In the aftermath of the 2008 financial crisis, one of the biggest casualties has been democracy. Every year over the past decade, according to the independent watchdog Freedom House, the number of countries experiencing a decline in political rights has exceeded those that have seen an increase. This retreat, reversing a period of progress that began in the 1980s, continued this year as autocratic leaders like Vladimir Putin of Russia and Recep Tayyip Erdogan of Turkey further curbed freedoms.
The retreat of democracy is entering a new phase, driven by voters embracing strongman rule. Parties led by autocratic personalities have won a string of election victories from Poland to the Philippines, and nearly won in Austria last month. In Germany, France and Britain, support is rising for parties that show a strongman’s impulse to address economic distress by command: shut borders, deport foreigners, stifle dissent. Now some people fear that strongman rule could loom for the leading democracy, as a Putin fan who promises to “make America great again” runs for the White House.
Voters are losing faith in the capacity of slow, deliberative democracy to solve their problems as the global economy faces its weakest recovery in postwar history. Amid mounting frustration, however, nothing has done more to legitimize faith in autocrats than the rise of China. In 2008 Beijing aggressively borrowed and spent to fight the global downturn, mobilizing resources as only a single-party dictatorship can.
As China boomed in 2009-10, while the West struggled, the world’s intellectual elite began talking up the new “Beijing consensus,” implying general agreement that autocrats have an economic advantage, particularly because they can command swift action in hard times. Donald Trump launched his campaign in part on the premise that Washington needs a tough guy to stand up to Beijing, claiming that in business, “I beat China all the time.”
Beware the economic allure of strongman rule. I have spent 25 years developing a system for predicting the rise and fall of nations, and I have studied whether autocracies or democracies are better economic managers. The winner: democracy. Of the 124 cases since 1980 when an economy grew faster than 5% for a full decade, 60 unfolded under an authoritarian government, while 64 unfolded under a democratic government. This suggests a near-dead heat, with a slight edge for democracy.
Those results conceal the big flaw of authoritarian regimes: their erratic economic swings and long slumps. Since 1950, 43 economies posted an annual growth rate of 7% or more for a full decade, and 35 of them were under authoritarian government. Those cases include some that kept growing steadily for several decades (including China before this decade), but also many that grew rapidly one decade only to collapse the next, as Venezuela did in the 1960s and Iraq in the 1980s.
Autocrats can orchestrate a forced march to prosperity, but these tend to end badly. Long slumps are also much more common in autocracies. Since 1950, 138 economies posted an average annual GDP growth rate of less than 3% for a decade, and 100 of those cases unfolded under authoritarian regimes, ranging from Ghana in the 1950s to Nigeria in the 1990s. Russia is now headed the same way.
Russia emerged as a new democracy after the fall of the Soviet Union, and when Vladimir Putin was first elected president in 2000, he was a reformer, cleaning up a corrupt and Byzantine tax system, saving windfall oil profits in a rainy-day fund. That set the stage for a boom as oil prices took off, and by 2010 Russia’s average income had more than quintupled to $12,000.
But success made Mr. Putin complacent and more authoritarian. He failed to diversify from oil and replaced reformers on his staff with loyalists. As oil prices collapsed, Russia’s average income fell by a third, back to $8,000. This is an odd moment for an American presidential candidate to cite Mr. Putin as an example of what tough guys can get done.
Autocracy is a bad economic bet because of its tendency to centralize decision-making in a circle of friends and family, and to tie economic policy to the whims of a strongman. Since 1950, 36 countries have seen at least nine individual years of growth faster than 7% and nine individual years of negative growth. And 27 of these roller-coaster countries were governed for most of the period by an authoritarian government, including Iran, Ethiopia, Iraq, Syria and Nigeria. Most of these countries are poor, with average incomes below $5,000, because the boom years were wiped out by the busts.
By contrast, democracies suffered very few extreme swings. Together, Sweden, France, Belgium and Norway have posted only one year of growth faster than 7% since 1950. Yet all four have seen average incomes rise five- to sixfold, to more than $30,000, in part because they rarely suffer years of negative growth.
This is the stabilizing effect of democracy. Among the large economies that have grown steadily enough to have average incomes over $10,000, every one is a democracy. China, with an average income now approaching $10,000, is trying to become a large, rich autocracy, but it would be the first. And today, the same autocratic model that allowed China to orchestrate three decades of rapid industrial development also allowed it to suddenly start fueling economic growth with debt, beginning in 2008. Those mounting debts are weighing on China’s growth, which peaked above 10% in 2010 and has since fallen to less than 4% or 5%, according to independent estimates. This record should give pause to any nation looking to a strongman as a quick cure for economic problems.
The big difference between Donald Trump and Vladimir Putin is that Mr. Trump is rising in a well-established democracy, with institutions that are probably strong enough to resist any leader’s whims. If a similar figure were rising in a developing country with weaker institutions, financial markets would be in panic, with money fleeing and the currency in free fall.
Instead, the dollar and the US stock market have been broadly stable even as Mr. Trump climbed in the polls and became the putative Republican nominee. Investors are betting that an autocratic personality can’t do much harm in the US, or that Mr. Trump is not a true autocrat, more outrageous than dangerous. Whatever one thinks of Mr. Trump, the message for any country looking to a strongman is clear: In the economic race, democracies ultimately prevail.