Make Democracy Great Again
I provocatively wrote “democracy has failed” in my 2011 book The Economics of the Financial Crisis. I was reacting to the prevailing charges “capitalism has failed” (because its incentives caused the global financial crisis) and “economics has failed” (because it did not see it coming). My response was that (i) we did see trouble heading our way: the newspapers were running articles on the “NINJA” mortgages, granted to people with no income, no job and no assets; but (ii) politicians took no action because if they spoiled the party they would have been voted out of power. It was democracy that set the wrong incentives.
Concern that democracy is succumbing to populism has now become widespread. Trump’s success has captured the greatest attention, but populism has also succeeded in Italy and gained strength across western and eastern Europe, as well as in South-East Asia (The Economist points to Thailand, the Philippines and Indonesia). Even where populism has not triumphed, the quality of leaders and governments produced by our democratic system leaves a lot to be desired.
Commentators blame the rise of populism on slower economic growth and greater income inequality. They certainly played a role. But if democracy only works in good times, we have a problem. Sadly, this might indeed be the case. Take Europe. Democracy flourished during the post-WW II economic boom, when it was associated with rapidly rising living standards; it seems to be losing appeal as income growth has slowed. The temptation then becomes to blame the “other”: the rich, the foreigners, the immigrants. Democracy worked well to set up generous welfare systems on the back of growing populations and expanding economies; now we can’t even start a debate on the need to cut back public spending and unsustainable pension systems.
Complexity has compounded the problem. In Team of Rivals, Doris Kearns Goodwin recounts how Lincoln and Douglas, competing for a Senate seat, engaged in debates with 60- to 90-minute long speeches. Across the state of Illinois these debates attracted massive crowds. People cared. Of course, they did not have television or Snapchat, so attention spans were longer—in the 2016 presidential debates we were down to 2 minutes. Ah, the good old days, I thought. But back then there were two main issues: slavery and public works. Today we have to worry about global warming and energy policy, health care, foreign policy, national security, artificial intelligence, robots, outsourcing, offshoring and a host of other economic issues. The world has become a lot more complex, and building an informed view on even just the top ten issues feels like a full-time job.
So we look for simple easy answers.
Slow wage growth? It’s the foreigners, kick them out and impose imports tariffs.
Then I will get a better job? No, you won’t. Sorry. The robots are coming, they will take all the jobs. We need Universal Basic Income.
High public debt in southern European countries? It’s the Germans. Again? Yes, always. And the Euro.
And so on and so forth.
Now of course the whole point of a quick simple answer is that it spares you from thinking. So it cannot be challenged, otherwise then you have to think about the issue, and we are back at square one. Simple answers therefore become articles of faith. You don’t have reasoned opinions, you believe (in income redistribution, global warming, that austerity is evil, etc.) Positions become polarized, and debate stops.
And here we are.
Some blame social media, which have made it easier to spread fake news and inflammatory opinions among like-minded people. I am not convinced. Yes, we are using social media in lazy and sometime irresponsible ways. I have seen people share an article and say “I haven’t read it but…” But what? But the headline confirms something you already believe?
We’ve had populism well before social media. We have always been lazy. Now we have also become complacent, because life, overall, is good; living standards have risen substantially, and the last world war ended seventy years ago. So we can’t be bothered. We take democracy and prosperity for granted, as an entitlement.
If most voters can’t be bothered to form views by reading, asking questions, thinking and discussing, democracy can’t work well. And indeed it doesn’t.
That’s a problem, because as we know, other forms of government are worse. China’s authoritarian style has built up a considerable fan base, because so far it has delivered the economic goods—an average growth rate close to 10% for the last forty years. But authoritarian regimes, even when they run good economic policies, have some substantial downside.
So how can we reboot democracy? Maybe we could delegate more decisions to technical experts, like many countries do with central banks and monetary policy. Except that I don’t trust the experts any more—not since I see some top-ranked economists spout politically-driven nonsense in the newspapers.
James Fishkin of Stanford University offers an interesting solution: deliberative polling. You take a random representative sample of people, and provide them with understandable and balanced briefing material on the issue at stake, as well as access to a set of experts with different views. After they have read the material and questioned the experts, people give their opinion. In this article Fishkin lists several cases where his approach has been used to guide actual policy decisions.
I found this intuitively appealing. We cannot expect everyone to become well-informed on every issue; but we can ask a small set of people to form a reasoned view on one issue. A diverse and representative set of people will still reflect the broader preferences of society at large, thereby preserving the democratic principle. Experts provide their knowledge and opinions, but don’t get to decide.
I don’t think this can be the full solution—and neither does Fishkin. If a politician campaigns on, say, Universal Basic Income, or open/closed borders, we are back to the war of soundbites. But as Fishkin says, it’s a start. Somehow, we have to regain the sense that making democracy work is everyone’s responsibility.