A central tension that has been part of Georgia political life for at least the last decade is that government leaders have generally shown a preference for more liberal, even in the case of some in the United National Movement (UNM) government, libertarian views, while there is evidence that suggests that many of the Georgian people are essentially social democrats. This tension has become more acute in recent years, after a brief respite, as Giorgi Kvirikashvili, the third Georgian Dream (GD) prime minister, has more liberal economic views than either of his two immediate predecessors.
Two recent news items nicely capture this conflict. The first is that Georgia was ranked 13th in the Heritage Foundation’s 2017 Index of Economic Freedom. The second was reports of employees of the Fresco chain of stores expressing their concerns about working conditions, wages, treatment by management and the like. It was not discussed in the article, but it is extremely unlikely that any of the thousands of employees of Fresco found any comfort in Georgia’s impressive scores for economic freedom.
It sounds like a high rank on an Index of Economic Freedom is an unequivocally good thing. After all, who doesn’t like freedom and doesn’t want economic freedom? However, a closer look at the ratings suggests there is more to the ratings than this. Among the countries with lower ratings than Georgia are Denmark (18), Sweden (19), Iceland (22), Finland (24), Norway(25), Costa Rica (63) and Slovenia (97). Georgia’s economy is not as strong as these countries or many others that according to the Heritage Foundation, have less economic freedom than Georgia.
The reason for this is obvious, but apparently needs to be repeated every few years. First, there are some positive components to the Economic Freedom Index. For example, reducing corruption in government helps improve a country’s ranking and is good for the country in question. Similarly, clearly and consistently defined property rights are something that can broadly benefit the entire society. However, he Heritage Foundation is also a conservative think tank with a considerably right of center political agenda. Their measure of economic freedom is not a feel good measure of economic progress, but a specific measure of how few regulations there effect businesses. This is nice if you are a business owner or share the ideological positions of the Heritage Foundation, but otherwise, this ranking is far from an unequivocal positive.
Some of the measurements are very ideological and not at all clearly in the best interest of most citizens. What the heritage calls “Labor Freedom” is conservative speak for having weak labor unions. A good score in investment and financial freedom, again nice sounding ideas, means that there are few laws regulating what financial institutions can do. Anybody who is vaguely familiar with global economic history in the 21st century, or pretty much any recent era, should recognize the perils these types of policies can present. Thus, scoring well on an Economic Freedom Index reveals little more than whether or not conservative policy wonks like what you are doing, and has very little to do with actual economic activity.
There is not much polling data regarding the ideological views of the Georgian people on big picture economic questions, but anybody who has spent time in Georgia and spoken to a range of people there, knows that many see the government as still being the primary employer, as responsible for pensions, healthcare and a range of other services and expect an activist government to solve their economic problems. This is hardly the sentiment of a society pining for a more libertarian economy. This is understood by politicians across most of the political spectrum as well. That is why this government, and more significantly, the previous one, which was much more public about their libertarian preferences, increase spending as election approaches and moreover, promise more spending on social programs after the election. Despite this, liberal economic views continue be important to many in the governing elite, particularly the English speaking western oriented members of that elite. This leads them to approach things like the Heritage Foundation rankings not as largely a measurement of an ideological commitment, but as a blueprint for economic reform.
Georgia is now in its third decade of independence. Although problems of the economy, democratic consolidation and territorial issues endure, Georgia has made substantial progress in the first two of these areas and, presumably, has learned quite a bit along the way. One of the things they should have learned is that radical liberal economic ideas may bring smiles to the faces of people in some western think tanks, policy shops, financial institutions and political parties, but they are rarely effective ways to solve the concrete problems facing the people.
Ten or fifteen years ago it was essential for Georgia to distinguish itself from several other post-Soviet countries mired in corruption, economic stagnation and Soviet style bureaucracy. To a great extent Georgia has succeeded in doing this. A decade ago, doing well on rankings like that of the Heritage Foundation was still a mixed bag, but the positive impact, signaling a strong reduction in corruption and bureaucracy, was worth it. Today, that is no longer the case and Georgia’s leaders do their people a disservice by still thinking about these rankings. The Georgian people, for their part, should understand that high scores in some of these rankings is not necessarily in their interest. It is also clear that not all of these rankings are the same. For example, improving Georgia’s score in various indices used by Transparency International or Freedom House reflect a less corrupt and more democratic Georgia while indicating little o nothing about economic policy.
This is also significant because it reflects a problem of how democracy is practiced, and perhaps, understood in Georgia. Social democratic voices have not had a chance to be heard as clearly as they should have been in Georgia because the institutions that should facilitate that are not well formed. Because elections, and politics more broadly remain stuck in a government-opposition dynamic, genuine pluralism does not emerge; and the elite consensus on economic approaches is not challenged.
Georgia needs an economic development policy that is holistic and places improving the material well being through economic growth, foreign investment, workers rights and, yes, social programs, front and center. The failure of the UNM to deliver these things during there decade in power was due to many things, but one of them was belief in an economic ideology that could not deliver for the people. The GD has been in power for almost five years and has a mixed record on economic development, to improve that record one of the first things they should do is shake off this residual and somewhat unfounded belief in the power of radical liberal reform. The positive aspects of these reforms, reducing bureaucracy, fighting corruption and strengthening rule of law are valuable but in no way preclude further economic policies that protect workers rights or that are more redistributive in nature.
Georgia also needs political processes that allow these debates to happen. It is an overstatement to claim that Georgian political parties do not talk about jobs and the economy as most of them do. However, they tend to simply promise to work to strengthen the economy, rather than offer competing visions of how to do that. The visions that are outlined tend to reflect these right of center economic ideas while any candidate or party who speaks of redistributive policies as dismissed by the political elite as a populist-a term that is increasingly misused and misunderstood in global political discourse.
The long term effect of this will not just be policies that may not serve the Georgian people well, but it will undermine confidence in democracy. When there is a disconnect between democratic processes and policies that majorities want, as is probably the case in Georgia, it is natural for citizens to become suspicious of democracy. If, instead of leading to policies that may make business school trained elites upset, but that ordinary people want, democracy continues to lead to the ideas favored by a western trained elite, the Georgian people will rightly begin to question what the point of democracy is.
Democracy without pluralism is a strange, almost oxymoronic, political construct, but it may be the direction in which Georgia is moving. It is better than some of the alternatives, but too frequently democracy is viewed as simply the political system needed to be part of the west, or a political abstract towards which countries like Georgia should, for whatever reason, strive. This, however, overlooks that democracy is supposed to lead to both better policy outcomes and to the outcomes that the people want. As long as Georgia continues to pursue economic policies around which there is a partial elite consensus, and little evidence of public support, it will not be a fully functioning democracy.
The Georgia Analysis is a twice monthly analysis of political and other major developments in Georgia. Lincoln Mitchell is a political development, research and strategic consultant who has worked extensively in the post-Soviet region. If you would like to be on the Georgia analysis mailing list or are interested in more research, analysis or consulting for your business, government, campaign or other organization, please email firstname.lastname@example.org.