Sunday, December 31, 2023

The merits and limits of lottocracy

A friend of mine strongly recommended that I read the book “Against Elections. The Case for Democracy” written by David Van Reybrouck. As the title suggests, the main message of the essay is that elections and democracy are not the same thing. And that to preserve the value of democracy, we have to reduce the scope of elections, and fill it with lotteries to select public jobs.

This was done in classical Athens, as well as in some medieval and Renaissance institutions in Venice, Florence and the Crown of Aragon (“insaculatio”). After the American and French Revolutions, the mechanism was discarded because the elites wanted to keep the new liberal systems elitist and aristocratic through the election of the theoretically “best and brightest,” which were supposed to naturally belong to the upper classes.

I should have read it earlier, because it is a suggestion with which I sympathize (as I tell my students when we talk about de sub-discipline of social choice, between economics and political science). The author dyagnoses a “Democratic Fatigue Syndrome”. And lotteries would be a better remedy than populism, technocracy or direct democracy. They are fair and democratic and they would legitimize the peaceful transfer of power not less than free elections. They would reduce the distance between those that govern and those that are governed.

Canada, Iceland, and Ireland have recently tried different mechanisms, using randomly selected citizen assemblies as part of the public decision making process. In Ireland, one of these mechanisms led to the historical approval of gay marriages.

In Spain, there have been some proposals and experiences only in the margin of the political system (for example, with the Citizens Assembly for Climate Change), but popular juries and presidents of ballot stations are selected by lotteries and the results have been very positive.

The imperfections of electoral democracies have been well known by some of the best social scientists such as Kenneth Arrow and Larry Bartels. Amartya Sen argues that these difficulties should not lead to pessimism or desperation, but to exploring how to improve the existing systems. This can be done accompanying them with tools of deliberation, like those of citizens’ assemblies.

There is little doubt that existing institutions are a very small subsample of all possible institutions, but we are often locked in inefficient evolutionary outcomes because of inertia, vested interests and switching costs.

Of course, there are no panaceas, and following the lessons of Arrow, the perfect mechanism of aggregating individual preferences in a democracy does not exist. The main problems of a lottocracy, beyond the existence of vested interests that stop it, are how to make it compatible with the mobilization of discriminated constituencies (workers and women), and with the political skills (managing alliances and the corridors of power) necessary to push for fair reforms or social transformations.

Workers rights, women rights, green parties: would they have emerged without fighting and mobilization of massive groups? Perhaps lottocracy in the form of citizens’ assemblies is better adapted to solving current challenges such as ethinc conflict and diversity.

Would Ireland have delegated the issue of Gay Marriage to a citizens’ assembly without the fight of the LGTB community through (mainly leftist) political parties in countries that took the step previously? Would women be even accepted in citizens’ assemblies without the previous fight of the sufragettes and the (left wing) parties that promoted female voting?

Doesn’t lottocracy take for ganted many freedoms for which people had to fight through movements, trade unions and political parties? Can we afford to spend massive resources in promoting lottocracy in front of the urgent task of democratically stopping Donald Trump and Marine le Pen?

Elections and political parties will remain necessary for a while, but it is worth exploring the expansion of sortition to new arenas (starting with sports clubs and universities?). Elections and political parties need serious reforms.  These are difficult, but not impossible. When reforms happen (as with secret voting in Chile, or electronic voting in Brazil), the results can be encouraging. Take Chile: citizens’ assemblies by sortition could have helped or complemented the constitutional assemblies that failed to produce a new Carta Magna, but perhaps also would (complementarily) the reliance on traditional parties that had experience in reaching broad-based agreements –and that were marginalized in the constituional process.

Monday, December 25, 2023

UEFA vs the European Super League: regulation, competition and ownership

The recent decision of the European Court of Justice (ECJ) denying UEFA the right to stop the European Super League (ESL) illustrates the dilemmas facing the football (soccer) industry.

FIFA (the global non-profit governing body) and UEFA (its European affiliate), both headquartered in Switzerland, are part of an international monopoly that acts as the gatekeeper of a global club good: the right to play football at the “official” (both professional and amateur) level. We are talking about the most successful and unified global sport. And it is successful, among other reasons, because it is unified.

That is why the ECJ decision does not guarantee the success of the ESL. Without the English (also, the French and German) clubs, it will just not happen. To some extent, the English Premier Legue is already the true ESL. Internationally, the unification of football’s rules and calendar brings value to the fans and stakeholders. It is true that one could think of making numerous improvements, but the challenge is to make them without eliminating the unified character of the current setting.

