When Differences Across Party Lines Make No Difference: the Case of Portugal (Part II)

Forty years ago, in the aftermath of the 1974 Carnation Revolution, Portugal held its first democratic elections. Two and a half years ago we showed just how irrelevant any political differences between Portugal’s two dominant parties – the Socialist Party (PS) and the Social Democratic Party (PSD) – have been for Portugal’s economic growth, stagnation and recession since 1974.

Two weeks ago, the Portuguese Parliament approved another annual budget and, yet again, the political intrigue around the merits of party differences abounds. Political parties matter, but the myth that differences between them make a difference is unfounded and completely ignores historical data and facts. My intention is not to blame any one politician for the level of political intrigue that exists today; current rules of the Parliament have been built over time. What I am suggesting is that the way the political discussion is structured currently -- the formal and informal rules of engagement -- encourages political rhetoric centered around accusations and finger pointing, rather than on competition of ideas and constructive, evidence-based argumentation. The issue is further complicated by an intrigue-hungry press and a poorly informed and emotional electorate, which at times, appears incapable of reasoning beyond traditional political tribes.

In order to test our original assumption that parties’ differences are irrelevant, we decided to expand our analysis beyond GDP and to include the period 2012-2016. Instead of GDP we developed our analysis using two of the most well known indicators of economic performance for the Portuguese people: public debt and public deficit. Below, colored periods represent the political color of the leading party in government (orange: PSD; pink: PS).

Source: André Corrêa d'Almeida’s configuration. Data: Public Deficit and Gross Public Debt (IMF).
Source: André Corrêa d'Almeida’s configuration. Data: Public Deficit and Gross Public Debt (IMF).

Once again, as we argued in 2014, “political differences in ideology and praxis between the parties are irrelevant.” An examination of the last 42 years revealed that any one political party’s influence is no more or less beneficial than any other. Data shows that periods of deficit spikes, deficit lows, and debt accumulation or reduction have occurred in seemingly equal measure irrespective of which party held power. Despite the irrelevance of political differences, however, fervent ideological posturing along party lines dominates Portugal’s policy process. This has been neither helpful nor smart for the country...

It is not only in aggregate terms that differences across party lines have been irrelevant. One could argue that, while in aggregate these differences have not been able to produce a differentiated impact in public accounting, different expenditure priorities between the parties actually made a difference in people’s lives. For example, it could be that one party’s having spent more on education and the other having preferred to spend more on infrastructure could have a differentiated impact on people’s lives. However, life satisfaction data for Portugal shows that this is not the case either.

Source: André Corrêa d'Almeida’s configuration. Data: R. Veenhoven, Happiness in Portugal (0: min; 10: max). <a rel="nofollow
Source: André Corrêa d'Almeida’s configuration. Data: R. Veenhoven, Happiness in Portugal (0: min; 10: max). World Database of Happiness, Erasmus University Rotterdam, The Netherlands.

This life satisfaction index is constructed with survey questions such as “How satisfied are you with the life you lead?” or “In general, how satisfied are you with life?”. In the entire 30-year period analyzed can anyone say that one party was capable of making the Portuguese people happier than the other? The answer is “no”! This should not come as a surprise since no single person or party should be expected to hold the monopoly of good or bad ideas. Parties and politicians behave as if politics had an intrinsic zero-sum natural predisposition. That just isn’t true! But don’t blame them…

In recent years, our political discourse has become conflict-centric, bashing, demagogic and offensive, a discourse in which facts, data, technical rigor and an open mind for positive negotiations and consensus are marginalized. The result has been a race to the bottom – a kind of Gresham’s Law - clearly illustrated by the drastically declining levels of trust in the Portuguese Parliament. According to the Eurobarometer the level of people’s trust in the Parliament plummeted from from 58%, in 2003, to 20%, in 2014. And it was not poor economic performance what caused this distrust. Right before the 2008 global crises the index had already declined to about 40%. Before the European troika started imposing extremely harsh austerity measures, in 2011, the index was already around 25%.

The current incentive system used to frame political discourse is poorly designed both in terms of people’s interests and of politicians’ own interests. This is simply not sustainable politics! If key development variables are indifferent to political parties’ differences, then the political process should be based less on differences and more on common ground. For that to occur, we need a non-confrontational, cooperative process that is grounded in an elevated political ethic of the common—not the tribal—good. Implementing such an ethic requires certain changes in the way the Parliament operates.

Here you have two very simple examples to illustrate what I mean with the idea of behavior change if rules change:

1. Problem: Information asymmetry between government and opposition. This has been an argument to justify not requiring parties in the opposition to present detailed budgets for their proposals. Lack of parties’ technical capacity is one of the dramatic consequence of this status quo. 

Rule change: Equip the Parliament with the necessary staff to help parties in the opposition produce well informed assumptions and policy measures. 

2. Problem: Demagogy of oppositions when discussing budget proposals presented by governments. Typically, oppositions ask for more programs (expenditures) and fewer taxes (revenues). How can politicians engage in reasonable budget discussions if rules do not apply equally to both sides of the discussion? Some are bounded by the need to balance a budget; others are not.

Rule change: Require all proposals presented by the opposition to include a budget - costs and ways to finance it – the same way governments are required to do.

Democracies around the world are going through challenging times and national parliaments must realize that. Politicians need to understand these trends, act as a collective and reform their processes and modus operandi. The continuous loss of prestige will make democratic institutions, as we know them, collapse. It should not be at all surprising that conciliatory politicians, such as the President of the Republic Marcelo Rebelo de Sousa, enjoys such high levels of popularity. This is clearly a sign of people’s repudiation of the hostility and lack of political cooperation characterizing life in the Parliament these days.

The Parliament needs to come together, to act as the national team that it really is, and innovate our political institutions from within. Since 1978, Portugal has relied on “external imposition” to achieve reform, including interventions from the IMF, EEC, EU, Troika, etc. Portugal hasn’t been able to self-govern. This must change!

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