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A master of two servants: lessons from the israeli experience about the effect of separation of powers on public accountability and social welfare

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And king Rehoboam consulted with the old men that stood before Solomon his father while he yet lived, and said: How do ye advise that I may answer this people? And they spake unto him, saying: If thou wilt be a servant unto this people this day, and wilt serve them, and answer them, and speak good words to them, then they will be thy servants for ever.

(Kings I, 12, 6-7, King James Version)


History is abundant with authoritarian rulers who reluctantly delegated governance powers to other institutions. Nevertheless, the intriguing question is why would democratic powerful rulers delegate powers voluntarily to (probably) contrarian institutions and tolerate activism that impedes the implementation of their election commitments. I develop a principal-agent model based on Fiorina’s (Congress: the Keystone of the Washington Establishment, Yale University Press, UK, 1977; Public Choice 39:33–66, 1982) blame-deflection hypothesis that politicians use the separation of powers principle as a shield against public criticism and accountability and addresses Stephenson’s (Journal of Legal Studies 32:59–89., 2003) criticism. I show that in subgame-perfect equilibrium, the agent manipulates the principal. The extended model embeds experience and impartial judiciary and shows that the equilibria are preserved, but social welfare is lower.

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  1. Ex parte Merryman, 17 F. Cas. 144 (C.C.D. Md. 1861) (No. 9487). It is worth noting that the same Chief Justice Taney issued the famous Dred Scott verdict (Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857)). Dred Scott (1799–1865) was an African-American slave who sued his master for freedom because he and his family lived four years in Illinois and the Wisconsin Territory, where slavery was illegal. The U.S. Supreme Court majority, led by Justice Taney, ruled that black people are inferior and thus cannot claim American citizenship or have locus standi in American courts. Therefore, setting Scott free would “improperly deprive Scott’s owner of his legal property”.

  2. In August 2009, a former deputy to the Israeli Attorney General, Yehudit Karp, reported 10 High Court verdicts loudly ignored by the government. The most famous case is Daud et al. v. Minister of Defense et al. (Bagatz 64/51 PD 5, 1117). In November 1948, the Israeli army expelled the Christian inhabitants of two Galilee villages, Iqrit and Biram, promising to return as the war was over. In July 1951, the High Court ruled that they were entitled to return to their homes. The military administration ignored the verdict. The villagers appealed several times again, but the government still bans them from returning to their lands, although the martial law on Israeli Arab settlements was abolished in 1966. The High Court, established by the British government, merged with the Israeli Supreme Court after the establishment of Israel in 1948. Henceforth I use the terms High Court and Supreme Court interchangeably.

  3. LDP = Liberal Democratic Party, the ruling party in post-WWII Japan.

  4. It is essential to distinguish between independent judicial review on legislation’s constitutionality and executive decision’s legality on the one hand and judicial activism on the other hand. The former is a vital precondition for a functioning democracy, economic development, and growth. The latter is primarily a politically motivated intervention in legal decisions of the executive, based on either general or personal moral principles and ethical values or beliefs of the judges regarding the appropriate goals of legislatures, and expanding creative interpretation of the constitution, or even without reference to any law. (I am indebted to an anonymous referee for this note).

  5. The common denominator of all ignored verdicts mentioned above is that the government could assess that the public is firmly against them. President Lincoln took no political risk when he ignored Justice Taney’s ruling regarding the writ of habeas corpus for suspects in treason during the American Civil War. Similarly, the Israeli government took no political risk by ignoring the High Court ruling regarding the rights of the Galilee villagers, whose lands were taken in the meantime by the surrounding Kibbutzim. The same applies to all other cases enlisted in the Karp report (see footnote 2). On the contrary, respecting those verdicts involved severe political risks. For analysis of the costs and risks associated with government-judiciary conflicts, see Vanberg (2001). For studies of the costs and risks associated with fulfilling political pre-election commitments, see Gustafsson (2019) and references there.

  6. The model developed below shows that the gap between reality and perceptions can persist in stationary equilibrium, as long as it is not “too big”. This gap affects other economic realms. For example, Feld and Voigt (2003; see also Voigt et al., 2015) found a significant correlation between economic growth and de facto judicial independence, contrary to the insignificant correlation with de jure judicial independence. The researchers calculated the de jure judicial independence index based on the weight given to several relevant variables in the constitution or the law. To estimate the de facto independence index, they used questionnaires sent to experts worldwide. Apart from the problems associated with relying on questionnaires (honestly acknowledged by the researchers), they naturally assess the perceived values of estimated variables.

  7. Several Israeli journalist investigations revealed that nepotism in the highest level of the judiciary is incomparable to any other branch of the public sector (Azriel, 2005; Friedman, 2016; Hovel, 2014; Levitsky, 2017). See the stunning journalist investigations regarding the Supreme Court Justices’ conflict of interests and political bias (e.g., Liebskind, 2018; 2019; 2020; 2021). For a critical analysis of the US supreme court, see, for example, Levin (2005).

  8. The associate editor noted that they might want to impede subsequent governments, but this may require a judiciary, not necessarily an activist one. Moreover, since the implementation of judicial decisions depends on the cooperation of the executive, tolerating judicial activism by the current government does not guarantee future governments’ restraint. Restraining future government involves designing a social mechanism that imposes certain norms in stationary equilibrium (e.g., Samuelson, 1958), not necessarily through a judicial system.

