May 16

Does democracy cause fiscal irresponsibility?

Written by: Nimrod | Filed under:General | 126 Comments » newest

Let’s begin with some maps:

This is the public debt as a percentage of GDP around the world. It was posted by somebody earlier.

The Economist has constructed a 10-point scale “Democracy Index”, where the larger the number, the higher the degree of “democracy”. Lighter colors are more democratic.

In a previous post, a discussion was opened on whether democracy scales. I argued that a direct, large-scale multi-party electoral democracy gave adverse incentives for irresponsible fiscal decisions. I put forth an argument that the electoral process devolved responsibility to people who could not make them well, and to such a degree that a bad outcome was assured. Is there something to this? Let’s see.
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