US campaign increases dangerous mistrust in political system

These liberal principles are not just vital for democracy, but also for the market economy to function. Without trust that the government will implement the laws impartially and that most people will act fairly and honestly, it is difficult to engage in most economic transactions. The reason is simple - and one that the last Nobel prize to Oliver Hart and Bengt Holmstrom was awarded for - namely, that most contracts are incomplete, in the sense that they cannot specify all the contingencies that are relevant to the buyers and sellers. On this account, contracts need to be designed appropriately, as the Nobel Laureates have shown, but furthermore they generally require trust that the other party will behave reasonably and fairly when unforeseen circumstances occur. Without trust, economies unravel. That is one important reason why the economies of the Ukraine, Kosovo, and other war-torn regions are in such a mess: there is too much mistrust for the free market to work.

The unraveling commonly begins with a mistrust of the ruling government. That is the reason why many African countries find it difficult to escape from poverty: When one tribe wins an election, the members of the other tribe believe that the political and economic systems will be rigged against them. In the last Presidential debate, Donald Trump fanned the flames of such mistrust by refusing to accept in advance the outcome of the Presidential election. This refusal comes after numerous speeches that he has given in the past week in which he claims that the electoral system is already rigged and that the election victory will be stolen.

These developments bode ill not only for the United States in the coming four years, but also for the rest of the world, which relies on American leadership both politically and economically.

How did it come to this? Why has the political infighting become so vicious? Why have personal attacks on the opponent become so prominent? Many of the conceivable, partial answers have been offered by political scientists, associated with electoral strategies. But there is one answer that doubtlessly plays an overarchingly important role and that has received relatively little attention so far. The Presidential debates have become a huge media event with virtually unparalleled entertainment value. The first Presidential debate was the most-watched in the history of American politics. While we don't have exact numbers for the following debates, it is clear that each exceeded 50 million viewers. This makes the debates a windfall not only for television, but for all the other traditional and social media as well. The moderators of these debates were all prominent American TV journalists: first Lester Holt (Anchor of NBC Nightly News), second Martha Raddatz and Anderson Coopers (Anchor of ABC News and CNN, respectively) and finally Chris Wallace (Anchor of Fox News).

The media need to entertain their viewers. No matter how seriously they take their social responsibilities, they all appreciate the paramount importance of grabbing the viewers' attention. This can be done best by highlighting the personal traits of the debaters and particularly by drawing them into conflict. For in the midsts of an acrimonious debate, the nastiest sides of personal dispositions are most easily revealed, and viewers love to see candidates reveal their nasty sides.

But this fundamental fact - that the US Presidential debates are a major entertainment event - reveals a major conflict of interest. On the one hand, the media get as many viewers as possible by staging emotional debates: on the other hand, the voters desperately need to be informed about  the underlying issues in order to cast responsible votes. The need to inform about basic issues is essential for a functioning of the American democratic process: How will one's election promises be financed? How will the candidates deal with Russian aggression in the Middle East? Will the candidates deal with the U.S. government's budget deficit? How much will the candidates contribute to building up American infrastructure? What trade agreements are they planning to negotiate? What precisely will they do to address the problem of climate change? And so on.

We don't have clear answers to these questions. Even though all debates have been concluded. This is a tragedy of global proportions. It arises from a fundamental conflict of interest. How we deal with this conflict of interest, in the U.S. and elsewhere, will determine how well our democracies function in the years to come.

(The above is a slightly edited version of an oped that appeared online on “Handelsblatt Global Edition” on October 21, 2016, entitled “The Disastrous Consequences of an Ugly Election”)