Are there countries where politicians and senior government officials can be forced to be personally invested in their official decisions?

Question

One criticism of the modern day regulatory state is that politicians and various senior government officials promulgating new policies have no "skin in the game"; that is, they have little to no personal liability in the results of their decisions. For example, a politician supporting a "bridge to nowhere" would not suffer any personal consequences if that bridge fails to have enough users - i.e. they wouldn't be forced to pay a fine. On the opposite side of the coin, a politician supporting the construction of a new spaceport would not see any direct financial benefits if the project is immensely successful - i.e. they won't see any dividends from commercial use of said spaceport.

Are there countries that attempt to tackle this problem by introducing some sort of "skin in the game" incentives? I'm aware that Singapore tried to encourage better governance by paying performance bonuses to top politicians but they're still guaranteed 70% of their salary every month no matter what.

Update as requested. Since it seems like "personal investment" is a vague concept, here's couple more examples:

1. A king personally participating in a battle is the most extreme example, though strategically unwise and no longer common for hundreds of years. If they win, the king gets the spoils. If they lose, the king is killed or kidnapped.
2. During the COVID lockdown politicians rarely suffered any consequences of their own actions. Financially they were better off thanks to selling stocks on time, they were exempted from stay-at-home orders and could continue living in luxurious houses. Politicians flouting the rules were likewise spared the worst thanks to having preferential access to the best treatments.

Answer 1

Sure, it’s pretty common, though we usually refer to it as “corruption”.

A politician can invest in that spaceport, or land on the other side of the bridge befor approving the subsidies. If they don’t have the money to invest, the company or developer can even offer shares at a steep discount to help them get “skin in the game” before making the decision. Then, if the spaceport is successful, then the politician profits handsomely, whereas if the bridge doesn’t spur the economic development promised, then their investment there will lose value.

This is partially facetious, but I think it’s also accurate and a good explanation for the problems with such approach. In a democracy, we want politicians to act for the common good, not their own profit, and so far the best, if imperfect, system for this is voting and elections

Answer 2

It doesn't work.

This is because most spending by governments isn't intended to generate a profit. Sure a bridge might not have many users: but it links an isolated community and avoids the dangerous ferry crossing.

A hospital isn't more successful if lots of people get sick.

And criminals don't pay the police to arrest them.

Social care isn't more profitable if more people get old.

A government isn't a company. It has goals other than "make the most money". So this (frankly weird) idea of "skin in the game" is a non-starter.

If a piece of capital investment is intended to be profitable, then there is likely to be a private investor who will pay, for a share of the profits. If it is not, but valuable for wider social reasons, then the government may step in to pay. The involvement of politicians is precisely because the spending is not expected to be profitable.

Politicians do have an personal interest in the success of capital spending - but through reputation and the ballot box.

Answer 3

The main problem with this idea is defining the behaviour we want to reward.

Imagine we had a really good algorithm for telling us what are good decisions/policies that politicians should be rewarded for, and what are bad decisions they should be penalised for. We can use this algorithm to tell us when you fine politicians or give them bonuses. But we can probably also just use this algorithm to make the decisions in the first place (the politicians certainly will in many cases, to maximise their bonuses) in which case why do we need the politicians?

In reality, you can't make anything approaching such an algorithm, because many (most?) political decisions are highly subjective and debated. Different people do not agree on what is the best decision on a given issue; they don't even agree on the principles that could be used to evaluate the benefits of different decisions.

Algorithms you can use are simple things, like giving politicians a bonus for the profitability of the projects they support. That immediately gives politicians a strong motivation to game the system and support projects/decisions that give them the most personal benefit, instead of ones that benefit the constituency they were elected by. And you can guarantee that companies seeking government support will game the system by structuring themselves so as to maximise the performance pay of politicians who arrange for the government to support the company; effectively this sets up a system of sanctioned bribes.

Another tricky problem is how are the rules of these algorithms to be determined? Are they in ordinary legislation? That means politicians themselves decide the rules by which they will be rewarded for their decisions. Or are they enshrined at a constitutional level? The immediate problem that comes to mind with that is, for example, yet another obstacle in legislating to address climate change (if that is what the people want) because the politicians personal incentives are defined by rules a century old and do not take it into account.

One form of "skin in the game" that elected politicians do have is that if they consistently make decisions that their electorate don't like they will be voted out, losing their politician's salary. Elections can in fact be viewed as an indirect algorithm for judging politicians' performance. If I were to try to redesign systems to increase the incentives for politicians to make good decisions, I would concentrate on strengthening the connection between the politician's decisions and their electoral success (e.g. reducing the necessity for and therefore influence of donors and lobbyists, maybe weakening the power of parties, things like that).

