Tinkering with Leviathan – Review of “The Fourth Revolution:
The Global Race to Reinvent the State” by John Micklethwait and Adrian
Wooldridge
“The ten most
dangerous words in the English language are ‘Hi, I'm from the government, and
I'm here to help’” – Ronald Reagan
Anyone following American politics will be familiar with
quotes similar to the one from America’s 40th president. There is no shortage
of people eager to echo sound bites like the above or the even simpler charge
to “shrink government to a size that we can drown it in a bathtub”. While these
statements make for effective campaign rhetoric, they do not make for elegant
policy prescriptions and are also guaranteed to elicit reflexive opposition
from their adversaries on the opposite political spectrum. A lot of air time
is spent by the right in denouncing the “evils of big government” with their counterparts
on the left responding in kind by describing any attempt to trim the government
as an attempt to starve poor kids. What has been sorely lacking is a debate or
examination of what the proper role of government should be in modern society,
what the structural challenges are that prevent governments from being
responsive to the needs of its citizens and, most importantly, what steps could
be taken to right the ship. This excellent book by two journalists at The
Economist goes beyond doing much needed justice to these essential topics, it
also provides an intellectually coherent and beautifully written sweep of the
evolution of what could be termed “western democracy”.
The authors’ essential point is that the values and
governing structures of western democratic societies (broadly defined to
include much of Europe and Anglophone North America) have undergone distinct
dramatic changes or revolutions over the past half millennia. These changes
have happened in response to the needs of society or to correct the excesses
that result when successful revolutions are transformed into a staid status quo
by the passage of time and the calcification of the governing elite.
The first revolution identified by the authors is the emergence
of the modern European state in the 1600s. This is a revolution personified by
its intellectual godfather, Thomas Hobbes who in his seminal work: Leviathan (or The Matter, Forme and Power of a Common Wealth Ecclesiasticall and
Civil) advanced for the first time the concept of a social contract between
the governed and their (absolute) sovereign. While modern readers may wince at
the powers that Hobbes sought as ideal to bestow on the sovereign - essentially
a call for dictatorship - it is important to put the work in its proper
context. Europe in Hobbes’ day was a place where life was truly nasty, brutish
and short. The entire continent was a relative backwater (compared to China) that
was been torn apart by senseless wars started by every petty lord or minor
aristocrat who could muster men under arms and proceed to find something to be
offended about. The most important thing that 1600 Europeans needed was order
and security, so the first revolution in government occurred to grant them the
much needed order. In the 1600s and subsequent centuries, Europe’s monarchs
grew much more powerful. Gaining greater control or successfully co-opting
previously troublesome noblemen and establishing dominance over religious
activities within their realms through the concept of cuius regio, eius religio (“whose realm, his religion”). They effectively
succeeded, in many cases, in establishing a monopoly on the legitimate use of
physical force within their kingdoms. France’s monarchs went to such great
length to keep tabs on their country’s nobility that they come up with the
concept of “The whole of France around the king”, keeping anywhere from 1,000
to 10,000 noblemen as hangers on at court and occupied with frivolities to keep
them from dangerous thoughts of war. The net effect of these moves was the
emergence of a stronger and more prosperous Europe that was able to shift its
attention and resources away from the wasting competition of civil wars to the
productive competition of commerce.
Like every innovation, the move to more powerful governments
embodied by the sovereigns - while serving a real need at that time to tame the
fractious tendencies of petty nobles - soon became long in the tooth and
self-serving. Government, especially in the UK, became largely a vehicle
through which elites extracted rents from the economy and society. This was the
era of “rotten boroughs”: parliamentary constituencies so small (one had 3
houses and 7 votes) that wealthy landowners basically treated them as heirlooms
that were passed from father to son and in that way secured an absurdly
disproportionate influence on the legislative process. This concentration and
abuse of privilege was not only restricted to the legislature. What counted as
a civil service was little more than a system of sinecures, with stories of
privileged appointees to government offices not showing up for a single day of work
for decades. To correct this unfortunate turn of events, the 2nd
revolution identified by the writers was launched by thinkers such as John
Stewart Mill and politicians like William Gladstone, a Liberal politician who
served as Prime Minister and Chancellor of Exchequer on four separate occasions
each. William Gladstone was a man so committed to reforming the corrupt and
inefficient public service of his time that he earned the nickname “The
People’s William” and had a most famous parsimonious quote: “No Chancellor of the Exchequer is worth his
salt who is not ready to save what are meant by candle-ends and cheese-parings
in the cause of his country”. If Gladstone is the political embodiment of
this movement, its intellectual godfather will be John Stuart Mill: a thinker
who championed the rights of the individual in opposition to unlimited state
control. These liberal reformers made important tweaks to the apparatus of the
state: instituting competitive exams for civil service roles; reforming the parliamentary
process and laying the foundation for a laissez
faire economic system.
