Democracy Reform

Sir Winston Churchill once said that democracy is the worst form of government except for all the rest. He is right. Its the best form of government but it also has its flaws. I think that its flaws endanger democracy and needs to be fixed. This blog is for like minded people who want to see democracy improved. I invite people to sumbit essays. I will publish even those I do not agree with so long as I find them interesting.

Monday, November 20, 2006

Democracy needs a Reformation By Ohmyrus

Why should a welfare bum have the same one vote that a taxpayer has? Why should a drug pusher have the same one vote as a Mother Theresa? Why should a school dropout have the same one vote as a college professor?

In a democracy, Mother Theresa
gets one vote, the same as
any gangster like say the
Sopranos. Oops, those guys
are only TV characters.

The one man, one vote system gives everybody an equal say in how a country is to be run. But obviously, each citizen contributes unequally to the society. Some, like drug pushers, damage society. Others, like welfare bums, take resources from society paid for by more diligent members. Given the unequal contributions, why should everyone be given an equal right (one vote) to choose its leaders?
That is the question that I have always asked myself.

Don't get me wrong, I do not want to destroy democracy. I think that despite all its faults, it is still the best form of government yet devised by man.
As Churchill once said, democracy is the worst form of government, except for all the rest. Yet, there are problems with it which if not addressed may result in the collapse of democracy. I wish to prolong its life by identifying its problems and proposing possible solutions before the problems cause a system failure.
This attitude may seem strange for, after the collapse of Communism, it appears that democracy has finally triumphed. (3) It appeared to many including writers like Francis Fukuyama that we have reached the end of History, meaning that we have reached the final stage in the evolution of human society with democracy as the best way to organize society.

In 1900, only a handful of countries were democracies, compared to 119 or 62 per cent of the world today. US President George Bush wants to promote democracy in the remaining places, confident of its appeal and justness. I am alone in the wilderness trying to sound a warning that we should not be complacent.
We have been brought up to believe that each person has the right to one vote. Thus the thought that some citizens should receive more votes than others is repugnant to most of us.

Leaving aside the moral issue, let us instead analyze the economic and social consequences that flow from this.

Before we begin, let me point out that politicians act like entrepreneurs or businessmen. The only difference is that instead of earning money, they earn votes.
The businessman sells a product or service in exchange for dollars. The politician sells himself for votes instead of money. Both will do a market survey of the population and craft strategies designed to appeal to the buyers or voters. To emphasize the similarity of businessmen and politicians, I will from now on refer to politicians as "votreprenuers" or use the two words interchangeably. As a result of the behavior of votreprenuers, democracy has the following flaws:

1)Democracy produces welfare states
The first thing a votreprenuer will notice in his market survey is that income distribution does not follow a normal distribution. It is skewed to one side. There are, simply put, more poor people than rich people. What this means is that politicians can prosper at the ballot box by proposing redistributive policies. The result is the welfare state and high taxes.

Benjamin Franklin puts it very beautifully and succintly. He said: 'Democracy is two wolves and a lamb voting on what to have for lunch.' (5)

Had the wolves eaten Ben's
lunch, would he still have
the time to fly kites?
Maybe we would still be
using candles.

The welfare state reduces the incentive to work and inhibits entrepreneurial risk-taking. On top of that, labor friendly laws in Europe make it difficult to fire workers, who already have very short working hours compared to Americans and Asians.
In some parts of Europe, the debilitating results can be clearly seen. Unemployment in France and Germany is around 10 per cent. Of course, a votreprenuer would not tell the truth to his voters by saying, "Vote for me and you can be lazy because we will get the hardworking taxpayers to support you."

Instead, he would couch his sales speech in a manner that dulls their conscience and makes them feel entitled to use their vote to transfer money from somebody's wallet to their own. This creates a climate of entitlement and dependency which is debilitating. These entitlements help the middle class more than the poor because that is where most of the votes are. In the present system, the centre of gravity of the electorate is Mr Average and this produces mediocre government.

On top of this, dependency on a faceless government has social consequences. It has eroded the ancient relationship between parents and children. For countless generations, parents have depended on their children to provide for them in their old age.

Now they depend on the government. Since children are no longer pension funds as in the past and taxes being so high, people decide to have fewer of them. If you look at the birth rates of Europe and Japan, you will find that they are below replacement levels. Yet the young are still expected to provide for the old! This time the provision is indirect - through the government in the form of higher taxes and welfare payments to the old. As the population in modern democracies ages, and with lower birth rates, it means that a shrinking working population has to support the old.

