GOVERNING FOR THE FUTURE: ASSESSING THE CONSTITUTIONAL, - - PowerPoint PPT Presentation

Jonathan Boston School of Government Victoria University of Wellington 17 November 2015 New Zealand Climate Change Research Institute

GOVERNING FOR THE FUTURE:

ASSESSING THE CONSTITUTIONAL, INSTITUTIONAL AND POLICY OPTIONS TO PROTECT THE INTERESTS OF FUTURE GENERATIONS?

• 1. Background and context
• 2. The nature of the problem
• 3. The scale and scope of the problem
• 4. Main causes
• 5. Possible solutions
• 6. Intervention logics
• 7. A brief assessment of the options
• 8. Interim conclusions and implications for

climate change mitigation

OUTLINE

By their very nature, democratic institutions are biased in favour of current voters. Bradford C. Mank When human politicians choose between the next election and the next generation, it’s clear what usually happens. Warren Buffett The future whispers while the present shouts. Al Gore The power of vision is one of many forms of power. Paula Tiihonen

SOME QUOTES

Question:

How to encourage prudent long-term governance, and especially ‘policy investments’ – non-simultaneous exchanges 1. Policy investments common across multiple policy domains, but generate significant political challenges

• Fundamental for protecting long-term interests

2. Many forms of policy investment – different types and timeframes of costs and benefits …

• the funding of physical infrastructure
• education funding to enhance human capital and intellectual capital
• preventative measures in health, social welfare or criminal justice to reduce future fiscal and social

costs

• research and development funding to enhance innovation, intellectual capital, productivity growth

and environmental sustainability

• regulatory interventions to protect human health and environmental quality/natural capital assets
• the pre-funding of future pension costs
• disaster-risk mitigation
• Climate change mitigation and adaptation

BACKGROUND AND CONTEXT

1. Democratic governments often struggle to make prudent ‘policy investments’ 2. Significant risks if inadequate ‘investment’ – including the likelihood of severe, widespread and irreversible harm 3. The problem is variously referred to as ‘short-termism’, ‘political myopia’, ‘policy short-sightedness’, a ‘presentist bias’ or an inherent bias towards the short-term 4. For my research project, I refer to the ‘presentist bias’ or the ‘long-term governance problem’ 5. My focus is on finding ways to reduce or mitigate this problem, especially within advanced democracies …

• How to bring the long-term into short-term political focus
• How to encourage more foresight and a longer-term perspective
• How to shift the temporal balance in favour of the future
• How to protect the interests (needs and rights) of our future selves and

future generations

BACKGROUND AND CONTEXT

1. The presentist bias

• not new
• not limited to governments
• not limited to democratic governments
• not all-pervasive – many examples of prudent policy investments

2. Time is continuous

• not a simple binary issue of present versus future
• different policies have different intertemporal dimensions and

varying impacts over time

3. Nature of project – comparative (advanced democracies), mainly qualitative, case studies

BACKGROUND AND CONTEXT

• 1. Much debate about the nature and causes of ‘the

problem’

• 2. Arguments:
• 1. No single problem (no one problem definition)
• The relevant literatures point to at least 7 different, albeit

related, problems

• 2. The problem is ‘wicked’ – relatively complex, no complete or

definitive solutions, available partial ‘solutions’ have both advantages and disadvantages

THE NATURE OF THE PROBLEM

• 1. Naïve short-termism
• 2. Urgency-driven short-termism
• 3. Poor anticipatory governance
• 4. Complexity
• 5. Delay and inertia – status quo bias
• 6. Elder bias
• 7. Prioritized (or calculated) short-termism
• focus on the last

THE NATURE OF THE PROBLEM

• 1. How significant, widespread and serious is the

presentist bias in advanced democracies?

Possible assessment criteria:

• Decline of ‘comprehensive wealth’ (aggregate assets – balance sheet approach)
• Poor management of global public goods – especially global common pool resources
• Unsustainable fiscal policies and high levels of gross and net public debt
• Unsustainable environmental policies – putting many species and human lives at risk
• Inadequate investment in new infrastructure and infrastructure maintenance
• Inadequate investment in preventative interventions or early intervention programmes
• Inadequate investment in early childhood education, R&D, future proofing, such as disaster

preparedness and the building of resilience

• Poor management of population ageing, increasing social and cultural diversity, etc.

2. No optimal amount of ‘policy investment’

• too complex and uncertain
• can set broad parameters on what is too little or too much
• trade-offs across policy domains – room for debate about the best portfolio of

policy investments

THE SCALE OF THE PROBLEM

What does the evidence suggest?

