An economic analysis of electoral laws
Malta’s electoral laws divide the tiny State into 13 districts of more or less equal size, each electing five members of Parliament. This means that in order to be elected to Parliament, a candidate must garner a quota of 16% of votes cast in a district, through a single transferable vote system (save for the fifth candidate elected in each district who often does not reach the quota but is elected because every other candidate is eliminated). In practice this also means that a political party must enjoy almost 16% support in an electoral district in order to be represented in Parliament.Proposals to adopt a 5% national quota have been resisted by the two major parties, thus virtually guaranteeing that they will be the only two parties in Parliament in a winner takes all system. This has been the subject of much heated debate on a popular Maltese blog.
The democratic advantages of greater pluralism are intuitive to some, while the advantages of stability engendered in a two-party system are intuitive to others. I will therefore adopt a different approach here and look instead to competition theory.
The forces that drive competition include (i) the existence of a plurality of suppliers, (i) the possibility of access to the market by new actors, and (iii) consumer choice.
On the first count, the political system does not fail completely. There is a plurality of political parties, but only two have the critical mass to make it into Parliament.
The second and third aspects that I identify are inextricable one from the other: Consumers, or voters for the present purposes, are restricted in their choices because they are aware that if they opt for a third party that cannot garner 16% of the vote, they will favour their less favoured major party by omitting to vote for their second preference. In other words, if Party A and Party B are the major parties, a voter who is ambivalent about Party A, but abhors Party B, must vote for Party A, notwithstanding that s/he identifies most strongly with Party C or Party D. The limitation on the demand side obviously limits access to the market by new actors (the second factor that I list above).
Accordingly, if economic theory is applicable, it can be concluded that electoral systems that are skewered in favour of a two-party system limit competition, encourage complacency and therefore drive quality down. They are basically inefficient.
Of course, I concede that there are a number of flaws in this approach, including the fact that there might be perfect competition within the major parties. Yet, there could equally be several barriers to competition within a political party. There are also several other factors to consider that I do not have the time or space to do here; these include the identification of the market: is it the independent voters alone, or should there be a market for ideas within a political ideology? And the list goes on.
Most importantly, there remains one central question: is it pertinent to apply economic analyses to electoral laws, or is this simply academic navel gazing? Can we apply competition theory to a market for ideas?
Comments
In other words, if Party A and Party B are the major parties, a voter who is ambivalent about Party A, but abhors Party B, must vote for Party A, notwithstanding that s/he identifies most strongly with Party C or Party D.
I suspect this analysis is based on a misunderstanding to how STV-PR works. Assuming parties C and D (small) both nominated only one candidate and parties A and B (large) both nominated 4 candidates, your voter with the preferences you describe above might well vote in order: C, D, A2, A4, A1, A3, B4, B1, B3.
IF, against expectation, enough other voters did the same, party C or Party D would win one seat. Your example voter does not reduce his/her ability to "keep party B out" by giving his/her highest preferences to party C and party D before marking preferences for the candidates of party A. Note that this "party-B-hating voter" may also influence the chances of election of the four candidates nominated by party B, by marking preferences from "least objectionable" to "most objectionable".
That may change you economic appraisal.
What I would add is that the 16% threshold ensures that Party A will inherit enough votes from Party C and need not improve its product to cater for the demand of consumers that prefer Party C.
There is also the factor of limited cross-party voting between the major parties. This is not a strictly systemic matter as such, but the STV system can be played in such a way that the party faithful will have just the right number of candidates in a district to ensure that their vote will be inherited by any one of the candidates of their preferred major party.
I think in this case we are talking about Perfect Competition since technically there is no tangible economic cost to be incurred.
But there are still strong arguments for applying economic theory...
I wouldn't dismiss the theory on grounds of barriers to competition. In fact I think that the problem third parties face is because of such barriers. These can be artificial and placed there purposely by the parties in power or they could be natural - and let us not dismiss the fact that maybe people do not want a third party.
Likewise electoral laws (I presume) would assume that individuals are rational... and therefore the concept of utility applies.