Would it not be better to cut out the middleman? It would certainly shrink the government bureaucracy if each retired person depended on his children in his old age as in the past. It would give them greater incentive to have more children and to raise them well which would also be beneficial to marriages. It was reported in the Economist in 1988 that less than 1% of American poor consist of people who are married, finished high school and held a job for at least a year. (6) All it takes to stay above the poverty line a a little bit of effort to get an education, be faithful to your spouse and keep a job. In other words, all you need are the old fashioned virtues of diligence, discipline and fidelity to one's spouse.

Nowadays, men find it easy to abandon their wives and children because they know they won't starve. The state will take care of them. This could have contributed to unstable marriages.

At the same time, the votreprenuers also notice that people hate paying taxes. They want benefits from government but don't like contributing money. So to cater for this market, they will promise tax cuts. The results are budget deficits and soaring public debt.

If you look at the statistics, most of the OECD governments have huge budget deficits. (1) As a whole, the OECD is running a combined budget deficit amounting to a tad shy of 4 per cent of GDP. Much of it comes from the US which has a budget deficit of about 5 per cent of GDP.

Japan is even worse at more than 6 per cent of GDP. Some economists have been warning of economic collapse if something is not done. Sometimes, politicians would inflate the money supply to pay for their deficit spending, resulting in inflation. Other times, they would resort to government borrowing which results in higher interest rates. Should there be an economic crash resulting in massive unemployment or high inflation, confidence in democracy will plummet. Then people will be ready to put power in the hands of a dictator. That was one reason why Hitler got into power.

2)Democracy produces short-term thinking
The second thing votreprenuers notice is that they face elections once every four or five years. This means that they cannot afford to take a long term view of things. Politicians know that their time in office is limited. To stay in office, they come up with policies that are popular in the short run even though they know are disastrous in the long run. I am sure you have heard of the saying, "No pain, no gain."

Democracies are incapable of delivering short term pain for long term gain. They tend to do the opposite, ie,deliver short term gain at the expense of long term pain.
The growing government debt in the US and other democracies is a good example of this. To satisfy this present generation of voters, politicians are making future generations pay the bill. The unborn of course cannot vote.The result of one man one vote is higher taxes, interest rates, inflation rates and government spending.

Part of the problem is that there is a misallignment between the personal interests of the politicians with that of the country as a whole. The votrepreneurers want to get elected by hook or by crook. Sometimes, the policies he promotes are damaging in the long term even though popular in the short term. Of course, eventually, the chickens will come home to roost some day, but he wont be in office by then!

If you ask me, I think the monarchies of the 19th century Europe were better macroeconomic managers than the democratically elected politicians of the 20th century. Statistics show that interest rates, taxes and inflation were on the whole lower. So was government debt as a share of the GDP. (2)

The reason is simple. The monarchs and nobles were confident of being in power for the rest of their lives and they wanted their sons to inherit the thrones of prosperous countries. So they tended to think more for the long term. It should also be added that most of the European monarchs of that era did not have absolute power and had to cater to popular opinion. If they provoke them too much, they
will lose their heads - literally like Louis XVI.

This balance between royal prerogatives and popular pressure gave rise on the whole to better macroeconomic management. The former gave a long term perspective to decision making and the latter checked the power of the monarchs, preventing Saddam Hussein type leaders from emerging.

3)Democracy has a tendency to divide people
For votreprenuers to win power, they must at least pretend to fight for
the market segments of voters that they deem are sufficient to secure
victory on election day. Some will fight for one ethnic group or the other. Others fight for different income groups. Some try to court the lower income vote by promising unemployment benefits while others fight for the higher income groups by promising tax cuts.

Still others court the elderly voters. Then there are the social issues. Some are conservative and religious while others are secular and liberal. Thus we see rich pitted against the poor, liberals against the conservatives and racial groups against each other. There is no incentive for a votrepreneurs to take an overall view for the good of the country as a whole. He is constrained by his need for re-election to satisfy his voting base that sent him to office. The people will develop a 'me first' mentality without thinking about the good of the country as a whole.

Antagonism between economic classes and different ethnic groups can be exploited and turned into votes for the votrepreneurs. Instead of cooling the passions of the people, they are more likely to fan them so as to pose as their champions.

Often these lead to riots. In France this year, there were two riots - one economic in nature and the other racial though there was some overlap. In the first riot, people were protesting a new French law making it easier for employers to fire young workers on probation.

