The Democracy Advantage

How Democracies Promote Prosperity and Peace

Morton Halperin, Joe Siegle, Michael Weinstein

• Publisher: Routledge
• Year: 2009
• eBook ISBN: 9781135153830
• Topic: Politics & International Relations
• Subtopic: Democracy
• Index: Politics & International Relations

Reviewing 40 years of hard, empirical data, from China and India to Chile and Iraq, the authors show that poor democracies beat poor autocracies in every economic measure. In addition, the authors offer dramatic evidence that democracies are less likely to fight each other and that terrorists more often find safe haven in authoritarian countries such as Egypt, Saudi Arabia, and Pakistan.

CHAPTER 1
Exposing a 50-Year-Old Myth

Dictatorship is like a big proud ship—steaming away across the ocean with a great hulk and powerful engines driving it. It’s going fast and strong and looks like nothing could stop it. What happens? Your fine ship strikes something—under the surface. Maybe it’s a mine or a reef, maybe it’s a torpedo or an iceberg. And your wonderful ship sinks! Now take democracy. It’s like riding on a raft, a rickety raft that was put together in a hurry. We get tossed about on the waves, it’s bad going, and our feet are always wet. But that raft doesn’t sink … It’s the raft that will get to the shore at last.¹

A Yankee Businesman in New Hampshire

This book makes the case that democracy does a better job raising living standards in poor countries than does authoritarian government. At first, you might think the claim sounds a bit trite—What decent person would argue otherwise? The truth is that for the past half-century or so, the bulk of academic literature, United States policymakers, and developing country leaders have done so. While America’s support for selected dictators across Latin America, sub-Saharan Africa, the Middle East, and Asia has been primarily based on strategic calculations, this has been further justified by the conviction that democracy in poor countries breeds economic stagnation and civil unrest.

Today, it is politically incorrect to extol publicly the virtues of autocracies—countries whose leaders are not popularly elected nor subject to meaningful checks and balances. Nonetheless, the view that these governments do a better job of promoting economic growth and stability among poor countries remains firmly entrenched in the minds of many world leaders, economists, national security advisors, business executives, political scientists, and international civil servants. According to this perspective, promoting democracy in poor countries is naïve and potentially dangerous.

Which side wins this debate matters, a lot. By acknowledging a democratic advantage for development—that is, democracy on average propels social and economic progress more effectively—policymakers open the door to a major rethinking of political and economic policy toward the developing world. The case for the United States and other industrialized democracies to back democratization unstintingly in these regions becomes much stronger. However, to seal the case for democratization requires overcoming the counterargument, discussed below, that holding elections “prematurely” will be destabilizing and can lead to the election of leaders uncommitted to preserving democracy. Nonetheless, establishing that democracies develop at least as well as authoritarian regimes would remove one rationale for not supporting transitions to democracy in poor countries and would strengthen the case for giving democratic countries preference in receiving development assistance.

Many readers are no doubt wondering at this point, “What about China?” China’s rapid growth since the late 1970s makes it the contemporary poster child of authoritarian-led economic development. Doesn’t it pose a major obstacle to our claim about the superiority of the democratic over the authoritarian model? Simply answered, “No.” Our argument is not mindlessly categorical. We surely do not make the extreme assertion that every democracy grows quickly and every autocratic regime flounders economically. Our analysis of the evidence, however, says that all other things equal, poor democracies are more likely to experience positive social and economic development and less likely to suffer economic crisis than are poor authoritarian regimes. China’s stunning economic performance, paradoxically, helps make our case by highlighting the exceptional and fragile nature of economic growth in autocratic systems. Accordingly, let’s take a look at China’s economic boom.

Starting with market reforms in 1978 that gave peasants incentives to boost agricultural productivity, China has experienced a nearly uninterrupted expansion of its economy. Income per person, adjusted for inflation, has risen more than ten-fold since 1977, when it was one of the poorest countries in the world at $150, to $2,600 in 2009. China has grown to become the third largest economy in the world, with an estimated gross domestic product (GDP) of more than $3.2 trillion. In per capita terms, it has moved up to 129th out of 192 countries.

Like other East Asian countries, China rode an export-led development strategy to economic stardom. Trade makes up 70 percent of its economy and 5 percent of world exports. Lured by cheap labor and the prospect of gaining access to a market of 1.3 billion people, international investors have flocked to China, pouring some $47 billion a year of foreign direct investment into its economy in recent years. Building on one of the highest savings rates in the world—50 percent of GDP—China has upgraded its communications technology and modernized its roads, ports, bridges, dams, and irrigation systems. In a single generation, farmers have switched from using donkeys to tractors. Television now reaches almost all its city dwellers and the Internet connects with more than 10 percent of them.² To facilitate its transition to a market economy, China established experimental capitalist enclaves known as Special Economic Zones that were free of many of the legal and bureaucratic restrictions that were typical of China’s command economy and that hindered trade, foreign investment, and technology transfers.

