Democracy is at risk worldwide. And the economy may be, too.

Venezuelan President Nicolás Maduro created a new cryptocurrency called the ‘Petro’ to combat hyperinflation. Reuters/Carlos Garcia Rawlins

Seventy-one out of the world’s 195 countries saw their democratic institutions erode in recent years, according to the 2018 year-end report by democracy watchdog Freedom House, a phenomenon known as “democratic backsliding.” Signs of backsliding include elected leaders who expand their executive powers while weakening the legislature and judiciary, elections that have become less competitive and shrinking press freedom.

When government institutions erode like this, it isn’t just bad for democracy – it also hurts countries economically, research shows.

To understand why, we applied our background as political scientists focused on developing economies to study Venezuela, Turkey and Hungary – all countries that have seen varying degrees of democratic backsliding in recent years.
 

The authoritarian economic problem

All three countries have struggled economically as their democratically elected leaders turned nakedly authoritarian over the past five years.

In Turkey, President Recep Erdoğan has been steadily consolidating presidential powers for years while attacking the independence of both the legislative and judicial branches, as well as restricting press and academic freedoms. Turkey’s economy has struggled in kind, with gross domestic product dropping about 60 percent between 2013 and 2016. Its currency, the lire, also collapsed last year, plunging the country into crisis.

Under the autocratic leadership of President Nicolás Maduro – who is now in a bitter power struggle to retain the presidency – Venezuela has seen financial ruin. Inflation hit 80,000 percent there last year, and food and medicine are scarce. Venezuela’s government stopped releasing economic data in 2014, but its gross domestic product is believed to have shrunk by around 15 percent for each of the last three years.

Meanwhile, Hungary has stagnated as Prime Minister Victor Orbán has become increasingly undemocratic. Since the 2014 election, when Orban’s grip on power really tightened, growth has mostly dropped, from 4 percent in 2014 to 2 percent in 2016. The World Bank predicts that Hungary’s economy will continue to contract through 2020 and beyond.
 

Leaders are fallible

Authoritarianism isn’t always bad for the economy. Autocratic China and Singapore are both economic success stories, growing at double digits – a pace largely unseen in Western democracies.

But these countries were never set up to be democracies.

When a one-time democracy turns toward authoritarianism, however, the economic effect is often negative. That’s because, in a democracy, economic policy is meant to be made jointly, by various elected officials from the executive and legislative branches. Other independent government agencies, like the U.S. Federal Reserve or central bank, help decide economic policy, too.

Lawmakers check impulsive decisions by presidents in a number of formal and informal ways, our research shows. Policies that relate to government investments, taxing and spending, among other issues, are generally the result of negotiation between the two branches.

When legislatures can no longer effectively serve this function – because they’ve been sidelined, as in Venezuela and Turkey, or because they are dominated by the ruling party, as in Hungary – there’s little to prevent authoritarian leaders from making bad choices that hurt the economy.

Turkey is a good example of the risks that come from having one all-powerful, fallible leader.

In July 2018, President Erdoğan expanded his executive powers to include making key appointments to Turkey’s central bank and appointed his son-in-law to lead economic policy in Turkey. Erdoğan then restricted the bank from raising interest rates to curb rising inflation – despite warnings from economists that this move would lead the value of the Turkish currency to plummet. And, of course, it did.

Turkey’s currency, the lire, collapsed after a series of unwise economic decisions made largely by President Erdoğan. Reuters/Khalil Ashawi
 

Social unrest is bad for the economy

Legislatures play an important role in setting economic policy also because, as representative bodies made up of different political parties, they serve as channels through which people and social groups can make demands on policymakers.

In healthy legislative debate in a functioning democracy, opposing parties develop economic policies that help their constituents. They also try to change laws that they believe will hurt the people they represent.

When authoritarian leaders sideline opposition parties and stack the legislature with their supporters, the only way for citizens to air their grievances is on the streets.

Venezuelans staged months of mass daily protests in 2017 after President Maduro stripped Venezuela’s opposition-dominated parliament of its powers. They are marching again now, demanding Maduro’s ouster.

Social unrest can deepen economic woes, especially when it gets violent. Riots may destroy physical infrastructure like oil pipelines or block highways that keeps the country running. People may flee for their own safety, leaving jobs undone and critical positions unfilled.
 

Democratic backsliding reduces foreign investment

International markets, too, dislike social unrest. When protests are prolonged or if the governments crack down violently, it is common for investors to flee.

International investors get worried, too, when parliaments have too few opposition parties to effectively check the executive branch, our study finds.

