How Democracy Can Trap Us

The overthrow of Egypt’s democratically elected leader – he received a majority of votes, which is more than can be said for most western governments – has left the doctrine of democracy in a mess. Tyrants are gleeful. Now is the time to define the authentic conditions under which a democracy can flourish. That must begin with a radical departure from the statecraft of greed that underpins western politics.

There is no alternative formula to the process of politics that is called democracy. But when the political elites are perverted by self-interest, the notion of rule by democratic process is discredited. The correct response is not to make space for authoritarianism, but to question the terms under which the malfunctioning democracy has operated.

The crippling deficiencies in the decision-making systems employed in Europe and North America tell us that there is a structural flaw that continues to cause chaos. So the problems are not with democracy per se, but with the underlying rules that pervert the outcomes.

We have sufficient historical evidence, backed by scientific reasoning, to identify the weakness in the system. It goes back to property rights, and the way these misalign the distribution of income. In essence, the property rights in land allow a minority to enrich themselves without adding to the wealth of their communities. This, in turn, results in government by taxation. Those taxes damage people’s wealth and welfare, and no amount of democratic process can lead to justice while those property rights remain in place.

Fear in the Voting System

In a democracy, politicians achieve power by seeking popular support. They know that to offend the people is to risk votes. So the trap is this. If a significant section of the community lives by extracting the rents created by other people, they will resist change. So politicians will avoid the remedial policies that could re-structure the social system.

Historically, the realignment of a nation’s rents has been possible only under conditions of crisis (Denmark’s introduction of the Land Tax early in the 20th century was an exception). In Britain, the Liberal Party tried to effect the fiscal reform a century ago, but the country was not ruled by an authentic democracy.

The world is in crisis today. Could this be the occasion for change? It reduces to a numbers game, and the signs are good for Britain’s Liberals. The chances are that neither the Conservative nor the Labour Party will secure a majority in the 2015 general election. So the Liberals will once again be courted to form a coalition government. If they go into the election with land-and-tax reform in their manifesto, they will lose votes but will still have enough MPs to hold the balance of power. If they have campaigned on a programme of financial reform, they will have the moral right to insist that the coalition government should adopt their policy. By this means, the Parliament that did more than any other assembly to implant the statecraft of greed on the other four continents would become a beacon of hope.

Democracy needs to be rehabilitated if people in countries like Egypt are to place their trust in this system of governance. That can only be achieved if the politicians are able to deliver good results. And the price for doing so is a radical reform of the tax system. Otherwise, democracy remains an illusion, trapping everyone in a not-so-merry-go-round.

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