SCIENCE: Democracy Makes Countries 20 Percent Richer

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Back in 2009, Thomas L. Friedman, who calls himself a journalist, churned out a hackneyed, airheaded column in The New York Times opining that China’s “one-party autocracy” is “led by a reasonably enlightened group of people” and has “great advantages.”

“It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power,” Friedman bleated — which is hilarious because, six years later, nothing remotely close to any such overtaking has occurred.

Now, four economists from three fancypants colleges have shown, in several ways, that Friedman’s shallow, foolish premise is flawed from the outset: Despotic China will never overtake a bustling, free democracy such as the United States precisely because China’s one-party autocracy dramatically limits economic growth.

The four economists are Daron Acemoglu and Pascual Restrepo of the Massachusetts Institute of Technology, James A. Robinson of Harvard University and Suresh Naidu of Columbia University.

The evidence they present in their paper, “Democracy Does Cause Growth,” demonstrates that the introduction of democratic institutions into a society causes a long-run increase in gross domestic product (GDP) of about 20 percent — or one-fifth of the whole economy.

“Democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest,” they write.

The economists examine the effects of democratization across several countries using a bevy of statistical methods, explains Bloomberg View.

In a nutshell, they theorize that economic performance improves in democracies because it causes social conditions to improve. There’s nothing instant or spectacular, but steady material progress does happen. Schools get better. Public goods (clean air, clean water, decent roads) become more widely available.

Such progress occurs, the economists suggest, because the people running government must be responsive to the basic interests of voters in any democracy. So, they are.

And with happy voters, the possibility of social unrest diminishes.

The economists behind “Democracy Does Cause Growth” also show that democracies experience higher business investment.

Bloomberg View cites a few more additional economic studies for explanations for why democracies consistently outperform dictatorships.

Firstly, as New York University political scientist Bruce Bueno de Mesquita observes, a democracy dilutes political power enough to limit some of the more deleterious effects of cronyism. Democracy pushes political leaders to make more decisions that improve society for many voters, instead of for themselves and their close allies.

Secondly, a study by another batch of economists, Toke Aidt, Raphael Franck, Peter Jensen, and Gabriel Leon, suggests that democracy is more stable than autocracy in industrialized societies. Autocratic nations that face revolutions and become democracies have tended to remain democracies since the advent of the Industrial Revolution.

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