Today elected representatives take the tough decisions about public finances behind closed doors. In doing so, democratic politicians rely on the advice of financial bureaucrats, who, often, cater to the political needs of the elected government. Politicians rarely ask voters what they think of budget options. They are no better at explaining the reasons for a budget. Explanations are usually no more than vacuous phrases, such as “jobs and growth” or “on the move”. They never explain the difficult trade-offs that go into a budget nor their overall financial reasoning.
This reluctance to explain public finances was all too evident during the global financial crisis.
In Australia, Britain and France, centre-left governments borrowed huge sums in order to maintain private demand and, in one case, to support private banks. In each country these policies helped a lot to minimise the crisis’s human costs.
Yet, in the elections that followed the centre-left politicians that had introduced these policies refused properly to justify them. They feared that voters would not tolerate robust discussion about public finances. Without a justification for their generally good policies each of these government was defeated by centre-right opponents.
In most democracies there is the same underlying problem: elected representatives do not believe that voters can tolerate the financial truth. They assume that democracy is not good at managing public finances. For them it can only balance the budget by leaving voters in the dark.
For decades, we, independently, have studied democracy today and in the ancient past. We have learned that this assumption is dead wrong. There are more and more examples of how involving ordinary voters results in better budgets.
In 1989, councils in poor Brazilian towns began to involve residents in setting budgets. This participatory budgeting soon spread throughout South America. It has now been successfully tried in Germany, Spain, Italy, Portugal, Sweden, the United States, Poland and Australia, and some pilot projects were set up in France too. Participatory budgeting is based on the clear principle that those who will be most affected by a tough budget should be involved in setting it.
In spite of such successful democratic experiments, elected representatives still shy away from involving ordinary voters in setting budgets. This is very different from what happened in ancient Athens 2,500 years ago….
In Athenian democracy ordinary citizens actually set the budget. This ancient Greek state had a solid budget, in spite of, or, we would say, because of the involvement of the citizens in taking tough budget decisions….(More)”.