Outcomes of Democracy
Economic outcomes
Judge democracy's record on growth, inequality and poverty.
Does democracy bring growth? If democracies make good governments, it is fair to expect them to bring development too. In practice, many did not. Looking at all countries from 1950 to 2000 (Table 1):
- all dictatorships grew at 4.42 per cent a year on average;
- all democracies at 3.95;
- but among poor countries: dictatorships 4.34, democracies 4.28: almost no difference.
Growth depends on many things. A country's development depends on its population, the world situation, help from other countries, and its economic priorities. So democracy is not a guarantee of development, but we can expect it not to lag behind dictatorships. And since democracy has many other good outcomes, it is the better choice.
Equal votes, unequal incomes. In a democracy every person's vote counts the same: political equality. But alongside it, we see growing economic inequality. A small number of the ultra-rich take a huge and rising share of income, while the poorest have very little, and their incomes have been falling. Some struggle even for food, clothing, a house, education and health.
Inequality inside democracies (Table 2). The share of national income going to the richest 20 per cent and the poorest 20 per cent:
- South Africa: top 64.8, bottom 2.9: the top fifth get more than twenty times what the bottom fifth get;
- Brazil: top 63.0, bottom 2.6;
- Denmark: top 34.5, bottom 9.6;
- Hungary: top 34.4, bottom 10.0.
So democracies can be very unequal, but some, like Denmark and Hungary, are far fairer.
What about poverty? The poor are a large share of voters, and no party wants to lose their votes. Yet elected governments do not seem as keen to fight poverty as you would expect. In Bangladesh, more than half the people live in poverty, and some poor countries now depend on rich ones even for food. The book's puzzle: democracy is majority rule, and the poor are the majority, so why isn't democracy rule by the poor?
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