The political lemons are damaging our politics

Chris Huhne is a political lemon. He’s the equivalent of a fourth-hand car with dodgy brakes being sold to a dear old granny with poor reflexes. He lied and did so in one of the most destructive ways possible. He lied to his family, the police, the courts and his constituents. This is why he’s like a bad used car – a lemon. It’s the sort of behaviour that damages everyone in politics.

It’s a problem of information asymmetry. Basically, we didn’t know that Chris Huhne was such a liar when he was elected. He probably did. Maybe some of those closest to him knew it too. But he kept it hidden from the public. In this way he’s a lot like the used cars described in George Akerlof’s ‘The Market for Lemons’, a paper which contributed to him winning a Nobel Prize in economics. When someone buys a used car they don’t know whether they are getting a lemon (a dud) or not. The information advantage is with the seller. A buyer will only know if they’ve bought a dud after they take ownership of it. In this case, a large number of people in Eastleigh who voted for Huhne only realised they got a dud after he was elected.

His lying is part of a bigger problem facing politics. Lemons in a used car market lower prices for all cars. This is because buyers don’t know whether the car they buy is a lemon or not, so even good cars are considered suspect. I think this principle can be applied to politics. When a politician lies or misrepresents their position, politicians of all stripes are tarred with the same brush. Even though most MPs, from all parties, are generally honest and hardworking it only takes the actions of a few, such as this Lib Dem lemon, to drag the whole lot down. After all if you didn’t know Huhne was the lying type, how can you tell any other politician is? It creates uncertainty in the minds of the voters about whether they can trust politicians or not. Of course, it’s not all Huhne’s fault. There are plenty of political events like the expenses scandal, tuition fees and Sarah Teather’s recent vote against equal marriage, that contribute. Only around 14% of the British public say they trust politicians.

Such behaviour also has the problem of the ‘bad driving out the good’. When the used car market has a noticeable number of lemons it doesn’t make sense for a seller to put a good car on the market as the value is lower than is should be due to a lack of trust. With the poor behaviour of some politicians causing a lot of public anger I suspect, but don’t have any evidence, that a lot of good and talented people are being put off entering politics. It’s also not good for getting genuinely honest people into the political system. If George Washington truely could not tell a lie, he would certainly be at a disadvantage in British politics when politicians, of all parties, are willing to change their ‘strongly held beliefs’ for the sake of getting selected, getting elected and getting ahead.

This is one of the reasons why the weekend of action against Sarah Teather is worthwhile. She gave a false impression about an important issue and it’s important for any party to put lemons of another party on display for the world to see. There are of course ways to mitigate the consequences of the lemon problem. Good car dealerships offer warranties; politicians have to answer voters at elections. A good car brand can help people trust that the car they are buying is worth it; there are politicians with good reputations. However, there’s no getting away from the fact that Chris Huhne did more than just shame himself last week, in his own small way he further eroded trust in politicians. His footnote in the history of political cynicism is confirmed.

John Clarke blogs at johnmichaelclarke.wordpress.com