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.

Tuesday, April 14, 2009

Lessons from the Ancients - by Ohmyrus

I have long been dissatisfied with the general performance of politicians whom I now call "votrepreneurs" to emphasise that they behave like entrepreneurs. Then I realised that its not their fault but the fault of the Democratic system itself. This realisation led me to investigate how the ancients viewed the problem of organizing government.

In the Discourses, Niccolo Machiavelli wrote that there are three forms of government – monarchy, aristocracy and democracy. Monarchy is of course rule by one man. An aristocracy is the rule by a few and democracy is rule by all citizens.

According to Machiavelli, all three are flawed and will not last long. The first monarch in a dynasty usually has the competence to rule well. But later his descendents will grow degenerate and the government will fall.

This will lead to rule by a few nobles which after a few generations will also grow corrupt and oppressive. The people will revolt and the government will fall paving the way for democracy. After a few generations, democracies will fall into disorder (I call it mobocracy) which again requires the rule by a strong man to restore order and you get a monarchy again.

In this, Machiavelli was following the writings of Polybius according to Peter Constantine who published the book, “The Essential Writings of Machiavelli.”

This cycle seems to see a rough parallel in the American experience. In 1776, the Americans succesfully revolted against an oppressive King George III and set up a Republic and not a Democracy. The Republic was essentially a libertarian quasi-aristocracy. It should be remembered that not everyone could vote in the new Republic. In 1776, only white males with property could vote because they believe that only those with a stake in the country should vote.

By 1830, fourteen out of 24 states still retricted voting to white males either with property or paid taxes. Even as late as 1860, seven states still had one of these restrictions. So describing this as a libertarian quasi-aristocracy is in my view accurate. Power lay in the hands of its elite who could inherit property and with it the right to vote. What they wanted was a Republic that can protect your freedom and not a democracy.

But with popular demand, the right to vote was gradually extended to all white males, then women and minorities. This peaceful revolution occurred without violence as what Machiavelli expected. But now that America is a full fledged democracy, will his prediction of the collapse of democracy come true? Will it degenerate into chaos which requires the rule by a dictator to restore order?

As expected, when one group of people grows too powerful, they will oppress the others. During the French Ancien Regime, it was the aristocrats and the monarch who had the power. They could party all day and live off the labor of the peasants. They were the parasitic class. So the people revolted.

Today, the parasitic class are those on welfare. They do no work (like the French Aristocrats during the Ancien Regime) but live off the labor of others who pay their taxes. As Marx said, Democracy is the Road to Socialism. Aristotle said something similar. He said, “Democracy is government for the poor because there are more of them and the will of the majority is supreme.”

That is why Democracies always lead to welfare states. Welfare states require high taxation to sustain. This means that wealth and income are being transferred from today's elite to the lower economic classes wheras the reverse was true during the Ancien Regime. Europe has gone further ahead than the USA on this. But America now has the most Liberal President in its history and both Houses of Congress are controlled by Democrats which is basically a Socialist Party.

Will the taxpayers' revolt? There has been signs of this happening with the growing Tea Party movement. Taxpayers do not like the idea that their money goes to fund entitlement programs that benefit others who often don't pay taxes so that votrepreneurs (politicians) can win elections.

If the original Tea Party was motivated that there should not be “taxation without representation”, today's Tea Parties are motivated by a distaste for “representation without taxation”. Once people get used to their Entitlements, its hard to wean them off it. Europe's high taxes, low birth rates are a killer combination making the long term viability of their states doubtful.

To fund these expenditures, the tax burden in France and Italy has risen to 45% of GDP. The American colonists rebelled against George III when the tax burden was far lower than this. According to Paul Leroy-Beaulieu, a tax burden of 12% at the begining of the 20th century would have been considered “excessive”. So taxes have been increasing.

Inspite of high taxes, they still could not pay for the exorbitant welfare benefits to satisfy the voters. So the votrepreneurs borrowed money and thus push the burden to future generations. In Socialist France, public debt has risen to 60% of GDP. In other countries, public debt rose to 100% of GDP.

Besides welfare spending, the votrepreneurs also implemented costly qualitative benefits to the workers like laws making it difficult to fire workers. This comes at a cost to owners of capital because of the higher cost of labor.

