Democracy Improves Lives In China - And Here, Too

Democracy properly applied brings widespread prosperity because when people have a say what they say is give everyone good wages, benefits and a share of the pie. They say reinvest some of the profits in infrastructure and education to keep the good times rolling. Last but not least they demand equal enforcement of the rule of law. Undercut those things and what you get is ... well, you get what we see happening all around us today...

Democracy Improves Lives

Here is a surprise that isn't a surprise in the WSJ today: Democracy Improves Lives of People in China [1],

A little bit of democracy has gone a long way to improving people’s lives in China.

Such is the conclusion arrived at by four economists who recently published the results of an investigation into the economic effects of China’s village elections.

Studying elections from 1982 through 2005, the quartet found villages that elected their leaders spent 27% more, on average, on “public goods” such as schools, tree plantings and irrigation canals than villages that didn’t hold elections. Elected officials also helped vastly reduce the gap between rich and poor.

Why the gains? Largely because elected leaders pay attention to their constituents as a way to assure their re-election. “The increase in leader incentives is an important driver” of change, write Monica Martinez-Bravo of Johns Hopkins University, Gerard Padro i Miquel of the London School of Economics, Nancy Qian of Yale University and Yang Yao of Peking University, in a National Bureau of Economic Research paper. [emphasis added, in order to add emphasis]

Prosperity Is Fruit Of Democracy

This is not a surprise. When people have a say, they say they want better. And when We, the People are were in charge, we got it. Because Americans had a say we built up a country with good schools, good infrastructure, good courts, and we made rules that said workers had to be safe, get a minimum wage, overtime, weekends… we protected the environment, we set up Social Security. We took care of each other. This made us prosperous. A share of the prosperity for the 99% was the fruit of democracy.

Unions Enforce Democracy

Before unions came along to enforce the idea of democracy we didn't get the share of the prosperity that democracy promised, after unions we did. Before unions we had 12 (or more)-hour workdays, seven days a week. Before unions we had low pay. Before unions we had no benefits. Before unions we certainly didn't get vacations. Before unions we could be fired for no reason. Before unions a wealthy few were able use their wealth to pay off influence legislators and keep the rules bent in their favor. Unions organized and forced changes that brought a larger share of the pie to We, the People.

Unions enforce the concept of democracy. Yes, We, the People were supposed to be in charge. Yes, the economy was supposed to be for our benefit. Why else would We, the People allow corporations to exist in the first place? [2] It was unions that gave people the power to enforce that idea. People organized together and demanded that We, the People get a share of the pie, and the results grew the pie. Unions are why we have had a middle class.

Our Prosperity Made Us A Big Market

That prosperity meant that we had a very big market that the rest of the world wanted to sell to. This market power gave us leverage. We protected that market by refusing to let in goods made by exploited workers without applying a tariff. This tariff kept the price of imported goods from undercutting the prices of goods made here by people who have a say, and said they were going to get a share of the pie. The tariffs helped pay for good schools and good infrastructure that gave our companies a competitive advantage in the world, even where people were paid less.

"Free" Trade Undermines Democracy

But for decades the democracy experiment has run the other way. Our "free" trade agreements have undercut our democracy. We allowed goods made by exploited workers to come in and undercut the good wages that we were receiving because we had a say. The exploited workers elsewhere were used as a hammer over our heads: "Accept lower wages and cuts in benefits or we will move your job out of the country." From Democracy V. Plutocracy, Unions Vs. Servitude [3],

Workers in countries like China where people have no say have low wages, terrible working conditions, long hours, and are told to shut up and take it or they won[t have any job at all. They are given no choice.
Increasingly workers here have their wages, hours, benefits, dignity cut and are told to shut up and take it or their jobs will be moved to China. Because we are pitted against exploited workers in countries where people have no say, we have no choice.

And the result was that our share of the pie got smaller and smaller. The concentrated wealth has been used to undermine our democracy, and we are in a downward spiral -- a "race to the bottom."

Decades Of "Free" Trade Has Made Us Poor

Corporate conservatives like Speaker Boehner like to say "We're broke [4]":

House Speaker John Boehner isn’t going to step in to stop proposed cuts for a low-income heating program.

Asked specifically about why now is time to be cutting LIHEAP and other key programs to help poorer Americans, the Ohio Republican said, "Everything is on the table. We're broke. Let's be honest with ourselves."

If, as they claim, "we're broke," then how did we get that way? By undercutting our democracy with "free trade" agreements, that led to terrible trade deficits. The Trade Deficit Keeps Draining Money From Our Economy [5],

Another month and another terrible trade deficit report. Why is it that DC elites who profess to care so much about deficits say so little about our worst deficit? The trade deficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.

...Here is the formula since Reagan:

1) We open our borders to imported goods made in places where people don’t have a say, so they don’t have good wages or environmental protections. We send our factories over there and import "cheap goods" into the country.

2) This sends dollars over there, and they don’t buy back from us (that would be actual trade), so they accumulate the dollars as they drain our economy.

3) Then we borrow those dollars back to fund the tax cuts for the rich. Our rich get richer, the rest of us get poorer, while they gain more and more power over us. The tax cuts force us to cut back and cut back on schools and infrastructure and other things that make us competitive

4) Meanwhile the imports from over there are used to break the unions and drive wages and benefits down over here.

5) Bob's your uncle, here we are where we are today.

The economic result of decades of these trade agreements demonstrates that when we let in products made where people don't have a say it undercuts our own economy. We opened the borders and let the big companies move the jobs, factories and industries over the border of our democracy, to places where workers don't have a say, so they are exploited. And the result was the big corporations were able to come back and cut our pay, and get rid of our pensions, and tell us, "take it, shut up, or we will move your job, too." We allowed the 1%ers to make the benefits of democracy into a competitive disadvantage! From Free Trade Or Democracy, Can't Have Both [6],

How often do you come across arguments that "globalization" and "free trade" mean that America's workers have to accept that the days of good-paying jobs and US-based manufacturing are over? We hear that countries like China are more "competitive." We hear that "trade" means that because it's cheaper to make things over there we all benefit from lower-cost goods that we import.

How often do you hear that we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay? They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes.

What they are saying is that we need to shed our democracy, to be more competitive.

The 1%ers Say Jobs Solution Is Be "Business-Friendly"

With our wages and benefits cut out from under us and our working hours lengthened the corporate conservatives demand more, saying we need to be more "business-friendly" to compete with countries like China. They oppose the minimum wage. They oppose pensions. The oppose health care benefits. They oppose unions. They say we have to cut taxes on the rich and corporations or they will leave, taking their jobs elsewhere. "Business friendly" means giving the 1%ers everything they want.

In fact, China Is Very "Business-Friendly" [7]. So was the South, before the Civil War.

But it remains a fact, where democracy flourishes prosperity follows. Where democracy is weak, so is the economy for regular people. And when regular people are not doing well there isn't much of a "market." Democracy is the only economics that works.

Join me at the June 18-20 “Take Back the American Dream” conference [8].

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