What Goes Wrong With Democracy?

Democracy is self-defeating. Freedom-loving people should place their hopes on secession rather than useless elections. In this recent interview about my book Beyond Democracy I explain the many flaws of this collectivist system.

Frank, in your book you strongly criticize democracy, a political system that is seen by most people to have no reasonable alternative. What then goes wrong with democracy?

Democracy is collectivist in nature. Democracy allows the majority to force their ideas upon others who do not share these views. Voting enables people to live at the expense of others, or even to expropriate them. This inevitably creates social tensions and results in the loss of production. After a certain time every democracy therefore suffers from the same problems as socialism, albeit in milder form: excessive bureaucracy, economic stagnation, loss of freedom, centralization, corruption and social conflicts.

But don’t democratic constitutions protect the rights of individuals? Beyond Democracy Frank Karsten, Karel B... Check Amazon for Pricing.

This is a misunderstanding. It is the law that protects the rights of individuals. Many people confuse or confound democracy with the rule of law, free markets and human rights. These concepts have nothing to do with democracy. These are completely separate principles which, for example, can also apply to monarchies.

So what does democracy mean?

Democracy means that the majority can impose its will on the minority – in principle unlimited in all aspects of life! This could be observed during the Arab Spring, when the Muslim Brotherhood won the Egyptian elections. Immediately Sharia Law was about to be introduced along with capital punishment for “crimes” such as adultery and apostasy from Islam. Surveys found that 80% of the electorate agreed with it. That’s democracy for you.

What many consider to be democratic achievements are in fact results of the rule of law, such as  the Bill of Rights, that existed long before the introduction of mass democracy in Europe.

But we have constitutions in the Western democracies. Is that not sufficient protection against the arbitrariness of the majority?

Unfortunately the laws and constitutions that protect the rights of individuals in Western democracies are based on the will of the majority. They can be changed or conveniently interpreted to suit one’s desires. So a democratic constitution is like a chastity belt worn by the same person who has the key. And even if the courts judge a bill to be unlawful, politicians simply change the law.

Now one could argue that the majority’s decision should simply be accepted in a democracy.

The problem with democracy is that – even if everyone is in favour of it- it is self-defeating. Politicians want to be elected and to achieve this goal they bribe the voters with handouts and other perks. Sooner or later people find out that they can vote themselves money, so politicians who promise most are elected. Soon the state can no longer finance these promises and must go into massive debt and must expropriate the productive members of society even more. This is the reason many Western democracies are burdened by massive public debts. But even a state can not take on more debt forever, as Greece and other countries have shown: at some point the game is over.

Isn’t the lack of personal responsibility the problem? Empire: A Novel Gore Vidal Best Price: $1.21 Buy New $11.36 (as of 02:20 EST - Details)

Indeed, but this applies to voters as well as to politicians. Neither are held accountable for their actions. This is completely different from what we know from normal life or the private sector: Rob someone and you go to jail. Make a wrong business decision and you lose money or your company goes bust. Not so when exercising political expression in a democracy: you can anonymously vote for a party that openly declares an intention to expropriate certain groups. Or vote by referendum for a stupid idea that will cost others billions, including those who voted against it. Nobody holds you accountable.

But many politicians claim they want to take responsibility.

Politicians who say they want to “take responsibility” are not telling the truth. What they want is to make decisions at the expense of others, without experiencing the slightest disadvantage themselves if things goes wrong. This means nothing less than the complete decoupling of power and responsibility. Politicians can overspend, make devastating decisions or introduce bad laws because they know that their successors must deal with the negative consequences. They in turn experience the same perverse incentive. As a politician you can decide whatever you want, at any cost without being held accountable, because you have always acted on the basis of a democratic mandate.

Isn’t direct democracy a way to make politicians more accountable? We have Switzerland as a pretty good working example.

I think corrective referendums are generally a proper way to limit state power. That’s usually a good thing, since virtually all state laws violate individual freedoms. People’s initiatives however are often a means to implement more redistributive policies, not more freedom. Think, for example of the recent Swiss initiatives for a 25 francs per hour minimum wage and for salary caps for executives. Although they were both rejected they show the redistributive nature of such polls, which have also become more frequent lately. My guess is that sooner or later such initiatives will be successful in Switzerland.

So wherein lies the relative success of Switzerland?

I think the success of Switzerland is mainly due to its decentralized political structure. Its 26 cantons and the municipalities still enjoy relative autonomy and they compete with each other with regard to taxes, education and health care. This means people and businesses can easily vote with their feet rather than at the ballot box. That keeps politicians at bay.

