Democracy: political freedom at the cost of economic freedom?

hong kong democracy protests 12/04/2005Back in college I went to a talk by Milton Friedman where he pointed out the puzzling fact that democracies seem to stifle economic freedom, while authoritarian states (Hong Kong, Singapore) sometimes encourage it. You can see an example in this NYT article on the current Hong Kong democracy protests:

A huge throng of pro-democracy protesters poured through the skyscraper canyons of Hong Kong on Sunday afternoon, defying warnings from senior Chinese officials who refuse to set a timetable for general elections here.

The march continued well past sunset, as more and more men, women and children of all ages emerged from side streets and subway stations to join. Organizers estimated the peaceful crowd at 250,000, while the police put it at 63,000.
China's leaders and Hong Kong tycoons have opposed greater democracy here, fearing that it could set a precedent for challenges to one-party rule on the mainland and for higher taxes and greater government spending in Hong Kong itself.

The final paragraph casts the dichotomy between the political and economic spheres in sharp relief. We have a repressive government which opposes democracy so that it can keep control of its billion-subject dictatorship. And we have businessmen opposing democracy because it will bring more taxes and public sector waste. The former I abhor, the latter I applaud - which leaves my feelings about the system understandably mixed.

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One of my professors spent a

One of my professors spent a lot of time exploring the democratization-economic freedom paradox in a political science class I took on the development of Latin American nations in the 20th century. Most countries went through periods of democracy and dictatorship. His analysis was that democratic governments are at a severe disadvantage if they seek to free the economy, since they must always worry about re-election. Expansive social programs, large social welfare expenditures, and protectionist measures can stifle an economy and may prove unsustainable in the long run, but they win votes well. This is especially true the way the party system works in some Latin American countries, where membership in a party may largely be a function of what it can deliver for you, rather than any particular ideological platform. Economic liberalization may have long run benefits, but the short-run pain they cause can be disastrous for politicians and parties trying to win elections. Dictatorships, on the other hand, don't worry about elections. If they wish to reform the economy (like Pinochet, for example), they can do so precisely because they are totally unaccountable to the populace. In a perverse way, a dictatorship that wants to liberalize the economy can be much more successful than a democratic government, which has to respond to people who don't necessarily want economic freedom.

How does a free market

How does a free market dictatorship protect itself against rival political factions who would offer to bring protectionism and welfare?

How does a free market

How does a free market dictatorship protect itself against rival political factions who would offer to bring protectionism and welfare?

Lack of elections?

Is it accurate to call a

Is it accurate to call a state with a substantial degree of economic freedom "totalitarian?" Certainly Singapore bans a lot of things that shouldn't be banned, and imposes excessively harsh punishments for things like drug trafficking and firearms possession, but I don't think it would be accurate to call it "totalitarian."

I don't want to defend all of Singapore's policies (I don't even know what all of them are), but I think it's important to draw a line between true totalitarian states, which run their economies into the ground through micromanagement and have a nasty habit of shooting people arbitrarily, and states like Singapore, in which people who follow the sometimes unlibertarian but largely tolerable laws have little to fear from the government.

I think "authoritarian" is

I think "authoritarian" is the word you're looking for. You can have liberal authoritarianism, but not liberal totalitarianism.

Hey! Stop rendering our

Hey! Stop rendering our comments irrelevant!

It's ironic that the

It's ironic that the communist party is concerned about taxing the rich too much and excessive goverment spending. It seems like every day the Chinese communist party gets closer to my views while our own Republican and Democrat parties get further away.

hmm, actually singapore is

hmm, actually singapore is rather harsh in certain ways. and i do think that sometimes our rights are trampled upon. but on the whole, laws are surprsingly fair and mostly everybody is happy so i think it would not be fair to compare us to states where there is no rule of law at all, save by the barrel of a gun

by the way, i totally agree

by the way, i totally agree with what lisa said as well. in my politics lessons and my own thinking, i have felt that my government does things so well becuase it can think long-term without the pressure of fair elections whereas countries like amercia cannot.

Singapore has the two other

Singapore has the two other significant advantages of being *small* and *young* (i.e. its current government is young). Both of these tend to, or at least have the opportunity to, increase liberty. The older a government is, the more it slides away from the founding ideas and the more it slides towards the inevitability of what governments intrinsically are. The bigger a government is, the more it encompasses and therefore the more it can get away with. People who fear world government, do so for good reason.

But doesn't any regime,

But doesn't any regime, democratic or otherwise, require the support of parties with vested interest in the regime?

I can't imagine a free-market dictatorship for this reason. There might not be elections, but there would still be unofficial competiton for political control, and I would imagine the groups which offer protectionism win out in the end.

