Is paying for votes really a bad thing?

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Vote buying is a recurring theme in elections in ‘emerging democracies’. There are strong allegations it happened in the 2006 and 2012 Mexican elections. US elections normally have some party accusing the other of vote-buying (through offering free food at election stations). You get stories on vote-buying from around the world though, ranging from Uganda to Bulgaria.

A colleague explained to me what ‘best-practice’ is in term of vote-buying: you give a voter one half of a bank note and give him a pre-filled ballot paper that includes a vote for a particular party. The voter would then get the other half of the bank-note in return for an empty ballot paper from the polling station. It’s an ingenious way of paying for a vote that involves a level of mutual monitoring of the deal. Not quite fail-safe because of course the voter could simply invalidate or change the pre-filled ballot paper whilst still collecting the bribe, but most likely the system is quite effective in reality.

Let’s think about the economics of this though: is it actually so bad if political parties would be able to outright buy the votes of the electorate in an open competition wherein they approach individuals with offers of bribes and a voter picks the one offering the most? I will of course end up objecting to vote-buying, but it is nevertheless handy to go through the normal economic train of thought to identify what it is in reality that makes vote-buying a bad thing.

If we look at this from our mythical rational economic man perspective, the surprising answer in a one-shot game is ‘no, it is not bad at all. In fact it is optimal and highly egalitarian’. Consider why: when political parties vie for voters by means of direct payment, the political party that wins is the one with the greatest purchasing power. In turn, in fully operational markets, the party with the best overall policy plans for increasing the size of the future economy (the tax-base) would be able to borrow the most on international financial markets, ensuring that it is the party with the best policies that wins in a ‘vote for sale system’.

Indeed, with otherwise entirely uninformed voters versus perfectly informed markets, buying votes is an efficient way of generating a believable signal to uninformed voters about what the best party is to vote for! And the ‘one man one vote’ aspect of elections means that the entire available surplus in an economy would be handed out equally to all voters, a highly egalitarian outcome! Hence paying for votes is not just optimal in the fully rational one-shot case, but also can help to overcome the issue of relatively uninformed voters facing better-informed politicians and markets. There is much to recommend it from a simplistic economic egalitarian point of view.

With this ‘rational economic’ benchmark in mind, we can start to talk more clearly about the importance of background factors in whether or not paying for votes is bad in reality.

One objection one might raise to the ‘buying votes is optimal’ story is the question of the limits to future government policies and the limits to the ability of voters to hide their election bribe. If an elected government is capable of immediately taking back any election bribe in full, then of course the election market would break down and paying-for-votes would only serve to scam the gullible off their electoral rights. This argument really turns on a subtlety though: whilst there is surely an element of recouping, lump-sum payments such as election bribes cannot be easily traced and thus recouped (the rational voter would cash in the banknote and buy foreign assets with it if fearing later dispossession). In a rational setting, limited recouping would simply feed back into a higher original election bribe, so as long as full recouping is not possible one should view the effective transfer as being inalienable and limited recouping as irrelevant to the main argument!

Another objection one can make comes if we consider a repeated game rather than a one-shot game; in the repeated game there is an inherent inability of a political party to commit to anything beyond the next election date, implying that from a pure investment point of view, all returns should be monetised within a single electoral cycle. But this runs into both national and international legal constraints: with the outlawing of slavery and child-labour contracts, it became impossible to commit a young person now to paying taxes in the far future as recompense for health and education services received now. The ability to have such long-deferred payment systems means that one-shot governments cannot fully monetise the value of various investments they might make in a population (like infrastructure and education), which in turn limits the degree to which they can borrow to pay the bribes. One hence gets a degree of myopia in decision making that focuses on the short-run at the expense of the long-run.

From a theoretical point of view the real issue with the repeated election game is that one cannot bribe a voter for the whole future stream of his or her election choices! As soon as one envisages such a ‘life-time electoral bribe’ possibility though, one would once again be in the optimal scenario with paying-for-votes.

A more serious objection is that vote-buying is likely to be an asymmetric market in the sense that not all political parties get access to the opportunity to buy votes. A political party with greater clout on the ground might thus use that advantage to ensure it is the only local party to be able to buy votes, effectively cashing in on local muscle. This would undermine the operation of an open vote-buying market and thus lead to potential distortions. It is undoubtedly an important component of vote-buying in the real world.

Yet again, from a ‘deeper perspective’ you could argue that an importance of ‘local muscle’ simply means that the necessary pre-conditions for true democracy have not been met, ie an absence of the threat of violence between political parties. Even more fundamentally, one can see the ability to organise local muscle as evidence for ‘high reputation’ and ‘deeper pockets’. If you thus see local muscle as a direct outcome of the ability of a party to access resources, which in a functioning financial system means better able to borrow against future income streams because it has the better policies, then even local muscle would be ‘for sale’ and thus get sold to the party with the best policies. One then gets less egalitarian distributions, effectively because the providers of local protection ‘tax’ a part of the vote-bribe, but one could still get optimal policies.

A final objection one can raise is that of pre-commitment: implicit in the rational-voting model briefly sketched above is that parties can pre-commit to markets on future policies via which they can recoup the investment made in vote-buying. In reality that pre-commitment is limited to the reputational value of an existing party, i.e. the amount of reputation it stands to lose from reneging on a loan. This reputational value itself depends on internal party cohesion and the ability to make good on implicit dynamic promises to party bosses and workers, ie on complicated group dynamics within political parties. Whilst such things are normally not considered in economic models, it brings the question to the fore whether monetisation of electoral relations via election bribes would have adverse effects on that internal cohesion.

