Roger Partridge: The Hole in Democracy Elections Do Not Fix

The American satirist P. J. O’Rourke spent the late 1980s watching the United States Congress at work. He ended the book he wrote about it, Parliament of Whores (1991), with this: “Every government is a parliament of whores. The trouble is, in a democracy, the whores are us.”

James Madison feared what a majority faction might do to a minority. But what restrains a majority when the people who will pay for its decisions have not been born?

Much of what goes wrong in a democracy is not done to voters but by them, and is paid for by somebody who was never asked. There is an old principle for spotting when that will happen: who pays, decides. When the people who make a decision are the people who live with it, it tends to be made well. When the cost lands on someone else, it goes badly. As I wrote in January, in a flat where the heating bill is split evenly, everybody runs the heater a little higher.

Public money is the obvious case. In Democracy in Deficit (1977), James Buchanan and Richard Wagner argued that the old rule of balancing budgets in peacetime had worked as an unwritten fiscal constitution, and that the followers of John Maynard Keynes had demolished it. Once the presumption against debt fell, democratic politics acquired a standing bias towards borrowing. A programme paid for by taxes announces its price. The same programme paid for by debt looks cheaper than it is, so voters demand more of it.

The voters who agree to the spending are alive to enjoy it. Some of those who will repay it are still at school, others not yet born.

Buchanan took a name for the trick from the Italian economist Amilcare Puviani – “fiscal illusion.” The term covers any way of raising money that leaves voters thinking it costs less than it does.

Borrowing is one way. “Bracket creep” is another. When a country does not raise its tax thresholds with inflation, rising prices push people into higher tax brackets, revenue rises every year and no minister has to stand up and defend an increase. The voters who take the visible benefit and ignore the hidden cost are not greedy. They are reading the prices they are shown.

Half a century after Buchanan and Wagner, the ledger reads as they predicted. American federal debt held by the public now roughly equals a full year of national income. In the 2026 fiscal year, Washington paid about $1.1 trillion in interest, more than it spent on its military. New Zealand is on the same road at a gentler pace. On the Treasury’s latest forecast, the government elected in 2023 to repair the books will have added NZ$34 billion to net debt over its three Budgets, almost three-fifths of everything the country owed before the pandemic.

Not only the budget

Borrowing is the case economists study. It is not the only bill we send forward.

Rich democracies pay their pensions out of the taxes of people still at work. Their populations are ageing because people live longer and have fewer children. So each retiree draws the pension for more years, with fewer workers behind to pay for it. In 2023, France raised the age at which most people can draw a full pension from 62 to 64. It took months of mass protest. Even then, the government could pass the change only by using a constitutional power that allowed it to skip a final vote. Two years later, to keep his minority government alive, Prime Minister Sébastien Lecornu suspended the rise until after the 2027 presidential election.

In New Zealand in the 1960s, seven working-age New Zealanders stood behind each person on a state pension. Today, there are four. By 2065, on the Treasury’s long-term projections, there will be two. When the pension age began its rise from 60 to 65 in 1992, a man of 65 could expect to live about 15 more years and a woman about 18 and a half. Today the figures are about 19 and nearly 22. Yet the age has stayed at 65 since 2001.

In 2017, the prime minister, Bill English, campaigned on lifting it to 67 and lost office. Those who receive the pension vote. Many of those who will pay for it are too young to. Others are not yet born.

The price of a house is a bill of the same kind, passed on by the people who own one to the people who have still to buy one. It appears on no budget at all. In The Homevoter Hypothesis (2001), the Dartmouth economist William Fischel argued that for most families, the house is the one large asset they own, and that they vote in local politics to protect its value. Zoning lets them. A householder can object to the flats planned down the road and keep the scarcity that holds up the price of his own house. As I wrote last month in The Engine of Discontent, the family who would have lived in the flats can object to nothing, because they do not live there yet. They pay in higher rent, a bigger mortgage or a longer commute.

England has run this system since 1947, when planning law made almost every new building a matter for a council’s discretion. In 2014, England, with 54 million people, started 137,010 homes by the Financial Times’s count. Tokyo, with 13 million, started 142,417, under national rules that let an owner build what the zone allows without asking the neighbours. New Zealand ran the English machine harder than almost anyone. At the 2021 peak a house in Auckland cost more than eleven times the household income of the people who might buy it.

