Bring on the Coup

Daniel Mitchell, who seems to be a bottomless pit of crazy blog posts, recommends an item by Kevin Hassett (yes that Kevin Hassett) making the case that dictatorships outperform democracies economically because they're "not hamstrung by the preferences of voters for, say, a pervasive welfare state."

The chart tells a striking story: the countries that are economically and politically free are underper­forming the countries that are economically but not politically free. For example, unfree China had a growth rate of 9.5 percent from 2001 to 2005. But China was not the whole story—Malaysia’s GDP grew 9.5 percent from 1991 to 1995, Singapore’s GDP grew 6.4 percent from 1996 to 2000, and Russia’s grew 6.1 percent from 2001 to 2005.

In fact, the story the chart tells is that the set of economically and politically free countries is a set heavily weighted to very rich countries, whereas the other set is weighted to substantially poorer ones. Strikingly Hassett even recognizes the glaring flaw in his argument, acknowledging that "nearly all of the unfree nations are developing countries" which "grow faster, at least for a while, than mature nations." But he decided to write the column anyway!

Comments

Ah.

So dictatorship - even Communist dictatorship, given the will - is better for capitalism than democracy?

My, my. They'll be discovering fire, next.

Posted by Gaius Gracchus | May 16, 2007 4:01 PM

And in what sense Russia is not "politically free"? It may not be the best example of democracy in the world but it's absurd to put them in the same league as China.

Posted by Carlos | May 16, 2007 4:15 PM

Well, I don't know about economic growth, but Gen. Peter Pace seems a pretty rational guy and I'd certainly sleep easier having him---or Admiral Fallon---sitting in the Oval Office instead of Bush, Cheney, and Gonzales.

Posted by RKU | May 16, 2007 4:17 PM

When will people learn? Democracy just doesn't work!

Posted by Homer Simpson | May 16, 2007 4:20 PM

Do these people actually think about what they are saying? Mitchell says that the problem is democracy's "enabling people to seize unearned wealth through the political process." As opposed to dictatorships? And Hassett starts with the problem of democracy not reflecting popular preference and concludes that dictatorship is the answer. Complete non sequitors abound.

Posted by Archit | May 16, 2007 4:22 PM

And in what sense Russia is not "politically free"? It may not be the best example of democracy in the world but it's absurd to put them in the same league as China.

In the sense that they get their listing from Freedom House.

Posted by Ed Marshall | May 16, 2007 4:24 PM

I think we will be seeing more calls for authoritarianism as an alternative to the growing recognition that a strong social democratic, redistributory is a needed resonse to globalization and growing inequality. If you are opposed to egalitarianism and redistribution authoritarianism is a tried and true alternative.
See 20th century for details.

Posted by dale | May 16, 2007 4:26 PM

Where to begin...I guess he knows nothing about the Russian economy which, while no longer Communist per se, is still one of the best (worst?) examples of a cradle to grave welfare state in the world. Many people still don't even pay rent there ferchrissakes!

Posted by calipygian | May 16, 2007 4:37 PM

Someone who doesn't understand the law of large numbers (it's harder to grow at a high percentage if your base is large versus your base being small) is not someone from whom you should be seeking economic advice or wisdom from.

Since almost all of the world's wealthiest countries (except for a very few exceptions that tend to have extremely small populations) are politically free, it's probably more of a case (unsurprisingly) that poverty assists in creating dictatorships, and increasing wealth will at least somewhat tend to put dictatorships politically in jeopardy. The exception is Singapore, but the counter exceptions are South Korea and Taiwan (both of whom were under similar regimes to that of Singapore when they were poor, but liberalized as their economies grew).

Also, small poor economies tend to do much better when commodity prices are high, which has been the case for the last few years. Even the worst dictatorships can (sometimes) manage to increase their economies when the value of the royalty they get from Shell or Total or Chevron doubles.

Posted by burritoboy | May 16, 2007 4:43 PM

Carlos:

"And in what sense Russia is not "politically free"?

In the sense of Putin canceling elections for governors a couple of years ago and deciding to appoint those governors himself, in the sense of government control of the media, in the sense of government prosecutions of some political opponents, spontaneous suicides and heavy-metal poisonings of other political opponents, etc.

"It may not be the best example of democracy in the world but it's absurd to put them in the same league as China."

