Clash Of Democracy & Economic Success In The Modern World

Published on by Sevi Fattahpour

 

By the term "Economic Sucess", i mean growth of national economy in terms of higher employment, lower inflation and of course, sustainable growth. Also, it's important to know that if the world was left to economists, it would be highly efficient and of course this is when there are no corruptions in it. However, this is not the reality and the world is managed and run by politics, which i would call "Economics permanent Enemy".

 

If you have studied economics, you will realise that there are solutions to the problems that have led the world into it's current situation (Recession) and these solutions are rather easy to find but may be hard or even impossible to implement. Just to make it easier for you to understand i will use an example here: Pollution is a big problem especially in countries like UK & USA and one of the first solutions that come into an economists mind is to impose heavy taxes on road usage, then this way, demand for road use will fall sharply. Sounds good, doesn't it? But such an economic solution will never be implemented and even if it gets implemented, it will be done partially. But why? well, in More developed countries, road producers are one of those people and firms that government wants to keep  happy for 2 reasons: 1- because they create a large tax revenue for the government (although the increase in the quantity of their good is indirectly involved in promotion of pollution) so they are being loved by the government and a heavy tax on road usage means less people will use the road , therefore demand for their good (building roads) will go down and of course as a result, less tax revenue for the government. This is true for the Financial sector too in which recently government is really trying to protect. 2.The current govenrment of the time will be able to stay in power if they can get these mass producers vote. so clearly, you can see that there is a DIRECT link as to why government doesn't want to implement economical strategies all the time which can almost solve the problem.

 

Now that you are fairly familiar with why government doesn't want to implement economical strategies, you will need to know that government  is only half of the problem! So whats the other half then? Theother half are The PEOPLE! Yes! The number 2 main cause of the current recession is people!

 

Let me explain this in more details. In this country, people vote for whom (politician) they want to run this country. In other words, ordinary people vote for the person who represents their interest and *put more money in their pocket*. Here comes the problem. Because ordinary people don't understand the fact that in order to put more money in their pocket, the economy has to be on the right track and have a sustainable growth which allows them to have a better paid job, which results in higher spending and so on. They simply don't understand this and are simply seeking short term solution and fortunately or unfortunately, if the Prime minister/president cannot put money in their pocket in short run, people will vote for someone else. 

 

Here is the big issue. Let's assume that the PM/President has a plan in which it can bring the country out of the recession which is approved by economics. This will usually involve spending cuts, higher taxes,less universal benefits, job creation, big investments such as building houses, schools and social institutions which all have high costs and may put pressure on people in short term but great benefits in long run and as i mentioned before, people don't want this pressure even though you keep telling them that in 5 years time, the economic growth will change the economy's status and will put extra cash in your wallet. But people are concerned with the fact that e.g. before this government came into power, after taxes, i had £2000 but now with the new government, i only receive £1800 after taxes so lets get this govenrment out of the office.(Lets assume the higher taxes have a long term benefit for people but currently it's a pressure on them).

 

So  now, although the governments plans and actions (cutting benefits and higher taxes) are well intentioned, but people, due to imperfect information, will vote another politician who ruins the country in long term but increases spending in short term. People will instantly vote for this person. This is the problem with "Democracy" which allows individuals with imperfect information decide the future of the country and the economy.The problem is worse when people of young age (18-25) are allowed to vote for the future of the country and the problem with this is that most of them are unemployed are just seeking finances for now which clearly means that people voting, look no further than now and their current life and are not  concerned with the future of the country and this is due to the mistaken belief that they have which is that "it will not benefit them if the economy is doing good" but the funny thing is that as soon as something goes wrong with their finances, they say that this is "due to the bad economic conditions"! 

 

 

So such decisions based on imperfect information can eventually harm the country and the economy in long run as people look no further than their own welfare. This means they will choose a politician who gives them more money now or in other words, it creates more money for them right now.

This is as a result of democracy which gives people a right to vote a politician which represents their interest or *"who gives them more money now, not in the future"*.

 

Lets assume that there was no democracy and people had no right to vote. Also, assume that the government which will come into power doesn't abuse its power and only use heir power to drive economic success. This way, they have no resistance or pressure from people in their decision makings which are the best for people. Then we will have an ecnomy well on the way to sucess and sustainable growth which will then give people more real money and they will start to feel the benefits of the long term plan.

 

The problem which may be caused by this model is the abuse of the power and exercise of dictatorship power which in a civilised and modern soceity we don't consider acceptable or desirable. Also such policy will affect the country's foreign affairs which basically isolates the country.

 

What i personally believe will be good is to extend the time a politician is in power from 4 years to 6 years. This way, they will be given more time to acheive their goals for the economy however this greatly reduces the flexibility of the choice by people. Also an increase in the voting age from 18 to 25, would be a good idea since people who are 25, tend to have better knowledge on who to vote for and of course they are more likely to be employed and will vote not just on he basis of who creates more money now.

 

We can conclude that democracy is against guaranteed success and it should be removed if economic success is what is needed. As such a policy is almost impossible, the best way to get close to this model which promotes economic sucess, is to extend the years of being in power from 4 years to 6 or 8 years.

 

Thank you for reading this post

 

Sevi Fattahpour

 

(Please note that ideas in this article, except the conclusion are 100% theoretical and have an informative purpose. I also acknowledge that idea in this post do not represent any current or past political parties in any countries and ideas are purely mine)

 

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