ELECTION – What’s In it for ME?

•  Why can’t the elections be done in a more dignified manner?

•  Why must my privacy be invaded by umpteen messages?

•  Can the ICAI not impose a ban on e-mails – in fact I have avoided giving my e-mail even to the Institute – the only thing I get from ICAI is this onslaught of e-mails.

Strikes a chord? Echoes your feelings? I am sure it does, for I believe 80% of our voters feel that way. Question is – are they right? Who is responsible for this, the Institute, the Council, the Candidates or the members themselves.

Admittedly, the aggressive manner of campaigning has invaded our homes, our work places, our e-mail inboxes and our mobile phones. It is equally true that a far more dignified approach is desirable, and really is expected in an election to a professional body. But we need to ponder – why has such a situation come about. I would believe that the need for such “carpet bombing” has arisen mainly because voters largely ignore the contents, the merits and demerits of information about candidates provided by the Institute. A belief, therefore, is created that since most messages are not read, if you send the message more often, the probability of it being read once improves. Hence, it is voter’s neglect that causes this response which, in fact, creates a widening of the chasm between candidates and voters.

“Whether it is ‘X’ or ‘Y’ – it really does not affect “me” or concern “me”. All I want is that the Institute should be managed well. Let those who are more aware or involved choose. [in any case I do not know most of these candidates).” That is the mindset of a large number (nearing 50%) of the voters – who do not vote. One can only remind them that “Bad Council members are elected by good, well intentioned members who do not vote1 ”.

Those who do vote realise that the way the Institute is managed has a more direct bearing on their livelihood and careers. Such voters (largely members in practice in professional firms) realise that the way the ICAI represents views of our members to the Government and regulatory authorities can make a difference to the future role of CA’s in audit. For e.g. can we have service tax audits, can CA’s be recognised abroad to facilitate better job opportunities etc. Hence, they recognise their self-interest in voting and this is not per se something negative or selfish.

Rather, it is a cornerstone of the democratic system which enables the will of the majority to prevail. The difficulty is that “self–interest”, can be viewed with a broader or narrower vision. Surely, it is in our collective interest to have a Council of persons who are capable of framing policies that will serve the interest of the profession in the long run. Last month’s editorial hit the nail on the head in saying that “I put the two – National interest and the professional interest together.” But that is a more statesman like view – unfortunately not the vision of the vast number of voters.

The “self-interest” is more often judged on more mundane criteria – which often come to the fore such as:

Whether candidate X or Y candidate

•  Favours relaxation or less strict application of CPE norms;

•  Is more likely to ensure that more bank audits are allotted and/or audit fees are hiked;

•  Supports increase of articleship vacancies in big firms (my son/daughter is to do CA next year);

•  Supports establishment of a branch in my town. I could then become office bearer – in my own town.

The list is long and subjective. Unfortunately, most of these issues are of personal interest and do not qualify as being in the “interest of the Profession”. But because they have a bearing on “what’s the benefit for me – if X rather than Y is elected”, such personal issues play a bigger role in deciding the voting preferences than interest of the profession.

But to the average member, even this poses a significant problem of choice. If one takes the trouble to go through the manifestos or brochures, most candidates seemingly have similar objectives and agendas. This happens, since most persons contesting an election do not really have a specific position on the most vexatious issues facing the profession such as rotation of auditors, authority of the council to call for data from members and take action against defaulters, a roadmap for implementation of Ind-AS, etc. Though none of the candidates really take a position on issues that matter, yet it is imperative to be seen as a person who has a stand on certain issues. It is best to address the more general and non-specific issues such as improvements in administration, governance matters, transparency and so on. This adequately serves the purpose of highlighting to the voters that the candidate has “some considered views.” While these issues steer clear of controversies, the approach identifies the candidate with the voter group from where he seeks maximum support. You will thus see that amongst the issues raised, some candidates would take pains to clearly identify themselves with the more populist issues that would appeal to the small and medium practitioners. Others, looking for more support from larger but traditional firms, would project the same issues with a slight shift in the emphasis to cater to their identified constituency, while those seeking endorsement from the largest firms would bring out the aspects that would further the interests of the highly organised and better remunerated segments of the profession – for example – the need to align with global best practices, ” raising” standards of professionalism and performance etc. While this may enable the candidate to cater to popular sentiment of his specific constituency, it leaves unresolved the problem for an informed voter of how to identify which candidate best meets his “personal interests”. At best, out of a list of say 20 candidates from whom he has to choose, the voter can negatively identify some candidates whom he clearly does not wish to go with – not because the candidate is not good – but that the positions taken by that candidate may not suit “his interest”. So the choice is usually narrowed from 20 to 15 which in real terms is not very helpful.

