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Populist democracies and universal suffrage

Ukraine, Turkey, Argentina, and many more countries are undergoing turmoil moments these days. Waves of protest movements and mass indignation with the ruling “democratic” regimes have engulfed these countries. The protesters require to annul the results of the last elections and conduct the new. Why is it happening in more or less steadily developing countries, whose economies just yesterday were rated as promising and rapidly growing? Why is it happening in countries whose leaders were elected democratically – with some inevitable caveats in procedure of course (due to imperfection of any elections) yet based on the principle of majoritarian vote? To find it out let’s have a look at these randomly selected country-cases.


The protest movements have been underway here since November 2013. The protesters require to introduce voting quota based on age, property and education. Until very recently, Thailand was a rapidly developing economy. As soon as the populists (Yingluck Shinawatra) came to power they immediately started crushing the economy. The country got entangled in a network of fraud ponzi schemes. The most fraudulent and notorious one was the so called “rice scheme.” The “rice scheme” was launched in 2011. Thailand is the largest rice exporter accounting for 70% of all rice exports in the world. Rice farmers constitute the bulk of voters. Prime-minister Yingluck figured that she could play the rice card to attract more votes and announced that the government would buy rice from farmers at a price that was twice as high as the spot market price at that time. Since Thailand was the major exporter of rice to the global market at that point, the government decided to artificially raise prices, monopolize the rice market and regulate prices at its will. What happened next was quite predictable: the neighboring countries such as Kambodia and Birma (also rice producers) began exporting their rice to Thailand at a higher price. Thus Thailand generously funded the Kambodian peasants. Meanwhile, part of the rice stocks in Thailand disappeared. To date, they have 18 million tons in storage with 4 million tons of rice stolen. India has been benefitting from the populist and myopic Thai policy. Thailand being swamped by its rice stocks has therefore yielded his status of the largest rice producer and exporter to the next large rice country – India. India increased its rice cultivation and flooded the world market with cheap rice. Consequently, the world price for rice has dropped by 20%. As a result, Thailand now stores 18 million tons of rice with no intention to sell it by the current market price. Thus, the government’s loss amounts to 9 billion dollars according to some moderate sources and 22 billion dollars according to other. The Thai farmers have not been paid since last October despite endless promises from the government to pay double for their crops. Educated urban upper-class people went out to the streets in Thailand in protest to such a policy and government. They request that “those wonderful people” who voted for these politicians and their schemes should be deprived of the right to vote.

President Maduro invaded the local stores with militants. He established the Ministry of Happiness [Notice, it’s not Orwell it’s real president Maduro in his real country]. Recently, all international airline companies cancelled their flights to the country because Venezuela operates on two exchange rates for bolivar – the official one (6,3 bolivars for 1 US dollar) and the black market that is 10-12 times different. Thus, foreign airlines had to sell the tickets for bolivars by the official rate. In the meantime, the Venezuelan government promised to exchange the bolivars back for dollars by the official rate. However, the government kept delaying the deal so that the debt for the companies has reached the point of 3 billion dollars. The companies had to shut their flights.


President-populist Nestor Kirchner was elected two times, for the third term he elected his own wife – Kristina Kirchner, because the electoral system in Argentina (as in any other decent democratic country) prohibits one and the same politician to serve a term three times in a row. After his succession maneuver Nestor died and Kristina started ruling on its own. She turned on money printer which brought the country to inflation of around 26%. Commodity prices skyrocketed. Kristina adopted a regulation law to keep the prices “fair”. In addition, she initiated two different exchange rates for peso – one official, the other – created by the black market. The two rates are not even close. Kristina also took control over the national media banning newspapers from publishing advertisements thus depriving the publishers of income. Noticeable that a few years ago Argentina was a country with steadily growing GDP, and the presidents have always been elected by the majoritarian vote.

These few examples of failed and essentially disruptive populist policies have explicitly shown that the belief that universal suffrage (to be especially utilized in a poor country) will bring about freedom and free market – is entirely wrong. This statement will be wrong in wealthy western democracies too. The financial crisis in Europe proves that even well-off democracies don’t benefit from universal suffrage and politicians-populists, who just increase the number of people dependent on state. The situation where people being corrupted by generous welfare programs outnumber people who work and pay taxes – is not going to not end well.


3 thoughts on “Populist democracies and universal suffrage

  1. Amen, what these 3rd world countries need is what Indonesia’s old dictator (president from independence to over throw)Sukarno called “guided democracy” were the people only had as much democracy as the country could stand.

  2. Shortly after I wrote this piece I went to a talk event where decent economists (from JP Morgan, Moody’s and a hedge fund) were discussing the current turbulent situation with emerging markets. None of them was able to draw parallels between the ongoing unrest and inflation/negative real rates etc in the developing world. What’s more – the JP Morgan guy said that “History doesn’t repeat itself”. But what does one mean by that? Does one knows history so well that can easily shake off any possible reminiscences? I strongly doubt that. To say that history never repeats itself is to simply neglect it, which is the easiest. In the meantime, if we look at the current events and back in the world’s past we’ll find plenty of similar cases that wouldn’t be a futile idea to analyze and learn from.
    Venezuela. Maduro: violent imposition of prices by state and confiscation of goods from businessmen. It is exactly what was happening under the law of maximum during the French Revolution. The French government set forth uniform price ceilings (maximum price) on goods. If there are no goods on which the government set prices and regulations, then the businessmen hid them. The latter obviously would mean violation of consumers’ rights which could be reported to the police.
    Another example. Look at Thailand and its epic rice venture by Ms.Yngluck. The idea to create a state fund of rice is not new. The history does repeats itself! China, the Wang An-shih reforms during the Song dynasty. Statesman and economist Wang An-shih believed that “The state should take the entire management of commerce, industry, and agriculture into its own hands, with a view to succoring the working classes and preventing them from being ground into the dust by the rich.” [Nourse, Mary A. 1944. A Short History of the Chinese, 3rd edition. P.136]. Among Wang An-shih’s opponents was Su Dongpo, head of local KGB and also a poet, heavily criticized the reforms and warned that they would bring nothing but dismal results. In fact, the reforms turned out misguided and disastrous.

    The Bottom Line here: politicians who seek to improve their own popularity and secure power don’t care about the state as such in the longer perspective. They use all means (namely, populist rhetoric and populist measures) to attract massive support while in reality painstakingly destroying the economies.

    • Winston Churchill is credited with the variation: “Those that fail to learn from history, are doomed to repeat it”. History is riddled with attempts by governments to control their economies and their people by regulating everybody and everything. It has never works out well. Now we have the Ukraine and their fight as to whether they will be a satellite of Russia or to become a member of the EU and become aligned with the Western. South American countries have been failing since the Spanish lost the Spanish-American war in 1898. Neither the Ukraine nor South America have histories of democracy and they are going to keep failing and are going to have to pick themselves up. All the countries discussed have young democrats that will lead the efforts and with a little luck they will ultimately persevere, but with leaders like Maduro and Putin it won’t be fast nor easy.

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