Your quote from James Mill is interesting for many reasons but also for it coming from such a political radical as James Mill. He was one of the formulators of what would become liberalism/progressivism and himself a proto-technocrat. The Latin quote itself is much older, as you would suppose, and the sentiment goes at least back to Plato.
The same idea pops up in J.S. Mill in the context of laying out a justification for technocracy, i.e., large societies are complex, managing complexity takes skill, skill takes time to acquire, lives are short, therefore, managerial skill must necessarily be invested in a small number of dedicated civil servants (technocrats), and not in the hands of representatives in parliament/congress. The question "who watches the watchers" refers to the bad judgment of Parliament vis a vis the technocrats:
"The bad measures or bad appointments of a minister may be checked by Parliament; and the interest of ministers in defending, and of rival partisans in attacking, secures a tolerably equal discussion; but quis custodiet custodes? who shall check the Parliament? A minister, a head of an office, feels himself under some responsibility. An assembly in such cases feels under no responsibility at all; for when did any member of Parliament lose his seat for the vote he gave on any detail of administration? To a minister, or the head of an office, it is of more importance what will be thought of his proceedings some time hence, than what is thought of them at the instant; but an assembly, if the cry of the moment goes with it, however hastily raised or artificially stirred up, thinks itself and is thought by every body, to be completely exculpated, however disastrous may be the consequences. Besides, an assembly never personally experiences the inconveniences of its bad measures until they have reached the dimensions of national evils. Ministers and administrators see them approaching, and have to bear all the annoyance and trouble of attempting to ward them off."
Had JS Mill lived to see our modern administrative state he might have been less enthusiastic for the integrity and farsightedness of bureaucrats.
My own answer to this is that the watchers must be aligned with the watched at a deep and abiding level. They must come from the same places, same economic conditions, same religion, same value system, same history. Their children must go to the same schools, marry and reproduce with their constituents, their own family's welfare must be tied up with the health and success of the community overall. No amount of "education" can substitute for a lived reality of sharing in the commonwealth of the community. And this societal health cannot be reduced to material welfare. That is the great flaw (angel-seeming devil) in secular materialism. Whatever the ultimate reality is or isn't, there is nothing in secular materialism that can provide for the incorporation of the leadership into the body politic the way a deep and successful culture can. The American WASP culture was that for a few hundred years. In contrast, our present political "consensus" has no solution to moral dissolution (except to double down on a kind of anti-morality). The only way out is down and through some kind of large-scale re-calibrating event, like a global war, which no one wants to experience.
