Thoughts on economics and liberty

Tag: Democracy

The tyranny of democracy – why utilitarianism is wrong and the USA Bill of Rights is right

This short video (must watch) affirms that a government can take away private property only for public use (and that must explicitly be public, not benefit any private individual or restricted group of individuals).

Benthmite utilitarianism is useful, but only up to a point. The moment its conclusions encroach on liberty, utilitarianism is dangerous. FTI's policy framework explicitly gives cost-benefit analysis a lower level of power in decision making than liberty. It becomes relevant only after liberty has been protected.

This video also affirms that majorities quickly tend to become tyrannies unless strongly restrained by a constitution. It affirms that Constitutions must be SHORT, CRISP AND TO THE POINT: and firmly prevent government encroachments on liberty. No qualifications. No ifs and buts. No "subject to the law". The law MUST NOT violate liberty. Period. 

(The Indian Constitution, by the way, is a total mess – but I don't hear people like Shailesh Saraf/ Arvind Kejriwal/ Anna Hazare, etc. talking about the destruction of liberties in our Constitution. For these people democracy is the main goal of a government. For me liberty is.)

The day democracy is seen as a tool for decision-making within the confines of a strong constitution, we'll stop unnecessary fights regarding "FPTP/PR/presidential" etc. systems. The way we elect representatives is far less important than what the constitution says and the way our courts defend liberty.

To most people, government seems to be about power. Therefore they want "people's power" or democracy. But that is mistaken. Government is designed SOLELY for the defence of liberty. It is not about power. If a democratic government goes outside this strict bound, then democracy itself must be shunned. It must be reformed. Even overthrown violently, and replaced by a stronger constitutional restriction on the majority.

In this video, Professor Munger reminds us of the difference between democracy and majority rule. Democratic constitutions establish not only the process by which decisions will be made, but also the limits on kind of things can be voted on. This prevents the majority from deciding everything. He warns, however, that these limits on what can be decided democratically have been slowly eroded in American courts of law.

One example of a weakening of limitations on democracy is the Supreme Court ruling in the 2005 case Kelo v. New London. When Miss Kelo refused a private real estate developer’s offer to buy her house in New London, Connecticut, the developer convinced the city council that its citizens would be better off if her house were torn down and condos built in its place. The majority of citizens preferred the greater tax revenue, and the council voted in favor of the developer. After taking the case all the way to the Supreme Court and losing, Miss Kelo lost her property.

According to Professor Munger, the United States Constitution was designed to prevent individuals and their property from falling prey to the “tyranny of the majority,” by defining the domain in which the majority can make decisions. By confusing majority rule with a democratic system, we endanger the freedom of all individuals.

Addendum

Found on Facebook

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The tyranny of democracy: Massive debts for future generations

Recently I discussed the tyranny of democracy and cautioned those who are blindly enamoured with direct democracy (or its proxy: proportional representation).

Democracy has its inevitable tendencies: middle class welfare (median voter theorem), lack of fiscal discipline (always convenient to borrow for one's term of government and let the future generations pay), and never ending intervention by government into our affairs. Everyone wants the government to do this or do that. No one is happy to leave others alone.

Most noticeable across the world today is the tendency of democracies to accumulate MASSIVE AMOUNTS of debt. Buttonwood (in The Economist) has summarised this well. [Does anyone know who is Buttonwood?].

Buchanan thought a lot about these issues. Not many have spent similar time trying to resolve the fundamental problems of democracy. I don't expect Indians to provide such insights, since they are generally unthinking and jump to conclusions.

Extracts from The Economist

For a long time, democracy was a dirty word among political philosophers. One reason was the fear that democratic rule would lead to ruin.

