Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth---and How to Fix It by Dambisa Moyo

Author:Dambisa Moyo
Language: eng
Format: mobi, epub
ISBN: 9780465097463
Publisher: Basic Books
Published: 2018-04-24T00:00:00+00:00

TO BE CERTAIN, THE ACCOMPLISHMENTS of democratic capitalism are unmistakable. It has proven itself, historically, to be a peerless tool for growth. During the past fifty years, US income levels have risen thirty times, and poverty has fallen by 40 percent; Europe’s per capita GDP tripled between 1960 and 2015, while hours worked declined by a third.8 The global economy as a whole has tripled in size in twenty years, driven as much by the developed world as the developing one.9 And with that prosperity came peace unprecedented in modern history. Even as we acknowledge the flaws in the current system, it is worth recalling that for every example of democracy being challenged (as, for example, in Russia and Egypt) there is another example of its durability (for instance, in South Korea and the Philippines, where despite scandals affecting their political leaders these democracies are strong and embedded). Nevertheless, the system urgently needs an overhaul if we are to jump-start the global economy. For beyond myopia, there are other substantial problems with democracy as it functions today.

For instance, democracies tend to misallocate assets. Political decisions for allocating assets should vary with a country’s level of development. Too often politicians in a system that follows the principles of democratic capitalism choose policies that limit rather than promote growth. The political system should instead direct available assets to the areas of the economy most in need of development and by extension will have the greatest impact on the country’s trajectory of economic growth. China and India, for example, needed roads to increase productivity. China built them, but India’s infrastructure programs got bogged down in red tape and political wrangling born of political fissures in its democratic system, suggesting that India’s democratic processes stifled decisions that could help drive economic growth. A veteran observer of India, John Elliott, notes that “democracy is also a drag on development [in India] because, while it has rightly opened the way for dissent and opposition to changes in land use and environmental concerns, no effort has been made to curb its misuse by vested interests who corruptly manipulate not only policies but their implementation. This has contributed to India becoming an increasingly unpredictable, unreliable, uncompetitive and difficult place to live and do business.”10

As a result, India’s competitiveness has suffered from historical underinvestment in key infrastructure, including transportation. In 2016 it was ranked 68th of 140 countries for overall infrastructure, well behind China, which was ranked 42nd. India’s poor-quality infrastructure directly contributed to its relatively low competitiveness ranking at 39th versus China at 28th. The effects of underinvestment in infrastructure on the economy are real: for India, spending 1 percent of GDP on infrastructure is likely to boost the country’s GDP by 2 percent and create as many as 1.4 million jobs.11

Interest group lobbying is another feature of liberal democracy that tends to interfere with proper allocation of assets. In 2016, more than $3.15 billion was spent lobbying Congress, roughly double the amount spent in 2000.12 Across sectors,

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