Much like friends don’t pay each other for a meal or a good conversation lest their friendship becomes cold and of less social value, so too will political parties where all relations are monetised lose internal social identity: they will lose the ability to appeal to group ideals and must then base all relations on an open economic accounting. The inability to generate and maintain idealism is serious business to any large group, particularly in better run countries, and one of the main reasons you don’t see full monetisation of relations in any large organisation in the West.

In short, though it may sound intuitively reprehensible, from a mainstream rational economic perspective there is much to like about political parties competing with each other by means of direct offered payments to voters in return for votes. The main counter-arguments come from the murky issues of ‘loss of idealism’ and ‘adverse effects of monetisation of group relations’. To understand those matters and thus the real reasons why our societies frown upon paying for votes, you of course have to read my book on groups, ideals, and other such matters!

 

 

6 Responses to "Is paying for votes really a bad thing?"
  1. Paul Frijters, are you imagining a scenario where a successful political party is able to use government tax revenues as its own private money to pay off its lenders, an uber-corrupt situation in which you might as well abandon any hope of holding competitive markets in vote buying anyway?

    And doesn’t the money for vote buying in real-life cases actually come from party donations? The objection here is that political donations reflect attempts by special interests to achieve policy outcomes that are favourable to them. If that’s the case, there’s no reason to think that vote buying creates an efficient outcome.

    And I think that, even in your scenario in which political parties can steal government revenues, they don’t actually have an incentive to maximise the welfare of citizens. GDP is not welfare. Consider the case where there is one factor of production, labour, one output, widgets, and voters are completely ignorant. What would a clever politician do? He or she would go to the international capital markets and say: “In my country, the workers currently choose to work 8 hours a day, and over the course of a year produce 100 widgets. But they can easily be forced to work 16 hours a day, and produce 200 widgets. Lend me some widgets with which to bribe them to vote for me, and when I get into power I’ll make them work 16 hours a day, confiscate all the widgets they produce and pay you back handsomely.”

    I don’t think we need to resort to “murky issues” to see why vote buying is a bad idea.

    • Hi Luke,

      Your welfare-versus-production point is important, but hinges on subtleties. Let’s think them through.

      I was indeed initially thinking of a welfare=production world where there is no tradeoff, but the basic argument does carry over. Think first of an open economy model in which people can walk away and be a citizen elsewhere (full markets). That mobility option then means you will in fact get welfare maximisation. This is the old Tiebout argument that competition for citizens will produce the optimal local mix of taxes and benefits.

      In a closed economy and a divergence between welfare and production however, you will still get welfare maximisation as soon as voters are informed because they will then not take the bribe of the party offering the most since they need to be compensated for the lower welfare due to worse policies later. The argument is then quite subtle though because the incorporation of that welfare loss in individual voting only holds for the pivotal voter since the non-pivotal voter free-rides. This means that you’d need sophisticated voters who’d play a mixing strategy such that all voters in equilibrium are the pivotal voters (ie none would optimally diverge from that mixing).

      So your problem holds only in the non-mobile, non-sophisticated voter case. Its a valid case, for sure.

      You ‘but stealing is immoral’ argument is of course an example of idealism in action: within a true democratic set-up what the winning party does by design cannot be stealing because it gets to decide what is legal and what is not. There is of course also no need to go via party funds anyway: the bribes can run via intermediaries and the later policies can thus include payments to those benefactors. Indeed some people look at lobbying and donations in the US today in exactly that way!

      • Paying for votes is common in the Philippines and Thailand. The Thai PM at the time of the East Asia crisis was a rural politician with the nickname ATM.

        Politicians are corrupt partly because developing country politics is retail: helping people with small loans, mediating disputes and getting children into better schools or universities. Japan is similar in that LDP politicians have personal support networks based on giving and receiving personal favours.

        My mother in law declined to run for barrio captain because there would be too many people coming to the door of her house at night to ask for help or to arbitrate disputes.

        Bloc voting by clans is common in PNG based on who is the highest bidder.

        Robert Tollison wrote a paper on the price of votes and the history of open vote trading in Great Britain and the United States prior to the 20th century at http://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/9/cj8n1-4.pdf

        Until the Sale of Offices Act 1809, House of Commons seats were freehold property you could buy or rent. After 1809, you had to pay even more because the few that voted had to be bribed to vote for you.

        The winners of secret ballots were the middle class because the working class could no longer sell their votes to the rich. The Thai and Pinoy middle class hate the way the votes of the rural poor can be bought with bribes and public services paid by taxing the cities.

        • “The winners of secret ballots were the middle class because the working class could no longer sell their votes to the rich. The Thai and Pinoy middle class hate the way the votes of the rural poor can be bought with bribes and public services paid by taxing the cities.”

          That is fascinating and very nice illustrations of the economic mechanisms talked about in the post.
          The idea of middle classes irate that the poor are getting something concrete for their votes raises the obvious question of why they don’t pool their resources in a single party and simply offer the poor more than the rich? Can I presume from the fact that this does not occur that the problem is that the combined middle class in Thailand/Pinoy cannot compete with the rich in terms of combined monetary might? Or are they rich enough in principle/potential, but cannot organise themselves effectively on a monetary basis?

          • thanks, Thaksin Shinawatra and Erap both were popular with the working class but loathed by the urban middle class and rivals within the elite as corrupt.

            The red shirts get 200 baht a day to protest; 500 baht for gunmen. They are bussed in from the farms were they earn less. No one volunteers to work for political parties.

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