chapter9_cq--LV

chapter9_cq--LV - Principles of Comparative Politics...

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Chapter 9: Does Democracy Make a Difference? Principles of Comparative  Politics
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Does Democracy Make a  Difference? Does democracy make a material difference in people’s lives? Do economies grow faster in democracies? Do people live longer in democracies? Are they healthier? Are the wealthier?
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Economic Growth Do democratic governments promote higher levels of economic growth? Theoretical arguments linking regime type to growth focus on 1. Protection of property rights. 2. Citizens’ incentives to consume rather than invest. 3. Dictatorial autonomy.
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Property Rights Story “Democracies have higher economic growth because they are characterized by the rule of law and the protection of property rights.” Democracy Rule of law Stable property rights Investment Growth
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Property Rights Story Empirical evidence is weak. Barro (2000) finds that rule of law is linked to economic growth. BUT democracy is not linked to rule of law. Barro concludes that “the electoral rights index (democracy) has no predictive content for the rule of law index” and, therefore, that encouraging democracy on the grounds that it will lead to economic growth “sounds pleasant, but is simply false.”
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Property Rights Story Why might democracies fail to protect property rights? Meltzer-Richards Model. Everyone pays a portion of their income t in tax. The government then divides the tax revenue equally among all members of society. Anyone with above-average income is a net contributor to the tax system and anyone with below-average income is a net beneficiary. Net beneficiaries prefer high taxes, and net contributors prefer low taxes.
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Property Rights Story What’s this got to do with democracy? Democracies tend to represent the interests of a wider portion of society than dictatorships. Poor people tend to have greater representation in democracies. If we assume that dictatorships make tax policy to benefit the rich and democracies make tax policy to benefit the poor, then a change from dictatorship to democracy will lead to higher taxes and a redistribution of wealth from the rich to the poor. Given the high tax rates in democracies, the rich are less likely to invest and so economic growth will slow.
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Property Rights Story Two potential criticisms of the Meltzer-Richard model. 1. Poor people are less likely to vote than rich people. 1. Structural dependence of the state on capital.
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Property Rights Story These criticisms suggest that democracies may not be as bad for investment and growth as the Meltzer-Richard model would suggest.
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Consumption vs. Investment Claim: Democracy encourages workers to immediately consume their assets rather than invest them. The intuition is that the poor cannot afford to direct their assets away
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chapter9_cq--LV - Principles of Comparative Politics...

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