MICHAEL KEATING. The Future of Democracy: Part 1

At the start of a New Year, a year when Australia will have to elect a new government, it seems a good time to consider the future outlook for our system of democratic government. Overall there is a sense that citizens in many of the advanced democracies have lost confidence in the capacity of their governments to deliver.

Many explanations for this loss of government capacity have been offered, and in this article, I will discuss what I consider to be the most important explanations as a contribution to the continuing debate about what is wrong with our system of government. In a second follow-up article, tomorrow, I will discuss some of the proposed options to improve our system of government, even if returning to the alleged glory days of the past might be a bit of a stretch.

In Australia, one of the symptoms of the loss of government capability is the proliferation of minor parties, with each of the traditional two major parties now struggling to attract as much as 40 per cent of the electorate, and mostly much less. In the last forty years few Australian governments have controlled both Houses of Parliament, and thus been masters of their own destiny. In the US, Congress is frequently gridlocked, and right now much of the US Government has been shut down. While in Britain, there is no simple majority for any of the three main options for resolving the Brexit crisis: leave with no deal, accept the deal negotiated by Mrs. May, or go back and have another referendum in the hope that the decision to leave the EU will be reversed.

Clearly governments in each of these English-speaking countries are struggling to fashion majority support for their principal policies and even to set a strategic direction. Nor are these problems limited to the English-speaking countries that are most familiar to us. The question that I want to address here is what has led to this situation, as a basis for considering what should and can be done tomorrow.

Economic Stagnation and Increasing Inequality

The 1950s and 1960s represented the Golden Age of capitalism. Economic growth has never been stronger than in those years, unemployment was never lower, and this prosperity was widely shared with inequality falling. Furthermore, most of the institutions to support the welfare state were established in this post-war period and enjoyed almost universal support. By contrast, economic growth over the last decade since the Global Financial Crisis (GFC) has been sluggish, at less than half the rate in the preceding 15 years. Wages have been stagnant, unemployment has been higher and/or employment participation lower, and inequality has increased almost continuously since the early 1980s.

Consequently, many people feel they are worse off, or at least they are no better off and are struggling to make ends meet. Policies promoted by economists in favour of more flexible markets and greater competition, are readily blamed for a loss of job security, as allegedly jobs are transferred overseas or have become casualised. This is an obvious explanation for the loss of faith in expertise and the rise in populism. But for those of us who are part of the ‘policy making elite’, these populist solutions are no solutions, and only serve to exacerbate the problem of governing effectively.

In short, if good government is about finding workable compromises that attract broad-based support, then the present policy-making climate is most difficult for good government.

A more diverse policy agenda

The other significant change is in the diversity of the policy agenda. For the first sixty years of the Twentieth Century, the political divide was based almost exclusively on the different interests of labour and capital. This difference was reflected in the political system, with only two major parties, one representing labour and the other capital.

However, as incomes and education levels rose in the 1960s, and women increased their workforce participation, the nature of our society changed. For example, education has encouraged citizens to be more critical and less respectful of government (and other) authority. New issues such as feminism and the environment were also placed on the policy agenda, and often the enthusiasts for these ‘causes’ found that they could better prosecute their political agendas by joining with other like-minded people in single issue interest groups outside the framework of the traditional political parties.

Second, many of the new agenda issues, such as the environment and moral issues such as abortion or same-sex marriage, involve significant clashes in values, where a negotiated settlement between different participants is extremely difficult. Or as Senator Ryan, the President of the Senate, recently put it: ‘our political system is finding it more difficult to deal with social issues that require a yes/no answer’. By contrast it is typically much easier to find a middle-ground compromise on economic issues. Third, many of the problems that the state is being asked to resolve, such as drugs and child poverty, have complex causes, and are often well outside the state’s control.

But according to Mansbridge (1997), it is this incapacity of governments to meet the different and typically incompatible expectations of different groups of citizens over a wide range of issues which are inherently insoluble that is most responsible for the decline in trust in government. Furthermore, this widening of the policy agenda has not happened over night. Indeed, as long ago as 1995, the late Ian Marsh, in his book Beyond the Two Party System, wrote about the impact of the more diverse policy agenda on the two major political parties and the Australian system of governance,.


