Is Democracy necessary for an efficient state?

An interesting find on a recently discovered (via PrestoPundit) blog "Truck and Barter" (which is unfortunately on blogspot- join the Esmay Jihad!), that brings up the observation that the existence of government services or the value of government services to individuals bears a tangential (at best) relation to whether that government is democratic:

DeLong uses this in support of his (and my) preference for democratic governance. However, it is completely unclear that the production of government services (public utilities, roads, police, education, and national defense) under democratic rule is more efficient than under authoritarian rule. Free markets--sustained by rule of law, secure private property rights, open capital markets, and unrestricted labor markets--have little necessary relation to the election of representatives in a democratic process. Also, it is unclear which system will yield greater rent seeking and rent extraction by private parties.

Indeed, what does democracy have to do with the efficient provision of goods and services? I remember this question coming up in an economics class, and the conclusion (of the professor) was that, ala Truck & Barter, so long as you have a free market, whether you have a monarchy, dictatorship, parliamentary system or limited republic, the form of the government has no theoretical effect on economic outcomes. Economists end up preferring liberal democracies because changes of government tend to be less disruptive (replacing the head of state via election and law, versus gun and bomb).

And as history has shown us, democracy doesn't necessarily correlate to economic performance. India has been democratic since its independence, and its economy (and public service provision) has been dismal for decades. Hong Kong, an undemocratic colonial holding of the UK for a hundred years (with no representation or democracy of basically any kind), by contrast was (and still is, though for how long?) an economic powerhouse with well developed and efficient government services (and even more efficient private enterprise).

One could argue that you're less likely to get a liberal market in an undemocratic setting (since part and parcel of the liberal market is other liberties, such as speech, press, movement, rule of law, etc) where the capricious rulers may decide to oppress the people, etc. Of course, this is possible in a majoritarian democracy, too, so again, why democracy?

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I've already reserved

I've already reserved www.truckandbarter.com, but it will be a month or more before I'm ready to move T&B over...

I cannot declare war on BlogSpot or Blogger. I've conducted free exchange with both, and received enormous consumer's surplus. I can only hope they've somehow made money off of me! :)

LOL The blogger bug has been

LOL

The blogger bug has been a major pain for me trying to follow links, so much so that I often will not bother following a permalink to a blogspot site.

If Blogger does indeed ever fix the archive bug and make a system that works, things could get very interesting between them and Movable Type (which is nice and reliable but very arcane- at least for this non-html-type guy).

Another thing that bugs about blogspot blogs is no trackback. Although lots of MT users dont have TB turned on, it's been invaluable in driving traffic to our 2 week old blog...