The Repre­sentative
Ratio Problem

Corruption inordinately affects the poor and is often overlooked by the wealthiest members of a country. But in many developing countries, this same group of wealthy individuals are often the country's legislators. As such, a legislative body is often entirely unrepresentative of the country as a whole. Indeed, the greater the ratio between the net worth of the median legislator and the net worth of the median citizen, the more we expect to see a ‘culture’ of corruption. We introduce this simple metric (Representative Ratio) and propose that by lowering this ratio, democratic institutions can be greatly improved and corruption controlled.

WORKING PAPER - APRIL 2018

Introduction

In 1959, the political scientist Seymour Martin Lipset made a simple, powerful point: "the more well-to-do a nation, the greater its chances to sustain democracy." Lipset argued that as countries develop economically, their societies also developed the strengths and skills to sustain liberal democratic governance. But, Lipset's seminal paper focused exclusively on the income/assets of the citizens which we believe to be a tragic mistake. Indeed, he suggested that if the median income of a country's citizen was less than $3,000 than it would be difficult or impossible to sustain democracy in that country. A bleak view indeed.

We find that by tweaking Lipset's work, and incorporating wealth data about a country's legislators provides not just a more reliable metric about the health of a country's democracy, but we end up with vastly different results than Lipset, and we suggest the possibility where even the poorest of countries would be able to sustain thriving and powerful democratic institutions while also combatting corruption.

As such, we propose a new metric called the Representative Ratio (RR). And RR is defined as the simple ratio between the median wealth of a country's legislators (in the numerator) and the median wealth of the country's citizens (in the denominator). For example, the United States has an RR of 40 because the members of Congress have a median net worth of approximately 1 million dollars, and the net worth of the median citizen is 50,000 dollars. So 1 million divided by 50 thousand yields an RR of 40.

And while 40 may seem a bit high (and it is), it is nothing compared to the developing nations, where countries like Bangladesh, Kenya and Bolivia, the RR can easily exceed 1,000. And a RR of, say, 200 or more is a shorthand way of saying that all the richest people in the country are deciding the policies of the country. As such, in these 1,000+RR countries, the members of Parliament own the biggest houses, have the nicest cars, and use their position to enter into even more lucrative business deals, which are greased by legal impunity. And as well-intentioned as these wealthy members of Parliament are, there is little chance for richest people of say Kenya or Bangladesh to empathize with the daily problems (corruption, institutional capacity) encountered by the poor. In these countries, the wealthy have no problem patching a vast majority of their daily problems by paying petty bribes to grease the wheels of all institutional interactions (from passports, to business licenses, to notaries). For the wealthy, there are no long lines. But the same petty/inexpensive bribes for the wealthy are enormously expensive for the poor.

Clearly the ideal Representative Ratio would be 1. So likely there won’t be much difference between a transparent or secret legislature, as the legislature is already a powerful special interest. This is already a problem. But there is another, similar problem, on top of that. The President of most of these same developing countries has enormous power over the members of parliament, and can literally strip them of their wealth, house, etc. So not only is the RR very high, but the President/Representative ratio of power is also disproportionately high as well. The common man not only lacks a representative in their legislature, but their elected officials are subjected to the authoritarian powers of the president.

One important way to lower RR would be ranked-choice voting and proportional representation. But it is likely other safeguards must be put in place as well.

We believe that this ratio is an essential tool for measuring a democracy and ideally it should always be equal to one. But in reality, this is never the case. In the USA the ratio of representative wealth to that of the average citizen is close to 40. And in some countries this ratio soars well above 100. This is likely divisive, as the central job requirement of a country's legislators is to control the economy of the nation and rich legislators will clearly approach the economy differently than poor ones. As such, a high ratio is bad news for the constituents, particularly, but not exclusively the poor and middle class.

Generating simple statistics such as the representative ratio create a type of 'moneyball' approach to democracy. While these same approaches have worked well for professional sports, we tend to ignore them in our government. A representative ratio is a simple and powerful glimpse at the health of a democracy and appears essential for measuring the legitimacy of a government and could be an essential tool for determining foreign aid and developing institutions.

NOTE: Another question arises here. We should also analyze what appears to be a fault with elections in general. It seems likely that elections, by their very nature, predispose our representative body to be far wealthier than average. If this is the case (and if we cannot solve this), numerous election problems can be solved in one fell swoop, with a lottery instead of a vote. No other system solves voter fraud, election turnout, primary problems, proportional representation, etc. better.