Democracy is great for providing transparency and accountability and thus helping to fight corruption and promoting rule of law. And also private proprietary ownership is well respected and thus helping the stability and growth of market economy.
However, there are downsides with how democratic political system has effects on economic policy. For example, whenever an executive power incumbent is changed, there is a likelihood of divided or discontinuous economic policy, thus hampering long-term economic planning. Elected governments are often forced to pay more attention to short-term to satisfy the needs and concerns of the voters as soon as possible
while it might be a sound economic policy in long-term. Partisanship and special interest groups might prevent the government from choosing situation-wise right economic policy over dogma and ideologies.
Limited government role in market economy can lead to its inability to foresee and prevent market crash. Often economic advisers’ policy might have to be turned down while it might not be politically correct. For those reasons, we have to give a thought how we can mitigate adverse effects of democracy on economic policy.
Citizens in a country choose or design a government not just for economic prosperity but there are also other purposes such as getting their voices heard, freedom and liberty.
Therefore, we still want to keep democracy and its good parts. Then, the question is how we can tweak democratic system to formulate better economic policies, without losing
democratic values most of us cherish and enjoy.