As China’s economy has grown, the quality of life of its people has improved. More than 90 percent of children attend primary school and 50 percent make it through high school. Life expectancy has reached more than 72 years, comparable to that of the United States and Europe. Malnutrition rates have declined steadily since the 1980s, and untold millions of people have risen above the poverty line. In short, China has become an economic juggernaut.

The Argument for Authoritarian Rule

China’s experience refuels the long-running debate about which type of political system is better able to boost economic development. Doesn’t China’s performance validate the conventional assertion that autocratic governments are better at mobilizing economic growth in poor countries? Is our instinctive desire to see democracy flourish in the developing world simply a projection of Western values? If we were genuinely honest with ourselves, wouldn’t we acknowledge that there really is a “cruel choice” between democracy and development?³ If so, shouldn’t we be pragmatic and support authoritarian governments in the world’s poorest countries in order to reduce the misery of their citizens? Then, after material needs were addressed, as part of some Maslowian hierarchy of priorities, we could focus on the more ethereal issues of freedom and self-governance.

In other words, after taking a good, hard look at China, shouldn’t we adopt the view that has prevailed among foreign policy experts almost since the end of World War II? Popularized by Seymour Martin Lipset, this perspective holds that democracies can flourish only if they are grounded in a literate and urbanized middle class. In poorer societies, its adherents argue, democracies can be manipulated by opportunistic leaders who will make populist promises to get elected but pursue their selfish priorities once in office. Unrestrained by adequate counterweights, these unscrupulous politicians are likely to abuse their power and rig the system to maximize their interests. The economy stagnates. Social conditions deteriorate. Alas, the disciples of Lipset argue, while democracy is a desirable goal, it is one that can best be achieved after a sequence of economic development and social maturation occurs. Democracy should be seen as the crowning achievement of a long process of modernization.

To spur development in poor nations, they assert, authoritarian governments are better able to marshal the limited resources available and direct them toward productive activities that will increase economic output. Because of the superior organizational abilities inherent in their hierarchal structures, only authoritarian governments can match resources to urgent strategic tasks such as increasing savings and investing in public works like highways and dams, building up a disciplined military, enforcing the rule of law, and creating a functional educational system. Authoritarian governments can undertake all of these things more efficiently than can lumbering democracies. And, as the labor force becomes more skilled, more sophisticated technology can be employed and productive capacity further improved.

It was with this reasoning that Samuel Huntington, in his still influential 1968 classic Political Order in Changing Societies, touted the advantages of one-party states for low-income countries. Dominant political parties, particularly those backed by the military, were seen as unifying institutions.

The efficiency of authoritarian systems also supposedly lies in their perceived longer-term planning horizon. Spared of the arbitrary deadlines imposed by elections, they can identify long-range objectives, decide on the best policies for achieving them and implement these policies without deviating from the master plan. And there is no need to waste time and energy in endless negotiations with special interest groups, as democratic governments must do. These groups can be safely ignored, and unhappy though they might be at their impotence at first, they will ultimately realize they also benefit from the modernization efforts of a benign dictatorship.

In other words, by banishing politics from its economic policymaking, an authoritarian government is able to focus on the bigger picture. And it will seek to find solutions that benefit the society as a whole, rather than this or that favored group.

By dint of the same freedom from competing interest groups, the reasoning goes, authoritarian governments are more capable of instituting a fair, consistent rule of law, better able to establish and protect the property rights that form the basis of investment and asset accumulation, and in a stronger position to enforce contracts—thus assuring firms that enter into agreements that they will be paid.

The appeal of this perspective extended beyond the Cold War mindset in the West that the ideological battle against communism necessitated supporting friendly authoritarian governments. The orthodoxy of this view was captured in the World Bank’s 1993 report, The East Asian Miracle,⁴ in which the global development bank endorsed the notion that authoritarian governments were better able to generate economic growth in the early stages of their development. Indeed, it was the meteoric growth of the East Asian Tigers such as South Korea and Taiwan that seamlessly bridged the Cold War intellectual moorings of the authoritarian advantage thesis to its ongoing post–Cold War resonance. Although the East Asian financial crisis of the late 1990s caused the buoyancy of this view to lag somewhat, the underpinnings of the mentality remain strong. This is reflected in a 2002 report to the Asian Development Bank that concludes, “… whereas democracies have been slow in grappling with poverty, the authoritarian regimes in the miracle economies achieved spectacular success…. In a democracy with a thriving civil society, the process of policy consultation, adoption, and execution is much more time-consuming and involves many more procedural formalities than under an authoritarian regime.”⁵

A 2003 best seller by Fareed Zakaria, The Future of Freedom: Illiberal Democracy at Home and Abroad, picks up these themes in a contemporary repostulation of the Lipset–Huntington argument. Coupling the perceived superiority of the authoritarian growth record among poor countries and the notion that democracies have never regressed to authoritarianism once they’ve surpassed per capita income levels of $6,000, Zakaria argues that the goal should be to support “liberal autocracies” in the developing world.