This trend towards utilitarianism however met with its
inevitable reversal as 19th century England became an increasingly
harsh place. This was the era of workhouses, debtors’ prisons and other
cringe-worthy mainstays of life now immortalized in the great works of Charles
Dickens. By the dawn of the 20th century, many people had come to find
the situation untenable and the authors did a masterful job of explaining how
the yearnings of the citizenry for a more humane society led to some
deemphasizing of utilitarianism as a governing philosophy and the advent of
Fabianism (in the UK) and Social Democracy (in much of Scandinavia and Northern
Europe). This movement, embodied by intellectual and organizer extraordinaire
Beatrice Webb, had the establishment of a universal welfare state coupled with
strong workers’ rights at the core of its governing structure and philosophy. Proponents
of this philosophy often viewed government control of “the commanding heights
of the economy” as a necessary condition for an ideal society. This thinking
led to the establishment of social security in the US in 1935 and universal
health care in the UK through the founding of the NHS in 1948. Governments all
over the western world become more assertive in the economy and more willing to
intervene in the markets when they felt the markets were not helping to achieve
desired public policy. Franklin Roosevelt established the Tennessee Valley
Authority (“TVA”) to electrify America’s deep south when it appeared
profit-maximizing utilities were more than happy to ignore the, often poor
inhabitants, of these sparsely populated farms in favor of the North’s more
industrialized centers. In the UK, the post-World War II government of Clement
Attlee proceeded to establish the foundations of the British welfare state and
embarked on a vast nationalization agenda that covered coal mining, railways,
telecoms, road haulage, electricity and the steel industry. The Swedes went
much further in putting a safety net under their citizens and a paternalistic
glow on their nation by coming up with the concept of Folkhemmet (“the people’s home”). A concept that says society
should effectively function like a small family with everyone’s needs taken
care of and the richer members subjected to the crushing taxes required to
maintain such a generous “cradle to the grave” style welfare system. The social
democrats’ long unbroken tenure running Sweden’s government (from 1932 to 1976)
gave them enough time to put this concept into action that people started to
refer to a Swedish “middle way” between socialism and capitalism.
Like everything conceived by man, the appeal of Social
Democracy / Fabianism / The Welfare State - or whatever term can be used to
describe the intellectual justification of the brand of activist government
popular in much of the western world in the post-war years – soon began to fade
and its warts became all too apparent in the 1970s. And if the backlash against
the welfare or corporatist state has a guardian angel, it will be Margaret
Thatcher, a grocer’s daughter made good, who decided she was going to force a
sought of striver’s thriftiness on her countrymen. To put into perspective how
much of a trailblazer she was, it is important to think about how involved the
government was in the lives of ordinary Brits when she came on the scene. A
Briton getting up to catch a flight to America in the late 1970s, would have
put on his bed lamp with electricity from the state; left a message for his
superiors on a phone line provided by the state; fixed himself breakfast on a
stove using gas supplied by the state; rode to the airport on a train owned by
the state; arrived at an airport owned by the state and travelled on a wide
bodied aircraft owned by an airline controlled by the state. And this is all
before 10am in the morning! Margaret Thatcher was not going to put up with this
for much longer and proceeded to launch a major privatization program, which
ensured that by the end of her tenure almost all of the services earlier
referred to would have been provided by private firms. Her kindred spirit
across the Atlantic, Ronald Reagan also embarked on a task to shrink the state.
Although he had much less to cut because the state in America was never as big (in relative terms)
as it was in the UK. These reforms were not limited to the western world.