Answer 4

You've just rediscovered the argument in favor of monarchy. In "Forms of Government and the Duties of Rulers", Frederick II (the Great) says the following in defense of enlightened absolutism:

If a ruler abandons the helm of the ship of State and places it into the hands of paid men, of the Ministers appointed by him, one will steer to the right and another to the left. A general plan is no longer followed. Every Minister disapproves of the actions of his predecessor, and makes changes even if they are quite unnecessary, wishing to originate a new policy which often is harmful.

Men are attached to their own. As the State does not belong to the Ministers in power they have no real interest in its welfare. Hence the government is carried on with careless indifference, and the result is that the administration, the public finances, and the army deteriorate. Thus the monarchy becomes an oligarchy. Ministers and generals direct affairs in accordance with their fancy. Systematic administration disappears. Everyone follows his own notions. No link is left which connects the directing factors.

The sovereign is the representative of his State. He and his people form a single body. Ruler and ruled can be happy only if they are firmly united. The sovereign stands to his people in the same relation in which the head stands to the body. He must use his eyes and his brain for the whole community, and act on its behalf to the common advantage. If we wish to elevate monarchical above republican government, the duty of sovereigns is clear. They must be active, hard-working, upright and honest, and concentrate all their strength upon filling their office worthily. That is my idea of the duties of sovereigns.

According to Frederick, politicians and bureaucrats have no incentive in the welfare of the country, but monarchs have this incentive because being "active, hard-working, upright, and honest" is the only way for them to maintain power.

In the 20th century, economist Mançur Olson also studied the incentives of rulers. He claimed that the transition from "roving bandits" (i.e. anarchy) to "stationary bandits" (i.e. tyrants) was actually the beginning of civilization.

Answer 5

The only thing that comes close to this (that I can think of) is performance-based pay for tax collectors. This is done in some developing countries. (One has to keep in mind that these are usually not elected officials, so it's not exactly what the Q asks.) But even then/there:

Historically, governments have addressed tax collector corruption by employing “tax farmers,” who are paid a fraction of the revenue they collect. However, the level of empowerment and authority that was given to these tax officials frequently led to taxpayer dissatisfaction and over-taxation. [...]

Tax officials [in Pakistan] also maintain almost complete control of the property database, for which submissions are handwritten, allowing them to manipulate records easily. Misclassifying a property in the database also can have a significant effect on revenue levels—for example, a commercial property is taxed three to six times higher than a residential property and rented property is taxed ten times higher than an owned property.

[...] the increase in revenue levels was primarily from reassessment of a small number of properties that were reclassified as commercial or rental property and thus taxed at a higher rate. Additionally, despite the revenue merits of performance-based pay, bribe payments increased by an unsettling 30 percent and were paid more frequently.

While performance pay may help address some major revenue collection issues, it cannot necessarily eliminate or even reduce the corruption and collusion between tax authorities and taxpayers.

Answer 6

There is one major example: A dictator. A dictator has all their skin in the game. Every decision they make affects their personal life, and could result in them being overthrown and killed. It's just that their ideal outcome isn't necessarily (or even usually) aligned with the population's.

Answer 7

The problem here is that the behaviour you want to reward, or the policies they may support or oppose, aren't always clearly linked to money value.

For example,something topical. The UK prime minister locks down the country due to Covid. This was done on the advice of the Minister for health, with a cautionary note about economic impact and deaths due to reduced services (believed unavoidable)by the minister for trade and minister for social welfare. Fictional posts all.

Now,we can never factually know if this was a good or bad decision and which of those cautionary notes was under or over stated. People will due and be harmed, but every other course of action would have resulted in deaths and harm too. We can never rerun history to know whether the alternative would have turned out better or worse, not least because we cant know what other "course correction" choices would have followed in any other timeline except this one.

Here's another. The UK prime minister pushes through Brexit. But does so by fudging Northern Ireland, believing that can be patched later. The country wanted brexit, but perhaps not all that happened was wanted. But how do you decide if it was success or not? And what on earth would count as "skin in the game"?

And last, politics isn't about financial results, its about finding a way to get most people to overall agree (happily or reluctantly) to work as a society. That means that sometimes an ideal theoretical outcome is actually a poor choice,because it won't have broad enough support, and sometimes the right choice is "not yet" or "small step and framework first'. So a good politician might be one who gets consensus to lay the groundwork for a change but leaves it to the future what happens as a result of that. Or accepts some will hate what's done,but its needed long term. How do you get skin in the game, for a decision like that?

If you can't find a way go make some skin in the game on big deals, or what counts as a success to reward, or failure to punish, its a losing cause to try and do this.