Every year we go into the question how government's efforts translate into measurable yield for the benefit of it’s citizens. In other words: to what extent does a citizen benefit from the way in which the government discharges of its duties by directing expenditure from tax revenues and managing public debt towards it’s set objectives? To answer this question, we developed the General Government Performance Index (GGPI) four years ago. Based on a number of external and objective performance fields (the Social Progress Index, Worldwide Governance Indicators and the Infrastructure component of the Global Competitiveness Index) and funding indicators (government expenditures and debts), the GGPI compares the yield and burden of government intervention. For a deeper insight into the background, components, weighting and operation of the GGPI, we refer to the detailed explanation to be found here.
In this edition we also establish a relationship between the results of the GGPI in a number of selected countries and the support for those results translated into the political voting behavior in the country concerned. Spoiler: it makes a huge difference (but in different ways than one might suspect)!
In the meantime, the GGPI can not only be used to produce a snapshot of how the yield from government policy actions for citizens relate to the associated burdens, but by now we have enough data to monitor how government policy has developed over a longer period. This gives GGPI an extra added value. The results clearly show in which direction the policy develops, which policy choices governments have made and whether they turn out well or not. By mapping not only the revenue and expenditure side, but also the inter-relationship between them, insight is gained into the way in which governments succeed in generating additional added value for their citizens. The methodology is such that outcomes above one hundred (100) indicate that government policy in a specific country has achieved relatively higher revenues for its citizens than what has been discharged to achieve those in terms of burden. This approach yields the following picture for 2018:
This chosen set-up leads to surprising insights, especially because contrary to the usual approach of measuring some kind of prosperity as the guiding principle, GGPI instead shows how the government uses their by definition scarce resources and whether it translates into results that are relevant to citizens. When more money is available, the yield relevant to citizens will naturally have to increase. This does not detract from the fact that government policy is (or at least should be) mainly about making responsible choices within realistic financial frameworks in order to achieve the best result for citizens within the margins of always (too) limited resources. Some governments are doing a better job at this than others. This can be traced back to the decisiveness of existing governments, but also the past and political culture of a country (and all too often a combination of these) play an important role. Insofar as that turns out to be negative, it is not an excuse for inaction, but rather should be an encouragement, albeit with appropriate gradual steps and with the help of international organizations, to amend things. GGPI also shows this: it clearly reveals that many governments due their financial situation, are trapped in a negative spiral from which they will not escape without radical rethinking and measures.
Ranking GGPI 2018
The outcome of the GGPI 2018 (for further details see below) shows that New Zealand has succeeded in offering citizens best 'value' for their money. The outcome is the result of a combination of very high societal yield relevant to citizens, coupled with a very reluctant use of public funds to achieve this performance. It is also striking that countries such as Chile, Estonia, Costa Rica, Peru and Botswana end up so high in the ranking. Although the performances are not perfect there and leave room for much improvement, they are nevertheless relatively high in relation to the available resources and debt obligations. This is not easy terrain to navigate and it requires a continuous and careful policy weighing between the desirable and the possible. This is in stark contrast to the 'performance' of large countries such as France, Spain, the United States, Belgium and Italy that are rich by any international standards. High government expenditures and debts do not translate into sufficiently acceptable yield for citizens. Political instability and social deadlocks stand in the way of making good policy decisions and/or establishing reliable political institutions and interactions.
Select group of OECD countries
As indicated above, the GGPI compares countries with totally different economic prospects. From the point of view of the index, this offers advantages: performance within the index is not determined by economic success, but by the policy choices made. The disadvantage is that the sample is etremely diverse, making it difficult to get a good picture of economies that are more or less equivalent in terms of size and state of development. To accommodate this, a further selection has been made of a group of 20 countries that are members of the OECD (Organization for Economic Cooperation and Development) and that are geographically and economically relevant from the point of view of the index. In addition to the results of the GGPI itself, this also allows further insight into the two main components that determine the ranking in the index: input (public charges) and output (social yield).
What is striking is that most countries (except Australia) have succeeded in reducing the relative level of their public burden in the period between 2014 and 2018, albeit that the gain is still very marginal in most of countries. This being the case, it is more difficult to raise the level of social yield that a government has to offer. For example, Switzerland and the Netherlands have no possibility to further improve their position because they already hold the number 1 and 2 rank respectively in the hierarchy of social yields for citizens. For a further insight into the underlying performance fields (for all countries included in the GGPI), I refer to the annex accessible via this link).
If we want to see which country has made the most progress in increasing the social yield of government actions and in reducing public burdens, we can suffice to map the change in both components of the index over the period from 2014 to 2018 to calculate what we could refer to as the Progression-index. This yields the following result:
Ireland and New Zealand have done considerably better than the rest. The Netherlands also performed well despite the fact that it can only manifest itself in the area of the reduction in public burden (in terms of social yield, it is already at the top). Nevertheless, she has a good third place in the progression index.
How countries relate to each other and how they have performed during the period 2014-2018 becomes clear when we compare the respective results of the social yield and the public charges per country. Clear clusters of countries with common characteristics emerge:
The chart above shows how well the Irish have done in the past four years. They have not only succeeded in significantly reducing the level of government burden, but also have managed to increase the level of social yield relevant to their citizens. This has been made possible to a large extent by the existing stable political relations in Ireland (see below).
Italy and Greece clearly have a big problem. Not only from the perspective of government spending and debt which has gone totally overboard, but also because of the alarmingly low level of social yield the government procures. The two are obviously inextricably linked. The poor state of public finances prevents steps being taken to provide citizens with more scope and better facilities. In our GGPI last year we comprehensively reported[in Dutch] on this. A complete reorganization of the existing political and economic structures seems to be the only way to bring about substantial change here.
