Playing at Democracy

– Kaushik Basu
Kaushik Basu, a former chief economist of the World Bank and chief economic adviser to the Government of India, is Professor of Economics at Cornell University and a non-resident senior fellow at the Brookings Institution.

NEW DELHI – Democracy is under threat around the world, but not because dictators are overthrowing elected governments and seizing power. While authoritarian takeovers still make headlines, they are no longer the greatest threat to free societies. The real danger is more insidious: a gradual yet profound transformation of our democratic systems.

On the surface, these systems appear to be functioning as they should. Elections are being held, and voters are casting their ballots for leaders and parties they believe will represent their interests. But too often, they end up electing politicians who serve only their own interests rather than those of their constituents. While gullibility is not new, it has become so pervasive that it now threatens the very foundation of democratic governance.

To understand how we got here, consider the “elé belé rule.” When I was growing up in Calcutta (now Kolkata), all smart kids playing in the streets and parks knew the rule. When they played games in the neighborhood, a younger kid – usually accompanied by a doting mother – occasionally would insist on joining them. Rather than refusing outright, the players would whisper to one another the code words “elé belé,” signaling that while the new kid could play along, he was not actually part of the game. If he scored a goal, we would cheer and applaud, but we all knew the truth: his goal didn’t count.

Today, elé belé has become a staple of democratic politics, with ordinary people around the world eagerly throwing their support behind demagogues who don’t think they count. For these leaders, a commitment to public service is worse than irrelevant; it threatens the relentless pursuit of wealth and power for themselves and their cronies. Voters who believe they are part of the game are just being played.

The result is democratic erosion. Mainstream economists and political scientists have long relied on the “median voter theorem,” which states that in a majoritarian electoral system, political leaders will naturally gravitate toward the preferences of centrist voters, as winning elections requires appealing to the ideological middle rather than the extremes. But today’s deepening political polarization and the growing tendency of politicians to embrace radical positions suggest that this assumption no longer holds.

While the underlying causes of this shift remain unclear, it is strongly correlated with the rise of social media. Instead of fostering informed debate, digital platforms have become powerful tools for spreading misinformation, enabling opportunistic leaders to manipulate and mislead people with ease.

Since its inception in ancient Athens, democracy has undergone numerous transformations. As technology advances, certain features of earlier democratic systems become outdated. Evolving moral standards can also lead to fundamental reforms. For example, in the Roman Republic, the votes of high-ranking officials and the wealthy carried more weight than those of ordinary citizens. We no longer find this acceptable.

Similarly, as democracy evolved, the need for stability became evident, leading to the introduction of constitutions. While constitutions can be amended, doing so requires more than a simple majority, ensuring that core institutions are not subject to impulsive change.

With democratic governance under increasing strain, the world once again finds itself at a critical juncture. Today’s extreme inequality is eroding democracy in unprecedented ways. The rise of digital platforms and social media has provided the super-rich with new tools to shape public opinion. Voters believe they are active participants while – elé belé – real power is concentrated in the hands of the few.

Curbing inequality is thus not just a moral imperative; it is also necessary for protecting democracy against the threat of authoritarianism. To this end, we need a tax system that redistributes wealth and income without stifling innovation and entrepreneurship.

There is certainly scope for this. Once they reach a certain level of wealth, the super-rich are no longer motivated by a desire for more money per se, but rather by the desire to outdo their super-rich peers. This implies an opportunity to implement what I call an “accordion tax,” which taxes high earners and redistributes the revenue to those with lower incomes in a way that preserves the relative ranking among the rich. Such a system would enable us to reduce inequality and maintain the incentives that drive ambition and innovation.

But individual countries cannot tackle extreme inequality by themselves. International cooperation is essential, given the limits of unilateral action in a globalized world. History has shown that when faced with major challenges, the world can come together to translate bold ideas into action. To save democracy, we must do so again.

Kaushik Basu, a former chief economist of the World Bank and chief economic adviser to the Government of India, is Professor of Economics at Cornell University and a non-resident senior fellow at the Brookings Institution.