Assuming that we are dealing with an “informed and enlightened voter”, who has taken the trouble to read the broad positions taken by the candidates, he is still unable to make the real choice on the basis of what is truly in the interest of the profession or even his own interest. In the absence of any other criteria for selecting the right candidate, voters then turn to simpler criteria which can be identified without much effort. These are the criteria which are applied in practice. Some of which are given below by way of illustration.

a)    Whether the candidate belongs to my community:- While cultural affinity undoubtedly gives a certain comfort level; the fact that a particular candidate belongs to the same community, residential area, religion, etc. have no relevance to the manner he would perform as a Council Member and fails to recognise the candidate’s individual abilities or track record. The effort required on the part of the voter is minimal because, usually the name of the candidate gives a clear indication of the community to which he belongs. Success in a professional election can be determined largely by this factor.

b)    Has the candidate phoned or met me? This criteria is simple to apply because not more than 8 to 10 candidates may be able to speak to the voter in person. It thus requires less mental effort to make a selection as the choices automatically narrow down. This approach is more prevalent amongst seniors and is a throwback to elections 30 years ago, when it was possible and often expected that the candidate would have some personal interaction with the voter. Given the increase in membership, this expectation is rendered impractical. However, such approach survives because it also embeds within it an element of ego on the part of the voter that “I and my vote are important – and the candidate must demonstrate this by making every effort to contact me.”

c)    Bosses directions – Often cited (to my amazement) is that “my boss has instructed everybody in office to vote for Candidate M”. One can understand if a member comes to a conclusion that the candidate M is best suited to represent the interest of the firm, or the class of firms or industry in which the voter is employed or engaged in. To a lesser extent, one could even appreciate that if a senior whose opinion you respect recommends a particular candidate very highly, the voter can be significantly influenced. But to vote in favour of a particular candidate M – merely on instructions throws all notions of “independent choice” for a toss. The voter does not know what the candidate stands for, his competence or abilities but is more concerned about the consequences “if my boss finds out – that I did not vote for candidate M.”

Numerous examples of such superficial, extraneous and inappropriate criteria can be given. All this is happening because, most of the members (or the silent majority) are well-intentioned persons who feel that this entire election process is extraneous to him, as he does not have an answer to the question that bothers him – “what’s in it for me?”

The members are not indifferent, not negative but are simply exercising what economic theory refers to as “Rational Ignorance”. The use of the word “ignorance” may sound harsh – but this is a phrase used in the economic and political theory. The phrase was coined by Mr. Anthony Downs in his seminal work “An Economic Theory of Democracy” where it is mentioned that – Rational ignorance occurs when the cost of educating oneself on an issue exceeds the potential benefit that the knowledge would provide2. In the context of ICAI elections, one can understand “rational ignorance” to mean that the perception of the voter is that going through the various e-mails, brochures or taking an active interest in the election process and ranking of candidates has very little outcome on the ultimate choice of who gets elected or on what policies are adopted for the ICAI. If this is understood by the member in an absolute context, that his choices make no difference whatsoever, the members show no commitment or inclination to even go and cast their votes. In economic terms, there is no “payback”, for the time likely to be spent in evalu-ation of candidates and in voting.

Since these members do not vote, and therefore do not affect the outcome of the election, one needs to see the factors that influence those members who do vote. Members who do vote, generally appreciate that at least in the narrow realm of their direct concerns (such as CPE, Bank Audit, SMP issues as mentioned earlier), electing a person who will further these interests is beneficial. However, they are also of the view that their own impact on the ultimate outcome is marginal and that the management of affairs of the Institute would most likely continue in the same direction so long as the few persons who are on the negative list are not elected. Therefore, such voters, generally, recognise their interest, but also exercise the logical choice of “rational ignorance”, in the belief that disruption of their personal/professional time, going through numerous brochures, manifestos, e-mails and SMS’s is not relevant, as it does not further the objective of making a rational choice amongst candidates. It is, therefore, much easier to adopt the very elementary criteria (community, firm, recommendation etc.) rather than exercising vigilance and due care in choice of specific candidates. That this approach is not driven by indifference but by “rational ignorance”, can be very easily established. Experienced candidates will confirm that persons going for voting, often go with a clear decision (based on the elementary criteria) about their Central Council preferences. But even when they reach the polling booth, they may be unaware of the candidates contesting the Regional Council. This will show that such voters are aware that although their overall impact on the election results may be minimal, getting a suitable person who will further their interests (such as bank audits and Big firm vs SMP issues) at the policy-making level i.e. Central Council is necessary and “is in his interest”. The Regional Council election will have virtually no direct impact on their personal issues ,and therefore the degree of “rational ignorance”, in regard to the regional Council elections is higher.