The 'yellow' cluster contains countries with relatively high government debt that apparently are unable to wrestle their way out of this. Whenever a new crisis presents itself and must be fought, citizens will again have to pay a relatively high price in terms of reduced facilities, higher costs and political unrest. Often this burden mainly rests on the shoulders of those who can bear it the worst. This offers little perspective for stability and improvement in the quality of government performance. One of the most important conclusions from the GGPI seems that more courage is needed to bridge the existing opposing political and economic interests. Unfortunately, however, it is very difficult to imagine how in the current climate of ideological struggle and identity politics in the broad sense, this is a realistic perspective.
Political developments and GGPI
What influence does the quality of government administration have on voter’s loyalty? In almost all countries (with the exception of Ireland) there has been a lot of movement between the various political ideological blocks (center left and right, right of the middle and left of the middle). This was mainly at the expense of the center parties (see column 'Wing party gain or loss' below). It also appears that parties that previously operated on the fringes of the political spectrum and were unable to obtain seats in elections ('single issue' and nationalist parties) managed to exercise a new attraction for voters and gain votes. The consequence of both trends is that the political middle is 'drained'.
This is shown by an analysis of 2014 election results (and earlier if there were no elections in 2014) and the most recent polls in the 20 selected OECD countries that were reviewed above. To this end, the ideological designation of relevant parties in Wikipedia has been taken as a guiding principle as much as possible. 'Green' parties, unless they are explicitly defined as center on the left or right, are assigned to left of the middle ('left wing'). Parties that are referred to as 'big tent' (ie do not fit into a clear ideological group), are defined as closely as possible at which European group they have affiliated themselves with in the European Parliament. In countries with a district system, the votes actually cast on the parties were taken into account, not the percentage distribution of the seats won on the basis of the won districts.
(click here for an interactive overview of the various aforementioned components of the GGPI 2018)
In countries where citizens can rely on good government, ie countries where citizens experience high and relevant government performance, voters are not more loyal to parties that assume government responsibility than elsewhere where this is not the norm. Government responsibility is often borne by parties in the center of the political spectrum. In the 20 countries surveyed, the support of the parties to the right and left of the political center increased by an average of 8.25% over the past 4 years. In countries with a GGPI score higher than 100 (which indicates good government management), that is 8.75% on average. If we focus on the countries in Western and Southern Europe, mostly traditional EU countries, we see an average reduction of votes from the center of the pollical spectrum to the wings (left and right) of up to 13%!
These are worrying developments. We have already seen where this can lead. In the run-up to the Brexit-referendum, British voters have been treated to an outdated and unrealistic view of the United Kingdom's greatness once outside the EU. Numerous inaccuracies have been thrown into play, in as much that facts no longer mattered and only opinions were voiced. The result is a torn country where people fear the future and where next generations will pay the bill for an opportunistic and elitist line of thought.
In Italy, a movement has grown to the right of the middle (Five Star Movement and League North) which has made promises that will accelerate Italy's bankruptcy, after they have been instrumental in countering reforms that are required to make the country economically (more) sound and to (more) agile.
Dutch voters in turn are most worried about their pension and healthcare, while their pension and healthcare systems are among the best in the world. Nowhere so many citizens can have access to such good pension provisions and care as in the Netherlands. The withdrawal from the political middle seems difficult to explain from that perspective.
This requires a further analysis. If we zoom in on the European countries from the above selection, we can see that regardless of whether countries were governed 'well' or 'badly' in the period from 2014, there is a shift in political support from the center to the flanks nevertheless:
If we dig a level deeper then it appears that in countries that are 'well' governed the jerk to the right wing of the political spectrum is greater (+ 12.6%), and where countries are badly governed the jerk to the left wing is greater (+ 5%). We suspect that classic human reflexes play an important role. In times of good governance and relative prosperity, the fear of an advancing government is greater. Conservation and individualism are logical reactions to this. People are worried about losing existing rights and attainments and are opposed to the idea of having to share in another (though often not necessarily worse) way with future generations and new compatriots. The fear is understandable, but the reaction to it is, in contrast, disproportionate. With bad governance you see exactly the opposite. The level of collective provisions is inadequate, as a result of which people tend to create 'safety nets' by seeking their salvation in (parties promoting) collectivity and caring.
Based on past experience, there is little or no ground for expecting success by seeking the edges of the political spectrum. It is difficult to see how the social interest, especially in the somewhat longer term, is served by the decentralization of political power and by embracing more extreme alternatives. Presented alternatives are too often empty shells and shallow promises, it alienates groups within society and ultimately undermines trust in politics.
The political center is generally best positioned to realize the most for the largest possible group of voters. The bigger question is who has an interest in eroding the political center. Is disruption of the political system a goal, and if so, what objective is served? Questions that we cannot answer. There is no recipe for good or bad democracy. After all, the voter decides, even though his/her choice sometimes does not seem so wise (if not outright foolish). It places an even greater responsibility on political parties and civil society organizations to think carefully about how to deal with this, what action (not) to take and consider what leeway to leave (if any) for the erosion of the political middle and the strengthening of the political wings.
For the time being, the shift in political relations does not seem to stand in the way of the quality of governance in those countries with sovereign state deficits and debts, although it is easy to take aim from the political wings at those who do not run away from compromises and the sharing of power. In the long term, however, there is a danger that the political center will become too thin and that too many political parties are needed to take responsibility for the operation of good government. We can of course wait for ‘disasters’ to happen, but for the sake of the country and even for the individual electorate it is generally better to act from a common interest rather than from self-interest. In an earlier article Democracy for the Netherlands 2.0[in Dutch] we made suggestions how to deal with this impoverishment of our political environment.
Translation from Dutch has been enabled by Google Translate