But thanks to globalization, capital can move quickly to low tax and low cost jurisdictions. So businessmen have been shifting their investments away from these high tax, high cost countries. This causes high unemployment in welfare states which in turn increases government expenditures because the unemployed are entitled to unemployment benefits.

Consequently, France has an Unemployment rate of 8.6 percent. For the EU as a whole, the Unemployment rate is 7.9%. As Michel Camdesssus said, they need to reform the Welfare State. He gave a list of reforms – like increasing the retirement age and reducing medical and retirement benefits. But once the Mob is used to high level of benefits, it is diffcult if not impossible to reform the system. Any votrepreneur trying to reduce the benefits will not be elected.

Making the problem worse for welfare addicted Europeans is its growing Muslim immigrants who are not assimilating and often form the underclass. But I won't go into that or my essay will be too long.

One day a crisis will occur which makes today's democracies ungovernable and a dictator will take over – making Machiavelli's cycle complete.

What can be done? Probably nothing. The game must be played out. But what should be done if we could? Machiavelli's advice was to combine the three elements into the government – monarchy, aristocracy and democracy. Perhaps he got his ideas from Aristotle, who said the same thing.

All three have their strengths and weaknesses. But if one of the three has too much power, the system is unbalanced and will fail. Machiavelli pointed out that Athenian democracy lasted far shorter than the Spartan Republic which had a more balanced system.

If the French Ancien Regime fell because its elite squeezed the people too much, today's democracies will fall because the people squeezed the elite (who pay most of the taxes) too much. In one case, the elite had too much power and in the other the people have too much power.

It is simply human nature to benefit ourselves at the expense of others if we have the power to do so. So you need to strike a proper balance. Has there ever been a country or polity that combined all three – monarchy, aristocracy and the people?

One that came close to this Machiavellian ideal is ancient Venice. It lasted more than a thousand hundred years till it was conquered by Napoleon Bonarparte in the 19th century – far longer than any Democracy, both ancient and modern.

What sort of constitution did it have that helped it last this long? Describing its government is like trying to hit a moving target because it evolved over time. After having read the book, Venice by Frederick C Lane, I will point out some of the features in their constantly evolving Consitution at different points in time that I think is beneficial to us.

First, Venice was led by the Doge who functioned a bit like a monarch. Once elected, he ruled for life. But there were restrictions on his power. Unlike a true monarch, power was not passed on to his son but requires an election. He was a member of the Council of ten and could not go against the wishes of the majority. However, while he ruled for life, his fellow Council members ruled for shorter periods like two years.

This gives him the experience and prestige to get his way most of the time but not so much power than he can abuse it. An advantage of having a King is that he is in a position to think more for the long term. Today's votrepreneurs can only think ahead not more than the next elections. So unlike the Doge they are unable to make necessary but unpopular decisions which causes short term pain but yields great benefits in the long run. This is because once elected, the Doge is secure.

But the other members in the Council of Ten face periodic elections. So there was input of the popular will in the decision making process. So the Doge was not quite a dictator like the average Medieval King nor was he tossed about like a blade of grass by the changing winds of electoral opinion as a modern votrepreneur (politician) is.

Below the Council of Ten was the Council of forty and the Senate. Both had different functions. Below that was the Great Council and at the bottom of the pyramid was the General Assembly which consisted of every citizen of Venice.

In theory at least, the Doge gets his power from the People. Each election of the Doge and important laws must be affirmed by them. But in practice, the important decisions were made by the nobility who served in the Councils and Senate. But they had to take into account the opinion of the common man for the laws and election of the Doge must be affirmed by them.

In Venice's early days, there was no great distinction between nobles and commoners.The only distinction was that the nobles were recognised as men of ability and were chosen to serve in the councils. They started off with minor duties and membership in the Grand Council. If they did a good job, they were promoted up the pyramid and assigned more important duties. So people from poorer families could and did rise to the top.

So you have all three elements present in the government of Venice – bit of monarchy, a bit of aristocracy and a bit of democracy. But of course, the situation was fluid as I said earlier and the Constitution evolved.

In the first few centuries, the Doge had enormous power. But later on, his power was gradually reduced. At the same time, the nobles became more entrenched in the positions of power and distinctions appeared between them and the common people.

