Indicators of Economic Success
This week’s readings arise a highly debated topic in the political arena — is an authoritarian regime better for the economy, or a democratic one? There are fundamental factors of each form of government that can suggest economic success either way. However, much of this debate falls on the discussion of which indicators should be used to measure the success of the economy.
Smith discusses the main benefits to the economy of an authoritarian rule within its ability to relinquish social pressures and focus on investment in programs over consumption without a necessity to produce immediate benefits. These are extremely valid arguments, however it should be noted that these can also be factors in certain types of democracy. For example, if there is a democratic regime where the elected leader has reached their limit on reelections, they may not face the social pressures that a leader facing reelection might. In addition, if we are observing a more “delegative democracy” or institutionalized democracy per say, there is a greater likelihood that the elected representative will be able to implement their own policies than in a more representative democracy.
A democratic rule is also suggested by Smith for its ability to represent the wants and needs of the citizens in a transparent way while encouraging “allocative efficiency.” The cruciality of transparency in government should not be underestimated as it can be a vital approach to cooperation in implementing a successful and cooperative economy. This political participation, however, may threaten a successful free market approach that is discussed by Holzner as a suggestion for an indicator of a thriving economy. Ultimately though, a free market encourages unrestricted competition, which may benefit elites over impoverished, and retract from positive democratization benefiting all. A democratic regime that promotes a more regulated or socialist oriented market may encourage a better economy than one with a highly competitive economy.
The majority of the statistical evidence on health, education, and poverty provided by Smith also obviously favor a democratic regime. Democracies promote the well being of the citizens as they are held to a certain responsibility to do so. These can be measures of a successful economy as well, though may not be historically thought as such.
Ultimately, Holzner indicates that the main benefit of a democratic regime is it’s political participation. These efforts promote government accountability which is usually not found under an authoritarian rule. Even considering other possible indicators of economic prosperity, the willingness and participation of citizens found in a democracy are key to a successful economy.
I really liked this post and the arguments you made. I would like to respond to one of your lines above “The cruciality of transparency in government should not be underestimated as it can be a vital approach to cooperation in implementing a successful and cooperative economy. ” This is think is CRUCIAL in any society not just in Latin America. However, in Latin America specifically, we can see how corruption and other non-transparent issues make this a difficult task in implementing a cooperative economy. In my eyes a thriving economy is one that encourages society and the government to work together on common goals, transparency and non-corruption is needed. This is why to me, latin america will always suffer from economic inequality and not experience economic booms. Brazil, while a big economy, will never be an economic super power. There is a saying between latin american economists that goes “Brazil is the economy of the future, and it will always be the economy of the future”…meaning that if Brazil (or other latin american economies) dont figure out their corruption and government issues, then the economies will not be able to thrive.