“Sovereign Debt is One of Democracy’s Weak Points”
April 8, 2015 | by BTI Blog
Political scientist Stefan Wurster speaks about the shortcomings of democracy and why it nonetheless remains a successful model to meet the challenges of the future.
BTI Blog: Responding to signals of democratic decline, the Club de Madrid has launched the Next Generation Democracy project with the goal of enabling democracy to better meet the challenges of the present and the future, like the financial crisis or climate change. How well does democracy perform in terms of future-readiness compared to other forms of government?
Stefan Wurster: After the collapse of the Eastern Bloc, many believed we would see democracy spread and become the predominant social system, but it turned out that they were wrong. Instead, we saw the emergence of hybrid regimes uniting both democratic and autocratic elements as well as a number of remarkably stable autocracies that have performed quite well in certain areas of policy. In principle, democracy remains a successful model, but whether or not it can deliver better results than its competitors, hybrid or autocratic regimes, depends on a number of different factors. One of the major contributions of the Next Generation Democracy project lies in offering a nuanced assessment that considers three different dimensions – Values and Institutions, Access and Inclusiveness, and Management and Policies – in terms of their political, economic and environmental implications.
BTI Blog: What are the biggest shortcomings of democracies in terms of future-readiness?
Stefan Wurster: Policymaking used to be geared primarily toward solving problems in the here-and-now. Democracy is the best form of government for that because it aims to address the needs of the majority of the current populace. The problem is that we are increasingly dealing with issues that not only affect us directly today, but impinge on the ability of future generations to act as well. Climate change is an example that comes to mind immediately, but reconciling the interests of current and future generations is also of key importance when it comes to other issues such as government debt.
However, motivating the majority of the population to take the interests of future generations into account in the decisions they make today is a considerable practical and normative challenge. If we look at the level of national and foreign debt in countries around the world, for example, democracies perform no better overall than nations with other forms of government. The reason is simply that voters fall into a trap often referred to as ‘the fiscal illusion,’ meaning they tend to focus on the short-term gain of pubic-sector spending and give less weight to the long-term costs of government commitments such as expensive social welfare programs. Short electoral cycles exacerbate the problem, since policymakers aiming to be re-elected within the next few years tend to take a short-term view as well.
BTI Blog: So what does democracy have going for it?
Stefan Wurster: There are enormous problems inherent in autocracy, of course. While it is possible to ignore the interests of future generations in a democracy, autocratic systems can disregard both the interests of future generations and those of the majority of today’s population. But it’s not just a question of democracy vs. autocracy. Aspects such as governments’ capacity to act, rule of law, and questions relating to states’ stability and the reliability of their legal and institutional frameworks also play an important role, and the Next Generation Democracy project consequently takes these into consideration as well. Its analysis shows that mature democracies score better in many policy areas, especially when an identifiable immediate gain as well as future benefits are involved. Democracies offer clear advantages when it comes to education, for example, benefitting both the current population and generations to come.
BTI Blog: How can democracies improve their ability to meet the challenges of the future?
Stefan Wurster: Democracies need to establish institutions or incorporate other elements in their political processes (such as an ombudsman system, for example) that serve to ensure that the interests of future generations and the long-term impact of political decisions are adequately taken into consideration. One possible approach is including what are known as ‘sunset legislation’ requiring the reauthorization of particular agencies, benefits, or laws based on regular assessments of their effectiveness. Another possibility is delinking certain areas from the direct democratic decision-making process. This is already the case with monetary policy, for instance. Here, an entire area of policy has been taken out of the hands of elected political representatives and delegated to central banks with the aim of achieving a certain policy goal—in this case, price stability. The problem with this approach, of course, is that sustainable development touches on many different areas and this route can’t be taken too often without limiting the scope for democratic decisions to an unacceptable degree.
BTI Blog: Are there best-practice examples for sustainable development strategies?
Stefan Wurster: A number of democracies, such as the Scandinavian countries, the Czech Republic and New Zealand, have introduced a wide range of policy instruments to foster sustainable development and instituted means of regularly assessing how effectively they are implemented. Local Agenda 21 was drawn up at the Earth Summit in Rio de Janeiro in 1992 in order to promote sustainable development at the community level. The opportunities for people to get involved and influence political processes directly are much greater at the local level. Democracies allow for political participation and civic engagement, which are essential to shaping policies that can successfully meet the challenges of the future over the long term.
BTI Blog: What would you say are the biggest challenges facing democracy over the next 15 years?
Stefan Wurster: Sovereign debt is undoubtedly one of democracy’s weak points. In Greece we’re seeing what can happen when the consequences of fiscal policy can no longer be deferred to some indeterminate time in the future and today’s citizens have to bear the brunt. Time will tell whether democracies are able to offer better solutions to these problems than autocratic governments.
Another major challenge is the issue of demographic change and aging societies. As the average age of voters rises and their average remaining lifetime becomes shorter, they may be more willing to shift a greater burden onto future generations. In this light, it is probably no coincidence that we are seeing significant numbers of older citizens participating in protests against the railway and urban development project Stuttgart 21 and other large-scale projects that impose substantial costs today, while their potential benefits won’t take effect until years or even decades from now. On the other hand, aging societies can tap into extensive pools of knowledge and potential, so they have the fundamental capacity to shape and implement policies that can promote sustainable development.
BTI Blog: According to democracy indices like the Bertelsmann Stiftung’s Transformation Index, there has been a significant decline in the quality of democracy around the world over the past decade. Do you expect this trend to continue over the next 15 years?
Stefan Wurster: It is unlikely that we will see big waves of democratization on the scale of those we witnessed after the collapse of the Eastern Bloc or in Latin America and Southern Europe in the 1970s. We can expect to see different processes and developments emerging and playing out in various ways in different countries and regions of the world, just as we do now. Democracy is facing serious competition from other models that appear to be delivering good results, at least in some areas. Notable examples are China, and to some extent, Russia. While I don’t believe this trend will lead to an overall increase in authoritarian regimes, some autocratic systems are so stable that they will undoubtedly persist for many years to come. With the exception of Tunisia, the hopes the Arab Spring sparked in this respect were not fulfilled; instead we have seen the emergence of an increasing number of hybrid regimes. If I were to venture a prediction as to what trend we are likely to see over the next 15 years, I would say that the number of hybrid regimes will probably continue to grow.
Dr. Stefan Wurster is political scientist at Ruprecht-Karls-University Heidelberg. His research topics are sustainable development, comparative public policy, democracy and autocracy.
Translation from German by Douglas Fox