Which Government Is Best?
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Policy Strategy Economics Nov 1, 2012

Which Gov­ern­ment Is Best?

Democ­ra­cies may not out­last dic­ta­tor­ships, but they adapt better.

Is democracy the best form of government?

bizoo_n

Based on the research of

Daron Acemoglu

Georgy Egorov

Konstantin Sonin

Fidel Cas­tro. Muam­mar Gaddafi. Kim Il Sung. All of these dic­ta­tors remained in pow­er for many years, but that should come as no sur­prise, accord­ing to research by Geor­gy Egorov. Using a dynam­ic polit­i­cal econ­o­my mod­el, he found that bad gov­ern­ments can last just as long as good ones.

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If you look empir­i­cal­ly at what’s in the world, it’s not nec­es­sar­i­ly true that demo­c­ra­t­ic coun­tries have bet­ter gov­ern­ments,” at least when you look at the country’s eco­nom­ic per­for­mance, for exam­ple, says Egorov, an assis­tant pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences at the Kel­logg School of Management. 

A com­mon notion is that a democ­ra­cy should be supe­ri­or to dic­ta­tor­ships because they are able to select the best peo­ple,” Egorov says. How­ev­er, there are both suc­cess­ful dic­ta­tor­ships and unsuc­cess­ful democracies. 

Where bad gov­ern­ments come from and whether democ­ra­cies have an advan­tage over dic­ta­tor­ships are two ques­tions that his­to­ri­ans have grap­pled with through­out recent his​to​ry​.To answer these ques­tions, Egorov, Daron Ace­moglu, a pro­fes­sor at MIT, and Kon­stan­tin Sonin, a pro­fes­sor at the New Eco­nom­ic School in Moscow, used a math­e­mat­i­cal mod­el to describe these dif­fer­ent forms of government. 

Democ­ra­cies dif­fer from dic­ta­tor­ships, they sug­gest, by the amount of influ­ence that the cur­rent gov­ern­ment has on form­ing the next gov­ern­ment. The cur­rent lead­ers in a per­fect democ­ra­cy would have zero influ­ence, where­as an absolute dic­ta­tor­ship would place total con­trol over the deci­sion in one person’s hands. Between these extremes lie imper­fect democ­ra­cies and less strict dictatorships. 

Is Democ­ra­cy the Best Form of Government?

What the researchers found was prob­a­bly not what most peo­ple would expect. It’s not nec­es­sar­i­ly true that more demo­c­ra­t­ic gov­ern­ments are bet­ter at bring­ing in the best peo­ple,” Egorov says. 

Accord­ing to their mod­el, when the con­di­tions in the coun­try do not change over time, dic­ta­tor­ships can last just as long as democ­ra­cies can. This makes sense if you con­sid­er how cur­rent gov­ern­ment offi­cials choose new peo­ple to join them in lead­er­ship positions.

It’s not nec­es­sar­i­ly true that more demo­c­ra­t­ic gov­ern­ments are bet­ter at bring­ing in the best people.”

In prin­ci­ple, if you’re in the gov­ern­ment, there’s no rea­son for you not to select the most com­pe­tent fel­low mem­bers of the gov­ern­ment,” Egorov says. But in a dic­ta­tor­ship, what hap­pens if the peo­ple you select to help you run the coun­try are bet­ter at the job than you are? The coun­try would be run well, but your tenure may not last long. The new offi­cials would have an incen­tive to oust you because you are now the least com­pe­tent leader. There would be a good chance you would not remain in office as a result, Egorov says. 

So if you val­ue being in office or being part of the gov­ern­ment, then prob­a­bly you wouldn’t want to select the best peo­ple into the gov­ern­ment after all. In fact, you have an incen­tive to select worse peo­ple so you’ll be the smartest of them.” That, he says, is how bad gov­ern­ments can persist. 

This log­ic does not apply to a per­fect democ­ra­cy. But when com­par­ing real-world imper­fect democ­ra­cies and dic­ta­tor­ships, there is no pre­dict­ing which will select more com­pe­tent individuals.

Impor­tant Ben­e­fit for Democracies

The researchers did find a selec­tion-relat­ed ben­e­fit to demo­c­ra­t­ic gov­ern­ments, how­ev­er. As it turns out, democ­ra­cies have a real edge in a chang­ing envi­ron­ment,” Egorov says. This is because these gov­ern­ments are more flexible.

