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GOVERNING FOR
THE FUTURE:
STEWARDSHIP,
SUSTAINABILITY AND THE
TYRANNY OF THE PRESENT
Jonathan Boston
Institute for Governance and Policy Studies
School of Government
Victoria University of Wellington
June 2014
THE ARGUMENT
1.
2.
3.
Wise stewardship and farsightedness matter
On balance, political systems are biased towards the
present – risk of intergenerational ‘buck-passing’
Policy short-sightedness reflects:
a)
b)
4.
Policy farsightedness can potentially be enhanced by:
a)
b)
c)
d)
e)
5.
The human condition, including analytical limits and uncertainty
Political factors – asymmetries, pay -off structures, etc.
Changing the locus of decision-making
Constraining decision-makers
Changing the pay -off structure for decision-making
Better analytical methods and procedures
More democratic policy processes
There are no ‘utopian’ solutions; need a combination
of measures – at multiple levels of governance
SOME RELEVANT LITERATURE
1.
2.
3.
4.
5.
William Ascher, Bringing in the Future: Strategies for
Farsightedness and Sustainability in Developing Countries
(Chicago University Press, 2009)
Jonathan Boston et al (eds) Future-Proofing the State:
Managing Risks, Responding to Crises and Building Resilience
(ANU Press, 2014)
Alan Jacobs, Governing for the Long Term: Democracy and the
Politics of Investment (Cambridge University Press, 2011)
House of Commons, Governing the Future, Public
Administration Select Committee, March 2007
Special Issue of Policy Quar terly on ‘Affording Our Future:
Statement of New Zealand Long -Term Fiscal Position’
(November 2013)
SOME VIEWS
I don’t think we should care a stuff about future
generations. They can take care of themselves.
It’s immoral to care for someone who hasn’t
been born yet.
Owen McShane, NZ National Business Review
I never think of the future - it comes soon enough.
Albert Einstein
SOME VIEWS
When it comes to the future, there are three kinds of
people: those who let it happen, those who make it
happen, and those who wonder what happened.
John Richardson Jr
Life can only be understood backwards;
but it must be lived forwards.
Søren Kierkegaard
… tomorrow belongs to the people who
prepare for it today
African proverb
SOME VIEWS
… in long-term political strategic forecasting, it's been shown
that experts are just not better than a dice -throwing monkey.
Daniel Kahneman (Nobel laureate in economics)
On the GFC:
In summar y, the failure to foresee the timing, extent and
severity of the crisis and to head it off, while it had many
causes, was principally a failure of the collective imagination of
many bright people, both in this countr y and internationally, to
understand the risks to the system as a whole.
A letter to the Queen from leading UK economists in response to
question as to why people didn’t see the GFC coming
WISE STEWARDSHIP AND
FARSIGHTEDNESS MATTER
1. Most religious and philosophical traditions
commend foresight – proper planning for the
future
2. Christian tradition:
 Creation care – wise stewardship of all resources
 Love of neighbour – across space and time
 The responsibility of knowledge – the responsible use of gifts
and talents
 Importance of ‘vision’, imagination and hope
3. Lack of foresight can result in great harm
WISE STEWARDSHIP AND
FARSIGHTEDNESS MATTER
4. Humanity’s capacity to predict the future is
limited

But there is much about which we can have reasonable confidence
5. Not all long-term thinking is good thinking
6. But there is still a strong case for:




conceptualizing, imagining and visioning
identifying major risks and vulnerabilities
planning – to improve, develop, invest …
‘future-proofing’ – to minimize future harms and enhance resilience
IS THERE A PROBLEM?
1.
Failure of many societies throughout human history due to
poor foresight – especially poor long -term management of
critical resources (Jared Diamond, Collapse)
2.
Democracies are ‘systematically biased in favour of the
present’ (Thompson, 2005) – reasons:




3.
elected governments want to satisfy voters’ preferences
voters typically have high discount rates
governments thus suffer ‘political myopia’ (Congleton, 1992)
many other factors encourage intergenerational buck-passing (see
later)
Dictatorships face similar pressures, but:
 less transparency, feedback
 less opportunity for policy learning
 weaker accountability and incentives for reform
IS THERE A PROBLEM?
The meaning of ‘the future’
1.Many different time-scales – near future/far future
2.Inter-generational dimensions – the futures of people alive
today, the next generation, multiple generations
3.The relevant timescale will vary with the problem (climate
change – implications for the far future)
IS THERE A PROBLEM?
1. What constitutes adequate policy farsightedness?
2. Many possible criteria, contingent on policy domain:
a.
Fiscal sustainability


b.
Prudent levels of national debt
Prudent management of long-term risks (e.g. population ageing)
Environmental sustainability


