How long can Thai democracy wait?
China's looming example and recent failures in democracy
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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That economic development could come before full-blown electoral democracy is often a dangerous argument to make.
One can quickly become an apologist for dictatorships, torture and human rights abuse if you make such an argument.
Western democracy may well be a universal ideal, but even so, doesn't every country have to find their way to it by themselves?
Or maybe western democracy is not the ultimate ideal? Perhaps there are a multitude of different paths to a multitude of different end-points.
Doesn't the stalemate of the US in Iraq over the last four years clearly prove that current knowledge about how to implement democracy in other countries is still very incomplete?
When a back seat driver guides a so-called "developing" country (like Iraq) along a long rough road to "democracy" is a tragic car crash inevitable?
Should the more "developed" countries like the United States be able to call the shots in "developing" countries like Thailand, China, and Burma?
Does long experience in building efficiently functioning economies give western democracies the expertise to address the problems that Asian economies face?
These are the sorts of questions addressed in today's article.
Political scientist Samuel Huntington dealt with similar issues in his 1968 book Political Order in Changing Societies. Huntington argued that "order itself was an important goal of developing societies, independent of the question of whether that order was democratic, authoritarian, socialist, or free-market." Here are two important quotes from the book, that are important in light of the ongoing debates about the coup and democracy in Thailand:
- "The most important political distinction among countries concerns not their form of government but their degree of government."- "The primary thesis of this book is that [the violence and instability characteristic of the post-WWII era] was in large part the product of rapid social change and the rapid mobilization of new groups into politics coupled with the slow development of political institutions"
- "The primary problem of politics is the lag in the development of political institutions behind social and economic change"
For further reading, read a controversial article by William Easterly, arguing in part that: 1. the so-called "developing" nations usually "develop" on their own initiative and that, 2. foreign development "experts" have been largely useless. Also see the discussion of this article in Dani Rodrick's blog and the Economist View blog as well as the extensive papers and writings on Easterly's website.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. After the Asian Economic Crisis of 1997, did the US want China to devalue its currency? why or why not?
2. When was the Chinese currency formally unpegged from the dollar?
3. How does China still maintain an effective peg to the dollar?
4. How did Clinton want Rubin to convince the Chinese to move towards deomcracy back in 1997?
5. Does China regret not having followed America's advice about moving towards democracy back in 1997, according to the author?
6. Has China's success had an effect on the way that other Asian countries view their political future?
7. What countries don't seem to be embracing President Bush's philosophy that "democracy is a necessary ingredient to economic success" ?
8. What are some Asian democratic success stories, according to the author?
9. What holds democracies together better: strong government institutions or strong leaders, according to the author?
10. What long-standing political institution in Thailand helps hold Thailand together as a nation?
11. What sort of government institutions would enhance democracy and the economy, according to the author?
12. Does having a constitution and holding elections guarantee democracy, according to the author?
13. What is Fareed Zakaria's notion of "illiberal democracy" ?
14. What do some countries with strong democracy admire in the absence of democracy in other countries like China?
Bangkok Post Article: Monday July 02, 2007
Democracy can wait while Asia's economies boom
WILLIAM PESEKIn September 1997, at the height of the Asian crisis, Robert Rubin visited China's Great Wall. It was a brief respite from the tense talks in which the former US treasury secretary was embroiled in Beijing.
As we walked along, he paused for a moment, pulled at one of the wall's stones and deadpanned: "Yep, pretty solid. Hopefully we can say the same about the yuan."
The reference was to the first of two missions back in the Chinese capital: encouraging China not to devalue its currency. The concern was that China would join Thailand in weakening its exchange rate. Even though Indonesia and South Korea did it too, investors predicted disaster if China were to do so.
Today marks the 10th anniversary of the start of the Asian crisis, and China's currency is still effectively pegged. China formally severed the yuan's link to the dollar in 2005, though it has amassed more than $1 trillion of reserves to hold the exchange rate in place.
