Democracy's Achilles Heel

Some timely thoughts in Foreign Policy about why democracy is in retreat, especially in the United States. The author, Dambisa Moyo, is a political economist and tackles the failures of modern democracy as an economic restraint which seems a bit curious given that the United States is now nearing the point of effective full employment. A lot of his supporting arguments do, however, hold water even if his conclusion is questionable and they should be of concern to us all.

Only 19 percent of Americans today say they can trust their government to do what is right. Meanwhile, citizens in developing countries see authoritarian leaders as more trustworthy than democratic politicians. Increasingly, it seems that people across the globe are skeptical of the ability of democratic governments to act effectively — including as good custodians of the economy. Indeed, the liberal democratic system is unwittingly undermining the economic growth that is necessary for its continued survival. 

At the root of the problem is a predilection for short-​termism that has become embedded in the political and business culture of modern democracies. By design, Western politicians have relatively short political horizons; they are often in office for terms of less than five years. So they find their duties regularly interrupted by elections that distract from the job of addressing long-​term policy challenges. As a result, politicians are naturally and rationally drawn to focus their efforts on seducing their electorates with short-​term sweeteners — including economic policies designed to quickly produce favorable monthly inflation, unemployment, and GDP numbers. 

Voters generally favor policies that enhance their own well-​being with little consideration for that of future generations or for long-​term outcomes. Politicians are rewarded for pandering to voters’ immediate demands and desires, to the detriment of growth over the long term.Voters generally favor policies that enhance their own well-​being with little consideration for that of future generations or for long-​term outcomes. Politicians are rewarded for pandering to voters’ immediate demands and desires, to the detriment of growth over the long term.
Politicians are rewarded for pandering to voters’ immediate demands and desires, to the detriment of growth over the long term. 

Because democratic systems encourage such short-​termism, it will be difficult to solve many of the seemingly intractable structural problems slowing global growth without an overhaul of democracy.
One of the most fundamental obstacles to effective governance is the short electoral cycle embedded in many democratic systems. Frequent elections taint policymaking, as politicians, driven by the rational desire to win elections, opt for quick fixes that have a tendency to undermine long-term growth. Meanwhile, they neglect to address more entrenched, longer-​term economic challenges, such as worsening education standards, the imminent pension crisis, and deteriorating physical infrastructure, that don’t promise immediate political rewards.

Moyo sees America's infrastructure crisis as a manifestation of dsyfunctional democracy.

America’s failing infrastructure encapsulates the problem of both public and private myopia. A 2017 report by the American Society of Civil Engineers (ASCE) gave the country a grade of D+ for overall infrastructure, citing 2,170 high-​hazard dams, 56,007 structurally deficient bridges (9.1 percent of the nation’s total), and $1 trillion in needed upgrades to drinking water systems over the next 25 years. 

At a minimum, the ASCE suggests that a $2 trillion investment is needed by 2020 to address the significant backlog of overdue maintenance and the pressing need for modernization. The effects of increased infrastructure investment on the prospects of low-​skilled labor could be substantial. Investing in infrastructure would have all sorts of other benefits, but the prevailing democratic political system discourages the sort of long-​term thinking necessary to do so. 

...Today, when it comes to infrastructure, China and India present a useful study in contrasts. Both countries needed roads to increase productivity. China built them, but India’s infrastructure programs got bogged down in red tape and political wrangling born of political fissures in its democratic system. Because vested interests in India have a stranglehold on policymaking and implementation, India’s democratic processes stifled decisions that could have helped drive economic growth. In the 2016-2017 World Economic Forum Global Competitiveness Report, India was ranked 68th of 138 countries for overall infrastructure, well behind China, which was ranked 42nd. 

...A second major obstacle to effective democratic governance is interest group lobbying, a feature in many liberal democracies that tends to interfere with the proper allocation of assets. In 2016, more than $3.15 billion was spent lobbying the U.S. Congress, roughly double the amount spent in 2000. Across sectors, lobbying by special interest groups has a discernible impact on public policy decisions in ways that negatively affect trade, infrastructure, and ultimately economic growth.

Curiously, Moyo refers to the environmentalist community lobbying Congress but makes not the slightest mention of how America's fossil fuelers won that battle a long, long time ago.

...Political cycles too often keep politicians beholden to the individuals and corporate interests that help fund their campaigns and to the vagaries of public opinion polling. And because democratic politics rests on political contributions, it widens the inequality between rich and poor. It is the use of wealth to influence political outcomes that helps inequality take root. Until democracies push back on the use of wealth to influence elections and policies, initiatives to address inequality will be blunted.

Some of Moyo's prescriptions are "fantastic" in the fullest sense of the word. He advocates for provisions that allow one government to bind future governments to its policies and treaty obligations. How does that apply to a bought and paid for government that has succumbed to legislative, executive, regulatory and even judicial "capture"? Can you imagine how the Koch brothers, the Coors clan and Sheldon Adelson would love to see their wishes chiseled into granite for all time?

