Tuesday, January 10, 2006

Why democracy doesn't work

There seems to be this idea that democracy perfectly represents exactly what the people want.

This is absurd. It assumes that by voting, people will choose what is best for everyone. However, just as a dictatorship fails as one selfish person makes decisions for everyone, democracy fails as millions of selfish people try to compete for carrots. Elections are nothing but an exercise in rent-seeking: this goes beyond campaign finance.

A second point is it assumes is that people know what's best for them. Now, this is a key point in libertarianism: and it is why pure democracy and pure free markets aren't the optimal solution. A situation can be improved with a slight change, some chocolate sprinkles to make it all better. Many reforms were done without a democratic mandate. With pure direct democracy, nothing would ever get done.

You can write a book on the number of market failures. You can't write a book on the number of Government failures, however: there are far too many. Democracy needs a sliver of dictatorship, libertarianism needs a sliver of authoritarianism, to really work. By sacrificing something minor, you can remove a major problem.

For instance, in the case of libertarianism, there's a big problem in the people who don't know what is best for them. These are the people, who given too much freedom, will destroy themselves and their families. So how can you solve this? By a blatantly non-libertarian method: central planning. Create a country from scratch that has high immigration requirements to ensure minimal damage from people who can't sustain the freedom. Why should potentially 99% of the population have all their freedoms restricted by the 1% who can't handle it? It's definitely unfair.

By adding a touch of the opposite extreme, you can vastly improve outcomes. Limit the power of the people sufficiently so they don't smother us, limit the power of the one so that person doesn't smother us.


Anonymous James said...

I defy you to produce one example of a "market failure".;-)

11:49 AM  
Blogger Nichlemn said...

Regulation of externalities. If I have a choice between a highly polluting power plant that nets me a profit of 100X but has a net cost in pollution of 50X, but I do not bear these costs, I'm not paying the true cost. I might have an alternative energy source that gives me a net profit of 75X and has a net cost in pollution of less than 1X, it's technically the better choice for society as a whole, but the worse choice for me. By taxing the first choice, the producer pays the full costs and will be encouraged to switch the one of the most net benefit.

Note that solving every externality is certainly impractical, due to government inefficiencies and the like - only when the benefit is considerably higher than any possible government failures resulting from it.

For me, the definition of market failure is basically exclusive to externalities, which are actually quite broad in scope.

1:17 PM  
Anonymous James said...

Actually the market as a natural process can't fail.It just is.See nature as an example of this.When a tree gets diseased and rots and dies we don't claim that this is a "failure of nature", quiet the reverse, this is nature working as it should.The market,being a natural process works the same way.

10:55 AM  
Blogger Genius said...

haha nothing fails.
Sometimes the world goes to crap but it does it entirely on purpose!

9:43 PM  

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