Even so, getting China to keep the yuan steady was a big coup for Mr Rubin at the time.
Ten years on, Mr Rubin's other mission in Beijing that week - nudging China toward democracy - isn't looking so good. At the time, US President Bill Clinton felt Mr Rubin, a Goldman Sachs Group alumnus, would have more success than his State Department in making the case for more openness. The pitch: democracy leads to prosperity.
Given China's 11% growth and rising global stature, it's doubtful many officials in Beijing regret ignoring the US' democracy-is-best message. What may be surprising, though, is how China's un-American views on democracy are gaining favour in Asia.
The region is certainly back. While much work remains to be done to improve economies and spread the benefits of growth, Asia is again a hot investment destination. Many - including Federal Reserve Bank of New York president Tim Geithner - say the crisis made Asia more resilient.
"They are much less likely to face the type of crisis, the acute, self-reinforcing panic produced by the balance sheet problems of that era," Mr Geithner, who visited the Great Wall with Mr Rubin 10 years ago as a Treasury official, said of the region's economies on June 20.
One of US President George W. Bush's most consistent philosophies is that democracy is a necessary ingredient to economic success. It's well-known that China, Russia and Venezuela see things differently. Less recognised is how Asia isn't embracing political openness the way officials in Washington expected in the late 1990s.
Thailand is one example. In September 2006, popularly elected prime minister Thaksin Shinawatra was removed by a coup. Prior to that, Thailand's post-crisis recovery made it an investment darling. Since September, three years of economic gains and wealth creation have been squandered. Singapore's politics, meanwhile, haven't changed much since the late 1990s. Hong Kong residents still don't have universal suffrage.
Asia does have its democracy success stories. India is one example, of course. Japan, South Korea, Malaysia, Indonesia and the Philippines are others. Taiwan gets little attention because the world doesn't want to lock horns with China over the issue.
Yet there are a couple of reasons to be disappointed about the state of democracy in Asia. One is weak government institutions: they hold democracies together more than national leaders do.
The Philippines is a case in point. While Gloria Arroyo is the elected president, democracy hasn't been the panacea that was supposed to reduce poverty. The country was never one of the Asian tigers, and corruption remains rampant.
Across Asia, strong ministries, independent courts, a free press, credible central banks and outside watchdog agencies would not only enhance democracy, but also the forces of capitalism.
In Thailand, Mr Thaksin governed according to his own playbook and circumvented the rule of law. Having a constitution and elections doesn't ensure democracy.
The other reason democracy isn't thriving in many parts of Asia is disillusionment with the process, coupled with the example offered by China. Instead of US-style government, Asia may be moving toward "illiberal democracy".
The phrase was made popular by Fareed Zakaria in a Foreign Affairs article in 1997, the same year the Asian crisis began. It refers to a model in which leaders are elected to some extent, but civil liberties and press freedom are kept under tight watch in the name of stability. Some call such leaders "elected autocrats".
The US' founders pursued democracy in sync with capitalism. In the age of globalisation, though, capitalism often widens the gap between rich and poor, and even undermines the push toward democracy. If political freedom doesn't quickly translate into riches, populations will question its utility.
Meeting with Indian businesspeople, one often hears some variation of "it's so hard for us to get things done, but China's top-down system can do what it wants, when it wants".
It's not that Indians want to live in a China-like system that censors the Internet. It's more a recognition that democracy can have its limits when it comes to economic policy making.
Rumblings in Asia may increasingly shift toward economic growth first, full-blown democracy second. It doesn't mean openness and capitalism are incompatible in the long run. It's just that Asia needs more convincing in the short run.
William Pesek is a Bloomberg News columnist.
