Economically Inept Democracy

Posted by Deepish Thinker on July 05, 2007
Economics, US Politics

Inspired by reading a review of Bryan Caplan’s book, “The Myth of the Rational Voter: Why Democracies Choose Bad Politics“, I have decided to take on the herculean task of attempting to justify democracy (I am such a hero).

Mr Caplan has apparently taken a careful look at the voters who form the bedrock of the democratic system and come to the (some would say obvious) conclusion that democracy is built on very shaky ground. This is not an entirely new idea. Winston Churchill clearly anticipated Mr Caplan’s case when he observed that,The best argument against democracy is a five minute conversation with the average voter.

The problem with Mr Caplan’s argument is the implied assumption that we should expect good government from democracy. Good government, whatever that may be, is far too lofty a goal for any political system. Certainly, I’m not aware of any such system that has consistently provided it.

Flawed as it obviously is, democracy does have two very important benefits that justify Mr Churchill’s other famous observation, “It has been said that democracy is the worst form of government except for all the others that have been tried.”

Firstly, while it does not by any means guarantee good government, functional democracies are reasonably effective at moderating bad government. The worst governments tend to be those in which one narrow section of society is able to seize control and relentlessly pursue their own interests. In a working democracy, the need to capture majority support means that the government is always a coalition of interest groups (although these interest groups may all belong to one “broad church” political party). These interest groups may all want to pursue dubious policies, but they don’t ever all want the same dubious policies. The resulting tension between interest groups within the ruling coalition tends to prevent the government from careening off the rails in obedience to the desires of one narrow section of society.

Secondly, democracy provides a means of transferring power between different groups without resorting to firearms. Whether for demographic, economic, social or technological reasons all societies from time to time experience shifts in the balance of power. In non-democratic countries these shifts are often accompanied by violence, as new power structures forcibly supplant the old. In functional democracies however voting provides a signal to the existing regime that it is time to go. The quid pro quo for a government that accepts the will of the voters is not being subject to retribution from the new regime, and in fact having the opportunity to regain its former perks at some later date.

Since the consequence of losing power in democracy is merely a period of opposition followed by a probable return to power, there is very little incentive for the ruling group to resist being dumped out of office. For this reason there tends to be very little political violence in genuine democracies, an observation that is sadly not true for most non-democratic states.

So while democracy may be a decidedly mediocre system of government dependent on the will of disinterested, ill informed and often wildly irrational voters, it at least avoids the worst pitfalls of the known alternatives.