Tuesday, March 2, 2010

Too much of a good thing: when democracy becomes the enemy of development

Here is an excerpt from the preface to the landmark research project conducted by Harvard University in collaboration with the Korean Development Institute, and funded by USAID, back in 1989 which sought to explain Korea's rapid economic growth in the later half of the twentieth century. The title of the book is The Economic and Social Modernization of the Republic of Korea.

"In the short run, for example, a period covering the years 1963 to date [1989], we have reasons for believing that a government able to maintain political stability (law and order if you will), undertake economic policies that a more democratic government would find it difficult or impossible to do, and implement these policies through a disciplined and well-organized bureaucracy, has been a significant factor in explaining Korea's growth. Whether the increase achieved in standards of living was worth the limitation of public participation and of civil liberties imposed on the population is a different question and one that is sure to provoke different answers."

Although the reluctance of the writer is evident, his conclusion is still glaringly, and uncomfortably, obvious. Rapid economic growth leads to social turmoil that can threaten such growth if given a democratic voice. To put it even more starkly, the willingness of Park Chung Hee to ignore his people's suffering was, to borrow the report's words, "a significant factor in explaining Korea's growth."
This does not mean it was the only factor, or that by itself it was sufficient. But we should dare to say that it was necessary. It may be an ugly truth, but that should not make us turn away from it.

Yet in the Western world of development experts, democracy is a holy fetish, its righteousness unquestionable.
It has not always been so. The founders of America's democracy were not nearly so enthralled. For them democracy was a means to an end and their disdain for mob rule led them to craft the U.S. Constitution in such a way that still frustrates "majoritarians," as we are now witnessing with the current Healthcare debate.



  1. I think that many Americans today do acknowledge that authoritarian rule has benefits early in the developmental phase. Some of the main caveats are that the ruler must pursue capitalist and exports-driven policies aggressively; the people must have a high savings rate; and some large rich nation must exist to buy their cheap goods.

    The economic growth and performances of the ROK, Singapore, and now China make the case compelling. However, I do not necessarily know that democracy led to the end of the steep rate of Korea's economic growth. I think the successful growth of the economy made a democratic revolution inevitable in Korea. And I believe that China will experience a similar revolution. I also believe that this is what happened in America and the west. In other words, the democratic revolution in Korea probably was the result of the rapid growth and not the cause of its decreased rate of growth.

    And although, the point may not be mutually exclusive, I think there were other unavoidable factors which led to Korea's decline in its rate of growth. At some point, Korea experienced a major inflation in pay, assets, standard of living and other consequences of growth, which probably made it increasingly difficult for South Korea to continue on with their old model of export-driven growth of just cheap products made by cheap labor.

    But when you criticize the democratic process, you rightly point out that the way we have implemented democracy unduly over-empowers the minority voices and makes democracies less likely to make decisions, which would likely result in the best possible outcome.

    But instead of scrapping democracy, we should figure out a way to lessen the virulence of partisanship and also weaken the power of a minority or, indeed, a single individual, from shutting down debate and denying even the opportunity for a vote.

    But as it stands in America, all the incentives in the democratic process compel legislative gridlock. As an outside observer of Korea, I think the democratic process is working much better for them. And I think Lee Myung Bak has been able to do a pretty masterful job and his rising poll numbers seem to reflect this.