By Poh Kok Bing
The lead of politics over economics determines how well a country defines a road map for creating economic growth. How successful a country becomes, has much to do with how governing challenges politicians. But, what if you found out your unfilled lives was the result of politicians manipulating democracy denying accountability to progress. That raises a question: how countries reconfigure democracy to suit their domestic priorities?
The conditional acceptance of democracy is a game many countries do not admit playing to misconstrue growth. It is because the impact of globalization and the fast digitized world remains the single largest open risk facing an economy without a functioning democracy. Politicians from emerging economies seldom have patience dealing with protests against rising inflations, government debts and corruptions, much less understand global market risk. Economic distortions created by globalization since the 1970s, will severely test politician’s mettle more than the typical political infighting.
A country built on good bourgeois institutions with egalitarian roots tends to cope well with global market risk including geo-politics. Such countries incorporating democracy sufficiently successful to a point of excelling in market competitive advantage, are Korea, Taiwan, and Singapore, which represent the Asian three tigers or dragons in reference to their highly free and developed economies.
Democracy challenges countries with a mandate to prioritize issues, which, otherwise, lay dormant only to erupt later into chaos. Take an example of India. A country with the world’s second largest population of over a billion, ranks the world’s largest democracy and yet still poor. Many argue India cannot compete with China because of non-existent long term planning, the result of frequently electing coalition governments, which, eventually, play hostage to regional politics than national issues.
It is not due to a malfunctioning democracy, rather a case of having to deal with many politicized national issues while fiscally stressed to provide basic social services. But, these services are often poorly delivered and subject to corruption. This is where a vote is vulnerable for exploitation by politician who benefits from a simple gratitude for performing public favours.
Thus, Indian democracy is constantly and heavily tested by the poor. The populist championing of government subsidies and regional projects works hand-in-glove with patronage politics to an extent that Indian debt ranks among the highest in the emerging markets at about 70% of GDP. Today, the question of whether democracy helps or hinders economic development for India, is a hotly debated issue. But we can conclude, without democracy, India will be in a more untenable situation to provide public services fairly to its growing population. The only draw-back is that Indian democracy has not been able to empower the poor to promote growth.
Traditionally, American democracy showcases the best of arguments and ideas by way of majoritarianism. Prominent French economist Thomas Piketty’s critique of capitalism in the aftermath of the great financial recession, reveals politics was much to fault at the heart of the colossal housing bubble crisis. Since the adoption of the financial deregulation law in 1999, American politics has shifted readily towards the right.
It is because of the heightened politics of wealth; less regulation, tax reduction, downsizing of government and importantly, the right of capital as being superior to labour. To have such a rightist view in a very matured democracy like the US sets up a classic class-war between the famous 1% rich and the rest 99% of Americans. Democracy is never intended to have such an undesirable outcome of wealth politics, much less survive from it.
Barack Obama
Today, the question remains: will democracy in the US lead inevitably to income inequality and hinder the progress of majority rule. In post-crisis years, the partisan view of American politics has climbed to new heights, elevating the rights of wealth to equal that of the majority. The rising power of the rich seems deeply entrenched in legislations which lead, inevitably, to income inequality. With this dilemma facing democracy, the hard-lined partisan politics, drove the American economy on several roller-coaster rides from blocking of economic recovery legislation, refusal to extend government debts and inconclusive annual budget fights throughout most of the Obama presidency.
Finally, it is said the grandeur of American democracy, the world’s most liberal style of government, has met its nemesis, the power of wealth accumulation and inequality. How the US overcomes this new singular right promoted by a main political party for the rich, will determine the fate of this exemplary democracy in the future.
Democracy is not one size fits all model. The world watched with awe and optimism when Facebook-led democracy dethroned powerful dictators in Tunisia, Libya , Yemen and Egypt several years ago. Though democracy had finally rained down on this traditionally Islamic Middle-Eastern societies, it dissipated fast with these countries reverting back to the old order under new savvy dictators. The reasons for the quick exit of democracy are ; the century-old sectarian conflicts are no match for democracy to impose a collective consensus based on a simple one-man-one-vote model because of deep-seated distrust among communities; seemingly, these societies rank security and public order, disregarding how crudely it is imposed, as more important than democracy.
Consequently, the world has witnessed how elections in Egypt and Thailand turned chaotic for years because of irreconcilable political differences, leaving no option but to pave the way for the military to assume political power. Egypt has a newly-elected general as president while Thailand is still under military rule and most likely will end up the same way like Egypt. To be fair, leaders from the emerging countries fail to understand the relevance of democracy in the context of a globalized economy. It is the intertwining of politics with economics that cause prosperity, income inequality, jobs and growth, all of which require politicians to challenge democracy for progress.
Indonesia, meanwhile, shows a relative bright spot for young democracies sprouting out among emerging economies. It’s newly-elected President Jokowi, does not fit the typical profile of a politician from a newly-developed economy. He rose from poverty, a former furniture businessman and elected Indonesia’s first president who has no ties to the past authoritarian power base. It reflects an unexpected triumph for democracy in the emerging market.
But, an exception in the conditional acceptance of democracy by China is another hotly debated global issue. China has allowed for the introduction of market democracy in business but denied its relevance in politics. To interact productively with the global economy, China incorporates democracy as much as possible to boost its market economy.
Nonetheless, China, the world’s number two largest economy with communistic roots and embracing market capitalism to great success, is still a one-party rule country. Baffled by China’s spectacular growth based on autocracy, the world feels, violates the tenet of western democracy: growth is an input by all and in reality, rights enshrined in business should enjoy the same inherent value in politics. Not so, argued China.
In recent years, China’s slowdown is being studied carefully by the world, presenting analysts with a primary question of whether the exclusion of political democracy will carry a compounding market risk. However, this answer will never be found just from within the context of growth itself. What may be less understood is that a modern China brings forth an aesthetic contribution, to the global economy. Hence, the case for adopting a political democracy in governing growth presents a dilemma to China, as much as to the world.
It seems some countries enjoy carte blanche to reject democracy like North Korea, however, there are those which tried and failed like Egypt while the western democratic economies are grappling with the rising fiscal cost of ensuring freedom. But, every nation needs a runaway to take off and democracy has been such foundation for modernization.
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Poh Kok Bing is an economics graduate with a career that spans 28 years in international business development. He now writes commentaries on world business and economics.
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