India, a nation in love with Fabianism as any, also embarked on a series of
lauded liberalization programs in the early 1990s that effectively put the
“License Raj” to a well-deserved death. The Brazilians also launched a series
of ambitious privatizations in the early 1990s and the Russian privatizations,
though seriously flawed, achieved a real objective of shrinking the state.
So why, one may ask, was the Thatcherite / Reaganite only
described as a “half revolution” by the authors? The answer lies in the lack of
durability of their revolution. After a lull in the 1990s, the governments of
the western world have continued to grow at a fast clip. Both conservatives and
liberals continue to find things to spend money on (e.g., defense and homeland
security for conservatives, education and other welfare spending for liberals).
Essentially, the authors argue, in much of the western world there is no real
party of small government. Each party is perfectly willing to be big spenders
when it comes to favored constituencies or projects and often times unwilling
to raise the tax revenue necessary to fund this expenditure, leading to
deepening fiscal problems.
If the authors of this book did an admirable job of
explaining the evolution of government in western democracies, they did a much
more outstanding job in examining and distilling the current ills that plague
western democracies. Of the “Seven Deadly Sins” of modern government that the
authors raised, using California as an example, the two that resonated the most
with me are: Olson’s Law and the problem of the “Overactive State”. Olson’s
law, first proposed by American economist Mancur Olson, essentially states that
because lobbying and collective action in a democracy is inherently
time-consuming and expensive only the people with the most interest in a topic
or issue will be sufficiently motivated to organize to effect change on that
issue. This “law” provides a good explanation for why so many issues that
affect society at large are effectively controlled by a few people. Examples of
this abound and they range from the influence the National Rifle Association (“NRA”)
has on US gun policy; the impact of the teachers’ union on shaping public K-12
education and the very significant role that the prison guards’ unions have
played (especially in California) in advocating harsh criminal law policies of
questionable value such as the “three strikes” law. For these constituencies
the issues they care about are “voting issues” and they can effectively dictate
the agenda since most of citizens don’t pay enough attention.
One doesn’t have to be a “small government conservative” to
be sufficiently miffed by the overactive state and the move to ever more
licensing and regulation. When Hippocrates was hanging out in ancient Greece
around 400 BC and codifying some of the early precepts of medicine or Benjamin
Rush was helping to lay the foundation of modern American medicine in 18th
century Pennsylvania, they may have contemplated a situation where the practice
of medicine will require a state license obtained after rigorous examinations and
many years of postgraduate medical education. What both men will probably find
deeply ridiculous is that it takes about 300 hours of coursework to work in the
wig trade in Texas or that many American states require multiple hours of
coursework, exams and licenses for people wishing to be barbers, florists and
even fortune tellers. While it is important for government to protect the
unsuspecting from an unqualified brain surgeon, I think it should not be a high
priority for the state to protect citizens from receiving a terrible haircut, or
from buying an incompetently arranged bouquet of flowers; or from wearing wigs that
are just not cut exactly right or receiving an inaccurate forecast of their
future. People are perfectly capable of dealing with these things. While
consumer protection may be the headline reason for the proliferation of
licenses, the net effect of this excessive licensing is increased costs to consumers
as prices are kept artificially low due to the barriers to entry that licensing
provides. You could wake up a medieval guildsman in the 21st century
and he will quickly recognize much of occupational licensing as basically the
same stuff they did back in the day. Liberals, with an interest in protecting
the poor and striving, should have an interest in taming the overactive state
as it increases costs to the people least likely to afford the extra cost. This
is one area of reform in which liberals and conservatives can make common
cause.
In concluding the book, the authors laid out a series of
common sense reforms that could go a long way in improving governance and
providing an avenue for western democracies to regain the edge in the
competition with alternative Eastern governance models (notably those of
Singapore and China). The idea I find most appealing is setting a sunset clause
for every new law that is passed. Every law that is passed should have an
expiry date, at which time it would be reexamined for relevance and if there is
sufficient public support it will be reaffirmed and if not, the law will be
struck off. That seems like a good antidote for anachronistic laws.
Overall, I believe this is a great book that should be read
by every politician or person interested in how people organize themselves for
effective governance in a democracy. And if you are just a history buff, the
sweeping history of western political philosophy and organization should tick
some boxes as well!