Journalists realised long ago that people find bad news more interesting than good news. I think this is because we search our environment for threats to our wellbeing so we can do something about them. Fortunately for the news media, it’s rarely hard to find something new to worry about.
But you can have too much of a bad thing. Unless we leaven the bad news with something nice, we risk having our customers wonder why they’re paying to be depressed.
The good souls at the Grattan Institute have been researching the state of our democracy, but the best I can do is report that the news is mixed.
The first bit of news is bad: the number of democracies had been growing in the last decades of the 20th century, but since then, the number’s been declining. According to America’s V-Dem Institute, by last year the world was down to only 31 liberal democracies out of the 179 countries assessed, with almost three-quarters of the world’s population living in autocracies.
The figures aren’t helped by the United States – soon to be renamed the Kingdom of Donald. The status of what used to be the poster child for democracy has been lowered from “liberal democracy” to “electoral democracy” thanks mainly to the way Trump has been gathering power to the presidency, weakening America’s much-lauded “checks and balances”.
The good news, however, is that our status as a liberal democracy remains unchanged. According to Grattan we are “one of the world’s leading democracies, consistently ranking highly on international measures of democratic health, as well as on a suite of economic and social measures – including life expectancy, human development, employment and [national income per person].”
If you’re wondering why an economic commentator like me is writing about democracy, it’s because although we tend to keep our democracy in a separate box to our economy, the two are interrelated. It’s no coincidence that most of the rich countries are democracies and most of the liberal democracies are rich.
A key issue is social trust. The more we trust each other to keep our promises and live up to the claims we make, the more smoothly and less expensively an economy grows and prosperity increases.
For instance, have you ever noticed that people pick up their bag from an airport luggage carousel without any official there to check they haven’t pinched someone else’s bag? The knowledge that almost all of us can be trusted speeds up the process and saves the airlines – and their customers – money.
The ability to trust people to do the right thing reduces an economy’s “transaction costs” – the cost of buying or selling something – leading to more transactions.
And it’s a fair bet that people who live in democracies rather than autocracies find it easier to trust each other and “the system”.
Grattan’s report takes stock of the health of our democracy. “The good news,” it says, “is that Australians’ support for democracy has been consistently strong – even growing over time. Only a small share of the population is discontent or disengaged with the system, and the data [does] not suggest either has been spreading.”
So what’s the bad news? It’s that people who aren’t doing well in the economy are less likely to be happy with the way our democracy is treating them.
Surveys conducted by economists at the Australian National University show that Australians are increasingly pessimistic about the future, with declining trust in government and institutions.
Although official economic indicators were good, a survey conducted early last year showed that people’s satisfaction with their life had fallen to levels last seen during the pandemic. More than a third of Australians reported experiencing financial stress.
People who aren’t doing well in the economy are less likely to be happy with the way our democracy is treating them.
“Economic perceptions are strongly associated with political attitudes,” the academics conclude. “We find that national economic assessments in particular are stronger predictors of confidence in government, satisfaction with democracy, and populist sentiment.
“Those who perceive the national economy worsening are significantly less satisfied with democracy, more distrustful of government institutions, and more receptive to populist narratives,” they find.
Australians who believe life was better 50 years ago and will worsen over the next 50 years showed lower trust in government and stronger populist attitudes. But although younger Australians expressed greater optimism, they remained less politically engaged.
Of all the survey’s participants, only a third expressed confidence in the federal government, down from more than half in 2023. Half the respondents believed life would be worse in 50 years, while only 16 per cent believed it would improve.
Dissatisfaction with housing, rising prices and Australia’s environmental policy are all central to explaining the public’s pessimism about the future.
Elsewhere, the academics discovered a very strong relationship between people’s views on income inequality in Australia and their views on democracy. Only half of those who thought the distribution of income was very unfair were satisfied with democracy.
The authors of the Grattan study say we face three big risks to confidence in our democracy. First, the rise of online social media is “fragmenting our fact base, and making misinformation and extreme views more salient in people’s daily lives”.
Second, global political tensions and the rise of anti-democratic forces overseas are testing Australia’s social cohesion at home.
And third, the heightened probability of economic, social and environmental shocks increases the challenge democratic governments face in delivering better outcomes to their people.
Good point. The fact is that the nation’s smarties are expecting tough times ahead. The climate is expected to continue changing, which will bring, among other things, more extreme weather events. There could be hiccups in our transition from fossil fuels to renewables.
And the latest “shock” to our economy, from the ill-judged Iran war, is unlikely to be the last to come our way. Let’s hope our democracy can survive the challenge.
