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Removing Tyranny from Democracy (Part III), was Democracy is thetrue enemy...



>At 6:16 PM -0400 9/8/97, [email protected] wrote:
>On Sun, 7 Sep 1997, Steve Schear wrote:
>
>> Many, beginning with de Toquivelle, have noted that democracy brings with
>> it the unhappy possibility of a tyranny of the majority.  The reasons for
>> this shortcoming are closely tied to the decision of whom within the
>> democracy receives the franchise and how in a representative democracy
>> officeholders are elected.
>
>I don't think it is so much of the franchise as to the problem of whoever
>the enfranchised are voting themselves largess at the public trough (also
>noting how few of the franchised actually exercise the right today).  If
>no one would consider voting for subsidies, the country is safe.  As soon
>as the first subsidy is passed, a mob will form to lobby for a similar one
>to benefit them.  This will occur even if the enfranchised group is small
>- absolute power corrupts absolutely, even when it is every citizen who
>can wield it, or an oligarchy.

Your mention of oligarchy helps introduce Part III, which like Part I is
excerpted from the Soverign Individual.

--------------------

The conventional way to treating the role of democracy assumes that it
brings violence-using and violence-producing enterprises "increasingly
under the control of their customers. This is certainly the politically
correct conclusion. But is it true?

...democratic governments typically spend only a bare fraction of their
total outlays on the service of protection, which is their core activity.
In the United States, for example, state and local governments spend just
3.5 percent of their total outlays on the provision of police, as well as
courts and prisons. Add military spending, and the fraction of revenues
devoted to protection is still only about 10 percent.

Most democracies run chronic deficits. This is a fiscal policy
characteristic of control by employees. Governments seem notably resistant
to reducing the costs of their operations. An almost universal complaint
about contemporary government worldwide is that political programs, once
established, can be curtailed only with great difficulty.

...you would look in vain for hints of competitive influences on tax rates
according to which government services are priced. Advocates of lower taxes
sometimes have argued that government revenues would actually increase
because rates previously had been set so high that they discouraged
economic activity.  They did not argue that because tax rates in Hong Kong
were only 15 percent, rates in the United States or Germany must be no
higher than 15 percent. To the contrary. Tax debates have normally assumed
that the trade-off facing the taxpayer was not between doing business in
one jurisdiction or doing it in another, but between doing business at
penal rates or taking a holiday. You were told that productive individuals
subject to predatory taxation would walk away from their in-boxes and go
golfing if their tax burdens were not eased.

Customers would scream bloody murder if a telephone company attempted to
charge for calls on the same basis that income taxes are imposed. Suppose
the phone company sent a bill for $50,000 for a call to London, just
because you happened to conclude a deal worth $125,000 during a
conversation. Neither you nor any other customer in his right mind would
pay it. But that is exactly the basis upon which income taxes are assessed
in every democratic welfare state.

Government in many respects appears to be run for the benefit of employees.
For example, government schools in most democratic countries seem to
malfunction chronically and without remedy. If customers truly were in the
driver's seat, they would find it easier to set new policy directions.
Those who pay for democratic government seldom set the terms of government
spending. Instead, government functions as a co-op that is both outside of
proprietary control and operating as a natural monopoly. Prices bear little
relation to costs. The quality of service is generally low compared to that
in private enterprise. Customer grievances are hard to remedy. In short,
mass democracy leads to control of government by its "employees."

But wait...there are many more voters than there are persons on the
government payroll. How could it be possible for employees to dominate
under such conditions? The welfare state emerged to answer exactly this
quandary. Since there were not otherwise enough employees to create a
working majority, increasing numbers of voters were effectively put on the
payroll to receive transfer payments of all kinds. In effect, the
recipients of transfer payments and subsidies became pseudogovernment
employees who were able to dispense with the bother of reporting every day
to work.

When the magnitude of coercive force is more important than the efficient
deployment of resources, as was the case prior to 1989, it is all but
impossible for most governments to be controlled by their customers. When
returns to violence are high and rising, magnitude means more than
efficiency. Larger entities tend to prevail over smaller ones.

How did inefficiency fostered by democracy become a factor in its success
during the Age of Violence? The key to unraveling this apparent paradox
lies in recognizing two points:

1. Success for a sovereignty in the modern period lay not in creating
wealth but in creating a military force capable of deploying overpowering
violence against any other state. Money was needed to do that, but money
itself could not win a battle. The challenge was not to create a system
with the most efficient economy or the most rapid rate of growth, but to
create a system that could extract more resources and channel them into the
military. By its nature, military spending is an area where the financial
returns per se are low or nonexistent.

