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Dysfunctional Government

by Fred Siegel

The Fourth Revolution: The Global Race to Reinvent the State, by John Micklethwait and Adrian Wooldridge (Penguin, 320 pp., $27.95)

This book speaks directly to the malaise that has accompanied Barack Obama’s second term in office. “The West,” write John Micklethwait and Adrian Wooldridge, “has lost confidence in the way it is governed.” The authors, both editors at The Economist, are referring to the loss of political confidence not only in America but in Europe as well, where a government capable of achieving an electoral majority has become a rarity. “The modern overloaded state,” they rightly insist, “is a threat to democracy”: “The more responsibilities Leviathan assumes,” the worse it performs them and the angrier the people become.

They argue that government in the West has metastasized because people demand more services even as they are unwilling to pay for them. America, they scold, taxes “itself like a small-government country and spends like a big-government one while hiding its true liabilities.” But of course, when it comes to liabilities, the same is true of much of Europe: In Italy and France, income taxes are piled on top of value-added taxes and the difference is made up with debt that obscures the government’s arrears. Further, generous social spending hasn’t spared France and Italy from a sharp rise in inequality.

Long-term unemployment has wreaked havoc on both sides of the Atlantic. In the U.S., rent-seekers and Silicon Valley oligarchs have, under Obama, produced both unprecedented wealth and an unprecedented growth in joblessness. The upshot has been a resentment and cynicism that have undermined the West’s ability to pull itself out of its current torpor.

The underlying problem, according to the authors, is that the West, which has at different junctures reinvented government, is caught between the third and fourth iterations of Western government. They present England as their model. The first stage, monarchy, was succeeded by the second, which incorporated Lockean limited government into the royal system. The third iteration was the welfare state, which was a response to industrialization; and the fourth, emerging from globalization and the current technological transformation imposed by digitalization, is now struggling to be born.

The authors tell their story with a sprightly style. Writing about Beatrice Webb and the Fabians, who shaped a British welfare state organized around experts and a purblind over-centralization of government, they note that she described herself as “the cleverest member of one of the cleverest families in the cleverest class of the cleverest nation in the world.” She was so clever, they point out, that she became a fervid apologist for Stalinism.

Micklethwait and Wooldridge take succor from the reforms that have taken place in Scandinavia and Asia. Sweden, for instance, seems to have cured itself of “Baumol’s disease” — the disorder that extracts an ever-increasing cost in order to run a government in which services seem immune to any efforts at efficiency. Sweden, which has benefited from widespread educational vouchers and “arguably the most efficient [health care] in the rich world,” has reversed the old ratchet. “Rather than extending the state into the market,” the authors write, the Swedes are extending that market into the state.

Swedes are still “socialist,” they explain, in that Sweden provides public goods such as education and health care “free at the point of delivery” — “but it uses capitalistic methods of competition to ensure that those public goods are delivered as successfully as possible.” The benefit is that Sweden, empowered by a cross-party consensus, has reduced public spending from 67 percent of GDP in 1973 to 49 percent in 2009 without a social upheaval.

It’s Sweden in the West and Singapore in the East that carry the authors’ hopes for reinventing government: We live in an era “when the West no longer has all the best policies.” For proof of this claim, they cite the way the combination of intelligently authoritarian rule and a system of public-welfare investments transformed Singapore from a swamp to a shining beacon of neo-modernity studied by Chinese and Westerners alike. “Our strength,” explains Lee Hsien Loong — Singapore’s prime minister and the son of Lee Kuan Yew, the architect of Singapore’s success — is that, by substituting meritocracy for democracy, “we are able to think strategically and look ahead.” By contrast, he argues, Western democracy is “a never-ending auction whereby votes are purchased with debts to be paid off in the future by the coming generations,” and charity has become entitlements that subsidize indolence.

The authors have a wide range of reference, sprinkled with sparkling quotes and apt bons mots, which makes the book an enjoyable and informative read. They quote, for instance, the insight of the British small-“l” liberal Gladstone that “if the government takes into its hands that which the man ought to do for himself, it will inflict upon him greater mischiefs than all the benefits he will have received.” But their overarching argument, while appealing, is thin: It is far better at describing the democratic disorders that threaten to bring us low than a purported fourth revolution that will save us from ourselves.

Micklethwait and Wooldridge assume that the Swedish and Singaporean efficiencies that engage them will appeal to American liberals because liberals necessarily have an interest in conventional measures of success. This is badly mistaken. So is their bald and bizarre assertion that Marx’s naïve view that the state could disappear once private property had been abolished was strangely similar to what they see as the anarchist undertones of the Tea Party’s anti-Washington rhetoric. They seem unaware that many in the Tea Party are far from naïve; many support a constitutional conservatism aimed at arresting the growth of an encephalitic central government conducive to crony capitalism. The Tea Party, whatever its numerous failings, has long recognized, like many other critics of liberalism, that apparent failures such as the breakdown of the family can serve as a boon for the expansion of social services and hence state power.

Public-sector unions are the linchpins of contemporary liberalism. They are powerful, their inefficiencies notwithstanding, because they can deliver bloc votes, such as those that helped elect Obama as president twice and Eric Garcetti and Bill de Blasio as the mayors of Los Angeles and New York. Liberalism in deep-blue states such as California and New York has no interest in reinventing government. It is doing just fine with government as it is.

Liberals had lost three consecutive presidential elections in the 1980s, so, in the 1990s, they turned to reform out of necessity. Prompted by the Democratic Leadership Council’s concepts for reinventing government, Clinton and Gore adopted reforms as a matter of electoral strategy. But in the current climate of polarization, the moderate Democrats, so central to the 1990s reforms, have been crushed. The Democratic party nationally and its state strongholds are firmly in the grip of a bi-class alliance of those who have most benefited from globalization and those who are either the least likely to be in the labor force or the government workers who service them. Neither of these classes has any interest in adopting the reforms that appeal to Micklethwait and Wooldridge but threaten the combination of crony capitalism and public-sector unionism that currently dominates American governance.

– Mr. Siegel is the author of Revolt against the Masses: How Liberalism Has Undermined the Middle Class.

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