1. In advanced democracies, the level of policy investment varies

• ver time, between countries and across policy domains

2. Some democracies have a better track record than others, and some policy areas are better managed than others 3. Within the same jurisdiction some governments have a stronger long-term policy orientation than others 4. Evidence of democracies (80 cases) investing more in fixed capital formation at the beginning of electoral cycles and less later (IMF, 2015) 5. The evidence of excessive policy investments is limited (asymmetry) 6. Inadequate investment in some policy domains is serious, but not generally catastrophic

THE SCALE OF THE PROBLEM

1. Various disciplinary perspectives and approaches 2. A simple framing of the ‘causes’: there is either:

1. Excessive demand for short-term solutions – or inadequate demand long-term solutions 2. Inadequate supply of long-term thinking, policy analysis, strategies and solutions – or excessive supply of short-term thinking and solutions

3. What affects the pattern of supply and demand? 4. Three main factors noted in the literature:

• motivational, epistemic and institutional determinants
• but more complex than this

THE CAUSES OF THE PROBLEM

• 1. The human condition
• 2. Epistemic determinants
• 3. Domestic political and/or institutional factors
• 4. Weak international institutions
• 5. Value conflicts and trade-offs across goods

involving different systems of value

• 6. Inadequate conceptual, analytical, accounting,

reporting and monitoring frameworks

• 7. Mind-sets, world views, ethical frameworks and

social norms

THE CAUSES OF THE PROBLEM

Policy investments are most problematic when:

1. The risks of policy inaction are unclear to the public, making it difficult to frame the investment as necessary or urgent 2. There is significant uncertainty over the likely net payoffs 3. The investment delivers few near-term benefits or co- benefits 4. Substantial near-term costs will be borne by powerful groups 5. The investment involves ‘goods’ that are incommensurable Examples include climate change mitigation, investment in disaster risk mitigation, minimizing the loss of biodiversity

THE POLICY DIMENSIONS OF THE PRESENTIST BIAS

1. The multiple causes of the long-term governance problem (or problems) suggest the need for multiple solutions 2. The nature, scope, scale, depth and durability of the problem suggests that only partial mitigation is possible; there are no silver bullets or utopian solutions 3. From the literature and interviews in four countries, I have identified at least 70 ‘solutions’ which can be grouped into 14 broad categories

SOLUTIONS – GENERAL OBSERVATIONS

4. These ‘solutions’ cover a range of different kinds of interventions or approaches:

• constitutional, institutional, procedural, policy-oriented, conceptual

and analytical

• broad, comprehensive, generic or ‘framework’ changes versus

changes to policy settings in particular policy domains (fiscal, health, environmental, etc.)

• most relate to things that governments can change, control or

influence, either directly or indirectly

• 5. Evaluating the options poses various methodological and

evidential challenges; 3 main criteria:

• Feasibility – both technical and political – will vary across states

and over time

• Effectiveness
• Desirability

SOLUTIONS – GENERAL OBSERVATIONS

Six different intervention logics (or explanatory justifications) underpin the suggested solutions:

• 1. Changing the motives of decision-makers
• 2. Enhancing the capacity to make farsighted

decisions

• 3. Changing the formal constraints within which

decisions are made

• 4. Insulating decision-makers from short-term

political pressures

• 5. Changing the political incentives facing decision-

makers

• 6. Establishing new coordinating mechanisms

INTERVENTION LOGICS

• 1. There are too many proposed ‘solutions’ to review in

detail here, but some proposed ‘solutions’ can be ruled

• ut:
• 1. pose serious risks (e.g. change the human condition –genetic

engineering for ‘moral enhancement’)

• 2. threaten significant values (e.g. democratic control and

accountability)

• 3. face insuperable political/institutional obstacles (e.g. transfers of

decision rights to international institutions)

• 2. Brief comments on options:
• 1. commitment devices
• constitutional/non-constitutional
• insulating devices
• 2. foresight capacity and processes
• 3. analytical frameworks, metrics, accounting rules, etc.

ASSESSING THE OPTIONS

1. Many kinds: strong/weak, hard/soft, constitutional/non- constitutional, procedural/substantive, etc. 2. Widely used across advanced democracies 3. They ‘work’ by limiting actors’ future discretion and reinforcing their desire to exercise self-restraint

• increase the rewards for good behaviour or penalize bad behaviour (or

both)

• may shift particular decision-rights to independent bodies (e.g. monetary

policy, regulatory enforcement, etc.)

4. Design issues

• political feasibility and durability
• consistency with democratic principles
• balancing bindingness and policy flexibility

COMMITMENT DEVICES

1. Constitutional – provisions to protect future generations

2. Procedural and planning rules

• requirements for decision-makers to consider the interests of future generations,

and prepare long-term strategies, plans, etc.

