School teachers are always quick to prompt impressionable young minds that popularity and righteousness are not necessarily interchangeable. However, as adults, we know that we live in a liberal democratic society where the popular course of action is deemed to be the correct one. The saying for children, “What is popular is not always rights, and what is right is not always popular,” does not seem to apply in Washington. The US$ 700 billion dollar bailout of the American financial industry is the perfect example of the endemic flaws of modern democracy.
For sometime, it has been well known that a government-sponsored consumption of bad mortgage-related debt is absolutely essential to the resuscitation of the American economy. In the original two-page draft of the legislation, exclusive power was vested in Secretary Paulson to organise and administer the bailout. However, vesting hundreds of billions of dollars worth of power into one individual was not palatable to representatives. They wanted their share of the power and have drafted an increasingly bureaucratised piece of legislation that lacks the flexibility of the first iteration to deal with the rapidly evolving situation.
Logical individuals may ask why Congress has insisted upon burdensome regulation on what should be a nimble and adaptable corporate activity. The simple answer is that as democratically-elected individuals, members of Congress are shackled by the two-year election cycle. They are unable to make decisions in the long-term, such as bailout of the financial sector which will translate into greater economic stability. Instead, they must pander to their power base to ensure their re-election. It is unfortunate that the current financial crisis occurred within six weeks of the American election. Members of Congress could not be seen making such a far-sighted decision, like the bailout, without implementing certain regulations to make them popular with voters, such as limiting executive remuneration of bailed-out companies.
This strikes at the root of the great flaw of democracy. Followers of democracy present it as universal – the answers to all of the world’s problems. From Iraq to Washington, Canberra to Moscow, democracy appears to be the unanimous formula and criticism of it is often marked as ignorant or despotic. However, democracy is not appropriate to all people, it is merely suitable to the majority of people. It is obvious that democracy could never further the interest of indigenous or minority people, and the tyranny of the masses is evident through the apparently-illustrious rise of liberal democracy.
In Australia, it is obvious that democracy doesn’t even function correctly for the majority of citizens. In fact, only marginal voters in marginal electorates, such as the suburbs of Adelaide, where many great pork-barrel projects are located, are the beneficiaries of political largess. Democratic decision making is not about creating viable long-term systems beneficial to the majority of people; it is about creating legislation to sway marginal voters to ensure that government survive through the next election.
I doubt the final bailout package will be successful because it is the by-product of the convoluted and inefficient democratic process. If we were truly concerned for the future, as we should be in an era of climate change and great economic instability, we would elect leaders for life (or a fixed retirement age to prevent a Parliament filled with geriatrics). Alternatively, like the ancient Romans, voting could be a privilege not a right. Instead of military service, voters would be required to pass a citizenship test, as immigrants must, that rigorously tests their knowledge of the operations of the complex institution that is democracy. This way, citizens would know the impact of their vote and, hopefully, make decisions more appropriate to broad social and temporal considerations. Either way, we would have a form of government that privileges long-term projects with broad benefits rather than short-term fixes for endemic problems.
Aron Ping D’Souza is a doctoral candidate in the University of Melbourne. He specialises in a form of statistical arbitrage known as Jurisprudential Forecasting.
The post A Faltering Bailout and the Case against Democracy appeared first on Daily Rant Online.
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