Economics of politics

An increasingly competitive media and growing financial insecurity amongst politicians have come together to create a flutter. Everybody knows, and has discounted the fact, that politicians are like that only. The recent sting operations, in which some members of Parliament were recorded selling their services to undercover reporters, merely provides clinching evidence. While the political parties that these politicians belong(ed) to have responded with appropriate noises and actions, they will only make an enduring contribution to the public good if they put aside the outrage and initiate a substantial debate on the economics of politics.

Just like many business activities in the liberalised economic environment, politics has also been hit by a number of financial shocks. Over the last decade, the probability of being re-elected for a second term has fallen so low that a realistic horizon for most participants is one term, with fingers crossed that it will be a full one. To add insult to injury, many channels that were available to them to make an extra buck have dried up as market power has shifted from sellers to buyers. Quotas for everything from gas connections to telephone connections to air and rail tickets have lost market value as supply has increased.

It is in this context that the MPs' Local Area Development Scheme (MPLADS) has to be viewed. Essentially, it was a recognition of the dwindling opportunities for politicians to cash in on their privileges. As was reported in this newspaper, for as long as the scheme has been in place, the office of the Comptroller and Auditor General (CAG) has been pointing out that the use of funds has very little to do with area development. Despite the suggestions of well-meaning people to scrap it, the persistence of the programme suggests that the politicians, at least, have found it useful""and have doubled the original budget for each district.

The consequence of the sting operation relating to MPLADS may well generate enough pressure to terminate it. But that is not going to make the problem go away. As long as politicians need funds beyond what their parties can provide, ways of monetising their positions will always be sought and usually found. Suspension or expulsion from Parliament and party memberships are all very well for individual transgressions, but the systemic solution lies in finding transparent and non-discriminatory ways to fund political activities. Even if one accepts that MPLADS is thinly-veiled election funding by the state, its fundamental flaw is that it discriminates in favour of incumbents, shutting challengers out of the public kitty. If the state is to formally provide resources for political activity, all legitimate contenders to Parliament have claims to them.

As a start, the money that was available under the MPLADS could be put in an election fund. Realistic estimates of what it costs to run a decent campaign, combined with widely accepted criteria for eligibility, can be used as a basis for disbursing these funds to candidates. This will give impetus to the process of getting political parties to put their financial houses in order and reveal their true sources and uses of funds. This, in turn, will facilitate transparency in direct contributions from individuals to parties and candidates, which will contribute to greater accountability for their positions and actions. A distant dream, perhaps, but the sting operations have created an opportunity to take the first necessary steps.