The nobles started making it difficult for people not in their social class to gain political power though they periodically opened the ruling class to new members. But eventually, Venice evolved into an aristocracy and membership to the ruling class was closed. This was a bad mistake and Venice gradually declined.

So the lesson we learn here is we must build a system where the ruling class must comprise of its most able citizens by practicing strict meritocracy. There must be social mobility where able people can rise to the top. The head of state must be a strong executive. He must have the ability to make decisions for the long term without fear of unpopularity. To do that, he should be appointed for life.

The voice of the people must be heard but not to the extent that votrepreneurs compete for their votes by promising to transfer property from one group to another. In short, we need to strike a balance between the three elements of society – the King, the aristocracy and the common people.

In today's terms, the King would be the President or Prime Minister of the country. The aristocracy would be the more able elite who no doubt earn more money and hence pay more taxes. How do we go about doing this?

I propose a two chamber Legislative – an Upper and Lower house. In the Upper House (which we can call the Senate) the voting rules would be skewed in favor of the more able citizens. This can be done without disenfranchising anyone.

I suggest that the vote to be made transferable. Every citizen will start with one vote. But for a mutually agreed price, anyone can buy votes from anybody who wishes to sell. An electronic market can be set up to facilitate this. Since the people with higher incomes are likely to end up with more votes, it is not in their interest to vote for anyone proposing entitlement programs that must be funded by taxes which they end up paying.

This may sound undemocratic to some because some people will end up with more votes while others have none. But you should bear in mind that the system requires the voluntary relinguishing of the right to vote when a person sells it. What could be more democratic than respecting someone's wish not to vote? Its his choice. Even in a Presidential election, something like 40% of the electorate do not vote. Now they can get paid for their choice.

The price of a vote could be substantial. Don't forget that hundreds of millions of money were raised and spent during Presidential and Congressional elections. Probablyl most of these funds can be used to buy up the votes of those who do not wish to vote.

America's Founders linked Representation with Taxation. Its time to bring back that link. Paying taxes is, for most people, the main contribution they make to society. Yet in the present system, those who pay the most taxes have less say on how that money is to be spent than those who pay less or not all. Is it not fair that those who pay more should have more say in how that money is to be spent? According to the Wall Street Journal, the top 10% of Americans pay 72.8% of total income taxes. But of course, they only get 10% of the votes under the present system.

Finally, it would be an improvement of the present American system which is undemocratic in spirit. In the US Senate, each state gets two Senators irregardless of the population size. This means that a Californian voter is less important than a Rhode Island voter. I propose doing away with this and alloting the number of Senators according to population as in the House of Representatives.

The present system gives favor to people who happen to live in small states. My proposal gives favor to people who contribute more to the country. I think my proposal makes more sense than the present system.

The Lower House will continue as before where buying or selling of votes will not be allowed. This will strike a balance of power between the elites who are the more able and richer citizens and the common people so that neither group can oppress the other.

Finally, the President should be patterned after the Doge. This means that his power must be increased. He should therefore be elected for life or till he reaches the age of say, 75. While the Senators and Representatives can be elected by the people, the President should be elected by the Senators and Lower House Representatives.

The Cabinet should also be elected by the Senators and Representatives but for a period of four years. One of them can be appointed by the former President for a period of four years. Knowing human nature, it is likely that he appoints one of his sons. This is to encourage the President to rule well with an eye to the long term. A good record will increase the prospects of his son's career.

Undoubtedly there will be problems with this new system. Nothing is perfect, but I believe that it will be an improvement of the current systems in place. The British still have the remnants of such a system. There is the monarchy and a House of Lords both of which are today powerless. Of course, you have the House of Commons which is today all powerful. But it was not so in the past. In the 18th and 19th centuries the monarch and Lords still had considerable power and the voice of the Common man was not as strong as today.

The King (or Queen) gave the country greater cohesion and a longer term outlook. He of course wanted his son to inherit a rich powerful kingdom. So its in his interest to think more for the long term. In contrast, today's votreprenuers can only see as far as the next elections. The result of the political structure today is that it rewards politicians to adopt policies that gives short term gain but long term pain.