Authoritarian governments in poor countries supposedly have another huge advantage over democracies. They are insulated from the demands of the poor. In a system of one person, one vote, democratic governments in developing countries are pressured to respond to the population’s desire for costly entitlements like free schools, decent health care, minimum wage laws, labor rights, and generous pension plans.⁶ Not only would caving into these demands break the national budget, it would also discourage savings and investment. What foreign business would want to pour serious money into a country with so many extra costs attached, when it could move it instead to low-wage countries like China and Vietnam? Democracy’s everlooming electoral cycle puts great pressure on politicians to extend fiscal commitments to particular constituencies that undermine a nation’s longterm economic health.

The argument further claims that the firm hand of an authoritarian government is required to maintain order and stability in backward nations in which tribal loyalties, economic disparities, social tensions, and regional conflicts are rife. Just look at Africa, Asia, the Middle East, and parts of Latin America. Too often, the people living there lack a real sense of national identity. In such places, only a strong national government can provide the security needed for people to go about their daily lives and safeguard the highways, bridges, and dams from insurgents. In other words, only a monopoly of power in the early stages of a country’s economic development can prevent anarchy.

This is the recurrent theme in Robert Kaplan’s widely read articles on democratization in the post–Cold War era.⁷ An unabashed Huntington revivalist, Kaplan challenges the West’s liberal instincts to promote democracy in the developing world. Lacking the Western traditions of tolerance and multiculturalism, efforts to encourage democratization in other regions of the world are likely to be highly destabilizing. Rather than advancing democracy, civil conflict and the emergence of neo-autocrats is the more likely result. A realist-based strategy of supporting authoritarian governments that can consolidate the authority of the state is what is needed.

According to this school of thought, democracies in ethnically diverse societies are highly vulnerable to social fragmentation. Each tribe or clan will be reluctant to cede any authority or share power with rival groups, leading to hair-trigger tensions and the constant threat of civil conflict. State policymakers are left wringing their hands at the near impossibility of coordinated action to alleviate national ills. More ominously, weak politicians will have obvious incentives to stir up ethnic divisions in order to cast themselves as defenders of their own cultures against the machinations of rival groups. Such a stance might win them public office, but it can also unleash violent passions. In fact, it is argued, the very act of staging democratic elections in the diverse societies of much of the developing world can trigger conflict.⁸ Single-party rule, by contrast, can channel a profusion of interests into a central political apparatus that can minimize ethnic divisions and clamp down on troublemakers who would attempt to exploit them.

In another best-selling book, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, author Amy Chua argues that the global spread of “free-market democracy” has been a principal cause of ethnic instability and violence throughout the world. Her concern is that by increasing the political voice and power of the majority, democratization has fostered the emergence of demagogues who opportunistically whip up mass hatred against the wealthy minority elite found in most societies. The result has been ethnic demagoguery, confiscation of property, authoritarian backlash, and mass killing.⁹

Contemporary debate has also focused on the resurgence of authoritarian capitalism—a more efficient brand of authoritarianism that has substituted the constraints of a command economy for the dynamic economic productivity generated through capitalism.¹⁰ Rooted in modernization theory’s tenet that growth is managed more effectively under authoritarian political systems at early stages of development, this model holds that the fusion of authoritarianism and market economics is a viable arrangement that can be sustained over time. Pre–World War II Nazi Germany and Imperial Japan represent historical precedents of the economic potency of this model. Fused with a strong dose of nationalism, the seeming economic vibrancy of authoritarian Singapore, China, and Russia represent an att...

Table of contents

• Table of Contents
• List of Figures
• List of Tables
• Foreword
• Acknowledgments
• Prologue
• CHAPTER 1 Exposing a 50-Year-Old Myth
• CHAPTER 2 Setting the Record Right
• CHAPTER 3 Sustaining New Democracies
• CHAPTER 4 Democracy and Security
• CHAPTER 5 Making Development Safe for Democracy
• CHAPTER 6 Democracy as the Default Option
• CHAPTER 7 Bringing Democracy to the Center of Development
• CHAPTER 8 The Great Race
• APPENDIX A Country Listings by Polity IV Democracy Level in 20081
• APPENDIX B Freedom Scores in 2008
• APPENDIX C List of Low-Income Democracies since 19601
• APPENDIX D Autocratic Recipients of U.S. Military or Economic Funding above the Decade Median Levels of Per Capita Assistance, 1950 to 2005
• Notes
• Bibliography
• Index