Economics, Political Change, Prediction Markets

POST: Economics Drive Political Change, November 05, 2008

On the day after elections in America, it seems like a good time to talk about democracy elsewhere. Politicians like to talk about politics and the ideologies behind their particular brand of politics. In the West, we are fond of democracy — especially representational democracy — and we try to spread the gospel about it wherever we go. Often we hear it in speeches like the one President Woodrow Wilson gave before Congress in April 1917: “The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty.” Over a decade and a half before that speech, Wilson had defined what he meant by democracy. “Democracy,” he wrote in a March 1901 edition of the Atlantic Monthly, “is not so much a form of government as a set of principles.” Winston Churchill, on the other hand, did see democracy as form of government. He reportedly uttered, “It has been said that democracy is the worst form of government except all the others that have been tried.”

My colleague Tom Barnett and I have preached that if you want to instill democratic principles in governments then improve the lives of the people in autocratic countries. Economic progress almost always precedes political progress.

In tracking “political” progress, Freedom House tracks trends and publishes a map of the world that identifes countries that are free, partially free and not free.

Barnett’s Pentagon’s New Map identifes the countries that are connected economically via globalization. In his map, note that Russia and China are are considered connected but are not rated as politically free by Freedom House.

Closing the gap … Prediction Markets are one approach that can be used to raise awareness and visibility and provide the feedback that may get people more involved in issues (political and economic) that they may be interested in influencing.