Democracy Development and Economic Issues Chapter

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branches of democratic governments create a balance of power, disallowing any one branch to amass or wield disproportionate power. Branches of government also ensure role clarity and stability in the separation of powers. Each branch serves a role, and that role is mitigated by the roles of the other branches. The executive branch of the government refers to the heads of state in charge of implementing the policies and laws enacted by the legislative branch. An executive branch typically performs roles not expressly or officially outlined such as administering to the people, providing public relations services, and serving as figurehead. For instance, an executive branch of government presumes powers related to not only executive, authoritative decisions but also matters linked to foreign affairs and macroeconomic concerns.

The legislative branch of government concerns itself primarily with the execution and creation of laws, policy, and legislation. Laws, policy, and legislation tend to reflect the prevailing needs, concerns, fears, and wants of the constituency. Therefore, the legislative branch of a democratic government should ideally be the most representative aspect of the democracy versus the executive branch, which may or may not be directly elected by the voting public. Finally, the judicial branch of the government enforces the laws that have already been ensconced. Generally, the federal governments' judiciaries uphold the supreme laws of the land such as the Constitutional dicta. The judicial branches of government extend into more localized affairs, as do the legislative and executive branches.

Presidential, semi-presidential, and parliamentary systems share many elements in common and yet structurally they differ in significant ways. The role of the executive branch of government will vary depending on the type of system. For example, a semi-presidential system will often exhibit a diversification of roles between the president and the prime minister. In some cases, the president will concentrate on foreign affairs, whereas the prime minister will focus on domestic matters. In other cases, the manner in which these officials are either elected or appointed is more meaningful than the roles they respectively assume. Parliamentary systems are distinguished by the fact that the voters directly elect members of parliament in their jurisdiction or ridings. Yet those voters do not elect a person. The head of the political party becomes the prime minister, in a system wholly different from that of the presidential system in which voters actually do cast their ballots for the specific person.

Advantages and disadvantages of these respective systems relate to responsiveness to majority rule, protection of minority rights, and effectiveness of passing legislation. There are clear pros and cons of each, with parliamentary systems tending towards the ability to protect minority rights due to the representation in parliament of minority voices. Yet parliamentary systems support a cacophony of voices that could preclude effectiveness of passing legislation.

2. At its theoretical extreme, a free market economy is one in which there is no government regulation, and all transactions were governed solely by market forces. A command economy, in contrast, is one where everything in the economy is run by the government. Neither one makes any sense in the extreme. In the real world, a free market economy comes with constraints that do not exist in the theoretical one, such as information asymmetry, that create market distortions. Moral hazard in particular comes into play. In the free market economy, the individual is to fend for himself or herself, and ultimately is going to suffer for that. The individual does not have the capacity to gather all relevant information about a product. If, on the macro level, a company selling an unsafe product goes out of business, it will still take a lot of negative experiences and time before information about the unsafe product is disseminated and the market correction can occur. The premise of the free market relies on information being perfect and flowing freely, but in practice this is never the case.

The upside of the free market is that information flows better than in a command economy. The market makes its corrections more quickly than would occur in a command economy, because all market participants make market decisions. The result is that the free market economy is a more efficient economy, where prices more closely reflect demand, and where utilization of resources more closely reflects efficient usage.

The command economy, in contrast, is incredibly inefficient. The amount of work it takes to gather information and then make decisions based on that is very high. Economic systems are incredibly complex, and continuously changing.

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A command economy in practice typically relies on a very small percentage of market participants to make the key decisions. The effectiveness of a command economy will depend on how much information those people can access, how quickly they can access it, and on their ability to understand the complex network of interdependencies that make up a real world economy of any size. No matter how good these decision-makers are, they will not be efficient, and the command economy will inevitably run poorly. Moreover, there is a risk with centralized control that political factors will influence decision-making (for example, keeping a money-losing factory open so that the workers remain employed), and that only heightens the inefficiency. The upside of a command economy, in theory, is that the decision-makers can defend against different sorts of externalities and negative outcomes.

As a result, most real world economies are a blend of these two. One type is the socialist economies, such as in northern Europe. Most economic activity is governed through market principles in these countries, but a large number of goods and services are treated as public goods, ranging from health care to education. This model emphasizes a greater government role in social spheres, and quality of life, but leaves room for the free market to run most enterprise.

Another model tilts more towards the free market side, with fewer public goods, and more private sector intervention. The U.S. tilts towards this model, but countries like Hong Kong are perhaps better examples. The market is deemed more efficient at allocating resources, even in sectors that otherwise would be in the national interest, such as education and health care. Restrictions on businesses are minimal -- just regulations to ensure consumer safety and environmental protections.

A third mixed approach lies with the heavy influence of the state, but with allowance for some private enterprise. Countries like China and Vietnam have adopted this approach, where the state remains heavily involved in many sectors, and often has input into critical decisions, but there is still room for a large consumer economy and independent enterprise. China's state-owned banks, for example, provide financial support for privately-held businesses such as Alibaba, Lenovo, and the country's manufacturing industry. These businesses are allowed to grow and compete, but within a control framework designed and governed by central and state-level governments.

3. Development refers to the evolution of structures and systems of capitalist enterprise, usually in tandem with technological advancements and innovations. Countries that are considered to be "developed" have robust economies that are competitive on the global market. They have institutions that support capitalism, even when there is a high degree of government regulation of business and industry. Developed countries tend to bear some of the core features of democracy, because of the way democratic forms of government enable free market enterprise and prevent the entrenchment of corruption. Other features of development are less rooted in economic performance and more linked to overall quality of life and civil liberties. Health status, assurance of freedoms, equality, and social justice remain core measures of development.

Developed economies behave in accordance with rule of law, as well as in accordance with the ethics and standards of global markets. Systems of laws to protect business enterprise help stimulate and maintain economic development, because the law prevents oligarchy and similar effects. Governments play varying roles in developed economies, but generally support economic growth in ways that reflect sustainability and ethics.

Thus, obstacles to development typically include the lack of legal protections that ensure social justice, perpetuation of income disparities and other types of disparities, and weak or inaccessible social services. Authoritarian regimes can inhibit development, but even large democracies like India remain underdeveloped due to problems like corruption. Social justice needs to be an ethical underpinning of developed economies because social justice promotes social stability. Moreover, developed economies depend on their participation in the global marketplace. The global marketplace in turn requires shared sets of values that include equitable wages and other aspects of social justice that prevent the cancerous growth of wealth disparity.

Large countries that have abundant natural resources and yet which remain poor and underdeveloped, including India, Nigeria, and Brazil tend to have certain features in common even when they have democratic forms of government and other hallmarks of development. Corruption is one of the most significant barrier to economic development, because public funds are misappropriated and mismanaged, leading to the ongoing impoverishment of the people. When governments are held….....

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