3. Reporting requirements

• long-term fiscal projections, intergenerational reports, posterity impact

statements

4. Target-setting requirements 5. Requirements to abide by certain policy principles

• fiscal responsibility, environmental sustainability, precautionary, etc,

6. Shift of decision rights to appointed bodies, with clear mandates 7. Guardianship bodies, trust funds and endowments 8. Multiparty agreements on major long-term policy investments 9. Election promises, verbal commitments

TYPES OF COMMITMENT DEVICES

Advantages: 1. Reinforce policy credibility 2. May help sustain cross-party support for desirable long-term goals 3. Increase the costs of (short-term) political opportunism Disadvantages: 1. Encourage goal displacement 2. Increase policy complexity and veto points – slows pace of desirable change 3. May lock-in undesirable policy settings 4. Loss of democratic control (especially via insulating devices and certain kinds of constitutional reform)

COMMITMENT DEVICES

Various options

• Strengthening constitutional protection for future generations
• Changing the dispersion of political power within a polity
• Reforming electoral rules and voting rights
• Reforming legislative institutions

Evaluating the options

• Constitutional reform is inherently difficult and time consuming
• Many proposals violate important democratic principles (e.g. placing more

weight on the votes of the young, reducing the voting rights of older citizens, fiscal constitutions, etc.)

• Some proposals have already been tried, with limited benefits in terms of

intertemporal choices (e.g. longer parliamentary terms, lower voting age, creating Upper Houses, inserting provisions to protect future generations in constitutions, etc.)

• Some proposals are desirable regardless of their impact on intertemporal

decision-making – transparent campaign finance, the setting of electoral boundaries by independent bodies, etc.

CONSTITUTIONAL REFORM

1. Prudent, long-term governance requires proper foresight 2. Foresight = systematic thinking about the future, reading the ‘signs’, evaluating risks and opportunities

• the goal is not to foretell the future, but to equip decision-makers to

shape and navigate it

• the aim is to improve preparedness, enable more informed policy choices

and enhance ‘anticipatory governance’ (Fuerth)

• related to risk management, strategic planning, urban planning,

infrastructure planning, emergency management, futures studies, technology assessment

3. Key assumptions:

• the future is unknown and uncertain
• there will be many ‘surprising’ high-impact events – ‘wild cards’

(Fukuyama) or ‘black swans’ (Taleb)

ENHANCING FORESIGHT

4. Techniques

• horizon (or environmental) scanning
• trend analysis
• scenario analysis
• the Delphi method
• long-term projections and forecasts
• visioning
• backcasting
• gaming

5. Useful supplement to other policy-relevant analytical techniques 6. Many challenges – demonstrating value; integrating foresight into the policy process; and maintaining the attention of decision-makers 7. Good international practice – Finland, Singapore, etc.

ENHANCING FORESIGHT

• 1. Some questions:
• What conceptual, analytical and moral frameworks do we use for

assessing policy issues and options, especially those with long- term costs and benefits?

• What discount rate do we use?
• How do we assess the performance of governments and firms, or

evaluate social progress?

• How are governments and firms required to report their

performance?

• How do these frameworks, metrics and reporting requirements

reflect, and affect, how citizens and decision-makers view the state

• f the world, what is considered ‘good’, and how future outcomes

are valued?

FRAMEWORKS, METRICS AND REPORTING

2. Claims:

1. Current frameworks, metrics and reporting requirements give undue to weight to the present and near future, and thus too little weight to the long-term 2. Current frameworks give too much weight to some values (e.g. narrow ‘economic’ values, financial flows and fiscal aggregates) and insufficient weight to other kinds of capital – human, intellectual, social, and natural – and changes in capital stocks: i.e. they have a very narrow conception of ‘value’, ‘value creation’ and ‘value destruction’ 3. Changing these frameworks, metrics and reporting requirements could significantly improve the quality of long-term governance

FRAMEWORKS, METRICS AND REPORTING

3. Recent developments:

1. New analytical and policy frameworks – more holistic, a broader conception of what counts or what is valuable – Australian Treasury: wellbeing framework; NZ Treasury: living standards framework, OECD: framework for green, inclusive growth 2. New and improved metrics – shifts from a focus on growth to wellbeing (objective and subjective measures), from wellbeing today to wellbeing overtime, from flows to stocks (4 or 6 capitals), and from economic/fiscal outcomes to broader measures of performance and progress

• UN System of Integrated Environmental and Economic Accounts (SEEA) to complement the

System of National Accounts (SNA)

