Democratic Efficiency

Motivational Speaker Writer Teacher Scholar World Traveler

Democratic Efficiency
Inequality, Representation, And Public Policy Outputs
In The United States And Worldwide
ISBN: 1-4184-0162-5

LEE'S NEW BOOK

Teaching Amidst the
Neon Palm Trees

Click Here.

"A SHOCKING INDICTMENT
OF OUR SYSTEM OF HIGHER
EDUCATION AND THE POLITICS
THAT PERMEATE IT."

~ Nevada State Senator,
Raymond Shaffer

EXCERPT FROM PART I, CHAPTER 1

Democracy possesses the same type of efficiency advantage as capitalism, M-form corporations, and distributed and parallel computer processing systems. It allows decisions to be made at the lowest possible level. In a democracy, people process political information and weigh the costs and benefits, articulating their choices and preferences (in the same way that individual consumers affect aggregate demand) through voting and exercising their freedom of expression. In non-democratic systems, on the other hand, governments have difficulty collecting the information about the needs of their societies and, as a result, tend to make sub-optimal decisions. They also run into sticky collective action problems, because the cartels monopolizing political power have strong incentives to use that power to redirect economic resources toward themselves, rather than allowing the market to allocate resources such that they maximize the welfare of the society as a whole. In other words, dictators and oligarchs should be expected to become wealthy from their positions, because they have the power to extract bribes and subsidies (political monopoly rents) for themselves and their individual economic interests. This diversion of economic resources from more productive uses, in general, retards economic growth.

Democracy should act as a check on such impulses by governments, because the electorate should be expected to demand policies benefiting themselves (the voters), not the people they elect to positions of power. Even when democratic officials become corrupt, democracy still limits their rent-seeking behavior. Dictators are able to demand a bribe nearly as valuable as the windfall to be captured by those who gain special favors in return for that bribe. Dictators like Ferdinand Marcos of the Philippines and Mobutu Sese Seko of Zaire accumulated enormous wealth in this way. But corrupt democratic officials accept remarkably "cheap bribes" that are substantially less than the windfall received by those who bribe them. Corruption is costly to any society. But democracy limits the cost of corruption. In microeconomic terms, democratic societies lose only the cost of the bribe, while non-democratic societies can see the entire consumer surplus from a particular transaction transferred to a Swiss bank account. Democracy limits economically unproductive, rent-seeking behavior by political officials.