It would appear from the above, that the voter behaviour does not arise out of apathy or indifference, but is the logical preference for “rational ignorance”. If this is so, well-meaning professionals, professional organisations like the BCAS and the ICAI itself, would appear to be wrong in their attempt to create greater involvement and participation in the election process. But such a conclusion would be incorrect, because there is a fallacy in the above reasoning. The voters exercising “rational ignorance” do so in the mistaken belief that the impact on their own interest is marginal and that irrespective of who is elected, the affairs of the Institute would be guided by the best interests of the majority of members. But in reality, this is not so, as explained in another economic theory – the Public Choice Theory3 . A study of this well accepted political and economic theory would show (and I have learnt from experience) that the fundamental assumption that the Institute would continue to work in the interests of the majority of members is incorrect. If the large mass of voters opt for “rational ignorance”, or abstain from voting, then the policies adopted would be influenced by the lobby or group that is more organised, and therefore, more influential. Would the policies be more influenced by members in the SMP segment (who constitute more than 80% of the membership), or is it the larger firms which would wield greater influence. The public choice theory clearly lays down that, whichever group is able to exercise influence in an organised manner will drive the policy in the direction favoured by such a lobby or group. It is for us to test whether this theory is simply an academic issue or something that really works at the ground level. I would leave it for readers to judge by evaluating the policies of the ICAI in the recent past. By way of an example, I may only draw attention to the composition and policies of Professional Accountancy Councils in Europe and USA (which are broadly similar to the ICAI Council). You will probably recognise the public choice theory in application in those circumstances, if you consider the composition of those councils and the policies framed by them. In almost all these countries, their policy formulation is overwhelmingly dominated by large firms who have a disproportionately higher representation as compared to the SMPs in those countries. This is apparently because though the SMPs even in those countries are larger in number; they seem to be less organised in terms of electoral groupings. This would indicate that the public choice theory does apply even to professional bodies and I see no reason why ICAI can be an exception to the theory.

If members consider the above points, it would be clear to each one of them that exercising “rational ignorance”, in such circumstances, may not be the appropriate choice because there is a lot at stake for each member. This is even more so for the members in the 25 to 55 age group (who incidentally constitute a large chunk of the electorate). These members will be significantly impacted by these policy decisions – irrespective of whether they are in practice or in employment. Where this profession and its members will be two decades from now could well be decided by certain approaches and policies chosen today. These issues could have significant impact on the nature and size of practice, on the entry and training requirements of our students and the way Indian professionals will perform in the global economy. Issues such as the road map for adoption of Ind AS, role of ICAI as a regulator, requires an informed debate which is usually not possible in the din of elections. But, it will be our elected representatives who will lay down the milestones for policy in this regard.

If all these facts are considered, it will be apparent that there is a lot at stake for every member who is conscious of the larger picture. In order to effectively shape and influence ICAI policy in the medium and long-term, it is imperative for every voter to see what is in it for us rather than for me (as a selfish, narrower horizon). Further, when the voter considers us, he has to recognise that it is not merely a big firm vs SMP issue. The us can refer to various interest groups within the profession which may have certain common objectives or interests. For example, recently certain interest groups have very actively sought to use the Internet to activate a common platform in regard to allotment of bank branch audit and influence the approach of members across the country to voting for candidates based on their response to this issue. This is a pressure group or lobby that fits perfectly in the parameters of the public choice theory. I personally believe that this is not in the larger interests of the profession- i.e. it is not in the interest of the majority of members to approach matters in this manner. However, the public choice theory indicates, that such a group (or any other organised interest group) may be able to drive a policy away from the larger interests of the profession and in the direction preferred by such a group. If the common member feels that the actions of a certain organised group are not in his interest and/ or in the interest of the profession, his only response in the democratic process – is to make his view known – through his vote. So if the member has a view in regard to the ICAI, its affairs, its policies and its future – it is not enough to vote on the basis of simplistic and superficial criteria adopted, consequent to opting for ‘rational ignorance’ approach. If the members really want to influence the way the Institute deals with the future challenges (our future as professionals), you must realise and accept that pro-active, logical voting is in your and our own interest. There is everything at stake for us. You need to make your vote count if you are concerned with OUR future – that’s the “pay off” for each individual who votes – there is everything in it for you.