Each of the three gives something to a voter now and sends the bill to someone with no vote on it. A child not yet born. A teenager not yet on the electoral roll. A family not yet living in the street. The politicians did not invent these bargains. They learnt them from us, at the ballot box.

Two things go wrong in each case. The price is hidden from the people deciding, and falls on people who cannot take part. Showing voters the price mends the first. But it does not mend the second, because a voter who sees the whole bill may still choose to send some of it on. So what can be done?

Promises do not last

The first thing a democracy reaches for is a promise. A government announces a target or writes its good intentions into a statute. The politicians making it answer to the voters who want the bargain, so a promise costs them nothing and binds them to nothing. New Zealand has tried one on borrowing and one on the pension.

New Zealand’s Fiscal Responsibility Act 1994 required governments to publish their fiscal intentions, report against them and keep debt at prudent levels. Net debt, which had peaked at 54.8 per cent of national income in 1992, fell to 6 per cent by 2008 while surpluses came easily. Even then, my New Zealand Initiative colleague Bryce Wilkinson found in 2004, it held down borrowing but not spending, because governments treated the extra revenue from growth as “free cash flow” to spend as they chose. Once the surpluses stopped, each government set its own targets and revised them when they began to pinch. The government has run a deficit every year since the pandemic. On the Treasury’s own projection, if nothing changes, net debt will reach twice national income by 2065.

The promise to save for pensions went the same way. Michael Cullen, then the finance minister, set up the New Zealand Superannuation Fund in 2001. It was sold as putting something aside for tomorrow’s pensions, though it was never going to pay more than a part of them. Its real work was to keep the surpluses of those years out of the reach of his colleagues in cabinet. The next government stopped paying into it in 2009. Nothing more went in for eight years. Nobody marched.

What works

What, then, can a government do that its successors cannot easily undo? Anything a parliament enacts, a later parliament can repeal. A remedy survives only if somebody will fight for it. Three solutions produce somebody who will fight: a habit voters have made part of the country’s idea of itself, an institution that lives on the money, and a rule they must be asked about before anyone changes it.

A habit is the cheapest and least dependable. New Zealand’s nuclear-free law has stood since 1987 because voters took it into their idea of the country. Fiscal habits are rarely held so firmly. The nearest New Zealand came was a number – net debt of about a fifth of national income. By 2017, even Labour, in opposition, was promising to get back to it. It was 18.6 per cent in June 2019 and 41.9 per cent by June last year. Much of the rise paid for Covid, but nobody fought for the old number, because nobody’s standing depended on it.

One way to keep a fiscal habit honest is a fiscal council, a body independent of the government whose job is to tell voters when its numbers are wrong. Fifty-four countries now have one, by the IMF’s count. Wilkinson proposed one for New Zealand with Khyaati Acharya in Guarding the Public Purse in 2014. A council’s weakness is that it is paid for by the government it judges, so it lasts only as long as that government’s patience.

Hungary’s lasted two years. In 2010 the governing party cut its funding by 99 per cent within weeks of the council faulting the budget. Britain’s fared better, but only after a chancellor announced £45 billion a year of tax cuts in 2022 without letting the council cost them. The bond market costed them instead. Mortgage rates jumped, the Bank of England had to rescue pension funds and the prime minister had resigned within a month. Parliament has since required that any large tax or spending announcement be costed by the council first.

The second solution is an institution with owners. The price of a house in Auckland had been kept high by owners voting to keep new homes out of their streets. When Auckland decided in 2016 to allow more homes on most of its residential land, the change survived two changes of government, because the owners who may now build more on their land will not hand that back. Promises to behave do not last. Institutions with owners do.

A tier of government with a tax of its own – a council, say, or a province – is an institution of the same kind. Its rulers carry the bill for what they decide and have something to defend. Parliament gave New Zealand’s boroughs and counties a uniform power to levy rates on property in the Rating Act 1876. That power has been amended for a century and a half and never once taken back, because the councils that live on it have fought for it every time.

Each of these handed something to people who would lose it if the arrangement were undone: a building right to a landowner, a tax base to a council. Britain’s fiscal council gained defenders more loosely, once households with mortgages had learnt what ignoring it cost.