Adequate maintenance of critical, non -substitutable natural capital
Remaining within planetary and sub-planetary boundaries
c.
Adequate investment in infrastructure
d.
Adequate investment in social well-being
IS THERE A PROBLEM?
The empirical evidence suggests a varied picture
 differences across policy domains, between countries
and over time
1. Much evidence of policy short-sightedness
2. Some evidence of policy farsightedness
3. Some evidence of an excessive focus on the longterm

e.g. ‘white elephant’ infrastructure projects
Scroll down for more...
Public debt as a percentage of the GDP, 2011
EVIDENCE OF SHORT-SIGHTEDNESS
By individuals, families, organizations and governments
1.Fiscally unsustainable policy settings


pensions policies in many countries
levels of public debt
2.Environmentally unsustainable policy settings


inadequate conser vation and environmental protection – fisheries management, water
management, deforestation, soil erosion, etc.
inadequate efforts to reduce GHG emissions
3.Inadequate social investment



early childhood education
relief of child poverty
public health and preventative health care
4.Inadequate or misguided physical infrastructure investment

poor maintenance of infrastructure, especially in some developing countries
5.Low private savings in many countries
6.Massive production and consumption subsidies for the fossil fuel
industr y

US$550b per annum globally
EVIDENCE OF POLICY FARSIGHTEDNESS
Recent New Zealand examples:
1.Fiscal policy – Fiscal Responsibility Act (1994),
requirement for regular Long-term Fiscal Statements by
Treasury
2.Local government – long-term community plans
3.Pensions policy – ‘Cullen’ fund; Kiwi-saver
4.EQC earthquake fund
5.Institutions with long-term mandates



Parliamentary Commissioner for the Environment
Commissioner for Children
Previously – the Planning Council and Commission for the Future
EXPLAINING POLICY SHORT-SIGHTEDNESS
At least 4 major factors:
1. The human condition
2. Uncertainty
3. Political or institutional factors




Various salient asymmetries
Particular patterns of inter-temporal trade-offs or pay-offs
structures
Powerful vested interests – resistance to change
Failure to integrate the longer-term into current decision-making
4. Limited or weak ‘danger’ signals and slow
feedbacks
THE HUMAN CONDITION
Various deeply rooted behavioural
characteristics and dispositions
these affect individuals in their many and varied roles, including
as decision-makers, and are often interconnected

1. High private discount rates, myopia, pure
impatience, procrastination, irrational exuberance

solving many problems and generating long -term improvements
requires short-term (economic) sacrifices; delayed gratification
2. Narrow self-interest

unwillingness to contribute to the collective effort required to secure
certain long-term gains (free-riding)
THE HUMAN CONDITION
3. Analytical limitations
….of individuals and organizations

Multiple problems
1.
2.
3.
Complexity
Limited (or excessive) information
How humans manage uncertainty


4.
Uncertainty over future gains can reinforce impatience, by reducing the value
that people place on possible losses and gains
Uncertainty can also encourage misguided optimism about the future, resulting
in complacency and passivity
Overload – tyranny of the urgent, can paralyze long -term thinking

Time scarcity and limited mental energy – reduces capacity for long-term
thinking
THE HUMAN CONDITION
4. Role of heuristics – analytic short-cuts and habits
(Kahneman et al)
Biases in judgement and assessment of risks



undervaluing of long-term risks
underestimating future benefits
cognitive bias in favour of the status quo – due to loss aversion and the
endowment effect
5. Unjustified faith in technological breakthroughs
and ‘solutions’
POLITICALLY SALIENT ASYMMETRIES THAT
CONTRIBUTE TO POLICY SHORT-SIGHTEDNESS
1. The voting (or accountability)
asymmetry
2. The cost-benefit asymmetry
3. The interest group asymmetry
4. The accounting asymmetry
THE VOTING ASYMMETRY
1.Elected governments are primarily concerned with the
satisfaction of voters’ interests




