Modern day clichés are evolving rapidly. It has become pretty hackneyed to refer to Brexit ‘shenanigans’; or, indeed, to say that we live in extraordinary times. Americans are probably fed up with talk of wall-building; and probably soon will be with the word ‘impeach’. And, globally, we really need to find another way of describing populism.
But what is at the core of this over-repetition of worn-out phrases is a global challenge to our systems of governance. And it is interesting to ponder the reasons for this because, on a smaller scale in our market, we have much to do and need to make sure we organise ourselves effectively to manage it. So, here is some amateur analysis of where things have gone well and where they have not.
Let us start with the positive: the beauty of the US Constitution and, in particular, the role its Electoral College plays. The Founding Fathers sought to create a system in which the central figure, the President, like the King, wasn’t very powerful and couldn’t really do anything. They were also keen that individual states retained the right to self-governance. They wanted to ensure that the federal government would struggle to do anything unless there was a very strong consensus in its favour. ‘Gridlock in Washington’ – another cliché – is precisely what Washington was designed to deliver.
At the heart of this is the Electoral College. The President does not get a direct mandate from the people, because he – as thus far it has always been – is not elected by the people. He is elected by electors sent by the states to meet in the college. Over the course of time, the states have taken to holding a poll of their citizens to determine how they think those electors should vote. But there are differing approaches to how that mandate is exercised: Maine and Nebraska allocate college votes by Congressional district, everybody else operates a winner-takes-all system. In 21 states there is no legal obligation for Electors to cast their vote in line with what their state poll suggested.
The President is actually elected not by the people but by a body designed to proportionally represent all the States. It means his programme of policies has no more or less legitimacy than both branches of Congress, who are under no obligation to support them. Hence Trump’s wall has yet to be built – although he is pursuing some questionable constitutional approaches to circumventing Congress; and Obamacare remains unrepealed. The system designed to curtail the individual power of one person has worked perfectly.
Now let’s look at the UK, which, it is important to remember, is not a democracy – in that we do not all vote on each issue as they did in Ancient Greece and as they still do in some Swiss cantons. We elect people – Members of Parliament – to take decisions on our behalf. This sort of representative system is fatally undermined when those people abrogate themselves of the responsibility by putting any issue to a popular vote, especially when it is the most divisive issue of the generation. It has paralysed the Parliamentary process and caused 42 ministers, including the Prime Minister, to leave office in less than three years.
Are there lessons to be learnt as Lloyd’s consults on the merger of the Franchise Board and the Council and the Future at Lloyd’s programme?
First, understand what you want to achieve from your governance approach and design the system to deliver that. The Founding Fathers wanted to place very significant restrictions on federal power. We probably want something more dynamic – hence streamlining the Lloyd’s decision-making process while retaining a measure of accountability and outside input – seems sensible. Second, don’t undercut your approach by not progressing the work in line with it. That is why it has always been vital to get the right market input consistently at all levels on our efforts to make London an easier place to do business. We are currently working with Lloyd’s to ensure this for the projects it has in mind for the future. And finally, accept that all systems of governance are a formalised framework to achieve consensus.
We all agree that there is work to be done to maintain our market’s competitiveness in the global industry. We are all also supportive of the direction in which the Future at Lloyd’s is pointing, and we all appreciate the different roles we will play in that future. Specifically, however, there is a lot to be discussed about how individual proposals might be progressed. That will take compromise. Unlike those in Westminster, I am confident that our representatives in market governance will find this is a word that they can practice not merely pronounce.
