionarytuitionsaresolelyneed-based,whilstelsewhereintheworlditisnotuncommontooffermerit-basedtermsandconditions,whichcanbeviewedaspricingtheadmission.Issuchpricing fair,ornot?Anotherexamplecanbe found incriminalcourts,where thesentencetendstoreflectthecrimethathasbeencommitted,butthisisnotthesameaswhateconomic theory teachesus.Tobeeconomically rational, the sentenceshouldreflect theexpecteddamagethecriminalmight incurto thefuturesociety,notwhathasalreadybeendone.Inthisway,however,attemptedmurdermayneedtobesentencedlongerthancompletedmurder,becausethevictimisstillaliveandthusmightbethreatenedagainbythesameperpetrator.Wouldthatbefair,though?Then, lastbutnot least, is thedoctrine thatscience"should"bevalue-free,value-free?

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