Dangerous Liaisons: the Democratic Mechanism and the Economy

Abstract

This paper uses the voting model of rational irrationality derived from public choice theory to highlight where we can improve results in New Zealand’s democratic systems of governance. Using such a model, I find that although democracy has worked well, there are areas that can be improved upon – particularly in the area of the economy. Building on this analytical framework, the thesis of this paper holds that the democratic mechanism traditionally has grown alongside a complementary principle of liberal values which restrains the democratic mechanism from breaching fundamental human rights in New Zealand. However, there has been no such development of a complementary or ‘good sense’ principle in relation to the economy. This means that, at the margins, the democratic mechanism produces sub-optimal results in relation to the formation of economic policy. In light of this, I examined four different reforms that could be implemented to try and develop such an economic principle. I conclude that a constitutionally imposed solution is unlikely to be able to solve the problem of economic bias in the polis. An approach that targets directly the median voter, although slow, is likely to be more effective in the long-run.