Governments grease the wheels of society. Without them, public life comes to a halt, the future is uncertain, and the law of the strongest applies. We do not realize enough how much we depend on how governments perform their duties. It has a decisive influence on how we, as citizens, can live without illness or fear, are protected by the law, know ourselves secured by social provisions in times of hardship and can develop ourselves regardless of colour, gender or orientation. Some governments are more successful than others in this respect. However, there is no such thing as a perfect government; there is always room for improvement. Many factors determine the effectiveness of the political process. Apart from the continuous shortage of available resources, there are such things as political and ideological contradictions, constraints of electoral systems and existing relationships between the executive, legislative and judiciary in government. On top of that, we need to consider the extra-parliamentary influence of citizens, interest groups and institutions.
My annual GGPI assessment shows to what extent governments, with the means at their disposal, deliver results relevant to citizens. Pre-empting the detailed 2019 results which I present in the last part of this article, I will first focus on the 2019 GGPI outcome for the 20 largest economies in the world based on GDP. India and Indonesia are missing from my overview because their government spending falls short of the minimum standard of $ 2,250 per capita set by me in the context of the index.
The graph clearly shows that the size of a country's GDP does not offer any indication as to what citizens may expect from their governments in terms of generating relevant benefits. It is not only "emerging" economies where these performances are disappointing. A considerable number of governments in established and developed economies are also insufficiently capable of delivering relevant results for its citizens. What are the root causes? This edition of GGPI investigates the relationship between methods of organization of the political process in a country and the quality of government services relevant to citizens there. I will examine the relationship between the level of government performance pertinent to citizens and income inequality on the one hand, and government structure and the electoral system on the other.
For an explanation of the terms used above, I refer to the glossary here.
Particularly striking is that parliamentary systems, that is, systems in which the government is directly accountable to parliament, deliver better service performance relevant to citizens than is the case with other forms of government. Within this group, governments that depend on coalitions from multiple parties, perform better than the rest. Also, income inequality in relevant countries is significantly lower than elsewhere. It seems that the more accountability a government has to give to parliament, the higher the added value of government action for citizens. In countries with a parliamentary system that have an electoral system based on a district system or a majority system, however, there is higher income inequality.
Presidential systems seem to be much less able to function in the interests of citizens. The concentration of executive power under presidential systems also often leads to higher income inequality.
Coincidence or not?
Are the above outcomes based on coincidence, or is there a logical explanation. To find out, I assess the different combinations of electoral systems and forms of government one by one.
At the one end of the political spectrum are the absolute monarchy (Saudi Arabia) and the one-party system (China). Citizens do not take centre stage here, the interests of the monarch or the party count above all else.
Then there are the majority and district system. Votes cast on the losing candidates will not result in any representation and will be lost. Decisions by elected representatives are guided by the interests of those who have chosen him. Only if the elected representative is of the same party of that in power, these decisions carry any significance. The dynamics of these electoral systems render the political landscape destitute and limit the diversity of thought in policymaking. It results in a binary, zero-sum, political culture: the government versus the opposition (one is for or against).
Where presidents in such systems also exercise executive power, the interests of citizens may be further compromised. Presidents typically are elected by a majority votes, and here too the votes cast on his opponent(s) have less weight, if at all, in his decision making. The (more substantial) executive power of the president limits the controlling powers of the parliament. Along the way, a lot of votes, and therefore representativity and legitimacy get lost. If the majority of parliament is from a party other than the president, the dynamics change. To get his program funded (often in presidential systems, parliament needs to approve spending bills) the president needs to negotiate with his opponents to get things done: quid pro quo. Although it is uncertain this would structurally improve relevant services for citizens; it is sure to push up expenditure.
Within a proportional election system, these disadvantages do not exist as a more substantial part of the population is represented through a party within a parliament. Furthermore, executive powers of the governments are subject to parliament's ongoing confidence in governments actions and execution. In a parliamentary system, the entire power ultimately lies with parliament, the government merely implements. Interestingly enough, this does not necessarily imply that governments need majorities in parliament to survive. Scandinavian countries have a strong tradition and solid track record when it comes to governing in a minority situation. This far-reaching accountability for government actions gives the highest chance that governments deed to take relevant interests of citizens into account and do serve their interests in best possible ways.
Give and take
There is, however, a big but. This only works if the political culture in a country is such that the players on the political stage dare to bridge contradictions when necessary and have a willingness to put country above party if the circumstances so demand. Being able to 'give and take' is an essential quality for this. Of the top 20 economies, several countries with both a parliamentary and a proportional system are culturally not, or at least insufficiently capable of doing so. Examples of this are Italy and Spain, where it is impossible to form coalition governments of waning political views. It takes ages to form governments, and once in place, they often fall quickly. Both citizens and the EU have a lot to gain by transforming political culture and structures in these countries. It would be naive, however, to assume that this is simple. What is certain is that the current systems do not work or do not work sufficiently. More research into the effectiveness of the interaction between forms of government and electoral systems is therefore highly desirable, as well as research into bottlenecks and possible solutions. One possibility is to give citizens an interest in achieving financially sound decisions by their government as a pre-condition to obtaining EU-support or subsidies.
On the whole, political cultures in which the national interest comes before those of constituencies or egos, do considerably better than those cultures in which that is not the case. More in particular, it can be established, anecdotally, that the highest relevant government performance for citizens is achieved in those cultures where people are used to co-operating across party boundaries politically.
General Government Performance Index 2019
The analysis above rests on an understanding of how citizens benefit from the policies pursued by their government. Since 2014, I compare the proceeds of government actions that are relevant to citizens to the costs that these government actions entail. This comparison results in the General Government Performance Index (GGPI). To gain this insight, I rely on three indexes that map government performance: the Social Progress Index, the infrastructure component of the Global Competitiveness Index and the World Governance Indicators. I subsequently off-set these results against the level of government spending and the size of the national debt. For a detailed explanation of the methodology used for this, I refer to: "Background, structure and methodology of the General Government Performance Index".