It is frequently asserted that the poor quality of present government decision-making and political debate is due to the poor quality of our leaders. Indeed, that may provide at least part of the rationale for the rapid turnover of these leaders. However, I am less sure. I agree that leaders can make a difference, and I will discuss that aspect further tomorrow when I discuss possible improvements to our government system. But for the most part, I think the quality of leaders such as President Trump, mainly reflects a response to the changing nature of the electorate. In the eyes of Trump’s rusted-on supporters, previous Presidents and their associated policy elite advisers have failed to acknowledge let alone meet the expectations of ordinary working people. In other words, the quality of leadership is more a symptom of the problems of governance that we are facing, rather than the cause.


In sum, the business of government has become more difficult. The number of competing and often incompatible issues demanding government attention has widened. Economic growth has been stagnant in most economies for the last decade or so, and many people’s expectations for their living standards are no longer being met. In addition, a better educated public has become much more critical, less respectful or trusting of authority and much more able to access news from sources that accord with their views and tell them what they want to hear.

Changing this situation will not be easy and at best it will take time. Some ideas for reform of government, that have been proffered, will be discussed tomorrow.

Michael Keating was Secretary, Department of Finance and Department of Prime Minister and Cabinet.


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10 Responses to MICHAEL KEATING. The Future of Democracy: Part 1

  1. Charles Lowe says:

    “[A]ccording to Mansbridge (1997), it is this incapacity of governments to meet the different and typically incompatible expectations of different groups of citizens over a wide range of issues which are inherently insoluble that is most responsible for the decline in trust in government.

    Ahhh… No!

    Parliaments exist to resolve even allegedly “issues which are inherently insoluable”.

    In early thirteenth century England the power imbalance between the King and the nobility seemed irresolvable/insoluable. Hence the establishment of the World’s first Parliament.

    If Parliaments end up not doing that (or not being properly able to do that) – we will replace them with ‘direct democracy’.

    Dr Keating, I don’t know why you quoted this person.

  2. Peter Sainsbury says:

    MK’s article and the comments are interesting but it seems to me that many of them are not the causes of a loss of faith in and/or functionality of democracy but rather are: 1) developments that a priori we might desire for a well-functioning democracy – eg a well educated citizenry who are willing and able to engage in the political process both within and beyond large political parties; and/or 2) predictable changes in society, within and across nations, that it is the task of governments to be significant players in managing for the benefit of all within a sustainable environment – eg technological changes, and the social and economic development of developing (often previously exploited colonised) nations.
    We must look beyond these factors for the causes of any failure of democracy/government. I am conscious of John’s request to keep Comments to less than 100 words so will not expand this here.

  3. Bob Mills says:

    Surely the 1950s and 1960s were no Golden Age of capitalism but of the mixed economy. Government departments and agencies dominated important economic sectors and the period since has been marked by their privatisation. One reason often proposed for the loss of trust in governments is that many of these privatisations should never have occurred, especially in areas of natural monopoly and personal service delivery where the profit motive can be seen to conflict with public interest.
    How does concern for the world’s environment possibly qualify as anything other than a central economic issue? The sustainability of our economic systems depends on a viable ecosystem. It is not an externality but an existentiality.

  4. Robin Shreeve says:

    As always a very perceptive analysis. A couple of minor observations. In terms of the difficulty of finding workable solutions it appears to me in the UK that Brexiteers are mainly pursuing a political argument (sovereignty) whilst remainers are mainly pursuing an economic argument (the economy will suffer) which may exacerbate the impasse. I also wonder about the impact of the contemporary perception in many parts of the world of mass migration because of war or economic ambition. I say perception because we have always had throughout human history mass migration but the way it is perceived now seems more acute and is often linked to notions of the sovereign state.

  5. Evan Hadkins says:

    In Aus the institutions are holding. There is little push to change the system – except for an Aus head of state.

    The problem I think is the professionalisation of politics.

    Looking forward to your ideas for solutions Michael.