  9. Roosevelt balked because even his closest supporters realized that if they manipulated the Supreme Court now, the Republicans would not hesitate to replicate this strategy in the future. Namely, what deterred Roosevelt was not expected judicial veto but strategic repeated-game considerations. The baseless political neutrality pretension of justices is another reason I find this explanation also normatively unacceptable. Rogers quoted distinguished law scholars supporting his assertion that “policymaking requires that legislatures and courts make empirical judgments regarding whether the law will achieve (or has achieved) its intended end at acceptable costs”. I am not a jurist, but I cannot accept that unelected justices void a democratically enacted law not because it explicitly contradicts the constitution but because they hold it did not achieve its declared goals. In my humble opinion, such political considerations are legitimate for elected legislatures only.

  10. For example, although Chief Justice Dorit Beinisch was appointed to the Supreme Court by an interim government (December 25, 1995), she opposed Justice Minister Daniel Friedman’s initiative to appoint new Justices to the Court, claiming an interim government is unauthorized to do so. The Supreme Court rejected appeals against the hasty negotiations with the Palestinians carried out by the provisional government of Ehud Barak a few days before general elections (in which he lost) but banned Benjamin Netanyahu’s interim government from appointing a new General Commissioner for the police. The systematic judicial inconsistency of the Supreme Court due to its heavy political bias was probably a significant factor in the continuous decline in the Israeli public confidence in the judiciary (Vigoda-Gadot et al., 2019, 2021).

  11. Alternatively, \(\it {\text{h}}\) may represent agents’ utility loss from implementing a policy different from their favorite. Assuming that \(\it {\text{h}}\) is a function of the differences between the principal and the agent is probably more realistic but would turn the model to insolvability while adding no insight.

  12. For example, the Hagenbach-Bischoff system, known also as the D'Hondt method or the Jefferson’s method (or the “Bader-Ofer Act” in Israel) for allocating parliamentary seats among parties, is biased towards large parties and consequently usually favors ruling parties.

  13. That is, we do not distinguish between a “leftist” or a “rightist” deviation.

  14. The possible existence of an infinite number of equilibrium strategies is common in infinitely repeated games (Fudenberg & Tirole, 1991). However, other strategy profiles would be too complex for the parties to implement and yield lower payoffs. Thus, focusing on pure-strategy profiles is reasonable given the purposes of the analysis.

  15. \(\Delta p\) in Fig. 2 declines smoothly from the beginning because due to technical reasons, all simulations presented in this article were run assuming continuous time and shown for illustrative purposes only.

  16. The possibility of over rent-dissipation is beyond the scope of this paper. For further discussions on this issue, see, for example, Epstein et al. (2007), Epstein et al. (2008) and references cited there.

  17. This stems directly from equation (35) in the Appendix.

  18. Israel’s Chief Justice Barak blocked political initiatives to establish a Constitutional Court and even appeared on May 8, 2001, in a Knesset Committee as a lobbyist, in a very exceptional and weird gesture.

  19. Israel has no constitution because its founders could not reach an agreed formulation. In 1950, MK Yizhar Harari suggested that the constitution’s chapters be written as a series of Basic Laws and consolidated in the future. The Basic Laws were considered ordinary laws that could be amended or repealed by a simple majority in the Knesset, implying that any subsequent legislation contradicting a Basic Law was regarded as an amendment. Chief Justice Barak declared in 1992 that the enactment of two Basic Laws was a constitutional revolution, and in 1995, the Supreme Court, headed by Barak, firstly annulled a Knesset legislation.

  20. See text around footnote 10 for references.

  21. Again, anecdotal examples are not a substitute for a rigorous empirical study, and as an anonymous referee noted, Belgium’s political system is even less stable than the Italian is. No doubt that many other factors affect political stability. For example, Belgium’s population is composed of two different ethnic groups (Dutch-speaking Flemish and French-speaking Walloons). The interesting question is, therefore, not why Belgium is less stable, but how it remained unified instead of splitting into two states (like Czechoslovakia) or deteriorating to civil war (like the post “Arab Spring” states: Lebanon, Syria, Iraq, Libya, Yemen, and Algeria, whose populations are composed of many rival tribes, ethnicities, and religious affiliations). However, our interest here is the relationship between public trust in unelected governmental agencies and political stability ceteris paribus; hence this question is beyond the scope of this article.

  22. For example, the model predicts judiciary self-restraint to keep the (implicitly) collaborating politician in office. The increasing Israeli judicial arrogance described above, while public confidence continuously declines and the political system destabilizes, seems contradictory to this prediction. However, the political upheaval coincided with the judiciary interest in February 2007, when Prime Minister Ehud Olmert appointed Daniel Friedman as justice minister. Friedman, a prominent Israeli professor of law, was known for his severe criticism of the judiciary, led contrarian policies, and planned overwhelming reforms.

  23. Risk-neutrality and value uniform distribution assumptions have been common in the auctions literature since Vickrey (1961). These assumptions simplify the analysis and have the advantage of making the exposition simple and easily applicable to an experimental setting (Asker, 2000).


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Correspondence to Mordechai E. Schwarz.

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I am genuinely indebted to Ronen Bar-El, Roger Congleton, and two anonymous referees for some eye-opening comments. Needless to say that the responsibility for every remaining error is solely mine.

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Schwarz, M.E. A master of two servants: lessons from the israeli experience about the effect of separation of powers on public accountability and social welfare. Const Polit Econ 34, 59–87 (2023).

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