‘Strongman trades trump democratic deficits’: why are illiberal democrats popular?


Poland’s tightening grip on its judiciary has prompted nationwide protests and threats of European sanctions, but its asset prices and currency have soared this year as they have in plenty of other places where democracy has been eroded, Reuters reports:

The nationalist government in Warsaw may have angered European allies and sparked demonstrations with bills empowering it to hire and fire top judges but investors reckon the strong economy outweighs the risks. The zloty and cost of insuring exposure to Polish investments barely budged and Polish stocks and bonds are among this year’s top performers, with dollar-based returns of 38 percent and 15 percent respectively. Returns have been strong across emerging markets this year, but the list of top performers is peppered with countries where leaders are strengthening their hold on power. Turkish and Chinese stocks jumped more than 33 percent, while Egyptian and Turkish dollar-bonds have returned more than 10 percent, showing that markets love the economic benefits and certainty that strongman politics can deliver.

“Providing governments are responsible fiscally they can get away with a lot of undemocratic measures,” said Renaissance Capital global chief economist Charles Robertson. “They can pretty much do what they want to their own country,” he added. “At least on a one-year horizon.”

But investors who think that can enjoy the fruits of illiberal government and get out before trouble emerges, are fooling themselves, argues analyst David Rosenberg.

Control over traditional media, like television, radio and newspapers, is of course one reason why these regimes maintain their electoral majorities. But manipulation, or even outright control, of the media cannot explain the enduring popularity of illiberal leaders, argues Daniel Gros, Director of the Brussels-based Center for European Policy Studies.

“The key reason for these leaders’ political success is that these regimes, despite positioning themselves as anti-Western, have followed the so-called Washington Consensus, which prescribes prudent macroeconomic policies and open market,” he writes for Project Syndicate. “They have resisted the temptation to use short-term fiscal or monetary stimulus to increase their popularity, relying instead on identity politics to maintain electoral dominance. The longer-run result has been relatively solid economic performance – and relatively satisfied voters.”

Shortly after the invasion of Iraq, Condoleezza Rice met her European counterparts in Berlin. They told her she was too wide-eyed about prospects for democracy in Afghanistan and Iraq. This annoyed Rice, The FT’s Edward Luce notes in a review of her book, Democracy: Stories from the Long Road to Freedom:

She writes: “I’d rather be naive than cynical, I had thought to myself...Returning to my hotel, I felt so American with a kind of optimism about the rightness of democracy for everyone, everywhere, at all times.” …. Rice’s Stanford colleagues, Larry Diamond and Francis Fukuyama [both associates of the National Endowment for Democracy, the Washington-based democracy assistance group], have each written elsewhere about the world’s “democratic recession”. There are 25 fewer democracies today than there were when the Bush administration took office.

“But the greater worry is the health of western democracy itself,” adds Luce, author of The Retreat of Western Liberalism. RTWT

Democratic resilience in a populist age demands that citizens do more than bemoan deficiencies and passively await constitutional reform. It requires openness to change and innovation, according to Helmut K. Anheier, President and Professor of Sociology at the Herthis School of Governance.

One can find powerful examples of democratic resilience in Central and Eastern Europe, which is also home to brazenly populist regimes, not least in Hungary and Poland…[where] mass protests have traditionally been a weapon of last resort, he writes:

Beyond protests, another way to improve democratic resilience is to equip political institutions with internal safeguards. …These mechanisms can take different forms, depending on the country. Some actions are appropriately initiated by governments “from above,” in response to pleas by political movements and civil-society groups. Other actions are taken by citizens “from below,” to give a voice to excluded groups, improve access to voting, and strengthen democratic processes.

The disconnect between widespread political dysfunction and relatively strong economic and financial-market performance is a cause for concern to Michael Spence, a Nobel laureate in economics and Professor of Economics at NYU’s Stern School of Business.

“In the current context, the cumulative effect of rising geopolitical tensions, loss of trust, and disrespect for key institutions could produce either a large shock or just deteriorating conditions for investment,” he writes. “But it is harder to construct concrete scenarios than it is to ignore the potential risks we face.”

Yet, on the plus side……

The inequality of opportunity and outcomes that have fueled popular discontent and political polarization are very real, and, after years of neglect, they are finally getting the attention they deserve. More concerted attention to social cohesion will not bring quick results. But, over time, it can help to reduce partisan intensity, refocus citizens’ attention on their common values, and restore their leaders’ capacity to deliberate responsibly and implement policy.


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