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So if you are correct why does the overwhelming majority regard democracy so positively? The Politically Incorr... Thomas E. Woods Jr. Best Price: $2.00 Buy New $9.90 (as of 11:35 EST - Details)

On the one hand because most people think that the only alternative to democracy is dictatorship, which is not true. Secondly, they confuse, as I said, the principle of democracy with other principles. Finally, democracy is promoted through the educational system, by the media and by politicians. Supporters of democracy point to the success of Western democracies as evidence. However they “forget” to mention the many failed democracies like India, Venezuela and many countries in Africa. They also fail to mention the successful but rather authoritarian states like Singapore or Dubai. The reason why our Western democracies are relatively successful, in my opinion, is that traditionally we still have a certain respect for individual and economic liberties, although these have been severely eroded by democracy.

Aren’t reforms possible, so that the democratic system is repaired from within?

Reforms are very difficult to achieve, and they are mostly modest and rare. In a democracy people are condemned to each other. It is like going out for dinner with hundred people and agreeing in advance to split the tab evenly. If you order an expensive dessert that costs 15 dollars you will only end up paying an extra 15 cents, Everyone has an incentive to order the expensive dishes, even if you wouldn’t do so on your own. The illusion of getting something for less than if you would pay for it individually is too appealing to resist.

Isn’t also the increasing number of welfare recipients an obstacle to reform?

Indeed. Our democracies show a huge increase in the number of government employees and welfare recipients. These people tend to vote for more government intervention and redistribution which further increases the number of people dependent on the state. Democracy provides no escape to a responsible minority against a wasteful majority. Accordingly, in Western democracies average government spending as a percentage of GDP has risen during the last hundred years by an average of 12% to a whopping 50%. Each “reform” is usually a small dip in the ever-increasing spending curve. The former German chancellor Ludwig Erhard realized that redistributive systems are almost impossible to change, because the number of those who benefit from it is eventually always greater than that of the net contributors.

Is the declining economic growth in Western countries also linked to democracy?

I think so. Democracy fosters irresponsibility and overregulation. Because in a democracy almost every special interest group or even each individual tries to put his or her personal goals on the collective tab. Therefore the regulatory burden, the tax burden and the government debt will have to rise. But high taxes and heavy regulation discourage production. Take the growth rates of the major Western democracies: In the 1960s, our economies grew 5-6% per year, but today we hardly manage 1%. This in spite of recent productivity accelerators such as computers, internet, smartphones, GPS, nanotechnology and DNA technology. Something is definitely pushing the brakes.

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But perhaps this is just a correlation. Perhaps this lower growth is because larger economies tend to grow less for they have already reached a certain saturation?

It is indeed difficult or even impossible to prove causality with the statistics that I mentioned. But I think they provide an indication that democratic incentives lead to redistribution and overspending and that these are bad for economic growth. This interpretation is supported by the observation that relatively autocratic countries such as Singapore and Hong Kong enjoy an income per capita similar to ours, but see annual growth rates of 3-6%.

Many free market proponents say that democracy and free markets go together. Is that true? Theodore and Woodrow: ... Andrew P. Napolitano Best Price: $3.50 Buy New $6.00 (as of 07:50 EST - Details)

I do not think so. In a free market individual entrepreneurs and consumers can freely decide, but then have to live with the consequences of their decisions. In a democracy however the elected government or the majority, decides as soon as a certain market outcome is disliked. We therefore have increasingly unfree markets in Europe. Governments decide who companies can hire and fire, what they may produce and at what price, what professions we may exercise, which treatments doctors may use, what rents should be, et cetera. We enjoy no freedom of contract, which is essential for a free market. Or take India, the largest democracy in the world, it suffers from a highly regulated and protected market which brought massive corruption, poverty and bureaucracy. So democracy has nothing to do with the free market.

One often hears that the EU suffers from a democratic deficit. What is your opinion on that?

I don’t think that the EU’s main problem is its alleged democratic deficit. On the contrary: the bigger and more anonymous societies are, the less restrained people feel to deprive someone else of their property through the ballot box. And if we take into consideration that in Europe national parliaments agree on practically everything their respective governments propose we can hardly imagine that the decisions of the European Parliament would be any different from what the Commission is already doing.

Could democracy work on a local level?

Yes it could, but not necessarily. Democracy simply works better at the local level for three reasons. First, as a citizen, you have a more direct, often an even personal, influence on the person that decides. Secondly the more direct feedback loop in a small democracy prevents irrational spending. Referring to my earlier dinner example: at smaller tables the squandering guests are more visible than at larger tables and are therefore more restrained. And lastly, in smaller democracies disgruntled citizens can more easily vote with their feet and move to neighbouring  municipalities.

Does democracy lead to socialism?