The third solution is a rule that cannot be changed without asking the voters. Buchanan and Wagner ended Democracy in Deficit by calling for one in the American constitution. The unwritten rule had failed, so its replacement had to be “more formal, more specific, more explicitly confining.” In the American states, the idea became a cap on the growth of government, with anything above it needing the voters’ consent at a referendum. Its defenders would be the people paying. Wilkinson’s 2004 report Restraining Leviathan asked for the same in New Zealand, entrenched in legislation beyond the reach of an ordinary majority.

Colorado’s is the best known. Its voters wrote a Taxpayer’s Bill of Rights into the state constitution in 1992. It holds the growth of state revenue to inflation plus population growth, hands anything above that back to taxpayers and requires their consent to any tax increase. It is still in force. When the state wanted to keep more of its revenue in 2005, it had to ask. Voters let it keep the surplus for five years and loosened the cap after that.

The Swiss have done the same for a whole country. In December 2001, nearly 85 per cent of Swiss voters approved a debt brake in the federal constitution, requiring the budget to balance over the economic cycle. Loosening it takes another referendum, so the brake has owners: the voters who would have to be asked. In Swiss towns where voters must approve large spending at the ballot, Lars Feld and Gebhard Kirchgässner found less public debt than where councils decide alone.

Germany wrote its own debt brake into its constitution in 2009 by a two-thirds vote of parliament, with no referendum. In March 2025 another two-thirds vote rewrote it, exempting most defence spending and authorising €500 billion of borrowing for infrastructure. Nobody outside the Bundestag had to be asked either time. Entrenchment without owners is a sturdier promise, but still a promise.

Entrenchment is not on offer everywhere. Britain has no written constitution, so nothing sits above the House of Commons. A British debt brake would be a statute like any other, repealable by a simple majority the week after it passed. Washington is barely better placed. Amending the federal constitution needs two-thirds of Congress and three-quarters of the states. The balanced-budget amendment Buchanan and Wagner called for has never passed.

New Zealand sits closer to Britain than to Switzerland, but not all the way. The Electoral Act reserves a handful of rules, the term of Parliament and the voting age among them, that can be changed only by three-quarters of the House or by a referendum. The section that protects them is not itself protected, so in law a bare majority could strip the protection first. In practice, no government has tried, so the rule has held since 1956. When a government slipped an entrenching clause into a 2022 law on water services with a bare majority, the outcry made it take the clause out before the final vote. Voters treated the protection as theirs.

For pensions at least, a parliament that cannot entrench has an alternative – though weaker – remedy. Denmark’s pension age has followed life expectancy since 2006. In May 2025, its parliament raised the age to 70 from 2040. Nobody owns the formula, so nothing stops a majority from repealing it. But a government that wants to stop the rise must vote against the formula in public, where the cost of doing so can be seen.

What to do

For borrowing and spending, the answer is to let the people who pay decide. Voters would be asked at a referendum before government spending grows faster than prices and population. That lets spending per person keep pace with prices and asks voters only when government wants more. An ageing population will press hardest against such a limit. Voters would then choose between paying more, spending less elsewhere and lifting the pension age.

A qualified majority of Parliament could be allowed to override the rule in an emergency. The same right could run locally, as it does in the Swiss towns. Local voters would be asked before their council commits them to a major project.

Parliament could protect both rights by entrenchment – in the same way it protects the term of Parliament. Taking either away would need three-quarters of the House or a referendum. Unlike the citizens-initiated referendums governments tend to ignore, this would be a consent that a government had to obtain.

None of this gives the unborn a vote. A referendum can approve a bad bargain as readily as a parliament can. But the rule would change the default. Today, a government can promise more and borrow the difference without anyone being asked.

Voters’ grandchildren still will not be asked. Voters may still choose to send part of the bill to them. But they will have to do it out loud, with the bill in front of them.

This essay is part of an ongoing series on liberalism, democracy, and the international order. Related writing in Persuasion, Quadrant, Quillette and on Plain Thinking is collected here.

Roger Partridge is chairman and a co-founder of The New Zealand Initiative and is a senior member of its research team. He led law firm Bell Gully as executive chairman from 2007 to 2014. This article was sourced HERE