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Archive for June, 2009

A former work colleague once asked me what I thought about democracy. I replied :

“Great! We can vote our CEO out if he doesn’t give us a pay rise”.

Realizing I was in need of an injection of creative fantasy, he decided to go along with the flow, and replied :

“But if we were all to do this, the company would collapse”.

I said “Fine. By that time, we would have enjoyed our stay and made some big bucks. So we will just move on to the next company, and repeat this all over again”.

I was of course only joking. I can’t imagine any company taking on that path any time soon. But if there was such a company, I am sure everyone would be piling up to apply to join that company. And we would be telling everyone else how great such a democratic system is.

We would of course be correct. Such a company would be an ideal place to be in. But is that in the best interest of the company?

Well, it depends. There are advantages and disadvantages. One obvious advantage is its ability to attract the best and the brightest talents (assuming everything else being equal). The most obvious disadvantage is that a true democracy by nature can never be as efficient as an authoritarian command organisation.

We can list more advantages and disadvantages. But before we get too carried away, it should be worthwhile to first consider whether this would even work. And if it would, what are the preconditions for having such a system.

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Preconditions of a Democratic System :

The strength of democracy lies in the ability of the system to allow the majority to influence the outcomes of decisions that affect everyone.

Such systems even when correctly implemented can only be as good as the quality of the collective decisions of the majority polpulation within that system. In order for the strength of such systems to translate into actual strength in reality, the majority population must be of a high quality standard.

A brief analysis should reveal at least 3 necessary preconditions :

1) First, as the above conversation shows, the voters must have loyalty to the company.

2) Second, the great majority of the voters, no matter how minimal their roles and responsibilities are in the company, must be sufficiently educated in order to be able to understand why certain actions and policies need to be taken by the CEO.

3) Last but not least, the voters need to be relatively selfless. That is, they need to put the common good above their own interests. That would often mean putting the interests of the company above their own.

These are merely the most fundamental preconditions, without which such a system would not work. Or at least it won’t work the way it was meant to. However, in reality, in order for it to achieve its true potentials, the list would need to be a lot longer. It would, for example, be extremely destabilizing for such systems if the voters cannot differentiate what is reasonable expectation, and what is not. This is especially true when we have a crisis, such as the financial crisis we have today. Under such scenario, democracy could easily become a child’s game of musical chairs, where the CEO is simply there to warm the seat until the next election.

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National Democracy :

As the idea of democracy is not destined to reach the desks of our corporate CEOs any time soon, it should be wise to redirect our focus on the more practicable topic of national democracy. So how does the above translate to a national democracy?

The obvious question is whether a corporate democracy is the same as a national democracy? The answer is no, it’s not. But it is similar enough for us to adopt the same preconditions discussed above to apply to a national democracy.

Under both cases, the quality of the majority voters is the key to whether a democracy would succeed or not. If the average Joe Blow on the street is not the kind of person you would entrust important tasks to, then the chance is the average Joe Blow on the street is also not the kind of person you should entrust the fate of your nation to.

Given that is the case, it should be, at least in theory, much easier to establish a corporate democracy than a national democracy. A corporation can always control the quality of the people joining itself. However for a country, no matter how strict our immigration laws are, there is no way of controlling the quality of the existing population and those young ones coming in through the maternity ward.

This problem of lack of control of the selection process for the existing population and the newborn arrivals would not be a big issue for a wealthy country. Wealthy nations invaribly have relatively educated populations, and the resources to educate newcomers. Poor nations do not. THIS, is where the problems lie.

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To Democratize or Not to Democratize :

In this world, there are no one-size-fits-all solutions. And seldom do we find silver bullets that fix age old problems without itself causing problems.

Regardless of the debate on whether democracy is the best political system, democracy itself does not work for all countries. In my view, nations without the ability to satisfy those 3 minimum preconditions would not reap benefits from such systems. Unfortunately, that disqualifies all 3rd world countries and most developing countries in the world.

Indeed, a group that cares only about where to find the next meal is hardly the best group to tell us who and how to run the country. A group without the necessary education is unlikely to make correct decisions on whose policies would bring their population out of poverty and misery.

The most important thing for a developing country is to lift its citizens out of poverty and misery. This invariably forces the goverment to make tough decisions. If a person is sick, he/she needs to take the appropriate medications. If a country is sick, it needs to adopt the necessary unpopular corrective policies. Such painful policies would never gain the support of those who do not have the capacity to understand the complex reasoning behind the policies.

While there is no reason to think that deveoping countries can never adopt a democractic system of government, it does mean that it is in their own interest to delay that adoption until such time that it has the necessary requirements to make it viable.

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Does Democracy Really Work? :

Now that we have established the minimum preconditions for a workable democracy. The next question is: Does democracy actually work?

To answer that, we would first need to get a common understanding of what “work” means.

Most in America seem to believe that George W. Bush was not the best candidate for the top job of supreme commander. Indeed, most in the world seem to agree. If general elections, being the most integral part of democracy, were meant to pick the best person for the job, then we can safely conclude that democracy does NOT work.

In order for us to claim that democracy works, we would first need to come to the consensus that general elections are NOT meant to place the right persons into office.