Vocabulary (in discussion above)
full-blown electoral democracy - a democracy that functions like it supposed to with public participation and clean elections
an apologist for x - someone who defends x
a universal ideal - it is the ideal for everyone in every possible situation
a multitude of - many
a stalemate - a situation that can't move forward towards its goal anymore
back seat driver - when a passenger gives too much advise to the driver making it impossible for them to drive the car
call the shots - direct, manage, control
Robert Rubin - US Treasury Secretary under President Clinton from 1995 to 1999, balanced the government budget (See Wikipedia on Robert Rubin and Rubinomics)
a respite - a short period of rest
a brief respite from the tense talks - taking a short rest after difficult negotiations
embroiled in - involved in
deadpan - in a serious tone of voice (but actually are teasing or trying to be humorous)
a pegged currency - when the central bank ties the exchange to another currency (peg at, for example, 25 baht per dollar) and then intervenes (buys and sells) dollars and baht to prevent the exchange rate from moving very far away from this peg (See Deardorff's economics glossary)
effectively is x - actually is x, but isn't by definition or officially
currency is still effectively pegged - not officially pegged, but the central bank behaves to make it pegged
severed the yuan's link to the dollar - untied, unpegged the Yuan from the dollar
Goldman Sachs Group - one of the world's largest investment banks (See Wikipedia)
an alumnus of x - someone who worked for x or went to school at x
Goldman Sachs Group alumnus - someone how used to work for Goldman Sachs
a pitch - an advertising pitch or promotional pitch, what you say to sell something (See Wikipedia on elevator pitch, a short sales pitch)
stature - importance and reputation
rising global stature - becoming more well-known and respected internationally
Federal Reserve Bank of New York - the most important of the twelve Federal Reserve Banks of the United States, the central bank in the United States is divided into 12 regional banks (See Wikipedia)
resilient - strong and not easily damaged, able to recover quickly from a disaster (See glossary)
* made Asia more resilient
acute - sudden and severe
self-reinforcing - initial problem causes more problems which cause more problems, and so on (in a positive feedback loop)
panic - sudden fright, suddenly become afraid
balance sheet problems - the maturity of domestic bank assets did not match the maturity of their liabilities, they borrowed short-term internationally to lend long-term domestically, when the short-term financing disappeared they couldn't recall long-term loans, they became illiquid and faced bankruptcy, this effect spread like a wave thoughout the economy causing non-performing loans and recession
* the acute, self-reinforcing panic produced by the balance sheet problems of
that era
embracing - accepting with enthusiasm, excited about
political openness - transparent political decisionmaking, political, the public can see what is happening so that there is no corruption
embracing political openness - accepting transparency in political decisionmaking with ethusiasm
made it an investment darling - investors like it a lot
squandered - wasted
universal suffrage - everyone can vote in elections
lock horns with - do battle with, fight with
weak government institutions - government institutions that don't function quickly or efficiently, suffer from cronyism and corruption
a case in point - a relevant example
a panacea - a solution to all problems
rampant - something bad increasing in an uncontrollable way
corruption remains rampant - corruption is increasing and can't be controlled
ministries - government ministries such as Ministry of Education (MOE) or the Finance Ministry
strong ministries - can get work done quickly and efficiently
independent courts - judges free from the influence of rich and powerful people, who can provide justice
a free press - newspapers not controlled by government censorship
credible - believable
credible central banks - believable central banks, that stick to a long-term sustainable monetary policy rather than change policy in the short-term every time there is political pressure by some interest group
a watchdog - watching people or companies to make sure they don't break the law or engage in corruption
outside watchdog agencies - checking, monitoring, auditing organisations that are independent, outside of, have no interest or relation with the agency they are checking, so their check is credible and believable
enhance - add value to, make better
a playbook - in football a team's book of plays that they practice and perfect
circumvented - go around, avoid
circumvented the rule of law - avoided laws (found a way to avoid the laws, but in doing so violated the spirit of the laws)
disillusionment - disappointment when you realise something is not as good as you thought
disillusionment with the process - disappointed about the process
