The Promises and the Pitfalls of Democracy – A Response to Hammond and Smith

“To hear these defenders of democracy talk, one would think that the people deliberate like a committee of wise men…”

-Joseph de Maistre

Economist Noah Smith recently linked to this Twitter thread.

To his credit, Hammond states he is not fully convinced by the argument. But immediately afterward, he says this:

Let’s try looking at this like the Man from Mars. We know that economic growth has worked wonders for fighting extreme poverty and associated suffering. We know that this growth will continue in market-friendly autocracies, as Hammond himself states. We know that slowing the growth down will harm millions of lives and livelihoods.

What would our Martian conclude? Clearly, “freedom” and a “democratic system” must be very valuable, if they win out against the lives and welfare of millions upon millions. But now let’s assume I set the intrinsic utility of “democracy” to zero, which it is. Now, when I make the above argument, our Martian wants to commit me to a mental hospital.

I’m not sure what people envisage as the endgame of liberal democracy in India. A Scandinavian welfare state? Corrupt bureaucrats would hoover up everything before the poor saw more than a few cents. A united nation-state? That’s even more a pipe dream than thinking Indians will recreate Sweden.

Let’s leave the dreams and get back to reality. One of the lovely things democracy has given India is slum votebanks. Even politicians admit they let slums proliferate to secure the votes of their inhabitants. de Maistre was right: far from having “wise men,” we have rent-seeking lumpenproletariat with room temperature IQs holding our cities’ futures hostage.

Now, let’s raise the stakes. Agriculture is the heart of India, but its productivity is destroyed by a number of issues. Very small farms mean that farmers cannot mechanize  or achieve economies of scale. Poor infrastructure and ineffective supply chains mean goods spoil en masse before they even reach the market. Extensive subsidies mask inefficiencies and divert resources from more useful tasks (like building the aforementioned infrastructure).

All these problems have solutions, and adherents of both state-driven and market-driven approaches will find them easily. But they cannot be implemented in a democracy. In a Nash Equilibrium, farmers will vote to keep their subsidies rather than building road-and-rail networks, even if the latter would benefit everyone to a greater extent. An autocracy would step in to correct this problem. A democracy will never do so, and that is why India will always suffer.

I’m sure someone will respond with Churchill’s famous quote, but Churchill’s words look rather hollow and outmoded these days. A market-friendly federalized autocracy is the best way to avoid the failure modes of both statist dictatorships and populist ochlocracies.

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