Indeed, that IS the main difference between a democracy and a meritocracy. The most fundamental element of democracy is the democractic elections. Democractic elections are essentially popularity contests. THIS, has to be a serious cause of concern for developing countries.

There are at least 2 serious flaws with such a system for developing countries.

First, popularity can be bought, and IS usually bought. This happens in both developing and developed countries alike. This can be done directly, through the purchase of air time and paid advertisements. Or it can be done indirectly, through the promise of personal benefits such as tax cuts, etc, which clearly has no relevance to the candidate’s suitability for the job, and often may not even be in the best interest of the country.

Secondly, such contests of popularity often plays on the emotions of the masses. This may not be a serious problem for first world countries except perhaps when in a crisis. However, it can be a very dangerous set up for developing countries. This is especially the case if the country has a belligerent uneducated majority population.

Developing countries, more than any other countries, need strong governments and strong leaders that know what they are doing, and can make tough decisions and then enact them. Such popularity contests that depend completely on the feel good factor of an uneducated population is almost a guarantee for that country to keep its “developing” label.

The supporting factor behind democracy is its inherent fairness to the majority. But for a developing country, this “fairness” is an irrational one. It is fair only because it unnecessarily keeps every person as poor and miserable as every other person in a country that may stay as “developing” for an unreasonable amount of time.

Democracy can work for wealthy first world countries. Whether it IS actually working for these countries depends a lot on your perspective. But there is no doubt that one can afford such luxury in these countries. However there can be little doubt that democracy does NOT work for developing countries.

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The Chinese Model :

If democracy requires preconditions that can not be met by poor developing countries, then it may be worthwhile to explore viable alternatives. The following is a brief introduction of an interesting hybrid system that seems to be taking shape in China.

(a) From the Bottom :

China has long stated that it would never adopt a Western style democracy on a national level. However it has at the same time been experimenting with the idea of democracy on local levels continuously since the 1980s.

The first experimental elections were held in the early 1980s in remote villages. Today, more than 600,000 villages across all of China conduct open, competitive elections every 3 years. These are very much like the city council elections in Western countries, and are monitored by American NGOs based in Atlanta, USA that operate around the world. These open and transparent competitive elections cover more than 1 billion of its citizens, accounting for approximately 75% of the entire population.

This is almost certainly only the first step in an evolutionary process. Provided there are no major social upheavals (which often have the effect of turning the clock backwards in China), these democratic elections should eventually be expanded to include at least one, or maybe more, higher level administrative divisions.

(b) From the Top :

While the top Chinese leaders today are not elected through universal suffrage, they are not dictators either in the original sense of the word.

No leaders in China are born into the position, and no leaders can overstay their set terms. The national leaders don’t happen to fall on the leader’s seat. There is a selection process not very different from the selection process of party leaders in most democratic systems. In China’s case, the leades are appointed for a set term by an experienced panel that includes current leaders and national advisors.

This is essentially a meritocratic system that is in use today in all major corporations worldwide. The benefit of such a system is its inherent ability to place the right person in the right job.

The chosen candidate is then put in an “apprentice” position within the cabinet for a maximum of 5 years. This safeguard procedure would ensure that the right person is chosen for the job. This also enables the new leaders to be proficient in handling the immense responsibilities by the time he/she gets into office.

(c) Combining (a) and (b) — The Final Model :

The resulting model would then be a hybrid system where the local affairs and demands of the population would be handled by local authorities that are elected by the people themselves through democratic means, while the macro management and foreign affairs would be handled by capable people trained for the job and are selected based on their abilities by an experienced panel.

This system is not only more effective and efficient than a democratic system, but should also be inherently fairer than both democratic systems and monarchy based systems. Unlike a monarchy based system, there are no hereditary leaders. And unlike a democratic system, there are no campaign cost burdens and considerations which tend to limit the average person’s ability to apply for the top job. This new system would ensure that ALL members of the society have equal access to power.

At the end of this evolutionary process, the eventual hybrid system should have most of the humanistic benefits of a democratic system combined with the stability inherent in a single party system, while at the same time preserving the effectiveness and efficiency of a meritocratic system.

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Conclusions :

Although there is no guarantee of success at the end of this political evolutionary process taking place in China, the case is compelling for a new system that suits both developing countries and developed countries alike. At least on the surface, it does seem to be a well balanced compromise that is likely to be superior to the current systems. It remains to be seen whether it is or not. But personally, I think it looks very promising.

At this point, I like to share with you a quote I found in one of Cam Hui’s articles on the SeekingAlpha blogsite ( which was in turn taken from Fabius Maximus’s blogsite ) :

Mao Tse-tung … (on 27 February 1957, declared that) … Only socialism can save China.

After Mao’s death, Deng Xiaopeng took control in 1979 and modified this: Only capitalism can save China!

After the fall of the Berlin (wall) in 1989 the remaining true believers said Only China can save socialism!

It’s now 2009, the western banks are burning, and everybody knows that only China can save capitalism!

It would be ironic if one day in the not too distant future, we would add to the quote above that : “Only China can save democracy!!”

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