Monday, January 26, 2009

Economist warning: Democracy may be bad for your wallet.

Our political leaders love to speak about democracy. It's a subject universally popular with the people. So politicians universally enjoy its use as a rhetorical wrench to sway the people to their ideas. I confess that I'm not fully immune to that rhetoric. GWB declared a secondary mission of our fighting in Iraq was to bring the blessings of democracy to its people. That's good, right?

I was thunderstruck today while reading Peter Schiff's book, Crash Proof, by a passage in which he argues that China is better off without democracy, and that democracy can actually be dangerous to the economic well being of the public. Here's an excerpt from the chapter I've just read:
What is of vital importance for economic success is economic freedom, meaning the protection of private property, the rule of law, and minimal regulation and taxation, not the right to vote. One could reasonably argue that with economic freedom, free elections are of secondary value, and without it, voting (suffrage) has no value. A choice between oppressors is tantamount to no choice at all. Remember, the old Soviet Union had elections and almost everybody voted, the alternative being frozen toes in Siberia.

The word democracy is used loosely these days, and it is useful to remember that one of the primary reasons for America’s early economic success was that our founding fathers recognized a distinction between democracy, which they understood as populist government with counterproductive implications for capitalism, and republican government, which stressed checks and balances, such as the Electoral College and staggered senatorial terms, designed to keep the evil forces of democracy at bay. James Madison, the father of the Constitution, writing in the Federalist Papers, said, “Democracies . . . have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their death.” After the Constitution was ratified, Benjamin Franklin was asked, “What form of government have you given us, Mr. Franklin?” His answer: “A republic if you can keep it.” Perhaps if we could have kept it there would have been no need for me to write this book.

For those of you who incorrectly believe that the United States is supposed to be a democracy, just check the Constitution. The word democracy does not appear once. However, Article IV, Section IV, reads, “The United States shall guarantee to every State in this Union a Republican Form of Government.” If you are still unclear, just recite the “Pledge of Allegiance” and listen carefully to the words.

We all take our understanding of democracy pretty much for granted, I think. I believe many of us also have some rather deep-seated misconceptions (myself included) about the role of democracy in this country, and the virtues of efforts to spread it abroad.

Democracy alone is simply populism, and I think that most of us can agree that doing what's popular is not always going to be in our best interest.

Our founders seemed to grasp this notion, and took great pains to develop a system where the national government is prescribed an exclusive short list of very limited powers essential to nationhood, and everything else is left up to the States comprising the union. These States then had representation within the national government to come to agreement on national policy, but the individual was not so explicitly considered.

It was left to the States for the most part to decide how they should govern themselves, internally. The model was bottom-up. Your main civic impetus as an individual was to your local government. Your local government was represented in the state where the self-interest of the entire state was integrated, and the states then sent representatives to the national government to integrate and hammer out policy and action in the interest of the whole nation.

At some point in our past, and perhaps this has been a rather recent thing in our national history, we started to break down this bottom-up arrangement and replace it with a top-down one (Often by invoking notions of grassroots movement, how ironic!). In so doing effectively centralizing power at the federal level, and making state and local government less relevant. This is not what the framers intended.

The 17th amendment gives a good example of the transformation. It provides for the direct, popular election by the people of each state's Senate representation. It was ratified not all that long ago in 1913 (a recognized "progressive" era where, worldwide, experiments in socialism and fascism were developing). We take it for granted today that this is how our democracy republic is supposed to operate.

Before this, the legislature of each state had the power of choosing the state's senators, thereby recognizing the authority and importance of each state. The state legislature then could codify a popular election as its desired selection means, or it could specify some other process where it would choose for itself (recognizing the importance of your local representative to the state government). The federal government dealt primarily with states, not with individuals.

The 17th amendment takes the power invested in the government of the state, and transfers it to the people directly, with the (intended?) effect of causing the federal government to become stronger because the will of the people as expressed by the representatives making up their state government is set at odds with the will as expressed by their senators at the national level. The senate now has the ability to undermine the will of the States via the state legislatures.

The framers categorically rejected the notion set by the 17th amendment, as this amendment directly re-writes language they had set down in Article 1, Section 3.

The framers desired this segmented republican form, with its segregated branches of government, separating powers, generally making it very hard...but not impossible, to change things. In this way they imbued government with the flexibility to adapt over time, with sufficient rigidity to stand firm against passing fancies which would jeopardize the liberty of the public. They saw this as the best way to embody the assertions of the Declaration and allow the will of the people to be represented, prevent over-centralization of power, while at the same time give the states and then the nation the ability to decide upon difficult choices that frequently are very unpopular, but in the best-interests of the whole.

And decidedly not democracy, but republicanism (and no, not the party either!). And, it has helped us to become our best as a nation, by allowing us generally to act in a manner that tends to be best for us in the long run.

The pure will of the people, on an individual basis, can be very shortsighted. You may be ignorant of all the salient facts, or struggle for the discipline to fore go some present pleasures for the opportunity for a greater future reward.

Like eating your vegetables and exercising and working hard to save money for the future, some decisions may not be popular, but the republican form served as a kind of mommy or conscience, compelling us to do what's for our own good.

Who doesn't want the most direct power possible? Democracy in the populist sense is an appeal by our politicians to our more base desires. In the process they accrue the power to themselves by using populist rhetoric against us as a whole. Dividing and conquering us as a nation by pitting our individual self-interests against one another. The framers understood that this could only result in a race the the bottom.

Their conception of a republic, decentralized in important ways, allowed for individual liberty to be guaranteed, allowing localities the most power to act in their best interests, while still allowing the national will to be felt and shape the nation's direction.

Peter Schiff's book, Crash Proof, was written in 2006 and published in 2007. It's so far been pretty spot on in predicting the economic fallout we've seen in 2008 and will likely see in the future. The logic is very sound and inescapable, in my opinion. If all else were to remain constant, only the timing is open to debate. I heartily recommend you pick up a copy and give it a read!

Make it your civic duty to read and consider its merits or demerits. Above all, think!

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