When democratically elected leaders turn authoritarian, investors get nervous, withdrawing funds and reducing investments.

Since 2013, Hungary, Venezuela and Turkey have all seen notable declines in their foreign direct investment, a measure of global confidence in a country, according to the World Bank. Declines range from 66 percent in Venezuela to 300 percent in Hungary.

One reason investment drops as democracy erodes is because investors fear the government could begin meddling in their businesses in ways that reduce profits.

This is a common strategy of authoritarian leaders from both the right and the left.

Since taking sweeping control of Hungary’s parliament in 2018, for example, President Orban’s right-wing Fidesz party has reasserted government control over major energy firms, taking over public utilities and increasing government oversight of foreign companies that operate in the country.

In Venezuela, the left-wing Maduro has taken over food production in the country, ordering companies like Nestle and Pepsi to vacate their factories in 2015.
 

It’s all about the legislatures

Our study found one condition that allows economies to thrive even when democracy is in decline: functioning political parties in independent legislatures.

In the Philippines, hard-right president Rodrigo Duterte has imprisoned, even killed, thousands of citizens as part of his “war on drugs.” Duterte has also arrested powerful people who criticize his policies. So far, however, the Filipino parliament is still fairly functional, with opposition parties that operate freely.

Consequently, the Filipino economy remains unaffected by Duterte’s authoritarianism. Gross domestic product has grown at a good rate of around 7 percent since 2012. Foreign investments have also been increasing.

Sharing some power with lawmakers gives the economy a boost. Ultimately, that may help these authoritarian-leaning leaders stay in power longer.
 

Nisha Bellinger, Assistant Professor of Political Science, Boise State University and Byunghwan Son, Assistant Professor of Global Affairs, George Mason University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Is this how it begins? With rage, with the demands of the entitled millions who feel their birthright has been stolen, with those who claim “we built this country, we fought its wars, when is it our turn?” Donald Trump is by any stretch of the imagination an awful candidate to be president of the most powerful state on earth, a sexist, racist, impulsive narcissist who lies with abandon and hates with fervour. His handlers don’t even trust him with his own Twitter account anymore. And now he is the standard bearer for an increasingly familiar social coalition, angry white working class men (and women) with weak formal education and weaker job prospects, along with disaffected white middle class conservatives, many of them religious, who are furious that they lost the culture wars. We’ve seen this coalition before: it’s a breeding ground for fascism. Liberals need to wise up and fast. The International Criminal Court (ICC), global human rights, international norms? These are sideshows. The battle is much more present and visceral than that now. It is the battle of democracy and in that struggle, human rights are too compromised by their association with the very liberal elite—exactly the elite that the Putin/Trump/Brexit coalition hates—to be a principal mobilizing banner.

It isn’t Left vs. Right any longer… It is the out-of-touch liberal elite vs. the rest.

For Trump’s constituency, his obvious and stupefying flaws are irrelevant. He’s a policy-lite hand grenade intended to spark a revolution. From his admiration for Putin to his authoritarian style, right down to the machismo, sexual bravado and contempt for minorities, the outlook for human rights in the US—let alone globally—under Trump is catastrophic. For his coalition, human rights are a shell game pushed by cosmopolitan liberals to steal the nation away from its legitimate, mainly white, heirs. Make no mistake about it, the right is on the move—in Britain, Hungary, Austria, Denmark, Germany, the Netherlands, India and now, far more importantly than any of those, in the United States. If Marine Le Pen can win in France in 2017 then fascism will truly have arrived, just seventy years after we assumed it had been banished for good. Get those immigrants out, get those trade barriers up, put my nation first, and forever, crush those bespectacled intellectuals, demean the unpatriotic, wrap yourself in that flag and humiliate the non-believers. Trump even threw in a healthy dose of anti-semitism for good measure.

Also Read: The Rise of American Authoritarianism.

After Brexit, I argued that winter was coming for human rights. Well, it’s here.

