At what reform cost does democracy break?

Imagine that a lawmaker came to you and said that he wanted to propose a law that would contain the following provision:

This law can only be changed after 15 years of complete consensus in the legislature and after paying 10 million USD.

What would your natural reaction to that provision be? I am guessing that it would be mixture of incredulity and horror, right? Because if we start legislating like this we completely invalidate the democratic processes that are enshrined in our constitutions.

But all laws are a little bit like this. To change a law is always harder than it is to put it in place. Revoking a law is very, very hard, since we believe that there is some wisdom in evolving the institution of the law respectfully (an idea that I agree with, to a certain degree – I do think that society goes through periods of punctuated equilibrium where it is appropriate to change and revoke many laws, but that is another matter).

One way to understand this is to think about it as a matter of cost. All laws have, because of the system they are embedded in, a certain reform cost associated with them. A number of observations flow from this assumption.

First, that not all laws have the same reform cost. Laws that are embedded in systems with greater inertia have a higher reform cost than laws that are more or less isolated in national legislation. A simple example would be a European directive vs a national law in a non-harmonized area. The European directive takes longer to change, and the cost associated with reforming it is greater than the cost of changing purely national legislation.

Second, the order of magnitude of reform cost goes up for every system that the law ties into. Let us define a way to measure this. Let u be the reform cost of a law. Here is my proposed hypothesis:

u for any given law can be calculated as the cost of changing the law of the different independent regulatory systems it is embedded in.

This is somewhat unexact, and only works as a guiding principle, but let’s take an example. The European directive on electronic signatures has been embedded in 27 systems, so the reform cost for that is 27 times what it would cost to change a rule that had only been embedded in a single country’s legislation. But, that does not really capture the complexity of different levels in the regulatory system, right? A European directive has to be implemented in national law, so changing it is a twofold process – first change the directive, then implement across 27 different countries. I think that deserves another multiplicator. So we end up with the notion that the reform cost depends on the number of regulatory systems that need to change times the number of actual regulatory levels (international, regional, national). That seems to give us an interesting way to extend the hypothesis. So.

u of a law is the cost of reforming it times the regulatory systems it is embedded in, times the levels of regulation that come into play.

In the EU case we would get 27*2*reform cost. The number of countries times the number of levels times the cost. We could always throw a national constant in there for specific cost adjustments in some countries. So if a country just accepts EU directives without implementation, well, their constant would be reflect canceling the lions part of the two-level cost.

So, why is this interesting, then? Very legitimate question (and thanks for staying with us this long!). The reason it is interesting is that I would argue that very high reform costs undermine the legitimacy of not only legislation but democracy. Just as in the example, we start thinking that this particular legislation breaks democracy since it is so hard to change it. Why bother to engage?

Now to the next observation. As we go towards a more and more globalized context, our legislation accrues higher and higher reform costs. A law flowing from an international treaty, embedded in a directive, implemented in national law and protected through a trade agreement has four levels of complexity, and if it is implemented in any number of countries, well, reforming it is almost impossible.

Should we allow for that?

Well, you may argue. We arrived at those laws in legitimate ways, so why not? If a law is decide upon in a legimate way, and put in place without force, it is legitimate. I think this is a flawed argument. The reason is really interesting. I think the legislative process is asymmetric: it is easier to produce laws than to revoke them. This asymmetry creates a situation where the sum total of democratically arrived at legislation may be undemocratic in effect.

Let’s say that again. The sum of democratically decided legislation is not always democratic in effect. In fact, there can be cases where it hurts democracy, because of exorbitant reform costs.

So what can we do? We need to start thinking about symmetry in legislation. How our processes for revoking and sunsetting legislation can be enhanced, how we can craft instruments for challenging sclerosis in the legislative system. We need to start measuring and carefully thinking about reform cost as a very peculiar cost on democratic and civic engagement. Reform cost is a powerful deterrent for anyone who is engaged in an issue. If I want to change something, and now that I face a condition like the one described in the beginning of this text, I will be dissuaded.

Activism, if we want it to be something else than empty posturing, needs to have a chance to succeed. Civic participation, for it to make sense, must make a difference. In a society with exorbitant reform costs none of that is true.

Let’s figure out how to change that. Maybe change begins by measuring.


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