Does Democracy hurt our Economy? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 7 December 2013
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Does Democracy hurt our Economy? A  A  A

- By Asad Dossani, Author, The Lucrative Derivative Report

Asad Dossani
All of today's rich economies have democratic governments. In fact, it is commonly assumed that democratic governments and economic prosperity go together. But is that the case in India? Is it possible that perhaps our democratic government actually hurts us more than it helps us?

If we compare China and India, we can see a clear effect of the government in the economy. In China, the government is authoritarian and can essentially do what they like without worrying about voters or any opposition. When it comes to supporting the economy, they are very efficient as a result.

For example, if the Chinese government needs to buyout land for a big infrastructure project, they can do this this quickly because the residents can't object. In contrast, whenever the Indian government has to do something like this, there are protests, the opposition gets in the way of the government, and it ends up taking years before anything gets done.

Unfortunately, our democracy is bad for efficiency in the economy. The democratic process gives everyone a say and is more fair and just, but this comes at a price. It means that our economic development is too slow.

Does this mean an authoritarian government is what we need? Not necessarily. Democracy has many benefits like freedom of expression, and individual rights. Instead, we need to find a way to give individuals a say, but also ensure that we have a strong government. We need a strong government that can pursue policies without excessive burdens. And we need a smart regulatory environment to ensure that business can be done efficiently.

Democracy in general doesn't hurt economic progress. As mentioned, all rich countries have democracies so they must be doing something right. But, our democracy in India holds up economic progress and is bad for the economy. Our politicians spend too much time talking and discussing what they would like to do, and too little time actually doing anything. If we want to one day become a rich nation, then this needs to change.

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is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

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5 Responses to "Does Democracy hurt our Economy?"

S.Ranganathan

Dec 9, 2013

Indians tend to interpret democracy as absolute freedom with out the attendant responsibilities. This allows fringe elements - sometimes malicious - to delay or derail progress by using the law. It takes the somewhat uniquely Indian "democratically elected but autocratic leader" to take the flak but somehow make things happen! Thanks to our federal set up,some states throw up such leaders - otherwise even a Hindu growth rate might have proved elusive !

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prashant

Dec 9, 2013

There is said in Marathi that mean if the house get lot of bed bucks, one should not burn the house, rather find solution to get rid of bed bucks, If democratic means are creating hurdles then within democratic frame work find out a solution. The democracy established and nurtured in India should not be disturbed. With rise of AAP on India’s political horizon perhaps indications that change in system would lead the process, Shortcuts of blaming or harming democracy should not be even thought of.

Like (1)

D.C.Misra

Dec 9, 2013

Dear sir,
it is not the fault of democracy, it is due to criminalization of polity. First the politicians toook help of criminals to grab power then such criminals themselves entered politics Discretionary powers were assumed and misused to corner more and more money in the name of party funds. You can see the increase in size of assets of politicians after every successive elections. Tickets are given by the parties only to very wealthy politicians who can donate large funds and then the try to cover their expenses and collect more money for next time thus corruption goes on and on. After entry of AAP we can hope for purging the politics to some extent.

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R.SEETHARAMAN

Dec 9, 2013

I fully agree with the views of Asad Dossani. Our democracy in India holds up economic progress and is bad for the economy. Our politicians spend too much time talking and discussing what they would like to do, and too little time actually doing anything. If we want to one day become a rich nation, then this needs to change.

Like (1)

S.D.Israni

Dec 8, 2013

It is surprising that after heaping praise in favour of Democracy, you have made the following comment, "But, our democracy in India holds up economic progress and is bad for the economy."

Is it the Democracy in India that is holding back the economic progress or is it the weak and meek political leadership that is failing in discharging its duty?

It is like saying that the fire in your kitchen is good for cooking but the fire in my kitchen damages food; if that is so, the fault is not with the fire but with the person handling the fire. Why blame the fire if you don't know how to cook?

So please don't make such an ill informed statement.

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