The immediate reason for setting up this index was my curiosity about how government responses to the credit and euro crisis (2008-2013) would affect the quality of government performance relevant to citizens. Over time, it also became an insightful indicator of the effectiveness of government policy to the extent relevant to citizens. It thus provides an additional benefit to the use of GGPI. The results reflect the direction in which government policy to the extent that it is relevant to citizens develops, which policy choices governments have made and whether or not they turn out well. By not only mapping the revenue and expense side but also the relationship between them, we gain insight into weather governments succeed in generating additional value for their citizens or not. The methodology is such that outcomes above one hundred (100) indicate that the government policy of that specific country has yielded relatively higher returns for citizens than it has sacrificed in terms of expenditure and debt creation. This approach yields the following picture for 2019:
The chosen design leads to surprising insights, mainly because it is not a quantitative measure, but rather a qualitative one. GGPI shows whether governments use their scarce resources in a way that produces results that are relevant to their citizens. As more money becomes available, the public yield of government performance should naturally have to be higher. This does not detract from the fact that government policy is mainly about or at least should be about, making responsible choices within realistic financial frameworks to achieve the best result within the always (too) limited possibilities for citizens. Some governments are better at this than others. Government decisiveness, history as well as the political culture of a country (individually or in combination) play an essential role. To the extent that the outcome is below 100, this is not an excuse to remain impassive, but instead be used as an incentive, albeit with appropriate gradualness and with the help of international organizations, to improve this. GGPI also shows that: it clearly reveals that many governments are trapped in a spiral with their financing situation from which they will not escape without radical reconsideration, support and measures.
Ranking and outcomes GGPI 2019
This year 76 countries (2018: 78) came through the classification. One of the main hurdles for a state to pass is to have more than $ 2,250 (last year: $ 2,000) per capita on government spending.
Again, Chile occupies the highest place. The country manages to offer its citizens a relatively high level of facilities with limited resources. The same applies to countries such as Estonia, Costa Rica (although performance is under severe pressure), Georgia, Peru and Bulgaria. They are on the list of the highest 40% government performance relevant to citizens but are among the countries with the 50% lowest government spending. While the social yield is not perfect and still leaves room for much improvement, it is nevertheless of a relatively very high level considering the relatively limited resources available, and debt obligations assumed. Providing public requires a continuous and careful policy assessment between the desirable and the possible, and the states mentioned above have done relatively well. This contrasts starkly with the "performance" of large and by all standards rich countries such as the United Kingdom, France, Spain, the United States, Belgium and Italy. High government expenditures and debts lead to insufficiently acceptable "proceeds" for citizens. Political instability and societal challenges and contradictions stand in the way of making good policy and realizing reliable political institutions and interactions.
Over the past six years, Turkey (-22.78), Brazil (-18.75) and Oman (-16.59) are the three countries where citizens have had to surrender the most in terms of government performance relevant to them. All three are led by autocratic government leaders, in the case of Oman even an absolute monarch. The three best-performing countries over the past six years are Iceland (+27.19), the Czech Republic (+25.42) and Denmark (+22.40). These are all three countries with a coalition government within a parliamentary system. The Danes even do this with a minority cabinet.
Selected OECD countries
As indicated above, the GGPI countries compare with each other with totally different economic prospects. This provides advantages: performance within the index is not determined by economic success, but by the policy choices made. The disadvantage is that it compares ripe and green, making it difficult to get a good picture of economies that are more or less equivalent in terms of size and state of development and players in the developed economies. We overcame this by selecting a group of 20 countries OECD-member countries which are geographically and economically relevant for the index. In addition to the results of the GGPI itself, this also provides insight into the two main components that determine the ranking in the index: input (public costs) and output (social return).
What is striking is that while most countries have succeeded in reducing the relative level of their public charges between 2014 and 2019, the gains in many countries are still very marginal. Positive exceptions are Ireland, Denmark and the Netherlands, which is exceptional because these countries already provide a high level of social yields relevant to citizens. For example, Switzerland has no possibility of further improving its position because it is already number 1 in the ranking of social yields for citizens. For further insight into the underlying performance fields (for all countries included in the GGPI) I refer to the appendix.
The Progression Index (last column) shows who has made the most progress in increasing the social yield of government actions and in lowering the public burden. It contains the change in both components of the index over the period from 2014 to 2019. Denmark and Ireland have done considerably better than the rest. The Netherlands also performed well, even though it was only able to manifest itself in the area of public tax cuts. Nevertheless, she has an excellent third place in the Progression Index.
It is worrying that very high-ranking countries such as the United Kingdom and the United States are unable to offer a satisfactory level of relevant government performance for their citizens. The political climate in those countries is populist, but apparently, this does not translate into actions that benefit citizens. For voters who are attracted to populism, this should be a lesson. Belgium and France deserve the doubtful honour of saddling their citizens with the highest public burdens within this selection. In Belgium, this goes hand-in-hand with the decline in government performance relevant to citizens. Italy and Greece are at the very bottom of the OECD GGPI ranking. For all those countries lagging and those in the hot-spot, political structures determine the quality of the output. Without analyzing it and revising it where necessary, no progress is possible. People will again go to the streets in their yellow-vests and demand that their government will do better. As such, it will remain a significant challenge for the EU as well. Ursula von der Leyen's new leadership team requires generosity and leadership to help break this downward spiral.
THIS IS A TRANSLATION OF AN ARTICLE WRITTEN IN DUTCH (TOOLS USED: GOOGLE-TRANSLATE / GRAMMARLY)