Freedom House ranks countries by "political rights" and "civil liberties" on a scale of 1-7 each, "1" being the best. In also groups countries more generally into "free", "partly free" and "not free" categories. Russia and China are both in the "not free" category, though Freedom House gives Russia slightly higher scores for political freedom and civil liberties than China.

Posted by Dave | May 16, 2007 4:50 PM

More yglesias straw man bashing. The straw man created in this instance by allowing the article greater certitude than it allows itself. Hasset is suppositive in tone throughout and offers some theoretically sound speculation on what may be occuring, and may occur in the future, with regards to democratic and authoritarian economies.

Posted by pimp hand strikes! | May 16, 2007 5:00 PM

Seriously, PHS, just stick to fat jokes.

Posted by Steve | May 16, 2007 5:01 PM

A more interesting column would have been one comparing economic freedom versus economic growth around the world, using the Index of Economic Freedom. Some high-growth countries rank high on the economic freedom index, e.g., Ireland, and some rank pretty low, e.g. China (Russia ranks low too, but Russia's economic boom is mostly the result of rising oil and natural gas prices).

Posted by Dave | May 16, 2007 5:10 PM

perfect last line. thanks for the laugh.

Posted by sandy | May 16, 2007 5:41 PM

A lot of high-growth countries in the 20th-century were run by what were basically right-wing Leninists. In Taiwan, during the 228 Incident and afterwards, Taiwan was cleansed of its political and rural elites as they were jailed, killed or left the country and their land was confiscated and redistributed to Guomindang party hacks from the mainland. Chiang Kai-shek was a big fan of democratic centralism and a former ally of Stalin who sent his son to study in the USSR (during which he married a fellow worker and tried to join the Communist Party of the Soviet Union). His son, Jiang Jingguo, was a former communist. Jiang's successor, Li Denghui, was also a former communist who joined the GMD in order to spite it. Korea had five-year plans and its state-owned steel industry is the most efficient in the world. South Africa moved left under Mandela at the same time it became one of the fastest-growing economies in the world. So what exactly is Hasset's point? Pretty much Chile is the only example that fits in with the neoliberal worldview of a near-pure free-market economy leading to growth.

Posted by Reality Man | May 16, 2007 5:41 PM

Reality Man:

Taiwan, South Korea, and Chile were all run by right-wing autocracies that peacefully transitioned to democracies after laying the foundations for economic success. This seems to be a decidedly better track record, both on economic and well as political grounds, than that of left-wing autocracies which tend to be less likely to peacefully transition to democracy (e.g., Cuba, North Korea).

Posted by Fred | May 16, 2007 5:59 PM

What I wonder is now that libs are these Hitler types if the Stalinists of old are also now good conservatives (which you understand is synonymous with being a good democrat). In that case the rather unremarkable performance of the command economies of the Soviet sphere would seem to say something rather unflattering about this gentleman's notion.

But I'm guessing that while libs are today's fascists they're also still Stalinists as well, and although conservatives can pray publically for a military coup, and praise the stellar growth of authoritarian countries they were, are, and will remain the good democrats of the world.

Posted by Linus | May 16, 2007 6:10 PM

Linus,

Was that post supposed to be a parody of a lefty frothing-at-the-mouth writing?

Posted by Fred | May 16, 2007 6:19 PM

Fred, your point is true, but neither really here nor there. This isn't so much a communism vs. fascism issue as a question of the relationship between democracy, dictatorship and growth. Hassett's argument implies that countries like the Asian Tigers grew as a result of a lack of a welfare state stemming from a lack of democracy. The Asian Tigers (unlike Chile, where growth was as much rebuilding after Allende what had before been one of Latin America's strongest economies) were heavily interventionist states whose "eat the rich" policies were stronger and more authoritarian than those of social democratic states (say, Scandinavian countries). Park Chung Hee, after all, had served in the Japanese military (despite being Korean) that killed off much of Korea's landed elite and we supported his coup because we felt he would be closer to the old Japanese development model, which was partly dependent on the kereitsu/zaibatsu and MITI and also included features like lifetime employment. The promise of lifetime employment, often backed by the government, acted as part of the East Asian welfare state. Ireland, for what it's worth, also became rich while democratizing, in part because the Church's grip on power weakened with social liberalization, thus leading to greater birth control use and a more manageable demographic scenario (fewer dependents per worker).