Moyo tries to revive the notion of campaign finance reform. Those who buy government aren't allow that to happen. Sure they shell out billions of dollars in electoral graft but they know the returns make it enormously worthwhile to maintain transactional government. Besides, that's not a flaw of democracy. It's the very antithesis of liberal democracy. If that's what Moyo wants to achieve to restore democracy to the US, he should be campaigning for the overthrow of America's governments, federal and state.

The author then endorses paying politicians more, something akin to an executive salary, replete with bonuses. Sure that might cause them to eschew those white envelopes swollen with campaign cash.

One idea that does seem to have merit is to extend terms of office to correspond with economic cycles.

According to the National Bureau of Economic Research, there were 11 business cycles between 1945 and 2009. Each cycle — that is, a period of economic expansion followed by one of contraction — lasted an average of 69 months, or almost six years each. 

If politicians’ terms in office lasted roughly the same amount of time, policymakers would have an incentive to implement policies that would deliver growth over five to seven years and beyond, rather than one to three years. They would likely be thinking far enough ahead to know that an economic contraction was inevitably in the offing; they would work to soften its blow rather than, say, take advantage of flush times by enacting a big tax cut.

A controversial idea is the establishment of criteria to determine eligibility to run for office.

Such screening of candidates would exclude those who are narrowly political in their outlook because they lack real-​world experience. Democracies should set minimum standards for public officeholders, requiring candidates to have work experience outside the political realm — not only in business but in a range of “real world” jobs.

A 2012 study by the British House of Commons Library sheds further light on the rising trend of professional politicians who have little to no real-​world experience. The study finds that since 1983, the number of career politicians in Parliament — insiders who worked in politics in advance of their election — more than quadrupled from 20 to 90 between 1983 and 2010. Over the same period, the number of parliamentary representatives with a background in manual labor has dropped from more than 70 in 1983 to around 25 in 2010. The British system is now designed to favor those who serve as advisors or aides to politicians. 

But this professional political class has relatively little real-​world experience to inform economic decision-making. Its members are arguably more susceptible than most to catering to the whims of the voter at the expense of addressing longer-​term economic challenges. It’s simply what they have been trained to do. People with real-​world experience, on the other hand, are more likely to understand the sorts of policies that are needed in a modern economy than those conditioned on a diet of polls and political tactics.

Do you think he's met Stephen Harper?

Moyo's final reform is mandatory voting.

Finally, we must recognize that voters are ultimately responsible for the politicians they elect and the economic decisions those politicians make. And that’s why voting must be mandatory. In November 2014, only 36 percent of eligible voters in the United States cast a vote in the midterm elections — the lowest turnout in more than 70 years. In 2016, just 58 percent of eligible voters cast a ballot for president.

Americans could learn from other countries’ electoral systems. Many of the countries whose turnout rates are highest — including Australia, Singapore, Belgium, and Liechtenstein — enforce compulsory voting laws. 

Most often, compulsory voting is enforced through fines on those who don’t vote. Often, the penalty amounts to little more than a symbolic slap on the wrist. But even the threat of a small fine clearly has an impact, as rates of voter participation in these countries suggest. In Belgium, nonvoters are disenfranchised for 10 years after failing to vote in at least four elections within 15 years, and it is difficult to get a job within the public sector if you are a nonvoter. In Singapore, nonvoters must reapply to be included on the voting register, explaining why they did not cast a vote.

The smaller the electorate, the likelier that policies will favor the few — in most cases wealthier citizens who vote regularly. By creating the broadest possible electoral base, mandatory voting maximizes the quality of democracy, making it more efficient and enhancing economic policy outcomes. 

That said, countries where voting is mandatory but the population is not well informed can fall prey to populist policies that are inimical to longer-​term economic growth and success. It is therefore imperative to educate the population on the tradeoffs between short-​term gains and their costs to future growth. Voters must be nudged toward the right long-​term policy choices, rather than being swayed by personalities and short-​term fixes.

What makes this recommendation inadequate is that Moyo is speaking in terms of two-party governance. Therefore he omits the problem of "first past the post" false majorities which, by their very nature, are undemocratic. Moyo is not to be faulted for his proposal but those in multi-party states have to look a good deal past his reach.

As I touched on at the outset, Moyo is a political economist who sees democracy in the context of its ability to deliver perpetual, exponential growth. He plainly doesn't see that in the United States and, indeed, globally, the economy has grown vastly beyond the finite limits of the environment to the point where we're eating our seed corn. While some of his proposals have obvious merit for democratic restoration, his ultimate premise seems a bit fanciful for a world in which the economy now exceeds the planet's ecological carrying capacity by a factor of 1.7.