2. The easiest way to obtain permission to invest funds in activities with
little or no direct financial return, like tax payments, is to ask for
permission from someone other than the person whose money is coveted. One
of the ways that the Dutch were able to purchase Manhattan for twenty-three
dollars' worth of beads is that the particular Indians to whom they made
the offer were not the ones who properly owned it. "Getting to yes," as the
marketing people say, is much easier under those terms.... In fact, we
would be far more persuasive if we could rely instead upon the consent of
several people you do not even know. We could hold an ad hoc election, what
H. L. Mencken described, with less exaggeration than he might have thought,
as "an advanced auction of stolen goods." And to make the example more
realistic, we would agree to share some of the money we collected from you
with these anonymous bystanders in exchange for their support.


Why Customers Could Not Dominate

Those who paid for "protection" during the modern period were not in a
position to successfully deny resources to the sovereign, even acting
collectively, when doing so would simply have exposed them to being
overpowered by other, possibly more hostile states. This was an obvious
consideration during the Cold War. The customers, or taxpayers, who bore a
disproportionate share of the cost of government in the leading Western
industrial states were in no position to refuse to pay hefty taxes. The
result would have been to expose themselves to total confiscation by the
Soviet Union or another aggressive group capable of organizing violence.

Industrialism and Democracy

In 1760, the Polish national army comprised eighteen thousand soldiers.
This was a meager force compared to the armies commanded by rulers of
neighboring Austria, Prussia, and Russia, the least of whom could control a
standing army of 100,000 soldiers. In fact, the Polish national army in
1760 was small even in comparison with other units under arms within
Poland. The combined forces of the Polish nobility were thirty thousand men.

If the Polish king had been able to interact directly with millions of
individual Poles and tax them directly, rather than being limited to
extracting resources indirectly through the contributions of the powerful
Polish magnates, there is little doubt that the Polish central government
would have been in a position to raise far more revenues, and thus pay for
a larger army.

...the military disadvantage of failing to circumvent the wealthy and
powerful in gathering resources was decisive in the Age of Violence. Within
a few years, Poland ceased to exist as an independent country. It was
conquered by invasions from Austria, Prussia, and Russia, three countries
with armies each of which was many times bigger than Poland's small force.
In each of those countries, the rulers had found paths to circumvent the
capacity of the wealthy merchants and the nobility to limit the
commandeering of their resources.

During the Industrial Age prior to (the fall of the Belin Wall), democracy
emerged as the most militarily effective form of government precisely
because democracy made it difficult or impossible to impose effective
limits on the commandeering of resources by the state. Not only did
(citizens) face the aggressive menace of Communist systems, which could
produce large resources for military purposes since the state controlled
the entire economy. But true taxpayer control of government was also
impractical for another reason.

Millions of average citizens cannot work together effectively to protect
their interests. Because the obstacles to their cooperation are high, and
the return to any individual for successfully defending the group's common
interests is minimal, millions of ordinary citizens will not be as
successful in withholding their assets from the government as will smaller
groups with more favorable incentives.

Other things being equal, therefore, you would expect a higher proportion
of total resources to be commandeered by government in a mass democracy
than in an oligarchy, or in a system of fragmented sovereignty where
magnates wielded military power and fielded their own armies, as they did
everywhere in early-modern Europe prior to the eighteenth century.

Thus a crucial though seldom examined reason for the growth of democracy in
the Western world is the relative importance of negotiation costs at a time
when returns to violence were rising. It was always costlier to draw
resources from the few than from the many.

A relatively small, elite group of rich represent a more coherent and
effective body than a large mass of citizens. The small group has stronger
incentives to work together. It will almost inevitably be more effective at
protecting its interests than will a mass group. And even if most members
of the group choose not to cooperate with any common action, a few who are
rich may be capable of deploying enough resources to get the job done.

To summarize, the democratic nation-state succeeded during the past two
centuries for these hidden reasons:

1. There were rising returns to violence that made magnitude of force more
important than efficiency as a governing principle.

2. Incomes rose sufficiently above subsistence that it became possible for
the state to collect large amounts of total resources without having to
negotiate with powerful magnates who were capable of resisting.

3. Democracy proved sufficiently compatible with the operation of free
markets to be conducive to the generation of increasing amounts of wealth.

4. Democracy facilitated domination of government by its "employees,"
thereby assuring that it would be difficult to curtail expenditures,
including military expenditures.

5. Democracy as a decision-rule proved to be an effective antidote to the
ability of the wealthy to act in concert to restrict the nation-state's
ability to tax or otherwise protect their assets from invasion.

Democracy became the militarily winning strategy because it facilitated the
gathering of more resources into the hands of the state. Compared to other
styles of sovereignty that depended for their legitimacy on other
principles, such as the feudal levy, the divine right of kings, corporate
religious duty, or the voluntary contributions of the rich, mass democracy
became militarily the most potent because it was the surest way to gather
resources in an industrial economy.