Does Democracy hurt our Economy?
7 DECEMBER 2013
- By Asad Dossani, Author, The Lucrative Derivative Report
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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