  • Plato warned that democratic leaders would “rob the rich, keep as much of the proceeds as they can for themselves and distribute the rest to the people”.
  • James Madison feared that democracy would lead to “a rage for paper money, for an abolition of debts, for an equal division of property and for any other improper or wicked projects”.
  • John Adams worried that rule by the masses would lead to heavy taxes on the rich in the name of equality. As a consequence, “the idle, the vicious, the intemperate would rush into the utmost extravagance of debauchery, sell and spend all their share, and then demand a new division of those who purchased from them.”

For a long time, there did not seem to be any limit to the amount democracies could borrow. Creditors have been more patient with democratic governments than with other regimes, probably because the risk of abrupt changes of policy are reduced. But this has postponed the crunch point, rather than eliminated it—and allowed stable democracies to accumulate higher debt, relative to their GDP, than many, more volatile countries ever achieved.

Democracies cannot make foreign lenders extend credit.

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Democracy is not an ultimate value. It is a means for securing justice, not an end in itself.

There are only TWO ultimate values (as I've elaborated in DOF): life and liberty. Every social action or design must show how it advances these two values, else we will be setting up society for failure.

F.A. Hayek demolished all arguments that consider democracy to be of value in itself. He showed that democracy has NOTHING to do with justice, and little to do with liberty. These goals must be secured by democracy if it has to serve any purpose. I can do no better than to extract from his greatest book: The Constitution of Liberty.

EXTRACTS

1. Equality before the law leads to the demand that all men should also have the same share in making the law. This is the point where traditional liberalism and the democratic movement meet. Their main concerns are nevertheless different. Liberalism (in the European nineteenth-century meaning of the word, to which we shall adhere throughout this chapter) is concerned mainly with limiting the coercive powers of all government, whether demo­cratic or not, whereas the dogmatic democrat knows only one limit to government—current majority opinion.

2. The current undiscriminating use of the word "democratic" as a general term of praise is not without danger. It suggests that, because democracy is a good thing, it is always a gain for mankind if it is extended. This may sound self-evident, but it is nothing of the kind.

There are at least two respects in which it is a most any particular issue the case for democracy is commonly presented as if the desirability of extending it as far as possible were indisputable.

That this is not so is implicitly admitted by practically every­body so far as the right to vote is concerned. It would be difficult on any democratic theory to regard every possible extension of the franchise as an improvement. We speak of universal adult suffrage, but the limits of suffrage are in fact largely determined by con­siderations of expediency. The usual age limit of twenty-one and the exclusion of criminals, resident foreigners, non-resident citi­zens, and the inhabitants of special regions or territories are gen­erally accepted as reasonable. It is also by no means obvious that proportional representation is better because it seems more democratic.' It can scarcely be said that equality before the law necessarily requires that all adults should have the vote; the principle would operate if the same impersonal rule applied to -all. If only persons over forty, or only income-earners, or only heads of households, or only literate persons were given the vote, this would scarcely be more of an infringment of the principle than the restrictions which are generally accepted. It is also possible for reasonable people to argue that the ideals of democracy would be better served if, say, all the servants of government or all re­cipients of public charity were excluded from the vote. If in the Western world universal adult suffrage seems the best arrange­ment, this does not prove that it is required by some basic prin­ciple.
 

These remarks are meant only to show that even the most dogmatic democrat can hardly claim that every extension of democracy is a good thing. However strong the general case for democracy, it is not an ultimate or absolute value and must be judged by what it will achieve. It is probably the best method of achieving certain ends, but not an end in itself. Though there is a strong presumption in favor of the democratic method of deciding where it is obvious that some collective action is required, the problem of whether or not it is desirable to extend collective con­trol must be decided on other grounds than the principle of democracy as such.

3. The democratic and the liberal traditions thus agree that whenever state action is required, and particularly whenever coercive rules have to be laid down, the decision ought to be made by the majority. They differ, however, on the scope of the state action that is to be guided by democratic decision. While the dogmatic democrat regards it as desirable that as many issues as possible be decided by majority vote, the liberal believes that there are definite limits to the range of questions which should be thus decided.
 