  6. Kim Wingerei says:

    Thanks Michael, an excellent summary – particularly the often over-looked point about the added complexity and magnitude of policy issues to be addressed. In my opinion that is also why a different kind of leadership is required – not so much the “strongman” as we’ve seen, but leaders prepared to set the agenda and make the brave calls on issues such as climate change action – not because they are popular, but because they are “right”. Look forward to the next post.

  7. Nigel Drake says:

    Ignoring evidence based science in favour of religious and political dogma simply in order to attain and maintain government is fraught with innumerable dangers to the wellbeing of the nation and the planet as a whole.
    In the de facto two-party system which has developed in this country there is little need to convince the already convinced so, in order to attract the vote of the non aligned cohort a more rational and pragmatic is needed.
    It is that small cohort of educated, rational people who can effect the configuration of Parliaments independently from the ‘rusted on’ party disciples and acolytes.

  8. Inigo Rey says:

    Much of what is covered here seem to me to be symptoms and signs not root causes. A systems approach to analysis may be better able to account for the changes we have observed and we may need to stand some pieces of common wisdom on their heads:
    1. What if relatively unrestricted market based competition contains within itself the seeds of its own destruction; what if the much lauded economic reforms of the Hawke-Keating era exacerbated the political and cultural problems of advanced societies rather than resolving them, even as they made the economy more efficient at the macro level.
    2. What if greater efficiency, as defined by economists, results in the thinning out of the middle layers of the wealth pyramid, and the reduction in the overall share of profits going to the bottom one third at the same time, both of which trends reduce the relative magnitude of internal demand.
    3.Add in globalisation, which has a tendency to export those jobs relied on by the bottom one third of the skills pyramid, and eventually, with the advent of new technologies, a lot of the middle layers as well. Basically, a quite standard economic analysis shows that globalisation results in growth at the top end of society while importing the third world.
    4.With the boost of technology that makes supply-chain management across borders possible, and increasing sophistication of third world/second world economies and education systems, the negative effects of the transfer process can outrun the rate of increase of jobs at the top of the skills pyramid in developed economies. This is made worse if the prevailing ideology is against the provision of aid to affected communities and policy decisions made on purist comparative advantage models, such as the closing of automotive manufacturing in Australia, accelerate the changes.
    5. Add the fact that out education systems have reached peak social mobility promotion some decades ago and no longer contribute to increased productivity as much as they did in the past.
    6. Adopt a growth model based on population growth via importing immigrants from the third world in great numbers, most of whom find entry level positions at various skill levels in competition with locally born job seekers.
    7. Add a siloed policy elite that analyses effects not causes and does not often join the dots…and a few smaller processes that involve various feedbacks (such as the importation by our monolingual politicians of various already failing ideological memes (from Labour’s middle way, to the prayer breakfast mob’s agenda) and put the cherry of the effects on the volume level of our bullshit detectors of loads of unAustralian spin-doctoring and sloganeering…

    There you have a large part of it Mr. Keating (x2).

    • Chris B says:

      Yes they are good and relevant points.
      ….and in response to this “The number of competing and often incompatible issues demanding government attention has widened.”
      …both major parties always side almost totally with the the big money on any of these issues.
      ….still disgusted with that shit John Rau claiming his greatest achievement was instituting the Business Council’s workers compensation scheme (the most draconian in australia). What a fraud.

    • Wayne McMillan says:

      Inigo your systemic analysis is worthy of consideration and attention.
      Perhaps capitalism as we know it has come to a dead end and we are refusing to face up to this phenomenon.
      We are confronted world wide with environmental, social and political and technological dilemmas that are forcing us to recognise the limitations of capitalism.

      If we continue to analyse the problems from the same old lens, applying the same old policy tools to fix these new problems we will fail and fail dismally.

      Australia and other developed nations needs to come to grips immediately with the problems of economic growth, population growth and refugee displacement, as time is running out.

      Sustainable development, environmentally friendly energy sources, recycling, de growth and population control are issues that will be need to be dealt with now not later, they are the elephant in the room that won’t go away!!!

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