Prosperity through democracy and elections
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Sunanda always had the same argument with me, whenever we had an opportunity to meet: “What should be done is very clear, and you’ll are writing about it all the time. But the question is how should it be done.”
Sunanda and I were friends from our undergraduate times although he and I have chosen to be in entirely different professions. We also had the opportunity to do our postgraduate studies together for a Master’s degree in Economics in the Hague, so that our friendship got strengthened. For the same reason, we always had something common to discuss and debate – the problem of economic policy making – whenever we met.
After a long pause, Sunanda last week gave me a phone call from abroad. He had remembered to call me after reading my article on “Next decade: Revival and beyond” published in this column two weeks ago. This time too he didn’t forget to ask me the same question: “I know all what you write – we need investment, we need exports, we need public enterprise reforms and so on; it is very clear to me, but tell me it should be done. Tell me in five points how to do it without upsetting the system”.
I said: “You can’t do it without upsetting the system; in fact, you can do nothing without upsetting somebody. If you intend to do something, then there will be obstacles. Trade unions will rise; students will protest; politicians will back them up; opinion makers will provoke us; media headings will stir up the public.”
“Exactly, that’s why I am asking you, how should it be done without upsetting the system”.
I responded: “Well, my point is that Sri Lanka is not trying to do it for the first time in world history. Many countries have already done it – the US, the UK, Germany, Japan, Korea, Malaysia, Singapore and many others.… And look around, even today many other countries are doing it…”
He laughed out loud: “All these are entirely different stories, right? We cannot replicate any of them here in Sri Lanka.”
At this point, I interrupted him: “Obviously; if we are thinking of copying them it is stupid. But the point is that if we have any problem to be sorted out, I am sure we are not the first country in the world to face that problem. Many have done it before us, leaving lessons to be learnt from them.”
How to do it?
We will never find a “magic formula” to answer this question. However, Sunanda is not alone asking this question, because it is a question that has been raised by many. Besides, this question has a deeper political-economic meaning which has set the foundation for the notion that “democratic nations cannot achieve economic development”. If we believe in this notion, then there is nothing we can do and, just leave our efforts aside and enjoy the democracy and elections.
I thought of addressing this issue today to show from our history that the failure of development was largely a result of the “compromise” rather than “democracy”. We all know that democracy, being a majoritarian-representative rule, also has its own weaknesses, which I don’t intend to discuss here. My focus is basically on “compromise” irrespective of whether it is a minor issue or a major issue because the beginning of the fall starts there.
It was during the 1977 elections that the former President of Sri Lanka won the election with five-sixth majority power in Parliament, introduced the “open economy” in the country, and spoke of his desire “to make Sri Lanka like Singapore”. In spite of that statement, after over more than 40 years now, the experience of policy making in Sri Lanka reveals the elements of “compromise” as a major weakness that caused the failure.
Singapore formula
In this column about a year ago under the title “The Singapore Formula”, I quoted a Singaporean Prof. Kishore Mahbubani’s “secret MPH formula” which he used to describe the success of Singapore. There were three basic elements of the Singaporean secret MPH formula:
(1) The first was the selection of right people for the job, whether it is the Parliament or the Cabinet or the public sector – the so-called “meritocracy”. Many developing countries around Singapore failed because the leaders used to pick up their family members, relatives, supporters, and buddies without any consideration to their competence to do the job.
(2) The second element in the formula was the “pragmatism” – an application of solutions without being bound by any doctrinal ideology. Ideologies were seen dominating policy making at that time in many developing countries, while some of these ideologies are leaders’ own imaginations without underlying principles.
(3) The third element in the formula was the “honesty of leaders”, aiming at building a “corrupt-free” society. In this case too most of the leaders compromised, allowing and covering up corruption by weakening institutions with their powers. It was a well-known case that even a Cabinet Minister of the Singaporean government was imprisoned in its attempt to build a “corrupt-free” society there because it is not possible to clean up the lower levels without cleaning the top level.
File picture of tourists at a local market. The Government needs to provide support to the industry in times of a crisis.
Rule of law
I am reiterating the above elements of Singapore’s success to highlight the fact that it was the “compromise” rather than “democracy” that began to weaken their authority in a democratic system. Democracy requires “discipline” of which the parameters are set by the “rule of law”, which includes law-enforcement and law-impartiality. The leaders who failed to remain “uncompromising” on the elements of the rule of law inevitably adopted strategies to weaken the democratic institutions rather than to strengthen them.
There were many who believe that “it is not possible to adopt the right policies in a democratic system” because politicians have to face elections. I always asked the question as to “how is it possible then, under the same democracy, leaders engage in indiscipline acts, corrupt practices and misuse of powers for their own benefit?” I am confident that strengthening rule of law and maintaining discipline and order in a democracy are much easier than weakening it and facing the consequences.
Our understanding about democracy is also clouded with circumstances in our own environment in which we have been living in. Democracy has boundaries, it is not the freedom to do anything and say anything and get away without accountability. Most of the rights that people carry out in the name of democracy are “unaccountable”.
Limiting the fist
The boundaries of democratic freedom are portrayed by the famous dictum that “the right to swing one’s own fist ends where other’s nose begins”. It is not clear who said it first, because the origin of similar versions are attributed to three prominent persons, all who lived in the 1800s: Oliver Wendell Holmes, an American Jurist; John Stuart Mill, British philosopher and an economist; and Abraham Lincoln, the 16th president of the United States.
Whoever said it, the dictum means that democratic freedom is not the freedom to do whatever it seems right before one’s own eyes. In other words, it should have the disciplinary character, and that it is the responsibility of the leaders to strengthen the institutions that safeguard discipline for the national interest.
Democracy is not a stereotype system, operating everywhere in a uniform manner. The leaders of some nations have strengthened the institutions to maintain the discipline and authority enabling them to put the economy on a growth path. And people remembered these leaders as they have left a legacy in these countries. At the same time, leaders in many countries have messed up and left with disappointment. Democracy and elections per se are not “anti-growth” but the leaders of the nations can turn it to an anti-growth political system.
(The writer is a Professor of Economics at the University of Colombo and can be reached at sirimal@econ.cmb.ac.lk and follow on Twitter @SirimalAshoka).