Ohio’s democratic decline is bad for business

Getty Images photo of voters in line.

In 2012, I had just graduated from college and I was looking for my first job after finishing up my Bachelor of Arts in Philosophy at Denison University.

I had spent one summer in college studying redistricting, trying to estimate the impact of redistricting on representation. Gerrymandering always struck me as fundamentally unfair, a violation of the tenets of democracy. It seemed to represent the most cynical impulses of political leaders: to consolidate power at the expense of the tenets of popular government.

I ended up interning for an ill-fated campaign to reform redistricting in Ohio. Today, over a decade later, we are still fighting for a fair system for drawing districts in the state.

Many claim gerrymandering is the source of political polarization in Ohio. While it may have some impact on polarization in state politics, I now think gerrymandering is a symptom of a much deeper political sickness in our state. 

Ohio certainly has leaders who have a sincere faith in democratic institutions, but there are others who have cynically joined the trend to erode institutions that keep our democracy strong. Whether it is a $60 million bribe for a sweetheart deal to increase energy rates or historically-low levels of lawmaking, we keep seeing signs that democracy in Ohio is in peril.

Democracy has inherent value: allowing people to determine their own government is good in itself. Democracy has also been found to be associated with more consistent good outcomes for residents of democratic countries. These range from better educational outcomes, more food and housing security, to better health and employment outcomes.

Most recently, Vanessa Williams of the Brookings Institution’s Governance Studies program wrote an insightful piece on the impacts of democratic erosion on economic growth. One finding she shared was from a recent study from the American Economic Review concluding countries with populist leaders, whether on the right or left, see a 10 percent decline in GDP per capita over the first 15 years.

Economists have argued for centuries that strong economies stand on strong institutions. People will only trade openly, invest dollars rather than hoard them or spend them frivolously, and take risks by creating new businesses or spending precious time creating new goods and service if they can use the past as a strong predictor of the future and know with some certainty that their investments will be safe in that future.

Compared to a government based on strong democratic institutions, a government based on strong “leaders” who claim a populist mandate to rewrite institutions creates instability that ripples out into the economy. That means the pie gets smaller: we all get poorer as our democracy gets weaker.

Williamson talks about the kinds of industries that suffer under a declining democracy.

Industries with high exposure to government decisions are endangered by capricious decision making by policymakers. This is how we get to $2 billion power plant bailouts shepherded into being with $60 million bribes.

Industries reliant on public investments or public services lose value as policymakers focus less on creating a strong environment for the economy and more on their self-interest. Ohio prides itself on its strategic location as a hub for logistics and shipping, but if road quality investments are driven by politics rather than strategic investment, it can push businesses in the transportation industry to look elsewhere for their investments.

Businesses investing on a longer time horizon lose the ability to trust macroeconomic stability will be ensured by policymakers. Young people move away as they gravitate toward places with better economic prospects. Media gets weaker as politicians make it their enemy. Scientists, doctors, and educators move to places where they can freely practice their professions. And tourists shun these places for others with less strife and violence.

Democracy is good in itself. Democracy is good for its people. Democracy is good for the economy. Ohio’s future will depend on leaders who care more about this than their own myopic interests.

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