Lee Kwan Yew built Singapore into a fully developed economy, but he leaves it a half-developed democracy. And that's just the way he liked it.

Lee Kwan Yew built Singapore into a fully developed economy, but he leaves it a half-developed democracy. And that's just the way he liked it.

His attitude to political opposition: "Everybody knows that in my bag I have a hatchet, and a very sharp one. You take me on, I take my hatchet, we meet in the cul-de-sac."

Lee was a leader of the so-called Asian values school of politics: "Now if democracy will not work for the Russians, a white Christian people, can we assume that it will naturally work with Asians?"

The answer, of course, was yes, it can. And it has. In South Korea, for instance, and Taiwan. Both were dictatorships that evolved into democracies in the 1980s and '90s as they prospered.

And for a while it seemed that Harry Lee would be left on the wrong side of history, defending a quasi-authoritarian system as the world underwent a democratic revolution.

Between 1974 and 2006, the era dubbed the "third wave" of global democratisation, the percentage of countries with democratic systems doubled, from 30 per cent to 60 per cent of all the nations on earth.

"Nothing like this continuous growth in democracy had been seen before in the history of the world," observes the co-editor of the Journal of Democracy, Stanford academic Larry Diamond.  

But then something changed. It broadly coincided with the collapse of the US and European economies in the global financial crisis:

"The world has been in a mild but protracted democratic recession since about 2006," Diamond reported in January this year.

The expansion in the number of democracies came to a halt. A few existing democracies teetered and relapsed. And "the established democracies, beginning with the US, increasingly seem to be performing poorly and to lack the will and the self-confidence to promote democracy effectively abroad."

China's Communist Party has seized the opportunity: "The 'China model' has created miracles, opened a unique path of development and superseded the belief in a superior 'America model,' marking its demise," the party mouthpiece, the People's Daily, declared in 2009. Unfortunately, there is much truth to this.

Now Lee Kwan Yew seemed to be more likely to be on the right side of history. Lee hadn't changed his position. But history had changed its. US global leadership is wilting; China's leadership is flexing.

You can see this in concrete form with the creation of the Asian Infrastructure Investment Bank. This is the China-sponsored institution that Australia's government is coming to support, but only with the greatest reluctance.

Canberra, like Washington, was wary of signing up because it fears the bank could be a cat's paw for China's foreign policy.

But the proposal did not come forward because of Chinese pushiness. Beijing stepped up because of a failure of US politics.

The world agreed that the International Monetary Fund and World Bank have to be updated. They were designed in 1944. They're dominated by the US and Western Europe.

All the shareholder countries agreed to give China and India and other big emerging nations more power. The White House agreed. But the US Congress has refused, for years now.

So China came forward. It proposed the AIIB as a competitor to the World Bank. Countries are flocking to sign up, despite their reservations.

Thanks to the pettiness and petulance of the US Congress, the US has been overtaken. Beijing 1, Washington 0.

Lee Kwan Yew once dismissed the idea of democracy for its own sake by saying: "You're talking about Rwanda or Bangladesh, or Cambodia, or the Philippines. They've got democracy, according to Freedom House," a US research institution.

"But have you got a civilised life to lead? People want economic development first and foremost. The leaders may talk something else. You take a poll of any people. What is it they want? The right to write an editorial as you like? They want homes, medicine, jobs, schools." 

Lee was right. As the Chinese Communists learnt, the people cannot eat dogma. Democracy must deliver for the people or it will remain in Larry Diamond's "recession". Or worse.

Barack Obama last week supported an idea that would reform American democracy.

"In Australia and some other countries there's mandatory vote," the president told a so-called town hall audience. "It would be transformative if everybody voted. That would counteract money more than anything."

Only a little over one third of eligible Americans voted in the mid-term congressional election.

Obama added: "The people who tend not to vote are young, they're lower income, they're skewed more heavily towards immigrant groups and minority groups."

If they all voted, it would be much less likely that the US today would be quite so stunningly unequal, delivering living standards to the mass of middle America that are no better than living standards 30 years ago.

Australia, one of at least 26 countries with mandatory voting, introduced the system as a nation-building measure out of concern that an indifferent community was not participating in its own governance.

Queensland began the trend in 1914. It went federal in 1924. The reasons are well summarised by Lisa Hill in the Oxford Companion to Australian Politics: "Compulsory voting is thought to serve liberal democratic principles such as political equality, popular sovereignty, legitimacy and representativeness."

But the US has tied itself into such a Gordian knot of political failure that it seems incapable of democratic renewal. So why did Obama bother to endorse it?

Like Obama, Tom Mann of the Brookings Institution favours the idea: "We know it's impossible to achieve, but it's a nice way to make a point. Small turnout produces poor politics."

It's a good idea, but the big Western democracies don't seem interested in good ideas at the moment. Harry Lee, rest in peace.

Peter Hartcher is the international editor of Sydney Morning Herald