[Author Name(s),First M. Last, Omit Titles, and Degrees]
Economic development changes society in a manner that it becomes more and more difficult for the country to remain in the hands of a single man or a group of powerful elite. The change results to transforming the social and economic framework and then moving towards a changed attitude of the population in general. The primary concern of the countrymen is to achieve a commercial greater status and increase their wealth holdings. This changing scenario leads to people taking to skilled professions; they learn the importance of collective effort and get organized into clubs, civic and human rights groups. Many countries across the world have witnessed increased mass organizations working towards transforming their nations into democratic one.
An essay by Inglehart and Welzel results from a survey done between 1981 and 2007 which shows a drastic difference in what people value and believe. The survey, done in several phases contends to have covered almost 90 percent of the world population. The differences are quite stark and interesting. The views also add to our contention that an economically developed and more educated nation is more likely to see a democratic transition.
The module assesses if there is any relationship between the level of economic development of countries and their adoption of democracy for governance. We look at how various countries have adopted democracy in a progressive manner and if their overall economic rise has been one of the reasons behind this change. Also, we look at some of the developed but non-democratic states, which seem to be moving towards a more representative and modern governing political set-up. We’ll debate the issue against a strong opposing view that – is it economic development that helps the transition to democracy, or the opposite i.e. is it democratic polity that leads to enhanced and smooth economic development? The paper aims at proving that economic development indeed has a role to play in countries adopting democracy for governance.
Just to elaborate on the basic features: As a citizen of a democratic country, it is essential that every adult has the right to choose or disapprove his or her political representative in the government in a free and fair manner. This not only requires a well-placed electoral system but also the greater understanding of the process itself. The understanding, on the other hand, is majorly said to come from the social, cultural, historical and political awareness among the population which again heavily relies on education. And to generate large-scale awareness, the economic progress of a nation plays an important role.
However, the essence of democracy in the United States is coherent with the taxation regimes that have been instituted by the government. The United States economy has been rapidly growing due to the adaptation of formidable tax system. However, the provision of an optimal tax system could not be provided without the existence of a democratic system. Democracy and taxation go hand in hand, as the applicability, and the success of the tax system is dictated by the political arrangements put in place. Apparently, the way the government funds different actors in the economy is an issue of disparity that has triggered a lot of debates about the economic status of the United States. Besides, distribution and collection of taxes in nondemocratic states is a major issue, but Democratic states have transparent tax systems which prevent conflicts.
Practically, the government can decide to either fund consumption, production, or reduce the amount taxed to the two economic actors. In the case of reducing taxation to the producers, the wages paid to the laborers by the producers is likely to increase, in such a way that none of the two parties are left worse off. However, the reduction of taxes to the production sector is likely to cause imperfections in the economy. Although the purchasing power of people is expected to increase, the influence of foreign economies on the domestic economy is likely to cause inflation. Apparently, taxation and interest rates are kept in check by a democratic system that ensures that equity is ordained among the economic actors. Moreover, the existence of democracy prevents the inequitable distribution of wealth. Khaldun’s theory of tax systems in a democratic state entailed the reduced taxation of producers, but there has been found to have consistent failures since it overlooks the forces that demand and supply of goods and services have on consumers.
Democracy is responsible for providing an optimal tax regime, for the purpose of government funding. Achievement of an optimal tax regime in nondemocratic states has not yet been achieved, despite many economic actors relying on government funding for most of their operations. An optimal taxation system is one which provides equity, by bringing about the essence of progressive taxes. A progressive tax is where the rich are taxed heavily, while the poor are lightly taxed. Progressive taxation also provides the government with the incentive of expediency.
Democracy in the United States makes the services that individuals receive from taxes are equitable to the amount that such people provide to the government regarding tax revenues. In a bid to gauge the economic status of the United States, the implication of per capita income cannot be overlooked, as the incidence and impact of the tax are manifested in the phenomenon. The wealth of the United States, according to the per capita incomes statistics, is widespread, with most of the population being at the middle social class. Per capita income is the average earnings that economic actors earn collectively, and represent the economic status. However, the level of per capita income is dependent on the tax regime but in place, as well as the revenue from taxes that the government allocates to fund development projects.
Tax revenues that are allocated by the government to funding economic projects represent the largest share, compared to the funding received from nontax revenues. Therefore, the implication of taxation in the United States about economic growth cannot be ignored. Taxation by the government has wide significance, both to consumers and producers. For instance, producers are dependent on the level of funding to avail quality and quantity of produce. When the firms are well funded by the government, the quality and quantity of goods and services produced will be of high standards.
Consumers are also dependent on the funding provided by the government for the consumption of economic goods and services. However, the welfare of the consumers can only be equated by the existence of a government system that caters for their welfare. Therefore, the need for a democratic government system is steadily rising for the introduction of equity in the economy. The government is responsible for keeping in check tax shift patterns that companies introduce. For instance, the purchasing power of customers is determined by how much tax is induced in goods and services. When the government adds more tax burdens to producers, the shifting of taxes will occur. For example, if the producers decide to shift forward and increase the value of goods and services to absorb tax accrued, consumers will purchase fewer goods and services, and the economy will start to decline. In the United States, the essence of companies shifting taxes forward and raise the value of goods and services is common, and the shifting of tax to consumers is a major cause of economic inflation. Inflation in the case of forward shifting of tax occurs in the form of cost push inflation, which is difficult to mitigate.
Government strategies that include the consumption aided by tax reduction are likely to cause an equitable growth of the economy. However, nondemocratic states consider only the welfare of the upper calls individuals and forget the welfare of the lower class people. For example, the increase of consumption in the economy is a trigger of economic production. In this perceptive, taxes reduction to consumers trigger an immediate economic growth, as individuals in the economy over a higher consumption curve, and the cash flow in the economy increases. Despite the labor suddenly trickling down, the taxation system allows the incentive of economic actors to outsource labor, and thus sudden shocks in the economy are not likely to cause any considerable harm to the economy.
However, to ensure that such disparities arising from taxes are mitigated, both democracy and economic integration for a consumer financed taxation system should be installed. The United States in currently facing tax system imperfections and the government is not certain of which policy to adopt for the sake of growing the economy further. Tax reduction, especially to the poor and lower class individuals, is likely to increase the welfare of economic actors, more so on consumers. However, the equitable funding of producers or the reduction of tax is also a useful means of containing the situation. Democratic and transparent economic system is an issue in the United States, and their significance to economic integration, are all dependent on
Bibliography
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