Posted by Reality Man | May 16, 2007 6:37 PM

Someone who doesn't understand the law of large numbers (it's harder to grow at a high percentage if your base is large versus your base being small) is not someone from whom you should be seeking economic advice or wisdom from.

This isn't really much of a critique, since the actual (as opposed to theoretical) pattern of economic growth is divergence, big-time. Rich countries have consistently grown faster than poor ones. China is a big exception, of course, but for the vast majority of countries (and countries, not people, are the relevant data points for this question) the pattern still holds good. So what Matt thinks is a knock-down argument against Hassett, actually isn't.

Since almost all of the world's wealthiest countries (except for a very few exceptions that tend to have extremely small populations) are politically free, it's probably more of a case (unsurprisingly) that poverty assists in creating dictatorships, and increasing wealth will at least somewhat tend to put dictatorships politically in jeopardy.

This, on the other hand, is quite true. Democracy may or may not lead to economic growth, but economic growth certainly leads to democracy.

Posted by lemuel pitkin | May 16, 2007 7:11 PM

"Was that post supposed to be a parody of a lefty frothing-at-the-mouth writing?"

Oh no sir. Like Professor Goldberg I genuinely believe that Mrs. Clinton is one of the leading fascists of our time and quite possibly the sixth most evil person of the last millenium.

Posted by Linus | May 16, 2007 7:14 PM

Reality Man,

Another thing to consider is there is indeed a social safety net of sorts in high-growth, economically free, but politically un-free Asian Tigers Hong Kong and Singapore. This safety net is funded by high payroll taxes, but it is more akin to the Chilean Social Security system than ours (i.e., worker benefits funded mainly by that workers investments as opposed to transfer payments from current workers to current retirees).

Posted by Fred | May 16, 2007 7:55 PM

1) I for one was not surprised to see what I believe to have been a misinterpretation of Arrow's Impossibility theorem which I understand is not about the undesirability of democracy with respect to "rationality" as defined by certain criteria but about the impossibility of "democracy" itself as defined by certain criteria.
2) Growth is not a particularly relevant statistic. GDP per capita in a given year is a statistic measured in terms of time itself, so it reflects current institutions, practices and resources as opposed to accumulated wealth, although clearly past GDP per capita has an extremely important role in determining its current value. Not that growth is irrelevant. Economic wealth has to come from somewhere in the case of a poor country. This is silly, but sort of true.
3) I really do imagine there is a possibility that dictatorships would have higher rates of growth than democracies even controlling for GDP per capita, even with ZImbabwe and North Korea.
4) The empirical correlation between taxes and GDP per capita is POSITIVE.
5) The empirical correlation between government presence in the economy and GDP per capita is POSITIVE.
6) PHS, MY needs content. I'd rather him link to articles with the suppositions of which he disagrees than complain about how Tim Russert be racist because he doesn't call John McCain a war-criminal to his face and has never invited Jessica Valenti onto MTP.

Posted by Trolly McTroll | May 16, 2007 8:02 PM

Transaction costs, motherfucker. Illiberal dictatorships exist outside the rule of law, which means property rights are unstable, which means that simply doing business at all gets a lot more uncertain, which means doing business gets more expensive, which means these regimes suck economically in the long run.

Posted by Shab al-Sham | May 16, 2007 9:18 PM

I think the proof of this is Saudi Arabia. With oil prices going from $20/bbl into the $60s and $70s ever since 2 oilmen stole the Presidency, I'm sure the growth rate in Saudi Arabia has gone through the roof. And unfree - they don't even let their women drive.

Posted by Ethel-to-Tilly | May 16, 2007 11:51 PM

Also, the variation between different "unfree" regimes here is huge. Singapore is certainly authoritarian, but it's nothing like Russia - they don't shoot journalists, they do have property rights, they do have real legal process.

I'd also query if it's possible to identify "a Chinese model" at all. Some bits of China might as well still be Maoist, or for that matter 1,000 years ago. Others are more like the 50s or 60s Soviet Union. Others are more like Chicago in the 1920s. Others are more like Dubai.

The Russian welfare state has not functioned since 1992, and is anyway being replaced by cash payments which may, or may not, actually be paid.