The very young and future generations have no vote or political
power
Voters tend to be self-interested and myopic and have short
memories
Constitutional and other protections for the interests of future
generations are generally weak and often ineffective
Governments are held accountable for their actions (or
inactions) on the basis of current impacts and conditions; they
are much less accountable for the future impacts of their
actions (or inactions)
2.Hence, strong incentives on democratically -elected
officials to avoid short-term costs designed to deliver
long-term benefits (or minimize long -term risks)
COST-BENEFIT ASYMMETRY
1.
The costs and benefits of certain policies (e.g.
climate change) may be significantly different
with respect to the key dimensions of time,
certainty, visibility and tangibility
2.
Problems arise particularly when:
 The costs are mainly short-to-medium term (front-loaded),
but the benefits are mainly long-term (back-loaded), as this
implies short-term pain for long-term gain
 The costs are relatively certain and visible, but the benefits
are less certain and less visible or tangible
INTEREST GROUP ASYMMETRY
1.
Many policies involve a clash between
concentrated and dispersed interests
2.
Concentrated interests are typically well resourced, and have strong incentives to
lobby to protect their interests
3.
Where interests are dispersed over space
and time, there are weaker incentives and
less capacity to mobilize politically
4.
This creates a power imbalance or
asymmetry
ACCOUNTING ASYMMETRY
1.
Financial and manufactured (built) capital is
valued and accounted for, natural capital and
ecosystem services are not
2.
Firms’ financial statements do not include full
effects of their activities on the environment;
triple-bottom line accounting only modestly
developed
3.
National accounts ignores changes in natural
capital and other environmental impacts
4.
What is measured affects policy decisions; if
measurements are partial and flawed,
decisions will be distorted
LIMITED OR WEAK DANGER SIGNALS
Policy makers are more likely to take long -term risks
seriously if there are clear danger signals, but:
In many policy contexts:
1.No fixed ‘thresholds’, ‘boundaries’ or clear tipping points

Planetary boundaries
2.No agreement on what is ‘safe’
3.Weak countervailing forces or danger signals



Bond markets provide signals (via interest rates) on national debt
levels
No equivalent to bond markets in many areas
Feedbacks of possible ‘failure’ are often absent until ‘crisis’
4.‘Black swan’ events – rare, big surprises (Nassim Taleb)
OPTIONS FOR INCREASING POLICY
FARSIGHTEDNESS
1. Difficult to change the human condition, but some
‘nudging’ options (behavioural economics)
2. Focus here on ‘institutional’ options, but:
1. Need to be clear about the problem(s)


Is it protecting/providing public goods, ensuring fiscal sustainability,
investing adequately in infrastructure or …
‘Solutions’ need to be context specific
2. Need to learn from experience
3. Need realism about the effectiveness of the
available ‘solutions’
OPTIONS FOR INCREASING POLICY
FARSIGHTEDNESS
Five main approaches:
1.Change the locus of decision-making
2.Constrain decision-makers
3.Change the pay-off structure facing decisionmakers – rebalancing solutions
4.Better analytical methods
5.Stronger democracy
OPTIONS FOR INCREASING POLICY
FARSIGHTEDNESS
Changing the locus of decisionmaking
i. Supra-national solutions
ii. Independent institutions – expert
groups
SUPRA-NATIONAL SOLUTIONS
1.
Shift decision rights from nation states to regional
or global entities that are subject to a different
incentive structure, and less exposed to short -term
electoral/political pressures
2.
Relevant for the provision and management of
global public goods – including the global
commons (atmosphere, oceans, etc.)
3.
Example – climate change policy in the European
Union
SUPRA-NATIONAL SOLUTIONS
Objections:
1.
2.
3.
4.
5.
National opposition to power transfers and loss of
sovereignty
Institutional design – membership, mandate,
powers/decision rights, resources, etc.
Accountability and democratic legitimacy
Enforcement and compliance issues
Effectiveness - will supra-national bodies take the
hard decisions?
INDEPENDENT INSTITUTIONS
1.
Shift decision rights away from governments and
parliaments to independent institutions, such as
expert committees, that are not directly accountable
to voters
2.
Relevant for decisions on ‘technical’ or quasi -judicial
matters requiring independence
3.
Examples: independent central banks and monetary
policy committees, independent regulatory bodies,
fiscal councils, etc.
INDEPENDENT INSTITUTIONS
Objections:
1.Opposition to the transfer of power – loss of political
control, democratic deficit, etc.
2.Institutional design – membership, powers, mandate and
resources
3.Risk of politicization of appointments
4.Accountability and democratic legitimacy – who guards
the guardians?
5.Effectiveness (the GFC and central banks)
CONSTRAINING DECISION-MAKERS
Constrain the decision-rights of
elected officials:
i. Constitutional constraints
ii. Other constraining solutions
CONSTITUTIONAL CONSTRAINTS
1. Constrain the decision rights of
governments and parliaments via provisions
in entrenched constitutions
2. Give constitutional protection to the
interests of future generations
3. Potentially relevant to all decisions with
significant long-term implications (the
principle of affected interests)
CONSTITUTIONAL CONSTRAINTS
Objections:
1.
2.
3.
4.
Lack of a formal, entrenched constitution (NZ)
Opposition to any power transfer to the courts – loss of
political control, democratic deficit, judicialization of
politics, etc.
Nature of the constitutional provision – principles, rights,
wording …
Ef fectiveness



