Democracy Is The Emperor's New Clothes

I remember this essay by economist Steven N.S. Cheung originally in Next Magazine (Hong Kong).  I see that it has been posted at the Yannan BBS forum and causing some unease.  This essay is interesting to the extent that it is typically blunt and unorthodox for Cheung.

What do I include this here?  Not because I am in 100% agreement with the man.  Actually, most of the time, I don't.  The major reason is that I want to introduce voices that are not obviously on one side or the other, as the politically-themed blogosphere seemed to be aligned.  People should NOT be forced to make a dichotomous choice: either you wave the patriotic flag to support all decisions by the Chinese Communist Party Politburo or you insist on universal suffrage as the sole criterion for policy actions.  Cheung has some other ideas, such as the consideration of a Bill of Rights to protect the rights of socially vulnerable minorities who would be crushed under a majority-only-counts voting system.  For example, minority issues in Hong Kong such as gay rights, domestic helper wages, and so on are likely to be crushed under a majority-only-counts voting system in the present social climate.

The following is not a full nor accurate translation (as I am unable to track down Cheung's original English-language essay).

In 1998, I had published an English-language essay.  Actually, I did not really wrote it.  In July 1997, as the president of the American Economic Association (Western Region), I organized a session on the subject of the reform of Communist systems.  I was acting as the commentator for three younger speakers.

The three speakers spoke eloquently about democratic reforms based upon voting by the people, and so on.  I was hopping mad as I listened.  Afterwards, I spent twenty minutes scolding them in the session.  The audience in the auditorium was stunned.  This impromptu speech was recorded and the editor of a journal transcribed it and then asked for my permission to publish.  I edited it somewhat and it was published in the journal.  The editor made up an odd-sounding title for it, something like democracy being the curse of reforming Communist economies.

My viewpoint is quite clear and precise.  If I ask the economic scholars whether democracy is good or not, the majority will say, "Yes, yes, yes."  If I ask them if voting is good or not, most of them won't dare to respond.  But if voting is not democracy, then can anyone tell me what democracy is?  How can we introduce reform with something that he don't even know?

If systems are classified based upon rights, then there are three known paths: Rights that are defined by class (Communist systems); rights that are defined by administrative regulations (India); and rights that are defined by capital (private property rights).  Everybody agrees that the reform of the Communist systems is to make a transition from class-based systems to capital-based systems.  Will voting get you there?  This is sheer fantasy and insanity.  People will always vote out of self-interest.  It does not matter what you say, there are many politicians who say that they are self-sacrificing on behalf of the people but I have never met one who actually does that.  Reform by voting can only achieve rights by administrative regulations.

When the three speakers heard what I said, two of them looked quite glum but the third one got up and said that he got it totally wrong.  Afterwards, I told this young professor that it extremely difficult to make the transition from one rights-based system to another one.  Those groups with vested interest in the existing system is bound to oppose, and the voting will be based upon multiple special interest groups leading to a chaotic mess.  Dictatorship has its own problems, but at least the transaction costs are low.  If the bet is between reform by voting versus reform by dictatorship, the choice is not difficult to make.  This is not to say the reform by dictatorship will definitely succeed, but reform by voting is guaranteed to fail.  I then offered the examples of the Eastern European countries in which every one had made the serious error of reform by voting.

The fuzzy notion of democracy was despised by scholars prior to the seventeenth century.  In the eighteenth century, Presidents Washington and Jefferson of the United States had the wisdom to reverse the case for 'democracy' leading to most people being fuzzily convinced that democracy is sacrosanct.  Washington and Jefferson are great persons, but I doubt that they knew what they were actually doing.  I say this because the Bill of Rights was added two years after the American Constitution was written.  The Bill of Rights had already existed in the state constitutions, but the federal constitution ignored it at first.  It was the Bill of Rights that was appended later that gave the democratic system its ultimate glory in the United States.  The system was based upon protecting individual rights so that votes cannot be cast irrationally, and this guarantees that your money won't end up in my pocket.  Nevertheless, systems such as price control, rent control and social welfare were all against what we consider to be the definition of private property today.  But the success of the American Constitution has turned the term democracy to be sacrosanct and its opponents dare not speak up aloud.

In Chinese, the translation of democracy is 民主 (leadership by the people).  Is that the correct translation?  Heaven knows.  This is a fuzzy concept, so there is no right or wrong.  A family of four goes to see a movie together.  The father wants to see movie A, but the daughter wants to see movie B.  The father gets angry and the daughter succumbs -- that is called dictatorship.  The father relents and asks the family to vote; he finds himself in the minority and he goes to watch a movie that he sleeps all the way through -- that is called democracy.

Do you understand?  Not necessarily.  More than twenty years ago, I served as the Chair Lecturer as well as Department Chairman at Hong Kong University.  I was quite busy, but I had difficulty finding a parking space at the university when I drove there to work.  I asked the university to rent a car parking space for me so that I won't have to queue.  The university rejected my request.  When I complained to an instructor in the Department of Economics, he said, "I can't believe how democratic Hong Kong University is!"  I reined in my anger and said in a calm voice: "The university may be democratic but I am dictatorial.  I told the chancellor that unless I get a raise of HK$10,000 in order to hire a chauffeur, I'll quit.  So he gave me a raise.  For a problem that could be solved by giving me HK$1,000, society ended up wasting HK$10,000."


If you say that democracy is something other than voting, then I will most likely not object.  But if you say that democracy is about universal suffrage, I get a splitting headache.  Other than examples such the one about the family going to a movie, there are plenty of instances in which voting will only strip away the rights of minorities and act against the market conditions.  The Bill of Rights in the American Constitution was designed to resolve the conflict between the two.  But if there are so many problems even in the United States, then how is any other country supposed to have their democracy via voting?

I am not a courageous person.  I have been in academia for several decades, and I won't dare say anything that I don't believe.  Other than voting, I have no idea what democracy is.  I can neither object nor support something that I don't know.  All the people today who raise the banner of democracy speak of the popular vote without being concerned about how to write the laws for rights and they do not seem to be opposed to the market.  Could it be that they do not see the emperor's new clothes that I see?