The Scots rejected a proposal to divorce from England and form an independent nation, 55% to 45%. Most economists thought this a pretty bad idea, particularly because the proposal did not include a currency for Scotland, but instead proposed using the British pound. After the experience of various members struggling almost hopelessly because they gave up their currencies in order to join the European Union, adopting the Euro and their own currency. Developing countries, sometimes developed countries, can end up taking on too much debt denominated in a currency not their own. That means a nation so indebted cannot devalue their currency to devalue the debt. If they had their own currency, they could devalue their currency in order to reduce the debt burden. That does not mean prices within the troubled country will become too expensive due to inflation caused by the devaluation. That is a fallacy. At the national level any price hike increases someones income in step with someones expenditure. If an apple goes from 80 cents to a dollar (a 25% price hike) that means the seller sees his income rise 25%. The buyer pays more, but whatever the buyer sells for a living will rise similarly. At the national level its a wash. Incomes rise along with prices. Sometimes faster. Unless, of course, the top 0.01 percent take all the money for themselves, and they own everything for sale. Sort of like the United States the past 35 years, in other words. But I digress. The dispute is how much should voters, or their elected representatives, pay attention to the experts in various areas--for example in regards to Scotland producing their own currency as an independent nation, instead of using the British pound. British economist Simon Wren Lewis has an essay about this aspect of the Scottish vote on independence. But a commenter to his essay offers some great information. Im printing this comment in its entirety because it explains representative democracy, and presents the anti-democracy argument of Plato. In the same brief space. Remarkably well, in my view. A link to the Wren Lewis piece follows. SpinningHugo19 September 2014 05:30 No. This will not do. So, in response to the charge that it is anti-democratic, you respond First, my general argument is not specific to economics, but involves any area that involves technical expertise. That is not an argument against it being anti-democratic. That is an argument which says screw the democratic process, things will go better if we give the decisions to people trained in the area with technical competence. This is precisely the argument Plato made against democracy, and in favour of Philosopher Kings. Second, the problem with democratic accountability as normally defined is that it is very weak: voters make one decision every five years that involves a whole basket of issues. That hopelessly misrepresents the nature of Representative Democracy. Yes we only have a vote once every four or five years. That is because we live in a Representative Democracy. We have adopted that system to overcome the very objections to Direct Democracy that Plato identified. In a Representative Democracy, the people who get to decide are the representatives we elect through due process. The accusation that your proposals are anti-democratic concern the fact that it is contrary to the principles of Representative Democracy. You are taking the decision away from the representatives. Of course representative Democracy is less sensitive to what people generally think on any particular issue than direct democracy. That is its entire point. Youd be much better off openly admitting that your views are anti-democratic (they are) but that you think other values outweigh the need for democratic accountability. The Scottish referendum was (and here I suspect we are in agreement) a startling illustration of the problems Plato identified with direct democracy. So, from the Stanford Encyclopedia Plato (Republic, Book VI) argues that democracy is inferior to various forms of monarchy, aristocracy and even oligarchy on the grounds that democracy tends to undermine the expertise necessary to properly governed societies. In a democracy, he argues, those who are expert at winning elections and nothing else will eventually dominate democratic politics. Democracy tends to emphasize this expertise at the expense of the expertise that is necessary to properly governed societies. The reason for this is that most people do not have the kinds of talents that enable them to think well about the difficult issues that politics involves. But in order to win office or get a piece of legislation passed, politicians must appeal to these peoples sense of what is right or not right. Hence, the state will be guided by very poorly worked out ideas that experts in manipulation and mass appeal use to help themselves win office. In relation to the economic and legal issues of independence, that seems to me to be pretty good description of why Yes managed to get 45%. Philosopher Kings, whether in economics or other fields, dont like any form of democracy much. It will give you sub-optimal decisions. The history of the 20th Century means we tend to worship democracy as a religion, but it is no good denying that there are not downsides to it, or limits on it that we have to accept. Nor is it any good denying that such limits are not anti-democratic. They are. mainlymacro.blogspot/2014/09/wishful-thinking-and-economics.html
Posted on: Sat, 20 Sep 2014 17:02:13 +0000
Trending Topics
© 2015