Monday, December 20, 2010

Democracy sucks

From T.C.A. Srinivasa Raghavan’s Last refuge of scoundrels
  • “Subject to some qualifications, the quality of governance in the worst equilibria typically improves when the Governor's compensation rises, but declines when anti-corruption enforcement becomes more vigorous.”
  • So we now know what to expect as the final outcome of the current drive against corruption: it will make matters worse! I recall reading a similar paper several years ago by two Italian economists. Indeed, Italian economists seem to have done a lot of the research into bad politicians and coalitions.
  • The key finding of that paper was that low-quality persons with a low opportunity cost drift towards politics because their market value is low. So voters get only the bad guys to choose from.
  • They then seek a mixture of good and bad guys which leads to a negative correlation between honesty and competence across political entities!
  • In India, this has come to be known as the winnablility quality: parties can't pick candidates because they are competent and honest if they will lose.

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