The relationship between

The relationship between democracy and economic development is widely debated and certainly not as transparent as the original article states. Milton Friedman is not the only person with an opinion on the matter.

For instance, Jagdish Bhagwati claims that there is "no necessary tradeoff between democracy and development. When compared to authoritarian regimes, democracy is more likely to foster an environment that facilitates the innovative and entrepeneurial process so essential for sustained development."

Siegle, Weinstein and Halperin go even further, regarding the developmental cycle (the "development first, democracy later" theory), they claim that democracy actually helps development. According to them, autocratic political structures perpetuate poverty, while democracy, more often than not, introduces a political system with checks and balances, openness and arguably promotes a stronger civic culture.

I am surprised to be the

I am surprised to be the first to mention Chile under Pinochet. The upper-crust still holds his regime in very high regard for the economic liberalisation reforms as well as for stopping communist/socialist advance. While the economic benefits of the Pinochet authoritarian regime are hard to dispute, the means to those ends were a bit on the nasty side. Talk to the poor and you get mixed messages about the Pinochet years, talk to any Chilean investment banker in NYC or London or Santiago and you will see their eyes mist over for the "good old days". One former colleague was so very enamored with Pinochet's rule that he was a denier of any wrongdoing on the part of that government saying the charges were lies and propoganda

I would think that the more

I would think that the more important metric is how powerful the government is; a weak and/or noninterfering government is usually an irrelevancy to the economy, while a strong one has a nontrivial impact. It would seem that the phenomenon suggested by others (democracy is a hindrance to economic development due to popular kleptocracy) becomes more important as the strength of the state increases.

Or the relationship could be backwards- a weak yet authoritarian government will be kleptocratic & thuggish whilst a strong authoritarian govt will be secure enough to have longer time horizons, and thus not steal as much from the people (so as to enrich their domain, much like old monarchs). While a weak yet democratic government will not have the wherewithal to steal from the people, and so while the weak democrats bicker over petty differences, the economy chugs on with little interference; but a strong democratic government will have the wherewithal to act on its natural kleptocratic tendencies and plunder the economy in the name of special interests.

The distinction between

The distinction between social and economic freedom is false. Social and economic choices are two sides of the same coin. Most of us work not only to subsist but also -- to take one example -- so that we can afford to live near and/or associate with the kinds of people whose company we prefer. When government curbs our economic freedom through taxation and regulation it diminishes our range of social expression and the enjoyment we derive from it.

The final paragraph casts

The final paragraph casts the dichotomy between the political and economic spheres in sharp relief.

Here, I'll turn up the sharpness a bit. Economic freedom is an end unto itself, as is social freedom. There is, however, no such thing as political freedom; politics is a means to an end, where that end is either economic and social freedom or economic and social tyranny.

Democracy is not freedom. Democracy is a political tool that can prevent the economic and social tyrannies that dictatorship and totalitarianism are prone to. But Democracy itself can and often does come with its own economic and social tyrannies. All things considered, it's a good trade-off. AnCapTopia is better than either democracy or dictatorship, of course, but it's not really a choice on the table right now for most people.

Would a benign dictatorship that allowed economic and/or social freedom but not democracy be okay? Would it be preferable to an economically and/or socially stifling democracy? Should we be singing the praises of the Pinochets of the world? How about the Netherlands, a democracy where socialism is rapant but at least they don't lock people up for smoking pot? Is that better or worse than fascist Singapore, where drug dealers get executed but at least taxes are low and business is booming?

False choices, every one of them. They're all bad and we all know it.

For my money, I think I'd rather live in a low-functioning democracy than a high-functioning dictatorship, simply because I'd be afraid of how quickly a dictatorship can switch from one extreme to another without warning, without recourse, and without escape.

The distinction between

The distinction between social and economic freedom is false.

Also, the identification of political freedom and democracy is false.

I agree with Constant - IMHO

I agree with Constant - IMHO it's not just that democracy is inconsistent with economic freedom, but that it's inconsistent with freedom, period. Democracies invariably end up trampling on people's rights to freedom of speech, religion, privacy, property, etc. With dictatorships, it's a crapshoot and they can either be worse or better than democracies. The majority is *always* tyrannical, whereas an individual or oligarchy can be tyrannical or not tyrannical.

I think part of the problem is similar to the problem of media independence in the US vs the UK: in the UK the media is government funded so they must go out of their way to appear independent, whereas in the US there is a presumption of independence, so the media and the government can get away with embedding reporters and giving special access to reporters who report positively about government, with the result being that the media ends up being de facto more independent when they are government funded. The solution is not for government to fund all media, but to eliminate the presumption of independence, which is exactly the direction things are moving in the US.

Libertarians should not

Libertarians should not support governments that silence non-libertarians.

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hey whats up i love it