By con­trast, if a shock like a war or eco­nom­ic cri­sis hits a coun­try run by a dic­ta­tor, even a gov­ern­ment ini­tial­ly com­posed of com­pe­tent offi­cials may not be flex­i­ble enough to respond well.

To see how this might play out, imag­ine a coun­try of six peo­ple, three of whom are bril­liant gen­er­als and three of whom are eco­nom­ic genius­es. The coun­try goes to war, and the gen­er­als form the gov­ern­ment. In this sce­nario, the gov­ern­ment is effec­tive whether it was formed as a democ­ra­cy or a dic­ta­tor­ship because the best peo­ple to lead dur­ing war are already in place. 

When the war ends and the coun­try slides into an eco­nom­ic reces­sion, how­ev­er, the dif­fer­ences between the two types of gov­ern­ment start to become appar­ent. In a democ­ra­cy, the coun­try could adapt because the eco­nom­ic genius­es could be elect­ed to office. But if the coun­try is a dic­ta­tor­ship, the gen­er­als would still be in pow­er and would be inef­fec­tive in the face of the new cri­sis. In a per­fect world, the gen­er­als would appoint an eco­nom­ic genius to help out with the gov­ern­ment. But in prac­tice, the gen­er­als would fear the genius might replace them with fel­low econ­o­mists, Egorov says. Even though they may not be able to man­age the cri­sis effi­cient­ly, they would refuse to cede pow­er to anoth­er group. 

Here is where we get an unam­bigu­ous pre­dic­tion that the more demo­c­ra­t­ic a coun­try is, the more able it is to fire peo­ple that are no longer com­pe­tent and bring in peo­ple that are need­ed at the moment,” Egorov says. There­fore, the more flex­i­ble the gov­ern­ment is, the bet­ter the outcome. 

When a coun­try is sta­ble, its type of gov­ern­ment does not have as large an impact on its suc­cess. But in a tumul­tuous world, democ­ra­cies are more flex­i­ble and thus more suc­cess­ful, Egorov says. 

The key is elec­tions. Dur­ing crises, peo­ple who are bet­ter suit­ed to solve the prob­lem are more like­ly to be ush­ered into office. Where­as in dic­ta­tor­ships, if you start­ed with a per­son who is very capa­ble and the envi­ron­ment changes, you are pret­ty like­ly to still be stuck with [that per­son] even though they are no longer the one you would want to have in the government.” 

For exam­ple, he says, if big crises were to hit both the Unit­ed States and Chi­na, the Unit­ed States would recov­er more quick­ly because its gov­ern­ment could adapt. In Chi­na, that is less likely. 

Who Is in Pow­er Mat­ters Most

Egorov admits that the qual­i­ty of gov­ern­ment does not only depend on the peo­ple in pow­er; it also depends on the incen­tives they are giv­en for per­form­ing well. At the end of the day, how­ev­er, he and his co-authors decid­ed to focus on the selec­tion of the peo­ple in gov­ern­ment, not account­abil­i­ty. Yes, democ­ra­cies should per­form bet­ter because politi­cians are account­able. In a dic­ta­tor­ship, politi­cians are not account­able to any­one, so they should per­form worse. And yet this is not exact­ly what we see in the world. Account­abil­i­ty alone can­not explain poor­ly per­form­ing democ­ra­cies and, espe­cial­ly, fast-grow­ing dic­ta­tor­ships. In this paper, we show that selec­tion can.” 

But the more impor­tant take­away is that when crises are pos­si­ble, democ­ra­cies per­form the best in the long run, which is what you might expect from look­ing at nine­teenth and twen­ti­eth cen­tu­ry his­to­ry, Egorov says. 

Flex­i­bil­i­ty is real­ly where democ­ra­cies excel. This is not obvi­ous and not what we expect­ed when we started.”

Featured Faculty

Georgy Egorov

Professor of Managerial Economics & Decision Sciences

About the Writer

Leigh Krietsch Boerner is a science and health writer based in Bloomington, Indiana.

About the Research

Acemoglu, Daron, Georgy Egorov, and Konstantin Sonin. 2010. “Political Selection and Persistence of Bad Governments.” Quarterly Journal of Economics. 125(4): 1511-1575.

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