Before Christmas, a reader sent me a pdf with a very thought-provoking article on the ability of technocracies to solve significant problems like climate change (or the Covid pandemic for that matter). The problem with this article is that it challenges some of my own beliefs and thus reading it made me feel quite uneasy at first. So, thanks for nothing (just kidding).
But in all honesty, I write these posts probably as much to shape my own thinking and inform myself as I do for my readers. And my thinking evolves all the time because knowledge and data evolve, and I try to keep up with the general body of knowledge relevant to understand markets, economy, and politics. Unfortunately, it seems that I am a minority in that respect because all too often investors, politicians, as well as the general public stick to outdated and empirically refuted theories and beliefs.
But because I am so much driven by data and academic progress, I tend to fall into the trap to advocate for technocratic governance. Sometimes, I think that we could solve problems like climate change by following an elite of scientists who determine the best cause of action for all of us. To me, democracy frequently looks like an ineffective form of governance because it takes too long to form a consensus or meaningfully change the country in the face of a crisis. Of course, in the extreme, this makes me sound like a socialist (which I am not) arguing that the government or an elite group of scientists knows what is best for everyone. And that is definitely a fool’s errand.
But the other extreme is the position of libertarians and free market liberals who argue that the individual knows best, and the market can solve all problems. This position is a fool’s errand as well.
In fact, my assessment of the efficacy of liberalism/libertarianism, democracy, and socialism/technocracy is: It depends.
In many cases, free markets work extremely well. But there are cases when free markets and a lack of regulation break down completely. Climate change is one such example, because climate change is an externality that creates costs for the entire economy that polluters don’t have to bear. Polluters effectively make profits at the expense of everyone else. Similarly, unregulated banks can make profits at the expense of the whole economy as we have seen in the housing bubbles of the 2000s and the subsequent financial crisis.
Does that mean that we have to take power away from markets and let the government decide what companies and individuals can and cannot do? The failures of free markets have led to a resurgence of left-leaning and outright socialist ideas in the world of politics. The problem with these ideas is that sometimes, they boil down to a minority thinking of themselves as being the enlightened people who know what is best not only for themselves but for everyone else as well. And that is not only undemocratic but also dangerous because the history of regulation and industrial policy as a form of politically guided investments shows that if these centralised policies and regulations fail, the damage for the economy and society can be just as large if not larger than if free markets fail.
So, too much regulation is not a good idea as is too little. Does democracy with its regular elections and constant strive to find the “will of the majority” provide a solution? Strap yourself in, because my answer to this is also: It depends.
Democracy can go horribly wrong if it is defined as simply the sum of the will of the individuals in an election or referendum. Over the last decade, I have been concerned to see democracy defined as: Let’s tally all the votes and whatever or whoever gets the most votes is the will of the people. Remember that throughout history fascist and socialist dictators alike got into power as a result of democratic elections. And over the last couple of years, we have seen leaders like Donald Trump, Jair Bolsonaro or Narendra Modi come to power through democratic elections and then work towards undermining democracy once they assumed office.
Democracy is far more than simple majority rule. Democracy is a process of constant deliberation that leads to compromises that allow the majority to prevail while not suppressing dissent and the rights of minorities. Only if dissent and minority views are respected and reflected in the final policies can democracy persist and can policies be developed that are broadly respected and followed by the people. And only if these compromises are found can we develop policies that are robust to errors. And let’s face it, if we know one thing about politicians, scientists, CEOs, bankers, etc. it is that they all make mistakes. All the time.
To solve climate change then, my preferred solution of a technocracy where we let scientists decide the best course of action is probably not the optimal solution. But neither is a free market economy where the price mechanism is supposed to take care of that problem. And neither are so called “democracies” where we just accept unscientific and disproven views like climate change denial as equivalent to the established scientific consensus and let the people decide in the marketplace of ideas which view is correct. This is not how science works. The only ideas acceptable in a democracy are empirically verified ideas or at least ideas that do not directly contradict scientific or historic evidence.
What we need is a constant process of deliberation and communication where ideas and proposals are checked with data by experts. And once these ideas have been proven to be valid, we can argue about the different choices and the trade-offs we face. In this process of deliberation, compromises can be formed and implemented.
The drawback, of course, is that in a compromise no side gets all it wants. If done right, democracy is frustrating all the people all the time. The moment one side considers itself a “winner” or “loser” we know something has gone horribly wrong and the outcome is undemocratic. And that is unfortunately the problem with our approach to solving problems like climate change or inequality in recent years. We are not looking for workable compromises but for ideological victories.
I personally believe democracy works fine for countries with a population that, whatever differences in opinion they might have, are at least vaguely aware of what needs to be done and are willing to cooperate. Problem is that in times of crisis and associated insecurity that is exactly what comes under fire.
People fall into rabbit holes of blatantly stupid grand ideas about the world to impose an artificial but mentally soothing order onto a fundamentally chaotic situation. Couple this with a desire for a "strong leader" in such times of crisis and you have the ingredients for a democratic system to eat itself. (Of course none of this is new and all(?) modern democracies have some kind of non-democratic power base as a check on democratic ouroborosing)
Climate change seems a particularly difficult subject for democracies to deal with because it is such a long term and abstract (until it's too late!) problem, while politicians have to get elected on immediate and "felt" issues. But, beyond what you already said, scientists are not infallible nor do they even agree amongst themselves about what should be done or even what the data is telling us.
As the kind of mix between democracy and technocracy you seem to propose it might be time to introduce a fourth branch of government; let's call it the empirical branch. Much like the judicial system checks the legality of law this branch could check its scientific validity (as much as that can be said with certainty anyway). With the accepted caveat that just as a legal law can be bad a "scientifically valid" law could also still be awful. Hopefully such direct "scientific" involvement would also lead to less of an ivory tower feeling towards the scientific community and perhaps lead to more interest in what science actually *is*. There are of course a million potential pitfalls here and I have no idea what the specifics would look like yet.
Hi. Would love to know your thoughts on what made you conclude that India's Narendra Modi has worked towards undermining democracy.