The second riot was racial and religious in nature. Ethnic
North Africa minorities who are Muslim rioted for many days.
Race, language and religion divide people into groups. The presence of each element increases tension. Tensions are at their greatest if all three elements are different between two groups and lowest if only one is present between two different groups.

But whether the tension level is high or low, it needs to be managed.
But instead of managing tensions, votreprenuers heighten them to win votes. Hitler won votes and power by unfairly blaming the Jews for Germany's problems. When dictator Tito was in power, Yugoslavia was in one piece with ethnic tensions well managed. But when democracy came to Yugoslavia, politicians posed as champions for their own ethnic groups by fanning grievances and demonising others. The result was a civil war.

Summing up, democracy suffers from three weaknesses - its penchant for redistributive policies, short-term thinking and ethnic discord. These weaknesses are already present in varying degrees in most mature democracies of the western world. At present, none are in danger of collapse. But as time goes by, the danger will grow.

In the case of America, there is a huge budget deficit that threatens to destabilize not only its economy but also the world economy, given America's share of the world GDP. Its growing minorities, both legal and illegal, have the potential to create discord if ethnic tensions are not properly managed.

But it is the Socialist countries like France -- with their combination of redistributive policies and ethnic tensions created by short-term thinking politicians -- that are in greatest danger of a collapse of democracy. France has a Muslim population amounting to 10 per cent of its total population. The Muslims are of a different race, speak a different language and have a different religion than the other Frenchmen.

This makes the problem more serious than, say, the ethnic tensions between blacks and white in America where the only difference is one of race. Also, France has an unemployment rate of 10 per cent, with many of the unemployed being Muslims. The recent riots may be the first shots of a civil war. The day may not be far off for a French version of Adolf Hitler or Slobodan Milosovich to emerge as ethnic tensions increase.

I foresee that European Muslims will within in the next 20 years demand autonomous regions in cities where sharia law rules. This will provoke the "classical" Europeans who feel their way of life being threatened and there will be a backlash. The people will fall prey to racists groups who of course will promise to defend their way of life. While it took a long time for Europeans to learn to settle their differences peacefully through the ballot box, this important lesson is slowly being unlearned. The lesson learned from the Danish cartoon affair is that violence pays.
Most western governments caved in by issuing apologies or condemning the cartoons instead of defending free speech. Soon groups that oppose immigration will turn to violence too. If European democracies cannot manage their ethnic tensions, democracy will break down, ushering in dictatorial rule.

How then should democracy be reformed? We must build a system that balances popular demands with long term thinking. There must also be a system that matches the right to vote with the amount of contribution the voter makes to society. If this sounds elitist, then I am in good company.

The early founding fathers of America were elitist too, especially men like Alexander Hamilton. They restricted voting to those with property, who were then the educated part of the population and who probably paid most of the taxes. Being men of property, they had a stake in the country's long term future and could be relied on to take a longer term view. Even as late as 1824, only 5 per cent of adult Americans could vote in the Presidential elections. (4)

Don't get me wrong. I am not advocating restricting voting to rich people. But I do advocate striking a proper balance between competing needs. I have thought out
some reforms which I believe will improve the situation.

Firstly, I propose that the Senate or Upper House be comprised of people that are
elected for life and their personal interests be more closely aligned with that of the nation. Once made a Senator, he is no longer subjected to
popular pressures that produces short term thinking. The Senator can only be removed if he commits a crime or is incapacitated. The House of Representatives will continue as before and its members be subjected to periodic elections.

The elected Senators should be paid in accordance to his 'market rate'.
This effectively means he should be paid the income he has to forgo as a result of going into politics. Salaries will be adjusted for economic growth. Bonuses will be given if certain economic benchmarks (eg unemployment, inflation, GDP growth) are attained. These benchmarks can be reviewed once every 10 years, say.
To further ensure long term thinking, his salary will continued to be paid into his estate for 10 years after his demise.

By making the Senate a life-time job, we ensure a balance between short term demands of the electorate and long term needs. We ensure a balance between the voters of today with the voters yet to be born. Our huge budget deficits and government debt is putting a burden on future generations who have no vote at present. It is unfair to saddle them with so much debt. Present voters are effectively taxing their children and grandchildren so that they can enjoy a profligate lifestyle.

The second proposal I have is that we make the vote transferable to other citizens. Each voter can buy or sell votes through an electronic marketplace for votes. The logic is like this. Votreprenuers are already buying votes with taxpayers' money by promising all sorts of government programs that will benefit this or that constituency. Why not allow the voters to do it directly without going through the middleman? Why can't voters buy votes when politicians are already doing that, in effect?

