The first Democracy and Economic Freedom report cards for 2021 are out and the results are not good. Economic Intelligence Unit, sister company of The Economist magazine, found that last year’s Democracy Index fell nearly a tenth of a percent. This is the biggest drop in the index’s 15-year history.
The Heritage Foundation’s Index of Economic Freedom, meanwhile, saw a similar but larger decline of 1.6 points out of 100. Heritage examined policies and economic conditions in 177 countries, while the Index of democracy examined 167 countries.
Both reports blame government-imposed COVID restrictions for the declines. The Index of Economic Freedom noted that increasing government spending to compensate for lost revenue had failed because it “raises inflation and generates huge public debts that future generations will have to pay.” The Democracy Index noted that developed democracies like the United States and authoritarian regimes like North Korea have been sliding towards more technocracy. He feared that emergency powers enacted by governments could disappear even if the pandemic subsides.
“[H]History teaches us that once they have acquired these kinds of emergency powers, governments are usually reluctant to remove them from statutes,” Democracy Index editor Joan Hoey told me in an email. She said the warnings of 2020 had gone unheeded: “This state of affairs is normalizing and the public is getting used to this extension of state power over many areas of life. This raises troubling questions about the future of democracy: under what circumstances and for how long are governments and citizens willing to accept this extraordinary extension of state power and the withdrawal of civil liberties in the name of public health – or any other threat in the future? ?”
Hoey also expressed concern about the current situation in Canada where Prime Minister Justin Trudeau has invoked emergency powers in hopes of stopping trucker-led protests against Covid restrictions. Canada’s Democracy Index score has fallen below nine as researchers fear it is more like the United States, with ‘extremely low levels of public trust in political parties and government institutions’ .
Findings from the Index of Economic Freedom explain why public confidence is low. He points out that politicians have bestowed favors on “societal elites or special interests” who “wield the most influence and control over the government and its institutions.” It is a populist message, which has been expressed across the world over the past decade.
The Democracy Index doesn’t necessarily see populism as a bad thing, although it does think it tends to roll back governments rather than reform them. “There are indications that populists have had an impact by injecting more political competition and dissent into the body politic, something that has been sorely lacking,” Hoey said. “But things need to go much further if we are to see a more substantial renewal of representative democracy and genuine political contestation.”
But how? What happens when the body politic locks itself into segments instead of listening to others? The Democracy Index suggests “doctor, heal yourself”, which Western nations should promote and, more importantly, follow their own democratic ideals. The authors suggest this will encourage people to be more tolerant and respectful of other viewpoints, and avoid becoming a technocratic state ruled by fiat à la Chine.
As for those who believe that a Chinese-style government, with state authority, could be better than democracy, the report warns that “China’s ‘political meritocracy’ has also failed stop the growth of huge economic inequalities”.
Income inequality in China has increased since the reforms and reopening of the 1980s, even as the regime now seeks to address it. The level of inequality in China, which [Serbian-American economist Branko] Milanovic estimates nearly 50 Gini points in the 2010s, far exceeding levels of inequality in the United States (the Gini index measures equality on a scale of 0 to 100, with 100 representing total inequality) . Disposable income inequality in the United States increased by around 4 Gini points between the mid-1980s and 2013, while in China it increased by almost 20 Gini points over the same period.
The Index of Economic Freedom’s response to societal and political drift involves more free markets and less state control. The authors acknowledge that people look to government in times of crisis, but encourage politicians not to seek more power. “[Lasting solutions] reside in a return to the free market principles that have unambiguously made our societies strong, vibrant and flourishing,” he says.
Not surprisingly, the Covid pandemic has caused a massive fall in democratic standards, including civil liberties and free markets. This only reinforces the declines seen in 2008 and 2009 when the global economy slowed. The post-9/11 world characterized by heightened surveillance under the guise of eradicating terrorism has also contributed to the decline of civil liberties. Whether anyone in power chooses to heed these warnings is, unfortunately, another matter.