Thursday, July 26, 2007

Disillusioned with democracy ……

Pratibha Patil becomes another symbol of Woman empowerment! So gushed a lot of celebrity women like Pooja Bedi... I don’t understand why PP cannot be a symbol of empowerment for- bespectacled old hags or senior citizens aspiring to be the first citizen or the likes of Harshad Mehta and Ketan Parekh or more precisely Nick Leeson (who brought Barings Bank down). PP, potentially, is also a beacon of hope for all those mediums who can converse with the dead... well, my point is why take a gender perspective of her ‘achievement’ and leave the rest of rich, diverse groups in the cold. OK, the uninitiated can see this.

Since the alternatives to democracy are untenable, it’s often implicitly assumed that ‘right to democracy’ is axiomatic. In an ideal sense, probably yes. My question is whether voters have any idea what they are doing. Voters are often worse than ignorant; they are irrational in their analysis. Now this is not a sweeping statement, a large proportion of the political leadership in India proves my point beyond a shadow of doubt. Theorists of public choice, in defending democracy, invoke what’s called ‘the miracle of aggregation’. Imagine that just 1 percent of the voters are fully informed and the other 99 percent are so ignorant that they vote at random. So in a contest between two candidates, one of whom has an excellent economic agenda and other a bad plan, the candidates evenly split the ignorant voters’ ballot. The fully informed voters, on the other hand, vote for the right candidate- she/he wins. Therefore even in a democracy composed exclusively of ignorant people; the system ensures an optimal outcome. The catch, of course, is that this miracle works only if the errors are random. In the real world, unfortunately, voters make systematic errors because of herd mentality and a variety of other factors turning the ‘wisdom of crowds’ into a myth. Now Markets and other phenomena like Wikipedia work because there is a real-time correction involved; prices adjust instantaneously and entries are updated almost on a continuous basis. In a democracy, the average correction time is 5 years, enough time to ruin an economy or screw up international relations.

A legitimate question to ask is why should the 1% of the population pay for the decisions made by the other 99%. If it was credit cards or a personal loan market, you could charge the 1% -a lower interest rate and ensure fair pricing. Unfortunately in a democracy, it would be hard to come with such a market segmentation strategy. However it not clear how we can solve this problem without coming up with some measure of voter competence – criteria that would allow extra votes to be given to individuals who score high on this scale. Highly educated people (elite b-schools grads for instance :-) , business leaders, academicians etc probably deserve some extra votes.

I know this sounds radical, elitist and self-serving, but here are some of the reasons why it may be appropriate and hopefully I will have convinced you that my solution is not as blasphemous as you thought it was. It may be important to understand why Governments exist in the first place and an economic perspective might give us the best answers. Now why economic, you might ask? Well, an economic analysis can tell you whether a system is efficient or not; and like it or not, efficiency is one of the fundamental requirements of any Government. Think of the Government as a business enterprise that offers its services to the entire country; taxes are its revenues- sure, everybody doesn’t pay taxes- but that is just differential pricing. It does look like a monopoly, but in some sense, the Opposition is expected to create a sense of balance in the system. We know, in practice, however the Opposition ends up ‘opposing’ progressive polices and teams up with the Government on ‘bad’ policies. So my solution is to have a non-political opposition (representing the 1%) functioning like a board of governors. Then you can bring in governance standards and accountability. And the rest I leave it to your imagination…It might just work.


Anonymous Macro Man said...


The government indeed does work like an enterprise..
Like any listed entity's performance is scrutinized by the price of its stock the governments' performance is analyzed by the voting stock...(inidvidulas may not vote together but the MPs vote on many issues on a daily basis)..

The role of the Board of Governors is played by a number of independent bodies...viz supreme courts, CAG (and the constituents of these bodies are the elite)

Maybe the problem lies elsewhere..maybe size is a problem...just like any large organization has problems managing itself...the government is too big to address the issues affecting individual/smaller one solution might to split/decentralize...may be then the elephant may dance :-)

1:53 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home