Business World, 12 May 2013


Today we exercise the most important single ritual of a democratic polity, voting. By democracy here is meant majoritarian one-man-one-vote. The poor being constitutive of the majority in our and most societies, the presumption is that officials who fail to keep faith with the poor will be replaced and thus inclusiveness will be served. On this basis, Rodrik (1999) called democracy the “meta-institution” that will spawn other good institutions, those that serve inclusiveness. It is difficult to argue against the idea that “one-man-one-vote” empowers of the majority. Indeed, the early political thinkers such as de Tocqueville (1832) worried about the “tyranny of the majority” (the majority voting to expropriate the minority) as the possible downside of democracy. Landlord and peasant can each cast one vote. Surely, the more numerous peasants can and will vote to dispossess the landlord! But do they? This has been a burning question for political scientists and economists. The obvious answer turns out to be wrong.

Keefer (2011) who has investigated this question has shown that the positive reIation between democracy and inclusiveness (proxied by delivery of public goods) fails to surface among poor countries; it appears only when the sample is expanded to include rich countries. This suggests that there exist wedges between one-man-one-vote and the delivery of pro-poor outcomes in poor countries. What are these wedges?

The founding thinkers of democracy were painfully aware of possible vitiations along the way to inclusive outcomes in a democracy. JS Mill suggested that some nations cannot profit from democracy not having yet attained the “maturity of their faculties.” The same logic underlies why voting age does not start at 10 years old or why convicted felons have no voting rights. Marquis de Condorcet focused on the “judgmental competence” of the masses (the capacity to discern the correct of two options). He demonstrated the Condorcet Jury Theorems: that democracy by majority rule beats monarchy in judgmental competence in a binary choice situation if the masses have better than 50% chance of choosing the correct option. Alas the reverse is also true: monarchy beats democracy in judgmental competence if the masses display less than 50% competence.

A penurious voter who worries about tonight’s meal for the family is also exercising good judgmental competence when he/she accepts ₱1,000 in exchange for his/her vote. Well-heeled do-gooders who condemn such crass materialism usually have fat bank accounts to backstop their convictions. The poor may be also painfully aware that the long-run harvest of upright voting has been subject to indefinite or permanent postponement. Worse, and going beyond JS Mill, it is not a given that the poor or anyone else necessarily discern what is truly inclusive.”Higher minimum wage” is good for those already employed by law-abiding firms; not good for the unemployed whose job prospect dims with higher wage. As my colleague, Emmanuel derightly notes, economic reality is often attended with complexity. Many grand larcenies have thus been visited on the poor in the name of and with support from the poor.

Abiding by tribal, religious or clan loyalties is more rewarding. The perception that the national political core has repeatedly failed to advance legitimate aspirations leads to the embrace of smaller more coherent groupings as repositories of those aspirations. A member of a sect or tribe voting not as a “Filipino”but as a member of a collective seeking particularistic benefits will do very well. The members of the Ampatuan clan acting coherently succeeded in forcing the national majority to transfer huge financial resources to themselves. The INC gets gravy for delivering bloc votes.

This is a problem of collective action first formalized by Mancur Olson (1965). Collective action exists when members of a polity or collective work together to engender an outcome that advances interest of the group. Olson argued that small coherent minorities can dominate large diffuse majorities due to differential transactions cost and differential benefits for different groups. Small coherent groups have low transactions cost and heavy return for collective action. He called this state of affairs the “tyranny of the minority” in democracies — the exact opposite of the de Tocquevillean tyranny of the majority! Groups with large memberships and thus minuscule prospective benefit from collective action for individual members lend themselves more easily to the free riding. It is more costly to organize them towards a mutually beneficial goal. Pervasive free riding results in bad social outcomes such as bad infrastructure and bad institutions. The upright exercise of the voting franchise in a democracy is especially vulnerable to free riding: the personal benefits of responsible voting to individual voters are small, diffuse and highly uncertain; by contrast, the benefit from selling one’s franchise is immediately appropriable. That some voters still vote and uprightly so (known as the voting paradox) shows that strictly rational calculus is not an iron law. Olson’s tyranny of the minority is, nonetheless, fruitfully utilized to explain the persistence of rent-seeking and non-inclusive institutions despite inferior social outcomes; why one-man-one-vote does not automatically translate into pro-people outcomes.

Here’s hoping that despite its many frailties, we will vote wisely and our democracy will surprise us by its future inclusiveness.