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A voter enters a polling location in San Francisco on Tuesday. Elections are awash in big money. Real democracy \u2014 in which we govern ourselves, our cities, our states, and the world \u2014 barely exists.<\/p>\n
Jessica Christian\/S.F. Chronicle<\/p>\n
Talk is cheap. Which is why you can dismiss all the rhetoric from California leaders about championing or saving democracy.<\/p>\n
If they were serious about building a 21st\u00a0century democracy statewide and in local communities, they\u2019d have governments borrow money to do it.<\/p>\n
How? By creating a new type of financial instrument: the democracy bond.<\/p>\n
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Our elections are open sewers of big money, donated by oligarchs who use voting to reinforce their power. Meanwhile, real democracy \u2014 in which we govern ourselves, our cities, our states, and the world \u2014 barely exists because it is starving for funds.<\/p>\n
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<\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n In California, we also need billions to replace institutions of democratic government, from financial regulators to health and safety agencies, that the Trump administration is corrupting or dismantling.<\/p>\n If all that sounds sensible, you might ask: Why don\u2019t we have democracy bonds already?<\/p>\n Article continues below this ad<\/p>\n Two answers: tradition and law.<\/p>\n In the U.S., we have long used state and municipal bonds \u2014 through which governments borrow money from investors and pay it back (plus interest) over years or decades \u2014 to build schools, bridges, tunnels, parks, housing and (maybe someday) high-speed rail.<\/p>\n Laws typically allow bonds to be used for \u201ctangible capital assets\u201d like infrastructure or buildings. The logic is: If a city builds a wastewater treatment plant to last three decades, then it\u2019s fair to issue a 30-year bond so that residents help pay for the infrastructure they will use.<\/p>\n But personnel, maintenance and even democratic processes have been considered less tangible and more short-term. The government is supposed to pay for these things via annual budgets rather than through long-term borrowing.<\/p>\n Changes in society should shift this calculus. \u00a0<\/p>\n Article continues below this ad<\/p>\n In a world built on ideas and technology, democracy is public infrastructure as much as any school or sewer. Democracy allows people to decide for themselves what gets built and ensures policies address real needs. Democratic oversight, from the public and elected officials, prevents corruption. As democracy declines, we are seeing just how tangible democracy can be. Authoritarians abuse their power to break contracts and laws, thus undermining investment, trade, education and health.<\/p>\n If California and its governments redefine democracy as infrastructure \u2014 by changing local and state\u00a0laws \u2014 then democracy bonds will make sense.<\/p>\n The government could structure democracy bonds in many different ways. They could be\u00a0general obligation bonds<\/a>, backed by state or city general funds. They could be revenue bonds<\/a>, attached to a dedicated funding source for paying bondholders back. (I\u2019d suggest a tax on large donations to election campaigns. Call it the oligarchy tax.)<\/p>\n Or if you prefer a more avant-garde approach, democracy bonds could work like social impact bonds, in which investors provide capital and the government pays them back with interest after meeting democratic milestones. In other words, you could sell a bond for which the payback depends on whether the city lets residents decide the local budget through participatory processes, or if local governments create digital tools to let citizens propose their own laws.<\/p>\n Around the world, international development agencies have floated ideas for \u201cdemocracy bonds<\/a>\u201d or \u201coutcome bonds.\u201d One concept, promoted by the World Bank, allows developing nations to issue bonds with interest rates or prepayment terms indexed to the country\u2019s progress in democratic governance, human rights or sustainable development.<\/p>\n Article continues below this ad<\/p>\n My idea would be to put democracy bond dollars in a democracy community trust<\/a>. This trust would allow local people, perhaps chosen by lottery, to decide what to do with the money. Through the trust, the community would also own the assets created by the bonds.<\/p>\n You may object because the world\u2019s peoples, governments and corporations all carry too much debt already. That\u2019s a fair point, but so is this: We use debt to pay for the things that matter most, including our homes and our children\u2019s educations. Paying with debt demonstrates long-term commitment \u2014 which is exactly what democracy needs.<\/p>\n A bond, after all, is a binding financial contract. When a city issues a 30-year democracy bond to fund democratic infrastructure, it\u2019s putting that money where a frustrated mayor or hostile city council can\u2019t touch it to satisfy narrow short-term aims.<\/p>\n Democracy bonds, more directly controlled by people, also might act as a counterweight to bureaucracy, forcing collaboration and weakening government silos.<\/p>\n Guest opinions in Open Forum and Insight are produced by writers with expertise, personal experience or original insights on a subject of interest to our readers. Their views do not necessarily reflect the opinion of The Chronicle editorial board, which is committed to providing a diversity of ideas to our readership.<\/p>\n Read more about our transparency and ethics policies<\/a><\/p>\n So the next time you see a public official vaguely promise to protect democracy<\/a>, get in their face and say:<\/p>\n Article continues below this ad<\/p>\n Show me the bond money.\u00a0<\/p>\n