However, the ECJ has concluded that FIFA and UEFA (both regulators and promoters of competitions) abuse their dominant position. How to solve the problem of abuse of dominant position? Traditionally, market power has been addressed through three mechanisms: competition policy (antitrust), monopoly regulation or public ownership. One can discard the latter in this field (not necessarily in others), because of the diversity of club ownership models and the involvement of federations and other traditions of self-organization. Also, given our fragmented institutions at the global level, there wouldn’t be a way to organize a system of public ownership of planetary scale. That does not mean that the issue of ownership (club-states, tycoons, sportswashing, the German model, member-owned clubs…) should not be the object of (interesting) debate.

The ECJ seems to advocate for a pro-competition model, where agents other than the federations can organize events and tournaments without their permission. In its decision, the principle is clear, but not the way to implement it (it is not the job of the ECJ). Economist Stefan Szymanski’s book “Playbooks and Checkbooks” has a chapter on the history of antitrust in sport, showing a dynamic field and many open questions, among them the treatment of Sports leagues as joint ventures that make possible a better product for consumers. One could extend the argument to global arrangements.

A look at basketball shows the problems of a non-unified approach. The basketball Euroleague shows that the model is possible, but the lack of a global calendar also shows that the final product could be much better if it were globally unified in a hyerarchy similar to football.

Not all monopolies are bad -if they can be regulated. The problem of a global monopoly such as FIFA is that there is no federal global regulator, but a patchwork of decisions by several jurisdictions. When large democratic jurisdictions have been involved in one way or another (the FBI 2015 investigation, the Bosman Ruling), the changes have been significant. But there is no day to day regulation.

In Europe, the Champions League or the ESL conquering the week-ends is still a taboo, but would no doubt be a move in the direction of efficiency if the losers (modest teams in national leagues) were somehow compensated.

The current structure, although it is very successful, is still inefficient (there is money on the table, because there are too many boring games), and has other important social problems attached to it, such as corruption, sportswashing or unfairness. My preference is for making progress towards a global regulation keeping the unified character of football, but it will be a second best and it doesn’t surprise me that others try other approaches.

Sunday, December 3, 2023

Bill Gates, the unaccountable global sovereign

The book “The Bill Gates problem,” written by the investigative journalist Tim Schwab, is more than a severe account of the sophisticated hypocrisy of an individual, Microsoft founder Bill Gates. It is a criticism of the whole system of “philantrocapitalism” by which billionaires are left to deal with some of our collective problems, in the absence of public action.

Bill Gates is probably the billionaire that has gone farther than anyone in the use business tactics, political influence and philantropy to exercise enormous power without accountability.

The founder of Microsoft decided to give priority to his “philantropic” foundation after the public relations fiasco of the Antitrust case that found him abusing his monopolistic position in the operating systems market. He has used the high profile from his Gates Foundation not only to leave behind his past efforts to control a global market, but also to try to hide other reputational problems, such as his proximity to sexual predator Jeffrey Epstein.

An individual that did not finish his studies is today giving lessons all over the world about everything from vaccines to education and agricultural techniques.

Having more money than the World Health Organization, he played an important and active role in the biggest failure of the Covid-19 pandemic: the inability to expand at the global level the success of vaccination programs of the European Union and some other jurisdictions.

Bill Gates has been using unaccountable, unelected power to try to impose his ideas and preferences on global health, US education or agriculture in Africa. Billions of dollars have been wasted giving priority to problems or ways of solving them that were of secondary importance compared to objective priorities. The resources would have been better spent by taxing the individual and his coporate interests and using the proceeds to fund programs with the accountability provided by transparent democratic institutions.

Schwab wonders why should Gates impose his idiosyncratic preferences combined with apparently technocratic solutions with little input from those affected. By subsidizing significant parts of the media and the academia, his colonial mindset has created a machine that occupies the room left by inexistent global structures that should ideally deal with our global problems. It is a machine that incidentally typically uses “technological solutions” from multinationals on which Gates himself often has a financial interest. An illustrative example of his many failures is his attempt to revolutionize the educational system of the USA with technologies that would help teachers to push students to pass homogeneous standardized tests. The failure is being used as a case study of those conditions under which powerful incentives backfire.

As the subtitle of the book reveals, the “good billionaire” is a myth, which is revealed when we know that there has been no trade-off between the charitable actions of the Gates Foundation and the wealth of Mr. Gates: he has become even richer since he has given priority (in his public profile) to the Foundation, remaining among the wealthiest persons in the world.