Political incentives for populism could let India’s democracy down

Synopsis: A democracy claims to represent the majority or the will of the people. However, often it seems to represent the will of a well-organized minority.

Introduction

The struggles of democracy to meet the conflicting demands of the electorate are well known. This was on display in 2018 in Goa when taxi drivers came head to head with the government decision to open doors for Uber and Ola.

About the issue

Taxi drivers dominate the local transport in Goa. Even the public was tired of bullying. Driven by these issues Government decided to open the doors for Ola and Uber. However, soon the issue turned political. The entire state came to a stand-still and the Government had to concede the demands of the taxi drivers.

This shows that Government responds more to a well-organized minority than responding to a loosely aggregated majority. Such responses have the potential to block the reforms as the general or larger public loses out.

How reform-oriented leaders can shape the policy?

In the ’90s, despite criticism by crony capitalist and socialist factions, Mr PV Narsimha Rao went ahead with economic reforms. These reforms helped propel India on a growth path and also lifted 200 million people out of poverty.

Reform vs populism

Reforms are the only means to institutionalize development. However, democracy has the potential of responding positively to well-organized minorities.

When the self-interest of citizens gets impacted by the government decision, they tend to respond keeping their self-interest in mind. When everyone does this, it will lead to an inefficient and incompetent governance system.

How the Chinese system escapes this?

In China, the reforms are based on economic performance and growth. Thus, Chinese politicians cannot be influenced by a minority electorate that seeks to hold the system.

What does prospect theory say about the loss to the government?

Prospect theory is a theory of behavioural economics and behavioural finance. It states that losses and gains are valued differently, and thus individuals make decisions based on perceived gains instead of perceived losses. This theory helps in the process of decision-making under conditions of risk.

Prospect theory shows that the impact of loss is twice as powerful as the potential gain. This political calculation allows a small minority to hold state and reforms to ransom. The response of leaders to such scenarios is what separates populist leaders from pragmatic policy-oriented leaders.

What should be the way ahead?

Democracy, instead of representing the will of the people, tends to represent the will of the vocal people. So, we should have a proper system where the well-considered will of the majority is promoted.

Source: This post is based on the article “Political incentives for populism could let India’s democracy down” published in Livemint on 14^th September 2021.