Leeson and Dean: The Democratic Domino Theory

The Bush administration believed that establishing democracy in Iraq might embolden reformers in other lands seeking to spread freedom.  In remarks to the national Endowment for Democracy at the United States Chamber of Commerce on November 6, 2003, President Bush said

Iraqi democracy will succeed -- and that success will send forth the news, from Damascus to Teheran -- that freedom can be the future of every nation. The establishment of a free Iraq at the heart of the Middle East will be a watershed event in the global democratic revolution.

Peter Leeson and Andrea Dean refer to the idea that establishing a democratic government in one country increases the probability of neighboring countries adopting more democratic institutions as the democratic domino theory.  They attempted to measure the size of the domino effect in "The Democratic Domino Theory: An Empirical Investigation."  The abstract of the paper reads

According to the democratic domino theory, increases or decreases in democracy in one country spread and “infect” neighboring countries, increasing or decreasing their democracy in turn. Using spatial econometrics and panel data that cover over 130 countries between 1850 and 2000, this article empirically investigates the democratic domino theory. We find that democratic dominoes do in fact fall as the theory contends. However, these dominoes fall significantly “lighter” than the importance of this model suggests. Countries “catch” only about 11% of the increases or decreases in their average geographic neighbors’ increases or decreases in democracy. This finding has potentially important foreign policy implications. The “lightness” with which democratic dominoes fall suggests that even if foreign military intervention aimed at promoting democracy in undemocratic countries succeeds in democratizing these nations, intervention is likely to have only a small effect on democracy in their broader regions.

Like beauty, the "lightness" impact is in the eye of the beholder.  If we are successful at establishing more democratic institutions in Iraq and Afghanistan, is an 11% increase in surrounding countries significant?
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Economists on American Democracy

William Davis and Bob Figgins ask the question, "Do Economists Believe American Democracy Is Working?" in the May 2009 Econ Journal Watch.  To answer this question, they randomly selected groups of 1,000 members of the American Economic Association for survey.  The survey contained thirteen questions meant to assess whether economists believe that American democracy works.  The authors broke down the responses into political affiliation.  The questions were graded on a scale of 1 to 5, with 5 representing the most skeptical view in eight of the thirteen questions and 1, the most skeptical view in the remaining questions.  I have reproduced the first three questions and overall results, dropping the political affiliation, to provide a sample of the results.   

In the U.S. special interest groups typically have more than a negligible impact on public policy formation (4.55).

Elected officials in the U.S. typically construe issues to create a "feel good" mentality among their constituents (3.87).

Elected officials typically use media outlets to "spin" a political viewpoint rather than to communicate the issue in an unbiased manner (4.28).

Davis and Figgins summarize their findings.

On every proposition a majority—usually a large majority—of economists express views that indicate they do not believe American democracy is working. In fact, for Question 9, only ten percent of all respondents either agree or strongly agree that the typical bill passed by the United States Congress and signed into law generates a positive net social benefit for society. Perhaps the most salient finding of the survey is that, regardless of political affiliation, a large majority of economists appear to be skeptical of elected officials to act on economic issues in an unbiased and objective manner. Further, the results generally indicate that economists believe elected officials employ creative methods to hoodwink their constituents while seeking re-election.

The authors ask why the profession is oriented toward the status quo when economists express so much doubt about American democracy?  They offer four possible explanations: (1) The poll was conducted in 2006 when the Bush presidency was very unpopular, (2) Many economists may view the political process as reliably beneficial (or reliably less destructive than alternatives), (3) Economists do not have allegiance to the status quo but its presumptions are focal to the research community, and (4) Research about vastly different institutions force economists to be less empirical and more speculative.

I hope that the analysis will be extended in another direction.  Seeing a need for change in governance, would economists support a greater reliance on markets, reform of democratic institutions that would improve incentives for elected representatives to work for the net benefit of society, or greater reliance on governmentally sponsored institutions like the Fed and the EPA that are largely shielded from the influence of elected politicians?
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