Wealth accumulation of politicians and voters’ usage of disclosed information

Understanding the motivations of politicians is a central question in economics and political science. It is crucial for modeling the pool of candidates that will seek office, and also important for designing policies to constrain politicians’ behavior while in office. Individuals may stand for election because of the non-pecuniary benefi ts of public service, or because of the financial returns that come with political office.

Ray Fisman, columnist at Slate, and Director at Columbia Business School, in a 2012 article writes

It used to be nearly impossible to measure the wealth of politicians, or the rate at which they grew their fortunes. But many countries now require elected officials—and even candidates merely running for office—to reveal their asset holdings.

In India, it’s been possible to keep tabs on what politicians have stashed away since 2003, when the Association for Democratic Reform, a nonprofit group, successfully petitioned to have all candidates for public office provide detailed disclosure of their finances. This included a list of bank deposits and loans outstanding; their stock portfolios; and the value of cars, jewelry, buildings, land, and other potentially valuable holdings. (They were also required to list their educational credentials and any criminal history. A surprising fraction of Indian politicians—nearly a third—had criminal backgrounds to report.)

With Florian Schulz and Vikrant Vig, Fisman analyzed the wealth accumulation of politicians in India and found that

candidates who were elected to state assemblies fared only marginally better financially than runners-up. There is an exception: Politicians who get high-level cabinet posts do sometimes make out like bandits. But for politicians who never make it very far up the hierarchy, politics doesn’t really pay at all. Overall, the numbers belie the widely held view in India that politicians are on the take. Before letting them off the hook completely, though, it’s worth keeping in mind that we only account for the wealth that MLAs themselves report in their disclosure documents. Funds or jewelry may be hidden in foreign accounts, secreted away in bank vaults, or “loaned” to cousins—though given these holes in the disclosure laws, it is all the more surprising that the data reveal the rich returns of state ministers.

The report, The Private Returns to Public Office, is available here.

And the objective of disclosures according to Fisman is

There will always be ways of eluding public scrutiny—the goal of disclosure laws is to make it harder, not impossible, for politicians to exploit their positions for personal gain. To really accomplish this objective, it’s also crucial to get the disclosed information—imperfect as it may be—into the hands of voters who can then reach their own conclusions about whether there’s something suspicious going on.

In fact

Researchers at Harvard and MIT have taken advantage of Indian disclosure laws in a study which finds that the electorate does make use of information from their MLA’s disclosures when casting their ballots.

That study, Do Informed Voters Make Better Choices? Experimental Evidence from Urban India, is available here.

Now, what I’d like to know is how come known corrupt politicians were still elected here. This will make an interesting subject of study.

On disclosures of wealth, good for India that it has its Right to Information Act (2003) which mandates disclosures to the public. Please note ‘to the public’. In the Philippines, while it has Republic Act 3019 (“Anti-Graft and Practices Act”), it has not India’s Right to Information Act. Meaning, public officers and employees in the Philippines are only legally required to file their so-called SALN (Statement of Assets, Liabilities, and Net Worth) with their respective employers, viz (highlight mine).

Section 7. Statement of assets and liabilities. Every public officer, within thirty days after the approval of this Act or after assuming office, and within the month of January of every other year thereafter, as well as upon the expiration of his term of office, or upon his resignation or separation from office, shall prepare and file with the office of the corresponding Department Head, or in the case of a Head of Department or chief of an independent office, with the Office of the President, or in the case of members of the Congress and the officials and employees thereof, with the Office of the Secretary of the corresponding House, a true detailed and sworn statement of assets and liabilities, including a statement of the amounts and sources of his income, the amounts of his personal and family expenses and the amount of income taxes paid for the next preceding calendar year: Provided, That public officers assuming office less than two months before the end of the calendar year, may file their statements in the following months of January.

Did it say the filing will be to the public? Or, that their employers will disclose the information to the public? No.

Technically, then, as I have written in an article here some time ago concerning the case against former Justice Corona, it is illegal to get or publicize information written in the disclosures (i.e. SALNs) without clearance from the holders of the information, which in the case of the Philippines are the employers of public officers. Otherwise, without the clearance, the purchase of such information is tantamount to invasion of privacy or stealing of private information. Think Wikileaks.

Going further, this means the public, I’m imagining, is all confused over why the papers nowadays are peppered with detailed assets (“disclosed and undisclosed”, whatever that means) of politicians. Is media expecting citizens to run out into the streets to arrest reportedly erring politicians? Using what legal justification, precisely? RA 3019? The law is clear as to whom public officers are accountable to with regards their list of assets. If there is any arresting to be made when violations are discovered, it ought to be by their employers and perhaps media given that it has apparently secured clearance to publish public officials’ assets.

What’s my point here? Well, firstly, while a vigilant citizenry is the way to go, there is the government/the elected to represent the people. And so if there are violations with regards to “undisclosed wealth” of public officers, then as a matter of course their employers (who are government) should know what to do with them. There is a precedent – the swiftness accorded to former Justice Corona. It has raised the bar in dealing with faulty SALNs. Secondly, relative to India (or the US for that matter), the Philippines, contrary to popular knowledge, doesn’t have the law that will support citizen access to, scrutiny of, and action against suspicious ill gotten wealth of its public leaders. Thirdly, without this law, all these nitty gritty reports by media of politicians’ “undisclosed” assets merely serve as fodder for public gossip. For all we know, the public may now be abuzz with who could be Senator Legarda’s filthy rich boyfriend after learning that she now has a Forbes mansion added to her Manhattan pad. The public will dissect the information with the fervor and regularity of Startalk and The Buzz and that’s it. These make for a confusing, bizarre, Alice in Wonderland situation. Definitely not a good learning curve for citizens/voters.

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