Contrary to popular belief, The Watcher does not meddle in civil affairs on a daily basis.1) When you're ready to see how the Island is really run, stop by your local Political Council offices. Each of the Outposts has one.2)
Council offices have three functions. One, they are a vital part of a certain Quest and secondly, they show you which outpost is in danger of being breached. Through ingenious camera calibration, they control rewards given to players. 75% rewards for safe outposts, up to 200% rewards for outposts that are nigh-overflowing with monsters. Third and last, if you're Human you can pick up 3 free goodies each New Day in New Home.
Note that the following doesn't apply anymore, and is here for posterity.
In season 1, it was widely believed, that Councils were rife with corruption and made no secret about expecting 'contributions.'3) In fact, the normal operations of the Councils would've been impossible without routine contributions from the Clans. In return for Clans' funding, the Councils would post a sign in the city squares announcing which Clan had provided more than half of their funding, and they also provided each member of that clan with a tribute.4) The nature of the tributes has been the subject of much speculation, but speculate no more, Dear Reader, because here's the authoritative list of tributes:
Efforts to reform the Councils have all met with defeat, mostly because the Watcher obviously likes the current governing system the way it is. Contestants who complain about the Council system too loudly tend to get eaten by very large spiderkitties.5)