The crucial conception of the doctrinaire democrat is that of popular sovereignty. This means to him that majority rule is un­limited and unlimitable. The ideal of democracy, originally in­tended to prevent all arbitrary power, thus becomes the jus­tification for a new arbitrary power.

4. If democracy is a means rather than an end, its limits must be determined in the light of the purpose we want it to serve. There are three chief arguments by which democracy can be justi­fied, each of which may be regarded as conclusive.

The first is that, whenever it is necessary that one of several conflicting opinions should prevail and when one would have to be made to prevail by force if need be, it is less wasteful to determine which has the stronger support by counting numbers than by fighting. De­ocracy is the only method of peaceful change that man has yet discovered.

The second argument, which historically has been the most important and which is still very important, though we can no longer be sure that it is always valid, is that democracy is an important safeguard of individual liberty. It was once said by a seventeenth-century writer that "the good of democracy is liberty, and the courage and industry which liberty begets.' This view recognizes, of course, that democracy is not yet liberty; it con­tends only that it is more likely than other forms of government to produce liberty.

The third argument rests on the effect which the existence of democratic institutions will have on the general level of under­standing of public affairs. This seems to me the most powerful. It is the burden of the argument of Tocqueville's great work, Democracy in America, that democracy is the only ef­fective method of educating the majority. This is as true today as it was in his time. Democracy is, above all, a process of forming opinion.

The old liberal is in a much better friend of democracy than the dogmatic democrat, for he is concerned with preserving the conditions that make de­mocracy workable. If it is to survive, democracy must recognize that it is not the fountainhead of justice and that it needs to acknowledge a conception of justice which does not necessarily manifest itself in the popular view on every particular issue. The danger is that we mistake a means of securing justice for justice itself.

There is little reason to expect that any people will succeed in successfully operating or preserving a democratic machinery of government unless they have first become familiar with the traditions of a government of law.

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Found an analysis that delinks democracy from majority rule

Chanced upon an article Democracy, Political Equality, and Majority Rule, by Ben Saunders (in Ethics, Vol. 121, No. 1 (October 2010), pp. 148-177).

I think this is really interesting work, for it distinguishes all three terms above, and offers a new option to majority rule. If you recollect, I've outlined earlier the essay in which Hayek offered alternative designs for democracy. And now we have Saunders. All such ideas are well worth exploring. I do not have time to provide detailed comment on Hayeks' work or Saunder's work, but acknowledge that there are significant issues with democracy as currently designed.

Let me note, though, that Saunders is guilty of not referring, even once, to the objective of liberty in his work. So I'd take his analysis with a pinch of salt.

EXTRACTS

It is often thought that there is a straightforward entailment from democracy, to political equality, to majority rule. It is commonly assumed that if the people should rule then they must do so on an equal basis (since inequality smacks of oligarchy) and that, if all count equally, more votes must count for more. However, democracy, political equality, and majority rule are three distinct concepts and no one of these logically entails either of the others

It is necessary, before proceeding further, to stipulate how democracy, political equality, and majority rule are to be understood:

Democracy: The decisions made by a group must be appropriately responsive to the expressed wishes of the members of that group.

Political equality: Each group member must have an equal (chance of) influence over the group’s decisions.

Majority rule: The option that gets the most votes should be the group decision.

Though a few others have before questioned the central place given to majority rule, less attention has been given to describing alternative institutions.9 I shall outline an alternative procedure, lottery voting, that satisfies the conditions of democracy and political equality.

In lottery voting, each person casts a vote for their favored option but, rather than the option with most votes automatically winning, a single vote is randomly selected and that one determines the out-come.11 This procedure is democratic, since all members of the community have a chance to influence outcomes, but is not majority rule, since the vote of someone in the minority may be picked. It is, as I describe it, egalitarian, since all have an equal chance of being picked. It gives each voter an equal chance of being decisive, but voters do not have equal chances of getting their way—rather, the chance of each option winning is proportional to the number of votes it obtains.

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