Arnold Kling  

Democracy,Education, and Growth

Kidney bleg follow-up... Rent-seeking and CO2

Two superstars, MIT's Daron Acemoglu and Harvard's Ed Glaeser, discuss the relationship on a Wall Street Journal feature. Ed says,

While I yield to no one in my passion for liberty, the view that democracy is a critical ingredient for economic growth is untenable.

...I think the relationship between democracy and wealth reflects the power of human capital -- education -- to make countries both rich and democratic. If you put enough smart people together, they'll figure out how to govern themselves and gravitate towards democracy.

Daron says,

Many societies counted as "democratic" using standard measures are really "dysfunctional democracies" where traditional elites dominate politics through control of the party system, political influence, vote buying, intimidation and even assassination. Colombia, which has had regular democratic elections for the past 50 years, is a typical example. In others, democratic institutions survive, but there is significant in-fighting between ethnic groups, religious groups or social classes. The situation in Iraq would be the most extreme -- but not a unique -- example. Finally, many democracies suffer economically from populist and irresponsible macroeconomic policies...

it's true that autocratic regimes can generate growth for certain periods of time by providing secure property rights and good business conditions to firms aligned with political powers. But modern capitalist growth requires not only secure property rights, but also creative destruction, that is, the entry of new firms with new ideas and technologies that replace the successful firms of the past. Creative destruction requires a level playing field, which democracies are better at providing

Ed, citing this paper, continues,

We found 95% of the democracies that ranked as "well-educated" in 1960 stayed democracies for the next 40 years. By contrast, 50% of 1960's "less well-educated" became dictatorships within a decade.

Daron rejoins,

But democracy is about collective choices in conflict-ridden situations, and education is not a panacea for solving these problems. Weimar Germany is an interesting example. In the interwar years, Germany was one of the most culturally advanced, educated and sophisticated societies in the world. Was the education of the German people sufficient to prevent the Nazi nightmare? No.

Ed cites this paper to argue that schooling predicts which dictatorships will transition to democracy. Daron comes back with this paper showing that "there is no correlation between changes in education and changes in democracy."

Daron gets the last word.

The main barrier to democracy is not low education but deep social and economic divides that create intense conflict. Democracy has failed in highly educated countries -- such as Germany before World War II or post-war Argentina. It has also been extremely successful in very low-education countries. Botswana provides a perfect example. It is the most successful democracy and the fastest growing economy in sub-Saharan Africa. When the British granted independence to this colony in 1965, there were only 22 Botswanans who had graduated from university and 100 from secondary school.

...I would also like to emphasize -- and conclude with -- this point: Sustained economic growth requires secure property rights and a level playing field for generating new technologies and entry by new firms. Democracy is the best guarantor for such sustained economic growth. Economic growth generates various vested interests, ranging from landed elites to businessmen in declining industries to privileged workers. These vested interests will try to block the introduction of new technologies and stop the entry of new firms. Democracy is not perfect, but with its more egalitarian distribution of political power, it will have greater resistance against vested interests than autocracy.

My father, who was in political science, was fond of saying that the first iron law of social science is "Sometimes it's this way and sometimes it's that way." In this context, that means you would never expect to find a perfect causal relationship between variables like education, democracy, and economic growth. There are always exceptions.

My own guess is that mental and moral development are part of the process of economic growth and democracy. However, you can have a well-schooled population that allows itself to be ruled in an unwise or immoral fashion, and you can have a poorly-schooled population that is fortunate enough to have a benevolent dictator. The mistake is to assume that schooling will be perfectly correlated with how well a country is governed.

Comments and Sharing

COMMENTS (5 to date)

In this debate democracy is not explicitly defined and the way the term is used by the protangonists seems too broad.

I think of democracy as the political equivalent of creative destruction - it is mainly a way of removing (destroying) governments without the need for/ damage from a revolution. Its timescale is decades, not years - so a short lived democracy is not a democracy at all.

Democracy is a way for countries to dig themeselves out from under a regime whose policies and methods are, over time and overall, destroying them. Economic growth is only one measure of success (albeit absolutely vital, over the long term).

But modern societies are (by definition) composed of multiple functional systems - and the other systems (law, public administration, education, health care, the military, religion, the mass media etc) must also thrive and grow (in efficiency and capability) over the long term - so the reason for government failure could be economic, or something else.

In a nutshell, the contrast should not be between democracy and dictatorship, but between democracy and a system of replacing government by sequential revolutions.

Marcus writes:

I think democracy is a way to keep the people happy but at the same time help benefit the economy. I say that because the people can voice their opinions and have freedom, but as we know it there are boudaries in which the people are controlled. By letting the people have a voice and opinion that produces a good repore between the government and the people. Now I look at the communist governments got rich and the people stayed poor. The government flourished ,but the people didn't and that caused rebellions and overthrowing of the government.

Fundamentalist writes:

The "intellectuals" of Germany led the population in worship of Hitler, according to Harvard historian Niall Ferguson, who wrote "...academically educated Germans were unusually ready to prostrate themselves before a charismatic leader." p. 240 The War of the World. Ferguson names Max Weber on one of those academics. He also blaims lawyers, doctors, artists and historians. In other words, the educated elite sold Hitler to the less educated masses.

Fundamentalist writes:

P.S. Economists probably pumped Hitler, too, although Ferguson doesn't single them out. Still, they were part of the academic elite he describes as prostrating themselves before Hitler. Besides, the German Historical School of economics that reined at the time would have encouraged worship of Hitler.

UlrichW writes: 'Bruce G Charlton' notes above, serious debate about "democracy" cannot be conducted without a specific definition of that term.

Most seem to use that term in a vague feel-good, egalitarian sense... avoiding any practical definition.

The essence of democracy is majority rule.

But even the U.S. does not meet that most basic standard. Few (if any) Congressmen hold office with a majority vote of the adult citizens in their districts/states; and, of course, no U.S. Presidents have majority authorization from the American citizenry (with or without Electoral College computation).

"democracy" seems a VERY elastic term.

Comments for this entry have been closed
Return to top