Democracy is a process by which the people are free to choose the man who will get the blame.
~Laurence J. Peter
Countries with a democracy system are somehow similar to companies in the stock exchange; The latest think on a quarterly basis, and try to give quarterly reports that raise the stock price. The former think on a election basis, and try to give results that will gain votes for the next election. A lot of the decisions taken have more to do with the short term implications that with the long term welfare.
This is why undeveloped countries with a democrat government have it so hard. The necessary measures to improve the over all economy usually hurt the poor, who in turn will vote against those measures, and, being majority, will reverse those measures.
The system works somehow like this:
1) A democratic, undeveloped country sets new reforms to improve their economy: reduce fiscal imbalance, increase expenditures in education, and raises new taxes.
2) The country, being undeveloped, has got the majority of population living in harsh conditions, and the new measures hurt them. Market-based policies meant to increase the efficiency of the aggregate economy frequently generate short-term dislocations and resentment.
3) The majority may understand the long-term benefits of the measures, but feel the short-term pain, so they vote against the government on the next elections, and elect a populist government which is going to cut taxes and increase spending.
4) All the populist measures increase deficit and inflation. The people understand how bad is the populist government and in the new election vote against it for a conservative government, which sets new reforms to improve their economy: reduce fiscal imbalance, increase expenditures in education, and raises new taxes. GO TO STEP 2
This is deadlock. Liberalizing the economy within an established democratic order are not inherently contradictory terms, but there are tensions between them that the country’s leaders will have to manage carefully. Ashutosh Varshney found that, in western society, three factors helped to avoid this situation:
1) Universal suffrage came to most Western democracies only after the Industrial Revolution, which meant that the poor got the right to vote only after those societies had become relatively rich
2) A welfare state has attended to the needs of low-income segments of the population
3) The educated and the wealthy have tended to vote more than the poor
While we can consider the democratic value a long-term asset, the need of be voted each four or six years places important constraints in the maneuver margin of present developing and under developing democracies. These factors will be very important when studying development and policy in the third world.