Montag, 12. Juni 2017

What Exactly Is Democracy?

If there is one thing that the West is in agreement about, it is the conviction that democracy is the best and the only acceptable political system. Only when democracy is spread throughout the world can there be the hope of world peace.

Democracy, everyone knows, is the rule of the people. By the majority of the people, that is. The governing are accountable to those who elected them.  But wait! It now looks like the French President Macron will get an absolute majority in parliament with only 32% of the vote! What will the majority of the people say about that?

There is NOT only one form of democracy. The ancient Greeks called it a democracy when people were elected by lottery. When people were elected by electors, they called it aristocracy. In the early days of American democracy, only land owners could vote. Today, in Western countries every one can vote even though the voting ages differ. And what differs most of all are the individual electoral systems. Had the French Presidential voting system been applied in the 2016 American election, Hillary Clinton would now be President.

The majority of the voters don't really care about all that. They think that if they give their vote once every few years, they have fulfilled their democratic duty and whoever gets the majority will win. Nevertheless, I wonder what the other 68% of French voters now think about the fact that Macron has an absolute majority in parliament.

Democracy without active participation of the people is democracy only on paper. The question of how we want to be governed, by what kind of party, electoral or voting system - that is a question which ought to be subject of lively debate all the time. The question of what exactly democracy is (or could/should be) should be a subject in High School.

The late American voice of conservatism William F. Buckley once said: "I am obliged to confess I should sooner live in a society governed by the first two thousand names in the Boston telephone directory than in a society governed by the two thousand faculty members of Harvard University." Both forms could be democracies. They would be democracies if the necessary majority of the people had approved a respective constitution and if that constitution provided for the possibility of changing that system if and when the majority of the people no longer liked it. One person, one vote is an attractive slogan but only seldom does it correspond with reality.

Jeremy Corbyn required 49.000 votes for each parliamentary seat, Theresa May only 43.000. One person, one vote? Yes! But not every vote carried the same weight!

Samstag, 11. März 2017

About Those Animal Spirits...

"A large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities."

John Maynard Keynes (General Theory of Employment)

When, during the post-2008 recovery, the expected recovery never really became a recovery, the star economist Paul Krugman, a biblical follower of Keynes, often proposed that some 'act of irresponsibility' was required, either by the Treasury or by the Fed, to set animal spirits in motion. One of his ideas was that the Treasury should 'mint that coin', the trillion USD coin, to circumvent the debt ceiling.

Since then, Krugman seems to have forgotten all about animal spirits. Instead, he described the improved job situation more or less as 'the outcome of weighted average of quantitative benefits multiplied by quantitative probabilities'. In Krugman's words: "The first few months of job numbers reflect the previous president's policies, not the new ."

If Krugman is right, then consumer confidence must also have a lagging impact, i. e. the confidence was built up by the previous President but it didn't show until the new President arrived. Be that as it may, according to Bloomberg, US consumer confidence is now at its highest level since 2001.

With so many positive news about the US economy, one forgets easily that it could have developed in the opposite direction, as Krugman predicted the day after the election:

But, fortunately, Krugman's then prediction did not (yet) prove correct. Perhaps it never will.

PS: Maybe the election of Donald Trump as President was the 'act of irresponsibility' which Krugman considered so necessary, except that he probably had a different act in mind.