Lecture+12+October+28

Lecture+12+October+28 - Today in Comparative Politics...

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Today in Comparative Politics Democracy: What difference does it make?
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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 or 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 Protection of property rights Citizens’ incentives to consume rather than invest Dictatorial autonomy
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Property rights claim Democracies have higher economic growth because they are characterized by the rule of law and the protection of property rights. Empirical evidence is weak. Barro finds that rule of law is linked to economic growth. BUT democracy is not linked to rule of law. Barro writes that encouraging democracy on the grounds that it will lead to economic growth “sounds pleasant, but is simply false.” X
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Property Rights Story Why might democracies fail to protect property rights? Meltzer-Richards model Everyone pays a proportion of income t in tax. Government divides tax revenue equally. 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 Net contributors prefer low taxes.
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Low productivity workers don’t work. Average productivity
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What’s this got to do with democracy? Democracies tend to represent interests of a wider portion of society than dictatorships. Poor likely to have greater representation in democracies. Assume that dictatorships make tax policy to benefit the rich and democracies make tax policy to benefit the poor. Change from dictatorship to democracy will lead to higher taxes and a redistribution of wealth from the rich to the poor. Given high tax rates in democracies, rich less likely to invest. Economic growth slows.
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Two potential criticisms of Meltzer-Richard model Poor less likely to vote than rich Thus, tax rates in a democracy may not be that much higher than in a dictatorship. Given the fiscal needs of the state, it may be dependent on capitalists whatever the political system. Thus there may be a tradeoff between growth and equality Thus democracies may not be as bad for investment and growth as the Meltzer-Richard model suggests.
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Consumption vs. Investment Claim: Democracy encourages workers to consume their incomes rather than invest them. Intuition: poor cannot afford to direct their assets away from immediate consumption Need to eat and pay rent today. Since workers get to vote in a democracy, they encourage
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This note was uploaded on 11/10/2011 for the course POLI SCI 790:103 taught by Professor Blair during the Fall '09 term at Rutgers.

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Lecture+12+October+28 - Today in Comparative Politics...

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