It’s here because the liberal democratic market model that has underpinned forty years of human rights growth is broken. It is here because what was supposed to happen, trickle down affluence, never did in any meaningful way. The age of rights, four decades of a newly potent set of claims for dignity, equal treatment and protection—for civility, for vibrant opposition to authority—were built on what Trump supporters have come to see as a lie. For them, human rights were not heralds of a new era of fair shares for all but a way to steal the inheritance of real Americans. Of course human rights were not the drivers of this change, they were part of its ideology. What drove it was a massive democratic experiment in which millions of working class, largely white voters, those whose forebears—so their mythology goes—built the nation, were told to hang tight while the economy was modernized. Liberalize those markets and break that union power and we would all be free. For election after election, as millions lost out in this vast demographic transformation, where wages stagnated or fell, and cheap and even illegal immigration filled the service sector with low paid workers, a “precariat” grew whose everyday life experience was chronic insecurity. But where illegal immigrants and the recently arrived were disenfranchised, white working class voters and their culturally conservative fellow travellers were citizens. They seethed. “Left” governments who promised a Third Way—Clinton and Blair—failed the former, “Right” governments who did nothing to stem immigration and talked down Christian values failed the latter. The mix of class and race was suddenly salient again, posing a major challenge for a country with such a problematic race history as the United States. All forms of diversity were suddenly in the crosshairs.

Also read: Trump’s victory sparks dozens of protests across country

Political entrepreneurs, Trump, Le Pen, Farage, Wilders, emerged to say: there is another way. They were quick to identify immigrants, religious minorities, refugees, foreign aid recipients and the liberal establishment as the problem. Their supporters know the liberal elite sees them as ignorant, backward, an embarrassment. But with the help of Trump they found their voice, which says: you can take control. You just have to take back power from the government and throw out the foreigners who have stolen your jobs or are doing them in China. It was a vast conspiracy, after all. You were right. The (white) social contract has been reneged on. And you were forced to be grateful for this, forced by the PC police to tolerate those who attack what you stand for and trash your most cherished values.

It isn’t Left vs. Right any longer… It is the out-of-touch liberal elite vs. the rest.

Trump’s election has changed all of this. It isn’t Left vs. Right any longer because a lot of that Left’s natural constituency has been lost (hopefully not permanently—a ray of hope—but what a missed opportunity a Sanders candidacy was). It is the out-of-touch liberal elite vs. the rest. And, guess what? The liberals are going to lose. Their signature ideology, free markets and human rights, will be among the first things to go. It appeals to too small a demographic. Why have people missed this? Because liberal elites talk to other liberal elites and political science often can’t see the wood for the trees.

Trump did everything possible to lose and he still won.

Can he fix any of this? Of course not. The seismic economic shifts are impossible to reverse without cutting off trade and growth, in which case greater fairness will come at the cost of huge economic contraction. Let us remember he’s promised tax cuts for the wealthy! What’s needed is a long-term plan of retraining, strategic investment in education and a great deal of research and development work for the new economy. All of which requires coordination, rather than endless bipartisan confrontation in both political and legal systems. It will need the very same experts, whose names are now so tarnished, to help formulate and implement the plan. These are big problems and will take a while to surface. What of the short term?

There are so many areas in which human rights will suffer, but let’s highlight three. Supreme Court appointments: one at least (with a Republican Senate likely to approve) will be enough to repeal Roe vs. Wade, and Trump might get three during his four years. Hang in there, Notorious RBG. Immigration: if the plan is really to deport millions of undocumented workers, then internment camps, dawn raids by thousands of armed government officials, deaths and killings in custody, border firefights and lacerating misery are almost inevitable. And foreign policy: Assad and Putin know that they can crush Aleppo with impunity because President Trump is only interested in something they also want, a massive air attack on ISIS. This isn’t even to start on Trump’s repudiation of generations of US foreign policy consensus on NATO, his tendency to make unilateral demands of other countries that he cannot possibly deliver on without negotiation and compromise, and his commitment to torture. Trump’s toxic attitudes will also surely affect the general climate for rights, for women, for the disabled, for minorities, in a deeply negative way by legitimating discrimination.

So, what is to be done? For human rights on the global scale, fight Trump and Trumpism. Fight fascism. Stop this ill-starred pursuit of failing global norms and institutions like the ICC, criminalizing the crime of aggression and a Convention on Crimes Against Humanity, and go where the struggle really is, on the ground, in national legislatures, in national courts, where there really is an “us” versus “them”. Embrace domestic, rather than international, politics. The struggle is now about democracy, democratic organization, reaching out, building coalitions of support that weaken the fascist base and getting into, in a serious way, class, race and identity. You fight fascism by rebuilding support for progressive democratic politics within national borders, not by building castles out of international normative air. It is now the national ballot box, more than international law, where the battle for human rights must be won.

(Stephen Hopgood is a professor of International Relations at SOAS, University of London. His most recent book is The Endtimes of Human Rights (for critiques see here), following on from Keepers of the Flame: Understanding Amnesty International). 

(This article was first published on openDemocracy).
 

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