Daniel Hannan

Government 4.0

The Fourth Revolution: The Global Race to Reinvent the State

By

Allen Lane/The Penguin Press 305pp £20 order from our bookshop

Geoffrey Crowther, who edited The Economist from 1938 to 1956, summed up its house style in three words: ‘simplify, then exaggerate’. That approach has served the magazine brilliantly. Other newspapers, especially in English-speaking countries, are rasping out their final, rattling breaths; but The Economist is going strong, drawing readers on every continent with its centrist radicalism, its moderate and predictable conclusions and its foreigner-friendly prose style. 

If you like The Economist, you’ll like this book, the latest collaboration by John Micklethwait, the magazine’s editor-in-chief, and Adrian Wooldridge, its Schumpeter columnist. It may not have the originality of their earlier works on American conservatism or the resurgence of religion around the world; but, like them, it takes a thesis, simplifies and exaggerates it, pads it out with lots of statistics and a few anecdotes, and reaches a neat little conclusion.

What’s the thesis? It’s that Western governments are obese, that they have taken on too much, that electoral logic makes it almost impossible for them to shed responsibilities, and that they must therefore find ways to discharge them more efficiently. Stated like that, it sounds obvious – banal even. Yet banalities sometimes need stating; had they been stated earlier and more persuasively, we might not be in our present mess.

The authors begin by telling the story of the Western polity through what they call three revolutions: the 17th-century invention of the modern state; the 18th-century liberal ascendancy, which elevated the individual above the collective; and the rise of the welfare state from the beginning of the 20th century.

Each revolution is described through the ideas of a contemporaneous thinker. The authors opt for familiar figures, respectively Thomas Hobbes, J S Mill and Beatrice Webb. Hobbes was early in conceiving the state, not in theological terms, but as a source of order and security: the protection of the law, he believed, was what lifted men from sanguinary savagery. Mill switched the emphasis from the state to the individuals who comprise it, formulating the classical liberal philosophy that, to this day, distinguishes Anglosphere societies. That, at any rate, is the doctrine for which he is best known. In his later years, he began to fret that freedom was meaningless unless a guaranteed level of education and opportunity was offered to every citizen. He began, in other words, to anticipate the democratic socialism that Beatrice Webb and her husband were convinced would bring greater efficiency as well as greater justice.

In the event, it brought neither. Socialism disincentivised productivity, misallocated resources and punished the people it had been intended to help, condemning them to poor schools and crumbling tower blocks. The overreaching of the state led to what we might call ‘revolution three-and-a-half’: the attempt to roll back government. Here the authors turn not to a British figure but to the great Chicago School economist Milton Friedman, who predicted the Thatcher revolution to an incredulous teenage Micklethwait in the sauna of a San Francisco apartment block in 1981. Margaret Thatcher and Ronald Reagan were heavily influenced by the writings of the tiny, brilliant professor. Both leaders believed that the state had reached saturation point: it could not take on any more functions without doing more harm than good. Both sought to slim the size of government. And both, contrary to widespread belief, failed.

Micklethwait and Wooldridge are very good on how and why they failed: producer capture, the pressure for regulation, the ability of the private sector to improve its productivity faster than the state, the shift in power from elected representatives to permanent functionaries. They frankly acknowledge the biggest problem of all: you.

In a democracy, once a benefit is bestowed, it is almost impossible to remove. Government services that should go only to the poor have become generalised – indeed, in some cases, disproportionately weighted towards the middle classes. The Western welfare state has become what Singapore’s former prime minister Lee Kuan Yew calls ‘an all-you-can-eat buffet’. There was bound to come a moment when the money ran out; for most Western countries, that moment came five years ago.

The authors toy with the Singaporean model, which elevates meritocracy over representative government and long-termism over electoral expediency. They consider China, too, as a variant of this model. They rightly reject this alternative as corrupt and self-serving.

What, then, is the answer? Well, if the state can’t do less, it must learn to do better. Micklethwait and Wooldridge canter through various examples. There are no-frills hospitals opening across India which, by bringing together many specialists in one place, create economies of scale that allow operations which cost tens of thousands of pounds in the West to be brought within the reach of the general population. There are reforms in Scandinavia, such as the automatic actuarial adjustment of the retirement age, that allow universal welfare to remain affordable. Above all, technology makes possible colossal savings that immobilist civil servants have so far been reluctant to consider.

All these ideas are true and important, if not exactly seminal. The independent-minded MP Douglas Carswell anticipated many of them in his 2012 book, The End of Politics and the Birth of iDemocracy. Come to that, the revolutionary social power of the internet was foretold by Chris Anderson – who wrote for The Economist before becoming editor of Wired magazine – back in 2004.

Both Carswell and Anderson are name-checked towards the end of the book. Indeed, the authors are meticulous about acknowledging their sources, some of whom are more than usually recherché. And, in a sense, that’s the real significance of this book. The idea that technological change would put 20th-century big government out of business is no longer the preserve of free-market eccentrics such as Carswell and Newt Gingrich (and this reviewer). It has – suitably simplified and exaggerated – won the approbation of the most respectable public-affairs magazine on Earth. The revolution is upon us.

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