There will still be redistribution of income from the haves to the have-nots but without going through an often inefficient government bureaucracy. There will be tax savings from cutting out the middleman. This is what I think will happen in practice:
The higher-income groups will end up with more votes since they have money to spend. But so will groups passionate about certain causes.

They will use the votes to curb government spending and lower taxes to benefit themselves. They will also balance the budget because they know it is unsustainable and eventually ruinous to their stock and bond portfolios.

But the have-nots will be compensated with cash. After some trial and error, a balance will be reached in which the losses from government entitlement programs will be approximately equal to the sales proceeds of their votes. Without welfare spending, welfare bums will have more incentive to look for jobs and improve their skills - even after selling their votes.

It is time to subject the electoral process to some sort of market discipline which my proposal will allow. The end result is that the balance of power tilts more towards the above average. These members of society who for usually good reasons are better educated, more successful and generate more GDP per head.

They also are people who are more talented, more diligent, more focused on the long term. Successful people also tend to have more stable marriages. Under the present system, people who are more disciplined, contribute more to the country and work harder are taxed more to help those more indolent, more irresponsbile and contribute less.

Under the present system, votreprenuers have electoral incentives to market their services to another group of people - the old. Under the present system, retirees are supported by the state. In the US you have Social Security. This means that you no longer need your children to support you in your old age. The state will
support you. In other words,you are relying on other people's children to support you.

But everybody has the same idea of relying on other people's children. Those who take the effort and money to raise good productive citizens are doing it for the benefit of others. They will be paying into Social Security and supporting some faceless strangers. The end result is that couples have fewer children and you end up with fewer working people to support retirees. This is happening not just in the US but also in other democracies.

It violates the millennium old practice of relying on our own offspring for our old age. It also violates a very good principle - you should be rewarded based on your own efforts. Relying on your own children for your old age may also have a beneficial effect on marriages as people have a financial incentive to maintain a harmonious household to raise their kids - since their own kids are their Social Security. People will think three times before they cheat on their spouses as this will endanger their marriages.

Under the present system, people who are very passionate with their issues and people who are apathetic on the issues have one vote each. Under my proposed changes, those who believe passionately in their issues be it the environment or abortion can pay for more votes.

People who are passionate on the issues tend to be better informed since they have done sufficient research and would vote more wisely than those who are apathetic on the whole electoral process. Even in an US Presidential election, usually less than 70% of eligible voters bother to vote. Those not interested might as well sell their vote to those who are interested. This proposal, I believe will shift the centre of gravity of the electorate to Mr Above Average, which should produce more intelligent government.

The third proposal is that the President's term of office be increased to a single term of eight years. This would free him from the need to seek re-election and permits him to think long term. Without worrying about re-election, it is in his self interest to ponder what history will say of him and this will result in better decision making.

To sum up, we should not become complacent about democracy's future. There are long festering and growing economic and ethnic problems which short term thinking votreprenuers cannot solve. With the rise of India and China (with their hardworking cheap labor), it is quite clear that the welfare state in Europe and to a lesser extent in America cannot be sustained.

The rising tide of Muslim immigrants in Europe who refuse to assimilate and adopt the culture of the host countries adds to the problems. A combination of economic hardships and ethnic tensions set the stage for the collapse of democracy and the emergence of another Strong Man, another Hitler perhaps. I am sure nobody wants to see that happen. We should fix the problems while there is still time. But I am not optimistic. To solve these problems requires long term solutions and invariably short term pain which democracies cannot deliver.

(2)See the book, "Democracy: The God that failed."
(3)There is currently a challenge from radical Islamism, whose proponents want to organize human society based on Islam. This can cause horrendous bloodshed and must be taken seriously, but at the moment its supporters are confined to a minority of the Muslim population, albeit a large minority.
(4)See the book, "The Future of Freedom".
(6)See page 221 of the book, "The Politically Incorrect Guide to American History".


At 3:36 PM, Blogger LoneStranger said...

While I admire your fervor for prolonging a dying country, I think you have to accept the ultimate truth that it is a dying country. Like all things living, countries have a finite life span, and they too must cease to exist. In the case of America, the argument could easily be made that it ceased to exist in its intended form a long time ago. What we have now is an America that resembles its former self in appearance only, and even that is stretching it.