problem of interpreting a constitutional right to a ‘decent’
environment or determining the nature of the ‘interests of
future generations’
reluctance of courts to override legislature
existing constitutional provisions in various countries have
been little used
OTHER CONSTRAINING SOLUTIONS
1. Upper Houses – with longer terms and
different electoral arrangements
2. Procedural constraints – e.g.


Require all cabinet papers to consider the implications of
proposed policy changes for the interests of future generations
Require the Prime Minister to report to Parliament on any bills
or major policy initiatives that may threaten the interests of
future generations – on advice from an independent body (Bill of
Rights example)
REBALANCING SOLUTIONS
Aim: change the pay -structure for decisions with
long-term implications
 i.e. increase the incentives on politicians to take ‘farsighted’
decisions
Many options:
1.Change voter time preferences (?)
2.Strengthen the ‘voice’ for the future
3.Reduce the power of ‘vested’ interests
4.Invest more heavily in strategic/long -term thinking
5.Better political management of long-term issues
But how? Many failures …
REBALANCING SOLUTIONS
Institutional mechanisms – rules, procedures, ‘voice’, etc.
1.Legislative institutions




Parliamentary Committee for the Future (Finland) or Futures Forum (Scottish
model)
Report on the Future each parliamentary term (Finland)
Prime Ministerial speech on long -term issues each parliamentary term
Regular long-term policy reviews and evaluation processes
2.Executive institutions




Periodic cabinet long-term strategy meetings
High-level, long-term advisory groups/strategy units
Stronger strategic planning procedures
Stewardship responsibilities for senior managers
3.Fiscal institutions



Comprehensive fiscal reporting
Periodic long-term fiscal statements
Independent budgetary agencies
REBALANCING SOLUTIONS
4. Environmental institutions


Strengthen environmental planning, monitoring and reporting
Strengthen oversight bodies/guardians
5. Independent advisory bodies and watchdog organizations


Strengthen existing watchdogs
Create new institutions – Commission for the Future Generations (Hungary,
Israel – 2001-06), Sustainable Development Commission (UK – 2000-11)
6. Electoral institutions


Reduce the voting age
Reform electoral finance
7. Strengthen civil society


Increase public funding for research and development
Strengthen public interest broadcasting
REBALANCING SOLUTIONS
Better political management of long-term issues :
1.
2.
3.
4.
5.
6.
Issue framing
No-regrets approaches
Emphasis on co-benefits
Side-payments and short-term benefits
Independent, arms-length reviews
Cross-party consensus building and agreements
REBALANCING SOLUTIONS
Foresight initiatives and techniques:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Horizon scanning
Trend analysis
Modeling
Road mapping
Visioning
Scenarios
Gaming
Backcasting – actions required to achieve ‘x’
Setting targets
REBALANCING SOLUTIONS
Objections:
1.
Each of the proposed rebalancing solutions is open to
objections of various kinds
2.
None of the proposed solutions is likely to have a
major impact on policy making
But multiple and systemic reforms are likely to help rather
than hinder the quest …
BETTER ANALY TICAL METHODS
Broaden the analytical frameworks used in policy
advising: e.g.
NZ Treasury’s Living Standards Framework
Australian Treasury’s Well-being Framework
Critical dimensions
1.
2.
3.
4.
5.
6.
Beyond GDP – well-being measures (Stiglitz et al.)
Approaches to discounting
Valuing of natural capital and ecosystem services
Analytical pluralism and multiple advocacy
Regular ‘foresight’ and strategic planning initiatives
Identifying and creating ‘danger’ signals
STRONGER DEMOCRACY
1. More transparency, openness and accountability
2. Greater citizen engagement and participation



More and better public consultation
Wider use of social media
Citizens’ juries
3. Greater use of collaborative governance processes
for ‘wicked’ problems with significant long -term
implications
CONCLUSIONS
1. Governing for the future is critically
important
2. Globally and locally – evidence of many
problems and poor decisions
3. No single solution or easy remedies
4. Need a mix of:




More constraints on decision-making
New and better institutional arrangements (at multiple
governmental levels)
Better analytical methods
Stronger democratic processes