Wednesday, February 2, 2011

Democracy and economic stability

I heard a commentator on NPR claim yesterday that Egypt needs democracy now in order to produce greater economic growth. That assertion - democracy now, growth later - has been gaining volume, and it's problematic.

I think it much more likely that the true state of affairs is that prosperity is a prerequisite for stable democratic institutions to take root. When people are relatively poor, when they don't have jobs, and when they see prosperity around them that they can't touch, they're not going to be in a mood to support their government, whatever form that government might take. If you drop democracy into Egypt and it doesn't produce change right now, it will get brushed aside.

Russia is an example of that, twice over. The Kerensky government didn't get Russia out of WWI, it didn't produce immediate positive change, and it was swept aside. The organizational skill of the Bolsheviks make that a weaker example than the more recent democratization of Russia in 1992-5. That also failed to improve living standards and people started talking very fondly about "strong leaders" (Stalin, for example) and "forceful measures" to right the economy.

The Egyptian economy was growing at a decent clip over the last few years, but the growth was lop-sided, the poor stayed poor and the jobless stayed jobless. I don't think that democracy is a bad idea in Egyp (I think it a very good one, actually), but if it isn't accompanied by real market reform and improving living standards, it won't last. What's needed are strong institutions to protect economic liberty - property rights and courts willing to protect them, transparent government and vigorous prosecution of corrupt bureaucrats and politicians, and so on. Egypt has a relatively strong civil society (something the Russians didnt') and is in a better situation than many other countries to grow democracy now, but if people think that democracy will fix anything and flourish on its own, they're badly mistaken.

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