Do you really need democracy to achieve economic success? Kevin Hasset will make you believe that you don’t, because countries with restricted political space are growing at a faster rate than democracies. Evaluating the recent Freedom House and IMF data, Mr. Hasset concludes that
The unfree governments now understand that they have to provide a good economy to keep citizens happy, and they understand that free-market economies work best. Also, nearly all of the unfree nations are developing countries. History shows they grow faster, at least for a while, than mature nations. But being unfree may be an economic advantage. Dictatorships are not hamstrung by the preferences of voters for, say, a pervasive welfare state.
And a gloom prediction:
So the future may look something like the 20th century in reverse. The unfree nations will grow so quickly that they will overwhelm free nations with their economic might. The unfree will see no reason to transition to democracy.
The point on dictators figuring out how to provide economic growth was also brought up — quite well — a few years ago in an article by Bruce Buena de Mesquita and George Downs, where they argued that the new breed of dictators and semi-authoritarian leaders we observe around the world today has figured out how to effectively take away political freedoms while achieving economic growth and providing some key public services.
In looking at all these examples, it is important to achieve a common understanding on some basics. And the reality is that economic growth is not the same as economic reform or economic freedom. While semi-authoritarian countries or full blown dictatorships may achieve high rates of economic growth through good economic policies – it is not the same as having economic freedom. It is economic and political freedoms that lie at the core of the link between free market and democracies, not growth in GDP per capita. Thus, the question of whether democracies are needed for economic growth is not the right one, rather, we should be asking “do free markets require democracies?” And the answer to the question will certainly be “yes.”
Over-fascination with rapid GDP growth can also be misleading. In the 1990s, for example, Russia’s GDP plunged by 40%, and its recent growth has only gotten it back where it was supposed to be long time ago. The larger point – if your economy is in ruins and you have nowhere to go but up, rapid economic growth is not as impressive as lower rates of sustained growth over long periods of time. And, to repeat an earlier point, rapid growth does not imply that you have economic freedoms.
And I really doubt that unfree people would see no reason to gain liberty, be those liberties economic or political. It is statements such as these that suggest that freedoms and key institutions are often taken for granted in developed countries – we use them often without thinking too much about their value.
I wonder if we would be able to talk freely about some of these issues in some of the countries with rapid economic growth…And I can also think of quite a few countries where for some reason dictators have not yet figured “it” out…I wonder why.
Published Date: May 11, 2007