A democ­racy is not demo­cratic

CityPress - - Voices - Ar­turo Bris voices@city­press.co.za

To­day, only 4.5% of the world’s pop­u­la­tion live in a fully demo­cratic coun­try, ac­cord­ing to the Econ­o­mist In­tel­li­gence Unit’s Democ­racy In­dex. About 45% live in flawed democ­ra­cies, while 33% are ci­ti­zens in au­thor­i­tar­ian regimes. Some of us have been raised with the ac­cepted wis­dom that, start­ing un­der the an­cient Greeks, democ­racy is the best sys­tem of gover­nance in the world. In­deed, among the top 10 most com­pet­i­tive economies in the 2016 IMD World Com­pet­i­tive­ness rank­ings, only two economies (Hong Kong and Sin­ga­pore) are not full democ­ra­cies. Yet the data show that, to­day, the world is less – not more – demo­cratic than it was 10 years ago; the coun­tries whose com­pet­i­tive­ness has im­proved the most in the pe­riod are non-demo­cratic. And th­ese – Sin­ga­pore and the United Arab Emi­rates (UAE) – are role mod­els for many pub­lic-sec­tor of­fi­cials around the world.

In Against Democ­racy, one of the most im­por­tant books pub­lished last year, Pro­fes­sor Ja­son Bren­nan from Ge­orge­town Univer­sity high­lights voter ig­no­rance as one of the ma­jor pit­falls of mod­ern democ­ra­cies. He clas­si­fies vot­ers into three cat­e­gories: hob­bits are those who do not bother to learn about pol­i­tics, and there­fore vote in full ig­no­rance; a sec­ond class are hooli­gans – those who fol­low their own party with the de­vo­tion of sports fans and who ad­here to a cer­tain party, ir­re­spec­tive of past per­for­mance and fu­ture plans; and, fi­nally, a sig­nif­i­cant mi­nor­ity of peo­ple be­have ra­tio­nally, gather data and vote with full in­for­ma­tion – th­ese are the vul­cans.

Un­for­tu­nately, and be­cause of the dom­i­nance of hob­bits and hooli­gans, demo­cratic out­comes are not only not rep­re­sen­ta­tive of the ma­jor­ity’s true views, but also wrong and dam­ag­ing to the com­mon good.

You can, in fact, ar­gue that when there are large demon­stra­tions in the US op­pos­ing a re­cently elected pres­i­dent, peo­ple are protest­ing against a dic­ta­tor­ship of hob­bits and hooli­gans. True democ­racy, where all those af­fected by a po­lit­i­cal choice are in­volved in the de­ci­sion-mak­ing process, does not ex­ist any­where. In fact, there is no rea­son only ci­ti­zens who are older than 18 should be al­lowed vote. More­over, since the out­come of the pres­i­den­tial elec­tion in the US af­fects all world ci­ti­zens in one way or an­other, we should all have the right to vote in it.

An­other as­pect of vot­ing that is un­fair is that, in many in­stances, we are pun­ish­ing or hin­der­ing the choices of fu­ture gen­er­a­tions, such as when we vote on the pen­sion poli­cies of peo­ple who are not even born yet.

The Brexit vote in the UK may have been a ra­tio­nal de­ci­sion by well-in­formed in­di­vid­u­als, but it cer­tainly re­stricts opportunities for many UK ci­ti­zens, who will be un­able to ac­cess a larger Euro­pean mar­ket in the fu­ture.

There are other prob­lems with democ­racy. Im­por­tantly, demo­cratic out­comes can of­ten just not make any sense. Just con­sider the Colom­bian ref­er­en­dum re­gard­ing the so-called peace agree­ment with rebel group the Rev­o­lu­tion­ary Armed Forces of Colom­bia, also known as Farc. Pope Fran­cis sup­ported a yes vote in the ref­er­en­dum. Be­cause he is pro­tected by dogma, he must be right. But the out­come of the vote was no, so it must have been the wrong out­come, be­cause the pope is al­ways right!

Democ­racy is also a slow de­ci­sion-mak­ing process. The Swiss sys­tem is the best in terms of pop­u­lar par­tic­i­pa­tion and rep­re­sen­ta­tion, and de­ci­sions are ac­cepted be­cause di­rect democ­racy is im­ple­mented ev­ery­where.