Fareed Zakaria - famous journalist and commentator on foreign affairs, editor of Newsweek International since 2000 (See his articles and biography and on relevant book (The Future of Freedom))
Foreign Affairs - an influential American journal on international relations published by the Council on Foreign Relations (CFR) six times annually (See Wikipedia)
civil liberties - freedoms that protect citizens of a country from their government, set limits on what a government can do, make sure the government does not abuse its power and interfere with the lives of its citizens (See Wikipedia)
press freedom - newspapers free from censorship and government interference
an autocrat - authority or person in control with complete power
elected autocrats - once elected have complete power (seems like a contradiction because elections are supposed to give power to the people, but sometimes the people like to elect strong powerful leaders, Mussolini is a good example, he undermined the king of Italy)
in sync with - agreeing and working with
undermines - weaken, make less strong than before (See glossary)
top-down system - decisions are made at the top with little participation from below
full-blown x - not partial x, having all the chracteristics of x
full-blown democracy - everything that democracy is supposed to be (according to someone's standards, note that many do not consider Singapore a full-blown democracy because there has only been one party and the opposition is ruthlessly suppressed)
incompatible - cannot be combined because they are very different
Bloomberg - the largest financial news and data company in the world, controlling 33% of market share, founded by Michael Bloomberg now Mayor of New York City (See Wikipedia)
Answer Key:
1. After the Asian Economic Crisis of 1997, did the US want China to devalue its currency? why or why not?No, the US did not want China to devalue its currency. Almost all the countries in Asia (Thailand, South Korea, Indonesia) had devalued their currencies, but the US predicted disaster if China devalued its currency.
2. When was the Chinese currency formally unpegged from the dollar?
2005
3. How does China still maintain an effective peg to the dollar?
By accumulating massive amounts of exchange reserves.
(... it has amassed more than $1 trillion of reserves to hold the exchange rate in place.)
4. How did Clinton want Rubin to convince the Chinese to move towards deomcracy back in 1997?
By arguing that: Democracy leads to prosperity.
5. Does China regret not having followed America's advice about moving towards democracy back in 1997, according to the author?
No, soaring economic growth is making China an economic superpower, so experiments with democracy probably seem irrelevant right now.
("Given China's 11% growth and rising global stature, it's doubtful many officials in Beijing regret ignoring the US' democracy-is-best message.")
6. Has China's success had an effect on the way that other Asian countries view their political future?
Yes, according to the author, "China's un-American views on democracy are gaining favour in Asia."
7. What countries don't seem to be embracing President Bush's philosophy that "democracy is a necessary ingredient to economic success" ?
a. China
b. Russia
c. Venezuela
d. Increasingly Asian countries, in general (for example, Burma and recently, Thailand)
8. What are some Asian democratic success stories, according to the author?
a. Japan,
b. South Korea
c. Malaysia
d. Indonesia
e. Philippines (later on he says Arroyo's government hasn't been that strong)
9. What holds democracies together better: strong government institutions or strong leaders, according to the author?
Strong government institutions.
10. What long-standing political institution in Thailand helps hold Thailand together as a nation?
The longstanding institution of Kingship in Thailand, of course.
11. What sort of government institutions would enhance democracy and the economy, according to the author?
a. strong ministries
b. independent courts
c. a free press
d. credible central banks
e. outside watchdog agencies
12. Does having a constitution and holding elections guarantee democracy, according to the author?
No, Thaksin is a case in point. Thaksin "governed according to his own playbook" and went around both the constitution and the rule of law.
13. What is Fareed Zakaria's notion of "illiberal democracy" ?
"Leaders are elected to some extent, but civil liberties and press freedom are kept under tight watch in the name of stability." Essentially, "elected autocrats."
14. What do some countries with strong democracy admire in the absence of democracy in other countries like China?
China's top-down system is seen as helping get things done quickly. Democracies sometimes bog down in endless debate, argument, and law suits. For example, to build the Seoul subway, private property rights were imposed on. In a full-blown democracy, with lawsuits and debate the subway project would never be completed. A good case in point is the building of the LA subway.
("...democracy can have its limits when it comes to economic policy making.")