I think democracy actually is a form of socialism. It’s Socialism Light in which the individual is subordinate to the wishes of the collective. It’s the idea that we must decide on everything collectively. Democracy has no safety valve like the free market has, in the form of start-up businesses that can offer new products and challenge established companies. Democratic minorities can not avoid the majority and try something else at their own expense. That’s why democracies tend to move in the direction of more centralization, more collectivism and more meddling with our personal lives, exactly like we experience nowadays.

“More democracy” was once a famous election slogan by Willy Brandt and the Left in Germany. How do you assess the demand for more democracy?

“More Democracy” ultimately means the politicization of potentially all areas of life and all private decisions. No individual freedom, no property, no money is safe from interference by the majority i.e. the elected government. Individual decisions are abolished. The individual becomes the plaything of the majority or their elected leaders. Democracy is therefore potentially totalitarian.

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In Germany we are witnessing an increasing loss of contractual freedom, through anti-discrimination laws, quotas for women in private companies, minimum wages, etc.. Does this have anything to do with democracy?

Dead Wake: The Last Cr... Erik Larson Best Price: $1.01 Buy New $5.49 (as of 10:25 EST - Details) Yes, these examples illustrate my claims. The majority can impose its views on the minority. With these anti-discrimination laws the majority has turned the fundamental rights, which were originally intended only as a defense of the individual against the state, in the opposite direction. The rules are now being used to mandate how individuals must behave in interactions with other individuals, and the State has the exclusive power to enforce these rules.

And the quotas for women directly contradict the equality article of the German Constitution (“No person shall be favoured or disfavoured because of gender…”). But the majority is apparently allowed to do so. Minimum wages logically lead to the destruction of jobs, experts basically agree on that. The majority feels better because of it but does not carry any responsibility for the negative consequences.

To what would you attribute this lack of quality in democratic decisions?

By definition, the majority is less responsible, less industrious and less honest than the ones at the top, since these traits follow a normal (Gaussian) distribution curve. In science and industry those who excel call the shots. In a democracy however we rely on the uninformed masses to decide on an ever-increasing number of subjects – also in science and industry. That’s not a sensible approach.

As a libertarian you probably don’t favor expert rule, dictatorship or theocracy. What might an alternative to democracy look like?

It is important to understand that we already use “alternatives to democracy” in our daily lives. We don’t decide democratically in companies, in science, in our families or when we buy our groceries. Smartphones keep getting better not because we democratically vote on the executive board of Apple or Samsung, but because each individual can buy his prefered product for himself and the demand for bad products thereby ceases. It’s not a dictator that buys our car for us! Naturally we do it ourselves. We should simply apply this proven mechanism to other areas of life too.

How?

I propose a market for governmental services like justice, defense and security. This can be achieved by breaking up the current cartel of 200 countries into thousands of independent communities. The world needs massive decentralization through secession. When there are many alternatives it will be easier for every person to avoid bad systems by voting with their feet, rather than by exerting their negligible influence every few years at the ballot box.

And what should those people do who fear a free market?

They can also arrange a system according to their preferences. I have nothing against socialism or paternalistic systems as long as membership is voluntary! Those new countries could provide a multitude of different systems, anything from authoritarian rule like in Dubai to advanced democracies like Switzerland, mixed systems like Liechtenstein, or private societies based on contracts.

What do you mean by “contractual societies”?

In these societies citizens are offered a contract in which is clearly stipulated how much you would have to pay for governmental services and what will be offered in return. These contractual societies would would provide legal certainty to citizens, contrary to the current situation in which laws are unilaterally changed according to the whims of politicians. Independent arbiters will decide in case of disputes. Membership is not necessarily based on one man – one vote. Just as with companies influence is based on merits, position and equity. In the end it’s the customers who decide which systems they like best and governments will be subjected to the discipline of the market.

That sounds utopian. How would you like to achieve that?

We need to raise awareness on why democracy does not work. Naturally democracy has the historic advantage of fostering bloodless power changes and perhaps it is also a necessary interim step to a free society. But considering the problems I just outlined it is certainly not the end of history. We should promote decentralization, by which power is transferred from Brussels to the national states and from the capitals to the municipalities and to the individual. It would be great if we could create special economic zones in Europe. They can operate as societal laboratories in which new ideas are tried in a small way. It worked very well for Shenzhen in China and inspired the Chinese rulers to grant more liberties to other regions. We should indicate that small is beautiful and that micro nations like Liechtenstein and Monaco are generally very successful and have low poverty rates.

Are you optimistic about the implementation of your ideas?

Yes, because truth generally wins in the long run. The cracks in our democracies are beginning to show, and people are noticing. So I am confident things will get better, just like they did in the past.

Original interview by T. Gebel for the German Employers Association (Deutscher Arbeitgeberverband AV)