How­ever, agree­ments take time – some­times too long. A good ex­am­ple is a 16km rail­way line de­signed to con­nect down­town Geneva with France. It is es­ti­mated that the project will be com­pleted by De­cem­ber 2019. How­ever, the orig­i­nal project dates back to 1850, and its con­struc­tion be­gan in 1912. Such a huge de­lay has been caused by the dif­fi­culty of gain­ing con­sen­sus from all of the stake­hold­ers in­volved.

In­ter­est­ingly, we pre­vi­ously gen­er­ally ac­cepted that democ­racy is by na­ture re­dis­tribu­tive, and there­fore pro­tects the lower class against the ex­cesses of any rul­ing mi­nor­ity.

How­ever, this premise was re­cently proven wrong by Daron Ace­moglu and James Robin­son in a 2013 pa­per called Democ­racy, Re­dis­tri­bu­tion and In­equal­ity. In a large lon­gi­tu­di­nal study of more than 100 coun­tries, they showed that democ­racy does not seem to have any sig­nif­i­cant ef­fect on in­come in­equal­ity.

On the con­trary, in­equal­ity tends to in­crease un­der democ­ra­cies when the econ­omy has al­ready un­der­gone sig­nif­i­cant struc­tural trans­for­ma­tion; when there is high land in­equal­ity; and when the gap be­tween the mid­dle class and the poor is rel­a­tively small.

There­fore, we can only claim the tri­umph of democ­racy if we ac­knowl­edge the prob­lems of any of the al­ter­na­tives. Dic­ta­tor­ships (and, to a lesser ex­tent, epis­co­pa­cies) rely on a some­how ran­dom al­lo­ca­tion of po­lit­i­cal lead­ers. Coun­tries can be lucky to end up with a benev­o­lent dic­ta­tor (the UAE, Sin­ga­pore) with no­ble in­ten­tions and self­less poli­cies; but this is rarely the case (North Korea, Equa­to­rial Guinea) and, usu­ally, dic­ta­tors are not ac­count­able to the com­mon good (China, Saudi Ara­bia).

Al­ter­na­tives to democ­racy should be more cor­rupt sys­tems, but this is not al­ways the case. The sup­port­ing group of a demo­cratic leader has to be larger by na­ture, and there­fore is more dif­fi­cult to please. This group is what Bueno de Mesquita and Alas­tair Smith, in the book The Dic­ta­tor’s Hand­book: Why Bad Be­hav­iour is Al­most Al­ways Good Pol­i­tics, call the es­sen­tials, or the win­ning coali­tion. In any po­lit­i­cal sys­tem – they claim – there are three im­por­tant po­lit­i­cal groups to con­sider: the in­ter­change­ables or nom­i­nal se­lec­torate, which in­cludes any per­son with some say in choos­ing the leader (in a democ­racy, those who can vote); the in­flu­en­tial or real se­lec­torate, who are the ones who truly select the leader (in a democ­racy, those who ac­tu­ally vote); and the es­sen­tials, whose sup­port truly mat­ters (in a democ­racy, the ones who vote for the win­ning can­di­date).

The less demo­cratic a sys­tem is, the smaller the last group is, and there­fore the more cor­rupt be­cause the sys­tem needs to en­sure the fi­nan­cial sat­is­fac­tion of only this group. Tellingly, the 10 most cor­rupt economies in the World Com­pet­i­tive­ness Rank­ing are in­deed demo­cratic coun­tries.

While most cher­ish demo­cratic coun­tries as ex­em­plary places to live in, look­ing closely at the com­pet­i­tive­ness of na­tions paints an­other pic­ture. As a re­searcher in this area, I could not rec­om­mend that any coun­try, es­pe­cially a new coun­try, seek to be demo­cratic at all costs, es­pe­cially when one takes into ac­count some of the seis­mic out­comes that demo­cratic pro­cesses have given us over the past year. Bris is a pro­fes­sor of fi­nance at IMD busi­ness school and di­rects

the IMD World Com­pet­i­tive­ness Cen­tre

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