In 18th and 19th century Britain, the Lords consisted of the best educated and able men in their society and thus it makes sense to have them wield power disproportionate to their raw numbers. (Of course, in modern times we must reject the idea of inherited power.) It may not be democratic but it was effective and practical. Then you had the House of Commons which protected the interests of the common man though of course at that time not everybody could vote. Nevertheless, with this system, Britain rose to the top of the world. It pioneered the Industrial Revolution and created the largest empire (not that its a good thing) the world has seen.

Later the Common people rose in power and the power of the King and Lords declined. This was different from Venice where it was the Nobles that gained power at the expense of the other two. This weakened them and Venice declined. However, Venician Republic lasted more than a thousand years - far longer than any democracy both ancient and modern.

To sum up, my proposals will increase the power of the head of state and the elite of society at the expense of the common people. I expect to be accused of being undemocratic. But as I pointed out in my earlier article, having too much democracy is bad for the country. The most democratic society is a pure democracy where every decision is made by the entire electorate. The ancient Athenians had one.

Today, with the internet, it is possible to put every decision to the electorate. But nobody is proposing this. It would lead to chaos because we recognise that the average citizen does not have the competence or the time to deliberate complex issues. That is why we live in Representative Democracies.

Thus we accept that somewhere in between a dictatorship and a pure democracy lies a golden mean. I believe none of the democratic nation states has found this. All I am proposing is a little fine tuning to find the Golden Mean.


At 8:34 PM, Blogger urbanadder22 said...

Intriguing proposal on how to save democracy as a form of government. In the U.S., it would require a severe revamping of our Constitution.

Amending the Constitution is a long-term process. With the present "government responding to the non-productive, non-tax-paying 'poor,'" tilting the system to favor the tax-paying, productive classes is unlikely.

Two things in your proposal evoked an unfavorable visceral response in me: the President for Life (or until age 75) and the trafficking in votes.

When you say " . . . somewhere in between a dictatorship and a pure democracy lies a golden mean," I am reminded of the socialist/fascist-national-socialist dictatorship into which we are heading.

I am picturing "Obama, President for Life," and I do not like it.

A start at reforming the "democracy" we now have would be a reform of the electorate.

Strict requirements for eligibility to vote would be start. Citizenship, a required educational level, and a record of paying or having paid (retired persons) a certain amount of income taxes should be mandatory for a voter.

At 7:27 AM, Anonymous Anonymous said...

I have thought of that. But reaquirements like paying taxes, education etc will end up disenfranchising a lot of people. it will never pass.

Allowing buying and selling of votes between fellow citizens disenfranchise no one. Its all purely voluntary.

At 9:28 AM, Anonymous Anonymous said...

The Senate is set up to balance the House, so it's power is checked already. Notoriously, it is the place where the passions of the people as seen through a constant election cycle in the House go to die.

Your premise starts flawed because you use Machiavelli's notions of the three forms of government, which were before the American political theory and Marx Engels theory were developed. I'm not where you would put Islamic theocracies as well. There are now arguably five, and perhaps more, forms of government.

As set up, I truly believe the constitution republic of the Americans was the strongest form of government until it fell in what is known as the Civil War through 1865. The balance of power was already upset when the Supreme Court took Judicial Review as a right in 1803, but totally dissipated with Lincoln's suspension of the Constitution. The American experiment continued on until it's bankruptcy in 1913. For that brief 76 year period, it was absolutely astounding in its expansion and political freedoms for some. While it could be rewritten to account for emancipations, the basic structure was totally sound.

I enjoyed reading your blog and you obviously put a lot of thought and effort into it. I look forward to coming back and reading more when I have more time.

At 8:43 PM, Blogger Ohmyrus said...

The Senate was set up to balance the House, its true. But its not doing a good job because the power of the common people is still too great. I want the elite to balance the power of hte common people.

So my proposal effectively creates an artificial aristocracy by tilting the voting process in the Senate in favor of the elite - those who pay most of the taxes.

Machiavelli's ideas are not outdated. Even in Islamic states and Communist states, you still have the three elements - the Executive who manages the country, the elite and the common people.

What I am trying to achieve is the proper balance between the three which must have representation in government decision making. I believe that modern democracies are out of balance with too much power given to the common man which is the root cause of the ills which I believe will result in collapse eventually.

I believe the longetivity of the Venecian Republic merits study. So does ancient Rome before the Republic collapse and power went to the executive - ie the Emperors.

At 3:06 PM, Blogger Erek said...

