Democracy, Education,
Government
Growth Economics
Roberto Pasca di Magliano
2015/2016
Interaction Democracy-Education
INTRODUCTION: DEMOCRACY
Definition of democracy
Formulated by Abraham Lincoln in his Gettysburg address in 1863:
government of the people, by the people, and for the people
Interaction between democracy and education affects the quality of
government
• Democratic elections do not foster the quality of government
in countries with largely uneducated populations
• The standard argument advanced in political science and
economics in favor of democratic institutions suggests that
democracy gives the right incentives to elected officials
because free elections provide to the voters from the
corruption and excess power (Sen, 2000, and Rivera-Batiz,
2002)
Virtuous Rules
INTRODUCTION: FREEDOM & VIRTOUS RULES
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Freedom
is the basic condition of the individual self-esteem
responsibility and participation to social and economic
choices
it can be considered a natural right
It has to be transformed in good and services whose
access must be garanteed to all individuals (positive
freedom)
Virtuous rules need to:
ensure the correct relation between individuals
induce in individuals, firms and policy-makers behaviours
coherent with the selected development objectives
Interaction Democracy-Education
EMPIRICAL EVIDENCE AND QUESTIONS
Only a weak correlation between the extension of
democratic liberties and good policy making
Countries with similar degree of democratic liberties exhibit
large heterogeneity in the quality of governance
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Questions
How can we make sense of these discordant experiences?
Why only some democratic governments deliver good
policies and others do not?
Or, to put it as Robert D. Putnam did in his famous book on
democracy in Italy, how can we make democracy work?
Finally, are there any rules’ mechanism to insure best
practices and good democratic governance?
Interaction Democracy-Education
ISSUES
The following issues try to reconcile discordant literature on the
influence of both democracy and education in promoting good
governance and economic development
• the interaction between democracy and education is positively
correlated with the quality of government
• the correlation between democracy and the quality of government is
not statistically significant in countries with low levels of education
and is positive and statistically significant in countries with high levels
of education
• nevertheless we assume that there is a significant effect of education
on governance only in democratic governance (Hirschman)
• Democracy and education rather complement each other and put
into perspective the predictions of Glaeser et al. (2006) who suggest
that stable democratic institutions cannot flourish in the absence of
educated population
Interaction Democracy-Education
CHARACTERICS AND PRINCIPLES
 making democratic institutions dependent from the cultural
surrounding
 providing civil culture through virtuous rule (i.e. inducing in
individuals, firms and policy-makers behaviours coherent
with the selected development objectives)
 creating social capital accumulation
 avoiding asymmetries between citizens and policymakers
 organizing education programs in order to increase:
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the citizen’s responsibility and participation to the institutions
the ability to select leaders and representatives
the knowledge of the issues upon which they vote
the capacity to recognize corrupted public officials
Virtuous Rules
IMPACT OF THE FINANCIAL CRISIS
Economic arrangements, value system and social equilibrium are
especially threatened by the financial crisis and by economic policy
distortions:
•use of conventional economic policies based on budget control and fiscal
pressure both give up to negative expectations on the future and, therefore lead
to recession, social difficulties, poverty increase. Furthermore, austerity
measures jeopardize the recovery. To combine rigor with growth, new wealth
should be created by raising consumption and investment.In order to fight socioeconomic deterioration, radical reforms are needed
Aims of radical reforms:
 to eliminate distorted behaviors that originate in collusive rules, typical of
top-down control systems widespread within the Civil Law system
 to fight conservatism and corporatism
 to favour the restoring of fair and sustainable ethical principles
 to counter financial speculation
 to reduce waste in public spending; contain and rebalance the tax burden
Virtuous Rules
EFFECTS OF FISCAL POLICIES
The tightening of fiscal policies has generated an inevitable vicious
circle:
 Loss of purchasing powers (Italy -1,9% in 2011) and profits
 Decrease of consumption and investment  higher
unemployment
 Decrease of GDP  lower revenues
 Increase of public debt  need for additional fiscal restrictions
Virtuous Rules
EFFECTS OF SPENDING REVIEW POLICIES
• Leading a policy of reduction of the public spending
could have triggered a virtuous circle:
 Debt and deficit reduction
 Spread reduction and lower interest rates
 Easing the tax burden on income and employment
 Growth of consumption and investment
 Growth of the GDP and higher employment
 Higher tax revenues in the medium-long term
Virtuous Rules
STRATEGIES TO REINFORCE STATE CREDIBILITY
AND INDIVIDUAL RESPONSABILITY
There is a widespread consensus on the need to reinforce
institutional credibility and to develop our country as a
coordinated and unitarily governed system but there remain
some contrasts among the various political and economic
stances
Different opinions concerning the modalities to realize
reforms to reach selected objectives:
• top-down rules, generally following the application of laws,
implying controls and administrative sanctions
• bottom-up rules, generally based on administrative
procedures only, implying the use of self-regulating measures
which re-evaluate individual’s responsibility
Virtuous Rules
CONCLUSIONS
Virtuous rules are the best ways to implement radical reforms
intended to modify socio-economic distortions within society
Main sectors of application:
• Improving credibility and public effectiveness
• Reduction of public debt and budget expenditure
• Fight fiscal evasion and the black economy
• Best way to increase individual’s confidence in the future
and thus to promote development
Virtuous Rules
VALUES OF DEMOCRATIC GOVERNANCE