The sad truth is that the people who today proudly call themselves Americans would run and hide from the level of freedom enjoyed by the earliest inhabitants of the states. We are so conditioned to accept what the founders would have abhorred that, much like Brooks in The Shawshank Redemption, we would rather kill ourselves than taste freedom.

Democracy, Republic, democracy, republic. It doesn’t matter what name you give it or whether you capitalize the word. That is merely semantics. What matters is when the ball got rolling because the lives of nations are etched on a wheel. There is a point where they begin and a point where they end. Granted, those points are not always easily defined, particularly when it comes to the end. After all, no one enjoys celebrating the end of something loved. But the freedom enjoyed at the beginnings of this country will never be enjoyed again by its citizens. The wheel has started turning. The end will most likely be beyond any of our lifetimes, but it is coming.

Man enjoys all manner of rights. Governments are instituted to protect those rights. Unfortunately, all governments operate under the greedy guise of helpers when the wolves in sheeps’ clothing (votreprenuers) are really about solidifying their own power. This is done through the usurpation of the peoples’ rights.

All rights exist in the ether, and all belong to the people. When the people enter into a government, they voluntarily set aside a portion of those rights for the good of society. The trouble is not that the balance never stays the same. The trouble is that the flow of rights only happens from one side to the other. (I’ll let you guess which direction that is and where they are being stockpiled right now.)

Ever read The Firm? In that story, the shady law firm throws money at new associates and gets them accustomed to the good life for a few years before they tell them the truth about the dishonest business dealings. That’s how we’ve gotten hooked as well. We’re comfortable with the way things are regardless of how much we kick and scream about the guv’mint, and the votreprenuers know this. They know they can continue to slowly chip away at our freedoms with our permission and in front of our very eyes as long as they allow us the comfort of the illusion of freedom.

It will continue this way because there cannot be a net gain in rights for us. We started with all of them. The best we can hope for, and the position you seem to take, is that we can reach a happy medium whereby we reach a steady state of no net loss. But governments are tricky by their very nature. As you point out, democracy thrives on short-term thinking. I’d refine that statement further to say that government thrives on short-term thinking. Government rewards the connivers and cheats, making it far unlikely that we can ever beat them at the game of who gets to keep the rights.

Therefore, we’re faced with a dilemma. The government is a politically capitalist entity. And despite our best efforts, we cannot match its efficiency because we designed it to be ruthless in order to stave off all manner of external and internal attacks. Unfortunately, in our haste to craft an unbeatable system, we placed ourselves outside the wall. The citizens of America have reached the point where we no longer can control the behemoth.

That’s why I believe you’re off base with attempting to salvage the current system. It’s like trying to put toothpaste back into the tube. What we’re faced with, and what most people will probably never acknowledge because it threatens their illusion of America, is the realization that we cannot turn back the rolling wheel. It will continue to roll, and the best we can hope for is to slow its acceleration toward death.

At 6:24 PM, Blogger Ohmyrus said...

Dear Lonsetranger,

That was a great comment. I am going to post it on the front page for all to see.

At 11:39 AM, Anonymous Anonymous said...

Hehe this is stupid really. I admire your effort to mislead people with your line of argumentation, which is composed of jumps and false premises. You assume a lot of things to prove your side and assume a lot of things as well to dispute the other side especially when it comes to human nature. You link your arguments with examples but some of those examples are taken out of context.

The gist of my counter is that 1) Redistributive policy of democracy is a strength, not a weakness, and that a lot of your argumentations were lopsided 2) Again, a lot of your argumentations were lopsided. Periodic elections are there to ensure true representation and as a check against abuses and monopoly of power. A lot of politicians have lead their countries thinking of the long-term. 3) Even without democracy, people already have the tendency to be divided. And diversity is celebrated by democracy because it ensures equal competition of competing needs.

Everybody has a stake in a country's future. Property restrictions are outdated. Life terms are stupid because there are many people that are as competent as any other politician in power, no one is too perfect to be able to be the only and forever leader. Vote transfer will only benefit the rich who are already dominant in society because they can buy votes and tilt the balance of elections in their favor. It's foolish to think that all the rich will act in good faith and for the welfare of the country. Eight years is too long, a lot of democratic countries have already applied a one time-six year term for Presidents. Your country obviously hasn't followed.

Anyway, your article is good because it provokes thought, and it can be used as a guide against false argumentation and outdated governance. Which I shall for my fellow intellectuals.

At 1:12 AM, Blogger Ohmyrus said...

What jumps and false premises?

Politicians acting long term cannot stay in power for long as what Luxemburg PM admitted.

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