2010-10-10

Is This a Joke?

Becker and Posner discuss which form of government is more conducive to economic growth: democracy or autocracy. Here's Becker:
Whether on average democracies are more conducive than autocracies to economic growth is far from well established. What is clearer is that democracies produce less variable results: not as many great successes, but also fewer prolonged disasters. Since the bad outcomes tend to produce more damage than the good ones, less variable outcomes would be an attractive feature of democracies compared to autocracies, even if democracies on average did not produce greater economic growth.
 And here's Posner (emphasis mine):
In general, then, the simpler the economy (all-out low-tech war is the limiting case: there is only one demander, and for a limited range of goods and services, thus making supply simple), the more adaptive a dictatorial political system; the more complex the economy, the more adaptive democracy is. A dictatorship is apt to limit information flows and business autonomy, and by doing so to reduce flexibility and innovation, fearing the private sector as a potential power rival to the dictator. At the same time, the dictatorship wants the population to be content, for then it is more easily controlled. The competing aims of limiting private freedoms and producing contentment may lead the dictator to relax control over the economy as increasing complexity makes a command and control economy increasingly inefficient. As that happens and people become wealthier, they also become more self-confident and assertive, creating pressure for self-government and therefore democracy.
Dictatorship will often by optimal for very poor countries. Such countries tend not only to have simple economies but also to lack the cultural and institutional preconditions to democracy. Dictatorship is much less likely to be optimal for advanced economies. This pattern seems to be broadly observed. 
I suppose we should laud Becker and Posner for being so "objective" about autocracy. Get it? They give autocracy a "fair chance," and conclude that autocracy produces better economic results in some cases.

But the discussion itself is disingenuous. It is not the autocracy or the democracy that determined economic success. Rather, it is the absence of government interference in the economy. Becker and Posner make the point that, provided a dictator is willing to do it, he has an easier time gutting the bureaucracy and letting people alone.

But what kind of nonsense is this? Autocracies are singlehandedly responsible for enacting China's barriers to trade in the first place. The kings, rajahs, mercantilists, etc. are now in the unique position of being praised for their ability to remove their own obstacles.

Here's a thought for Becker and Posner to consider: How much more efficient had the autocracies never existed in the first place?