Posted by Alex | May 17, 2007 5:09 AM

As a political scientist I resent the fact that crap like this gets attention when smart people in my profession, as well as several good economists, have studied this question like crazy in the last decade. Just ridiculous. For all the reasons noted by Matt and in the comments--as well as a few others--this stuff is just not serious at all. AEI has been intellectually bankrupt for a while, and this (if Iraq weren't enough) makes it obvious.

Posted by Jim M | May 17, 2007 9:18 AM

I find this article more interesting as a sign that modern current "gang" (they don't merit the honorable title of "Conservatives") that rule the Republican Party, now worried that they can no longer manipulate the democratic processes to maintain power, status, and increase their wealth, are starting to look for justifications for a military coup. Thomas Sowell blogged recently on NRO that only a military coup could save the country. VP Cheney's comments on the complete "irresponsilibity" of the Democrats would logically imply that a coup would be necessary if the voters were equally irresponsible to to elect them to power. One sad thought is that about 30% of the country would support them. But for the moment it remains basically a fantasy given that they could not count on the support of most senior military commanders or in rest fo the Government the bureaucracy who are still loyal to their Constitutional oaths. I know their have been efforts to subvert that loyalty, and institute loyalty based on party and religion, and thereby subvert the rule of law. But, at least for now, these efforts have had only a limited impact. It took 100 years of militarism and lawlessness to subvert the Roman Constitution and pave the way for Augustus's establishment of the Principiate. We are only less than half way along in the process.

Posted by Rick Kane | May 17, 2007 10:00 AM

Ahh Jim M,
But that is why the AEI is there, to shoot out a wall of flack and misleading arguments, so that our Universities and their faculty who dedicate their lives to the truth and submit their ideas to brutal peer review can be ignored forever, especially when they derive conclusions that are inconvenient to the powerful. If for some reason a true academic does stand out and present his argument, the media will quickly be fed the AEI BS counter argument to deminish him. And the media go along with the AEI bullshitter because an argument makes better copy than a single reasoned point. And afterwords they can delude themselves that they provide 'fairness'and 'balance' when really they simply mixed truth with untruth, their food with shit and ended up with ... just unedable shit.

I sometimes feel that the very idea of "the West" is dying in America. You know, the West of Decartes and Hume and Locke and Hobbes and Kant, the scientific method, scepticism, reasoning, etc... So much faith based, bad-faith argumentation is poisoning America's culture. We're becoming demented.

Posted by Northern Observer | May 17, 2007 10:07 AM

I find this article more interesting as a sign that modern current "gang" (they don't merit the honorable title of "Conservatives") that rule the Republican Party, now worried that they can no longer manipulate the democratic processes to maintain power, status, and increase their wealth, are starting to look for justifications for a military coup. Thomas Sowell blogged recently on NRO that only a military coup could save the country. VP Cheney's comments on the complete "irresponsilibity" of the Democrats would logically imply that a coup would be necessary if the voters were equally irresponsible to to elect them to power. One sad thought is that about 30% of the country would support them. But for the moment it remains basically a fantasy given that they could not count on the support of most senior military commanders or in rest fo the Government the bureaucracy who are still loyal to their Constitutional oaths. I know their have been efforts to subvert that loyalty, and institute loyalty based on party and religion, and thereby subvert the rule of law. But, at least for now, these efforts have had only a limited impact. It took 100 years of militarism and lawlessness to subvert the Roman Constitution and pave the way for Augustus's establishment of the Principiate. We are only less than half way along in the process.

Posted by Rick Kane | May 17, 2007 10:16 AM

What's puzzled me for the last several years is, why does Norman Ornstein threaten his otherwise excellent reputation by working for an intellectual chop shop? I guy with his credentials has to have better options....

Posted by sglover | May 17, 2007 11:10 AM

"What's puzzled me for the last several years is, why does Norman Ornstein threaten his otherwise excellent reputation by working for an intellectual chop shop? I guy with his credentials has to have better options...."

Probably good benefits there compared with yer average university. Plus he doesn't have to teach or do the publish-or-perish grind. Or maybe Brookings has crap coffee in the break room. Or something.

Posted by Sck Puppet of the Great Satan | May 17, 2007 12:32 PM