Fallacy of too much democracy: No economic freedoms can thrive without political freedoms

We hold China in awe because it has a per capita GDP five times India’s. But the history of economic and democratic growth coincides almost everywhere else.

Illustration: Soham Sen | ThePrint

There is no point debating what exactly NITI Aayog CEO Amitabh Kant meant when he said “we are too much of a democracy”.

You can go with those who were outraged and saw this as a statement of the Modi government’s concept of limited democracy, delivered vicariously through an articulate civil servant.

Or, you could be persuaded by Kant’s own op-ed in The Indian Express this Thursday. He argued that he was misunderstood and misconstrued, while all he wanted to say was that you cannot compare the speed of India’s reform with China’s because “we are too much of a democracy”.

Of course, you could also listen to both sides. But that, “both sides”, is such a triggering expression these days. So I get off the kerb.

Other important questions emerge from this. Is democracy good for economic growth or bad? How much democracy is good, and when does it become too much? Is there such a thing as limited democracy?

Almost two decades ago, I found myself caught in this debate in an Asia Society conference in New Delhi, where I was on a panel with the voluble Ronnie Chan, the formidable real estate and philanthropist ‘tai-pan’ from Hong Kong and owner of Hang Lung Group. He was then investing big time in China, especially in Shanghai’s redevelopment. The audience asked when he would bring his investments into India.

Ronnie was forthright: I won’t bring any investment here, because you are too much of a democracy. If you were less so, I might. This lit a fire under the audience. But, the facts and figures were with Ronnie. China was booming, and India struggling after the first flush of 1991 reforms.

The issue was, however, settled by the Japanese ambassador, sitting in the front row. “Isn’t Japan the world’s greatest economic miracle since World War II devastated us? And we’ve been a full democracy.”

 

And then the penny dropped. Japan, South Korea, Taiwan — many economic miracles had preceded China’s. Some, like Japan, started out as fledgling democracies and became even more so as they grew.

The others like South Korea and Taiwan emerged from their own fratricidal post-WWII conflicts and started out as dictatorships. But, as their economies grew and people got better informed, they democratised in a manner so dramatic that a millennial (which is 70 per cent of Indians) who isn’t a specialist of that region or preparing for UPSC, can’t imagine a South Korea under Park Chung-hee (1963-79) and Taiwan under Gen. Chiang Kai-shek and his son until 1988.

These three are now the shining lights of democracy in eastern Asia, in the front yard of China. Two (Japan and Taiwan) thumbing their noses at it, and the third (South Korea) at odds with its second nuclear-weapon protectorate after Pakistan: North Korea. All three also tell you that there is no contradiction between economic growth and democracy. And that as economies and societies grow, they yearn for more democracy, not less.

But what about the Chinese then? Quite unlike the statutory warning in mutual fund advertising, when it comes to the fate of nations, the past is an excellent guide to future performance. The China of today is no democracy, but it is a far cry from what it was until Deng Xiaoping began to loosen things up.

Xi Jinping, if anything, has reversed the clock. As he rolls back the few freedoms that were growing, much to China’s economic benefit, his challenges are increasing. For evidence, see his latest document on his version of ‘atmanirbhar Cheen’ as he prepares his mighty nation in his own image of a super-power and a fresh Cold War. His throttling of China’s incipient democratic urge will set its economy back, not further it.

We hold China in awe because having started at about the same level as us four decades ago, it now has a per capita GDP five times India’s, and the gap is increasing. But it dwarfs in comparison with its tiny peers in eastern Asia. Taiwan, which is China by another name, is two and a half times its per capita GDP, and South Korea, more than three times.

Whether those countries have paid a penalty for “too much democracy” or reaped a dividend from it, you can decide. Those are also the two countries globally acknowledged to have handled the pandemic the best. With figures everybody trusts. And we can close this part of the argument by also looking at the wealth and fame of Ronnie Chan, who had started this argument, which was also built in the world’s most remarkable growth engine, little Hong Kong. It boomed as a noisy “too much” democracy, in spite of technically being a part of China.

Optimists had believed that with the merger, Hong Kong would change China more than the other way around. Under Xi, it all changed. Watch him now strangle its democracy, institutions, creative and entrepreneurial energy. Its best minds and businesses are shifting West.

 

There is a vocal constituency of educated, well-to-do, articulate Indian elites who would rather go with the idea that too much democracy is a liability. That India needs a spell of benevolent dictatorship. Of course, they’ve never lived under one. Even the Emergency was just 19 months long, and ended 43 years ago.

Look at Singapore, they’d say. They adore it. You are safe, the rule of law works, you aren’t bothered about any politics, there’s continuity, and it’s OK if the laws are a bit draconian on some fun indiscretions of life. So what if you can’t live by that eternal Americanism of walking and chewing gum at the same time, in the dread of fine and jail?

The history of economic and democratic growth coincides in almost all parts of the world, with the China exception, and it is now our wager that it is losing momentum. Russia blew its post-Communist economic dividend by choosing to be a new kind of dictatorship. European peers one-fourth its size have economies bigger than it, never mind its oil, minerals, and megatonnage of its nukes and armament industry.

Iran and Iraq, relatively small populations with humongous hydrocarbon reserves, could be richer than Europe. Each also is the child of a great ancient civilisation — Persian and Mesopotamian. But both have wasted generations in conflict, under sanctions; their people in many ways worse off than those in the much poorer third world countries. Will they blame too much democracy for this, or too little? Would a democracy have allowed a Shah, a Saddam or the Ayatollahs to hold sway through decades, burning the oil wealth? Erdogan, elected ruler in Turkey in a free, fair and legitimate election, decided that so much democracy was not good and shifted into reverse gear. So did his booming economy.

In conclusion, I go back to that travelling reporter’s favourite stereotype: The wisdom of the taxi driver. Mine in Prague in January 1990, when I was covering the unravelling of the Eastern Bloc, was an unemployed computer engineer. He cursed the Communists bitterly. I told him how, in my country, they were still winning elections in some states. That is, he said, because you never lived under Communism or dictators.

But we had the Emergency, I said.

That’s a good point, he said. The Emergency took away your political freedoms, so you realised what you had lost and fought back to restore them. You’ve never enjoyed economic freedoms, so you have no idea what you are losing, and might lose further with the Communists. We Czechs know. We had full economic freedoms until the Communists came.

We finished that conversation when I reached my hotel in Wenceslas Square. There was a crimson banner hanging from the roof of a building, reaching the street. It read, in golden letters, ‘Welcome Home, Mr Bata’. Thomas Bata was a Czech entrepreneur who built a multinational footwear empire. Then came the Communists and nationalised everything, and he went into exile in Canada. Now, Vaclav Havel had thrown the Communists out, and Bata was back home. No economic freedoms can survive without political freedoms, you see. More the democracy, greater the entrepreneurial energy and economic growth.