Hardliners Learn That Democracy Can Pay Off

(Bloomberg Opinion) -- (This is the second of a series of columns on economic growth and the challenges to democracy.)

“What have been the really major advances of the past 20 years?” is one of the most common debated questions in my circles. The smartphone is probably nominated most often, while Google, Facebook and fracking have their advocates too. Yet we hardly ever talk about one of the most important developments, perhaps because it raises uncomfortable political issues: the governance technologies and strategies of authoritarian regimes have become much more efficient.

Hardliners Learn That Democracy Can Pay Off

I recall the 1970s, when there were many fewer democracies and communism was still a major scourge. Apart from what at the time was called the free world, led by the U.S. and its closest allies, most countries were abysmally governed.  In the Soviet Union people waited in lines for hours to buy consumer goods, if they were available at all, and were locked behind the Iron Curtain that kept them from fleeing to the West. China was an impoverished country and it had just recovered from a major famine. Ethiopia was the poster country for thin, emaciated children, suffering and on the verge of death.

Since that time, governance in those regions has become much, much better, even though China, Ethiopia and Russia still are not democracies in the Western sense. China for instance has built one of the world’s most impressive economic growth miracles ever, with the Communist Party still firmly in power. Ethiopia is coming off of some years of double-digit economic growth and is developing its manufacturing. Yet the country is autocratic and has a history of censoring the internet. Putin rules Russia with a firm hand, but today consumer goods of virtually all kinds are widely available and most Russians are free to leave whenever they want.

What led to these beneficial changes? In the 1970s and 1980s, it was a common view that if authoritarian or totalitarian regimes liberalized, it would bring an end to their rule. The collapse of Soviet and Eastern European communism over 1989-1992 seemed consistent with this prediction, as perestroika and relaxed travel restrictions caused those regimes to implode.

The big innovation in authoritarian governance has been this: subsequent autocratic leaders, most of all in China, have found ways of both liberalizing and staying in power. The good news is that people living under authoritarian governments have much, much better lives than before. The corresponding bad news is that autocracy works better than it used to and thus it is more popular and probably also more enduring. The notion that autocratic government would fade away, either in practice or as an ideological competitor to Western liberalism, simply isn’t tenable any more.

So how exactly did authoritarian governments make this transition toward stable and indeed power-enhancing liberalizations? Singapore in its early years showed it could be done, as the nation’s founding prime minister, Lee Kuan Yew, found growth-enhancing, pro-business reforms that strengthened his party’s hold on power. Since that time, Singapore has transitioned to a much more democratic system, but other countries picked up on the broader lesson, namely that liberalization could be strategic.

A second development was when authoritarian leaders realized that absolute prohibitions on free speech were counterproductive, and they learned how to manage an intermediate solution.  Allowing partial speech rights is useful as a safety valve, it allows major dissidents to be identified and monitored, and absolute speech prohibitions tended to wreck the economy and discourage foreign investment, leading to unpopularity of the government. At the same time, an autocratic government could come down hard on the truly threatening ideas when needed.

Scientific public opinion polling has been another advance in authoritarian states. In 1987, the Economic System Reform Institute of China conducted the first Chinese public opinion survey, a breakthrough event. Under Chairman Mao in contrast, the incentive was to report only the good news. In the 1990s, however, Chinese public opinion surveys boomed and also became much more scientific. 

These days, the Communist Party monitors public opinion closely, to learn what people are unhappy about (e.g., forced resettlements, pollution), so those problems can be ameliorated, or at least the government can position its failings appropriately. The Chinese government also knows on what issues it is pretty popular, namely most of them. At the end of the day the Party still does what it thinks is best, but it is no longer crazy to suggest that the Chinese government is, along many dimensions, more responsive to public opinion than is the U.S. Congress.

I, for one, only wish to live under a vibrant democracy. Democracies do more to protect human rights, they avoid the very bad outcomes of tyranny more easily, and they handle political succession more smoothly. 

In spite of these loyalties, I cannot ignore the relative shift in efficacy that has happened over the past few decades, as authoritarian government has made big, innovative strides forward. At the end of the day, I cannot help but notice America’s governance innovations have not been nearly so effective, and that is one reason why liberalism seems to be in retreat. America, and that extends to Washington too, is wallowing in a long, ongoing productivity slowdown. 

©2018 Bloomberg L.P.