Government Failure in Iceland - Essay Example

Research proposal Government failure in small societies: the relationship between legislative procedural discipline and administrative accountability. The case of Iceland. 1. Overview a. Overall context Iceland was strongly affected by the financial crisis in late 2008. Even though Iceland is a relatively small country in the last 10 years it succeeded in building up a banking sector 8 times larger than the country's GDP. Because of the "credit crunch" which happens to be a catastrophic worldwide event, Iceland turned out to be particularly vulnerable due to the ineffective public governance marked by extreme ties between financial supervisory institutions, Parliamentarians and the business elite. When asked about the systemic risks the Icelandic government referred both to its responsibility and to the public officials in ensuring overall stability. However, few if any could define in fact what "responsibility" means and if they do definitions will vary. Laws on the ministerial accountability1on the other hand have never been applied in the history of Iceland and in general political accountability is not common. Public confidence in the government has vanished and it is likely that the only way to regain the trust of the public is to redefine public sector accountability. Doing so means to look at the nature of government failure within the Icelandic government and to understand how the entire political system directly or indirectly allows for leeway which often leads to lack of accountability. b. Background The catastrophic financial events that shook Icelands economy in 2008 have confirmed the necessity for a complete overhaul of the entire political system. Given the economic reconstruction that is already underway, it is of primary importance to seek renewed government system and to redefine accountability of the public officials. This may also play a key role in reestablishing the trust between Iceland and foreign governments. c. Proposed knowledge contribution of study. Analyzing the effects of government failure on public management and accountability. Understanding the systemic conflicts within the government branches. Understanding the limitations of a small state's public governance. Comparative analysis with systems of higher complexity, (ex. UK, France). 2. The proposed research Given the overall context described above the research proposal can be summarized under the following points: The initial aim is to analyze the specific nature of government failures within the context of Iceland. Parliamentarian processes and errors will be examined in order to comprehend whether the Parliament - as the heart of the surveillance mechanism which consists of three power branches - has some inherent procedural weaknesses that prevent it from both following and reacting the changes in society.2 Secondly, the question "to what extent the lack of legislative supervision and discipline affect the nature of accountability in the executive branch" will be addressed. 3 Thirdly, clear ideas so as to how to increase political accountability will be developed. In this regard the surveillance mechanism of the three branches of government will be examined in order to provide improvements of its systemic accountability mechanism. Potential changes might include: The establishment of an independent Investigation Committee every two years (with a constitutional mandate) that publishes an annual report on government's transparency, accountability and efficiency. This report would be include simplified version so that ordinary people can read it and it will be publicly available. The Investigation Committee would furthermore investigate whether the delegation of powers functions properly. The possible issues covered will include financing of the judicial branch and legislative discipline. Establishing a new role for the President, namely to oversee the executive branchs decisions in matters concerning the high public interest. Building a complete overhaul of the structure of the Parliament's committees and their procedures, mandate and authority. Constructing a limit on how long government officials can stay in office Research objectives a. Aim of study The aim of the study is to find out what types of government failure is the most fatal for accountability's mechanism in a small states. This will aid us furthermore in discovering what kind of procedures need to ensure public accountability in the small state. b. Objectives The objective of this study is to develop more accurate mechanism of systemic accountability and in particular to prevent the negligent of legislative supervision from affecting the overall administrative accountability and efficiency. c. Proposition This research will be useful for governments of small states since it will reveal specific weaknesses and errors directly related to the small scale environment and feeble administrative platform. Benchmarks will be developed to analyze whether the accountability structure is adequate. 3. Literature Review a. General The overall challenge of addressing government failure and its consequences is enormous. Different circumstances account for different methods and solutions. Nation states differ in many fundamental ways including in terms of complexity, political systems and culture. However, most recent literature on government failure mainly focuses on the effects of government intervention in markets and the effects on pricing. In Gordon Tullock's "Government failure - a primer in public choice", Mr. Tullock provides fascinating examples about the ineffectiveness of various public policies and how many public programs eventually fail because they do not reach the desired outcome. Although Tullock describes common theories on government failure his book - as most similar literature - neglects delivering a holistic picture on the systemic differences between large and smaller societies and geographic specificities. The book also does not address the effects that a poor legislative discipline has on governmental accountability. Similarly, in "Government failure versus market failure", Clifford Winston gives an outstanding analysis of the effectiveness of government economic intervention in the US. Therefore, the book - as many others - does not deal with the systemic causes for inadequate decision making processes. The limitations of current literature constitute the gap I plan to help filling. 4. Methodology a. Research plan In 2008 the so-called "Investigation Commission" (SIC) was established by the Icelandic Parliament (Act No. 142/2008) 4. The Commissions 2000 pages long report will be made public at end of February 2010. It should be announced clearly that this report offers a unique insight into the public governance and accountability. Furthermore, it is unlikely that a similar report will be produced in the near future. It is on the basis of this report and its remarkable context that I have decided to embark on a PhD. In article 1 it says that: "The purpose of this Act is to have a special Investigation Commission seek the truth relating to the events leading to, and the causes of, the downfall of the Icelandic banks in 2008, and related events. The Commission shall furthermore assess whether mistakes or negligence occurred in the course of the implementation of the laws and other rules regulating and providing for control of the Icelandic financial sector. In this purpose the Commission shall: .. Assess the manner in which the financial sector has been supervised in Iceland in the past years and the exchange of related information between administrative authorities and to the Government and Parliament. Provide suggestions and proposals for amendments to acts of law, administrative provisions, working methods and organisation of public administration..." This report is exceptional in many ways. Firstly, the collapse of the Icelandic banking sector was unparalleled and therefore the report is unique in itself. Secondly, the events leading to the collapse form partly the world-wide financial crisis and therefore the report will reveal how the Icelandic administration and surveillance mechanism functioned when global challenges emerged. Thirdly, Iceland has a small scale environment, yet it has extensive financial operations abroad from which interesting contrasts can be derived and applied to other smaller societies facing similar governmental weaknesses. The report will undoubtedly reveal new and intriguing aspects of government failure. My assumption is that the main conclusion will evolve around the importance of how legislative branch must be more active in its reactions to the rapid developments of the business life in order to ensure government surveillance accountability. This is, clearly, an essential part of my research proposal. The proposal may need to be adapted under the circumstances following the outcome of the Commissions report. This, however, does not change the overall context of my research proposal. One of the issues the report aims revealing is how government failure to initiate action can be as harmful as the actions taken. Read More