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 2^nd 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 19^th 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 20^th 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 18^th 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 21^st 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!