“Democracy in Australia is sinking into a self-destructive
spiral. The sickness at its heart is the demise of individual responsibility
and expecting more from the state when the national interest says state
responsibilities should be cut, not increased. Our democratic system now works
to undermine economic progress.”
That is how Paul Kelly, Australia’s most widely respected
journalist, concluded an article in The
Australian a few weeks ago. The article entitled “Crisis time: We can take
a stand – or solve a problem” (probably gated) was published on March 29.
As far as I can see there hasn’t been much public reaction
to this article. Only a small proportion of the population read articles of
this kind, and most readers would still feel complacent about the Australian
economy and the future of democracy in this country. It will become easier to
convince people that they should be alarmed about the self-destructive spiral when
the crash is imminent. The malfunction began over a decade ago and it might be
another decade, or more, before crunch time.
Some other informed commentators take a more optimistic view
than Paul Kelly. For example, Gary Banks, former chairman of the Productivity
Commission, acknowledges that policy development is now a problem. He has
suggested the a “loss of policy capability within government – Commonwealth and
State - is palpable and multidimensional”. He is hopeful, nevertheless, that
the problem can be ameliorated by improvements to policy-making processes:
“Yet, if this diagnosis is correct, there is hope. Unlike
the adverse changes evident in our parliaments and media, changes which are
arguably reflective of changes in society itself, the decline in capability is
not irreversible. Unless it is turned around, however, we cannot tell whether
reform has truly become ‘too hard’, as many now seem to assume”.
A few years ago I was similarly optimistic. I still support
efforts to improve policy capability within government. I agree with Gary that
improvements to the policy-making system are an essential pre-condition for
improvements in policy. However, I doubt whether much economic reform will
be achievable until we see substantial changes in the rules of the political
game that will provide political representatives with appropriate incentives to
pursue the broader interests of the community, rather than the narrow interests
that too many of them currently seek to protect. And, unfortunately, that seems
unlikely to occur until a major economic crisis is upon us.
In his article, Paul Kelly drew inspiration from The Fourth Revolution: The global race to reinvent the state, by John Micklethwait and Adrian Wooldridge.
The authors
of this book make a case that western societies have seen three and a half
revolutions in government over the last four centuries:
- The rise of the nation state in 17th century Europe. Europe’s network of competing Leviathans threw up a system of ever-improving government.
- The rise of the liberal state in the 18th and 19th centuries following the American and French revolutions.
- The advent of the welfare state in the 20th century.
- And the half revolution in the 1980s, associated with economic reforms promoting a partial return to classical liberalism in a few countries.
This history of the revolutions in government seems broadly
accurate. Micklethwait and Wooldridge associate each of these revolutions with
a notable contributor to ideas about government. In sequence, the four
revolutionary thinkers they chose were: Thomas Hobbes, J S Mill, Beatrice Webb
and Milton Friedman. It is possible to quibble about that choice, but I will
refrain. I want to focus here on what the authors have to say about the fourth
revolution.
The authors argue that the fourth revolution is occurring as
a result of a confluence of three forces: failure, competition and opportunity.
- The West has to change because it is going broke:“Debt and demography mean that government in the rich world has to change. … For the foreseeable future the Western state will be in the business of taking things away – far more things than most people realize”
- Competition from the “Asian alternative” is prompting change:“Chinese-oriented Asia offers a new model of government that challenges two of the West’s most cherished values: universal suffrage and top-down generosity. This ‘Asian Alternative’ is an odd mixture of authoritarianism and small government, best symbolized by Singapore’s long-term ruler, Lee Kuan Yew”.
- There are opportunities to “do government” better: “New technologies offer a chance to improve government dramatically, but so does asking old questions such as the most basic question of all: “What is the state for?”
So, what will government look like after the fourth
revolution? The authors would like to see greater individual liberty emerging
as a consequence of reforms that reduce government spending and relieve
governments of some of their responsibilities. I would too, but we need to be
careful not to confuse what we hope will happen with what we see as most likely
to happen.
Micklethwait and Wooldridge published their book a couple of
years ago, but it was apparent even then that many voters were becoming cynical
about politicians representing the mainstream political parties. The European
Union had become a breeding ground for populists who were speaking out against
“incompetent and arrogant elites”. Even then, that cynicism was also apparent
elsewhere. The authors suggested:
“Such cynicism might be healthy if people wanted little from
the government. But they continue to want a great deal. The result can be a
toxic and unstable mixture: dependency on government on the one hand and disdain
for government on the other”.
Perhaps the victories that the populists appear to be
winning at the moment will cause the elites to become less complacent, and less
incompetent and arrogant. The political cycle may be turning, as Tyler Cowan
suggested in The Complacent Class (recently
discussed here). Over the longer term, the elites may come to embrace dynamism,
rather than protection of their professional turf, so we might see the battle
lines being drawn more clearly between dynamism and stasis. That might
correspond broadly to Tyler Cowan’s depiction of the political battle as
between talent (human capital) and authoritarianism, stemming from underlying
fears of disruption. Since this is also a battle between talented young people
and fearful old people, in my view the odds favour talent in the longer term.
It would be easier to predict what government will look like
after the fourth revolution if some western democracies provided models of a
successful revolution in government. Micklethwait and Wooldridge suggest that reforms
in Sweden, necessitated by economic crisis, have produced “a highly successful
update of the old middle way”. New Zealand provides a model of what effective
government can achieve following a natural disaster. The response to crisis in
Sweden and New Zealand provides better protection for citizen’s rights than would
adoption of something like Lee Kuan Yew’s model of technocratic government. However,
democratic government in Sweden and New Zealand might well revert, within a few
years, to taking upon itself more responsibilities, until another economic
crisis ensues.
It seems to me that the fourth revolution is likely to involve
changes in the rules of democratic politics. This might require constitutional
change in some countries, but revolutionary change might be possible in
Australia and other countries similarly afflicted by voter cynicism and political fragmentation, if
the major parties were to adopt a convention for accountable government. What I
have in mind is that the major parties should agree that whichever party wins
government has a mandate from the people to implement the tax and expenditure
policies it has taken to the election. What could be more democratic than that?