I think you have a problem that plagues many people, you haven't taken enough time to question your own underlying assumptions.

First of all you only identify one parasitic class. The blindness of the left is in recognizing the parasitism of the welfare state, but the blindness of the right is in recognizing the parasitism of the capitalist class.

First off, shifting money that was entrusted to your care via complex and incomprehensible financial instruments is not 'production'. It doesn't really matter how hard you work when you are scamming someone, that doesn't make you a productive member of society. Hard work is not evidence of a virtuous character.

You are posting this idea of the welfare state following a time period where the disparity between the rich and the poor is higher by orders of magnitude than it has ever been in any society ever in history.

There is one other fundamental flaw in your thinking. That people's votes are disproportionate to the value of wealth. This couldn't be further from the truth. The wealthy can pay lobbyists to argue their cases, and as such make a lot of money, if it were not profitable they would not hire lobbyists to argue their interests. The poor and middle-class cannot fund lobbyists in the same way. So as it is being wealthier does give you a great say in our democracy. The average person votes once per year to elect representative. The wealthy vote multiple times a year because they influence legistlation directly at both the Federal and State levels, or the Municipal if they are Real Estate developers.

So even with the economic downturn the economic disparity is greater than it has ever been. So the idea that the rich are being soaked by the poor really has no merit. The rich are being soaked by the poor a little, but the middle-class are being soaked by the rich who siphon from their pensions to fill their own coffers.

Your proposal doesn't work because it doesn't recognize that we have two parasitic classes, and expresses sympathy for the greater of the two parasitic classes. The wealthiest 1% has far more wealth than the bottom 10% in the welfare class.

Now I'm not arguing that our welfare state is a good thing, it's problematic, but the problem with these tea parties is that Fox News is votrepeneuring on populist outrage for the benefit of the wealthier parasitic class.

At 3:09 PM, Blogger Erek said...

Deregulation is passive welfare for the wealthy. Entitlements for the poor is active welfare for the poor. Either way it's a redistribution of wealth by means of government.

At 11:31 PM, Blogger Ohmyrus said...

But the capitalists work hard to make their money unlike unproductive people on welfare. Of course, if you are refering to Bernie Madoff, then you are right. He was scamming people and his work was non-productive. But most capitalists do productive work that brings welfare to the world by making products and services that people want.

At 12:14 AM, Blogger Ohmyrus said...

Dear Erek,

I forgot to mention something. You mentioned lobbyists to promote the interests of the moneyed class. Obviously, these lobbyists are not so successful. Otherwise, income taxes would have been lower and capital gains tax and estate taxes would have been abolished.

Compare this to say Hong Kong's or Singapore's taxes. I think the top rate for income taxes are below 20%. There are no capital gain or estate taxes.

At 7:58 PM, Blogger Ohmyrus said...

Urban adder said:
' am picturing "Obama, President for Life," and I do not like it. '

With my proposed changes, someome like Obama will not be elected President.

At 2:55 PM, Anonymous Anonymous said...

I am missing another example of quite a stable democratic structure, Switzerland.

I am still learning how it works here, but the principles seem to be that a lot of decisions are taken at the lowest level possible, with taxation done at national, cantonal and communal level for example.
Moving by a few miles can change significantly your tax rate.

I am not sure if citizenship is given the old fashioned way everywhere here: there was a time when a candidate for swiss citizenship had to defend his wish for it before citizens of his village, who had to know him.

Although money can buy you nearly everything here, it can't buy you votes (well, except for the welfare packages sold by the leftist parties, who thrive on immigration of the uneducated into large cities, where citizenship is handled by the administration).

Maybe the solution is to work towards the least possible 'central government' and allow people at very local level to decide how they want to live, and to be thus taxed to finance this way of living.

At 4:04 PM, Blogger unaha-closp said...

Under your system the first change will be an end to income taxes and capital gains. The second will be institution of poll tax or similar and increase in sin taxes (alcohol, tobacco). These will shift taxation burden down income/wealth and you have the same fundamental problem as now - the tax payer is relatively disenfranchised.

At 4:36 PM, Anonymous SWIFT said...

hey I liked that post...It was really a help...
any way for blocked funds..I know a company called Blocked Funds..Dose any one know about it

Daniel Goodman


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