• national wealth accounting, OECD Better Life Index, OECD Green Growth Indicators
• composite indicators (e.g. Genuine Progress Indicator, HDI, Ecological Footprint, etc.)
• dashboard approaches (e.g. StatsNZ Sustainable Development Approach)

FRAMEWORKS, METRICS AND REPORTING

3. New policy approaches and tools for handling deep uncertainty – e.g. robust decision-making models 4. New accounting conventions, standards and practices – sustainability reporting and integrated reporting (covers 6 types

• f capital, broader conception of value creation)

5. Development of natural capital accounting, the measurement and valuing of ecosystem services, etc. 6. NZ – new focus on ‘investment’ approach in social policy (forward liability model based on actuarial analyses)

• potentially relevant for designing policy interventions to reduce long-term

welfare dependence, but not for assessing needs or setting benefit rates

• potentially helps governments ‘sell’ near-term social investments

FRAMEWORKS, METRICS AND REPORTING

4. Implications:

• How will these new frameworks, tools, metrics and reporting requirements affect

mind-sets, values, behaviours, decisions and long-term outcomes?

• 5. Impacts difficult to assess – perhaps too early to tell
• Many approaches still being developed and refined
• In principle, better information, broader metrics, a more holistic conception of

progress, etc. should contribute to different mind-sets and better policy decisions

• Example: PUMA – produced accounts using the Integrated Reporting Framework –

resulted in decisions to change inputs and production methods in order to reduce GHG emissions

• NZ Treasury’s LSF was used to frame the 2014 BIM and is altering the content of

advice (but only marginally)

6. But: radical or quick change unlikely

• comprehensive measures of ‘wealth’ – conceptually and analytically challenging
• measures of short-term flows (like GDP) likely to trump broad measures of progress

(including changes in stocks)

• short-term financial considerations are likely to trump long-term environmental

costs (and economic benefits)

FRAMEWORKS, METRICS AND REPORTING

How to enhance policy investments?

• 1. Use commitment devices
• establish procedural and substantive policy rules to guide and

constrain future decision-makers (e.g. to ensure fiscal, environmental and social sustainability)

• possible new rules – e.g. Dieter Helm’s aggregate natural capital rules
• establish institutions (at multiple governmental levels) to

embody and protect important values – especially guardianship/stewardship and advocacy roles

• 2. Improve foresight mechanisms and longer-term analytical

capabilities, better integrated into near-term decision- making (at all levels)

INTERIM CONCLUSIONS

3. Develop broader, more holistic and integrated analytical frameworks for assessing policy options and better metrics for measuring institutional performance and societal progress 4. Build a more conducive enabling environment for long-term decision-making

A. Political trust is important for long-term policy investments

• trust increases certainty and reduces transaction costs
• trust is higher in countries with more egalitarian distributions and low corruption

B. Encourage more participative decision-making models

• deliberative processes, collaborate governance, etc.

C. Shift the temporal orientation of business to longer timeframes

• change remuneration systems for senior executives and fund managers
• encourage sustainability reporting, integrated reporting, etc.
• encourage new business models, such as benefit corporations

INTERIM CONCLUSIONS

1. Mitigating climate change represents one of the hardest kinds

• f ‘policy investments’ in political terms – for multiple reasons

2. Need an extensive network of commitment devices (both substantive and procedural in nature) – e.g.

• International targets and rules
• Domestic targets (emissions budgets), strategies, plans, etc.
• Independent high-level advisory institutions (UK model)
• 3. Need maximal effort, via deliberative, multi-stakeholder

mechanisms, to build robust and enduring political majorities for effective policy initiatives

• 4. Need active political (and civil society) leadership to change

public mind-sets, values, priorities and intertemporal preferences

• 5. Model of an independent central bank (insulating device) – not

applicable to climate change mitigation policy

IMPLICATIONS FOR CLIMATE CHANGE

1. William Ascher, Bringing in the Future: Strategies for Farsightedness and Sustainability in Developing Countries (Chicago University Press, 2009) 2. Jonathan Boston et al (eds) Future-Proofing the State: Managing Risks, Responding to Crises and Building Resilience (ANU Press, 2014) 3. Leon Fuerth with Evan Faber, Anticipatory Governance: Practical Upgrades (George Washington University, 2012) 4. Alan Jacobs, Governing for the Long Term: Democracy and the Politics of Investment (Cambridge University Press, 2011) 5. House of Commons (UK), Governing the Future, Public Administration Select Committee, March 2007 6. House of Commons (UK), Leadership for the long-term, Public Administration Select Committee, March 2015 7. Oxford Martin Commission, Now for the Long Term: The Report of the Oxford Martin Commission (Oxford, 2013)

SOME RECENT RELEVANT LITERATURE