GOVERNANCE (Mini-articles) Index

Visceral dislike of government is nothing new in America. The nation owes its existence to a grassroots revolt against British colonial rule. The difference today is that the American people are venting their anger on their own representatives in Washington, rather than foreign oppressors. The intensity of anti-Washington sentiment is shocking even professional politicians. It swept Newt Gringrich to victory in last November's congressional elections and has embolded state governors and city mayors, who are now demanding greater liberty. It is absurd, they argue, that nearly every aspect of social and economic policy should be minutely regulated by distant bureaucracies in Washington. Give us the freedom to design our own policies, they say, and we will make faster progress while cutting taxes.

It is an arguments that floors most Washington politicians. Educated Americans are brought up to revere Alexis de Tocqueville's classic work, Democracy in America (1835). After touring the US in the 1830s, the French aristocrat and philsopher declared that the genius of the American political system lay in its decentralisation. Americans were resourceful and public-minded because local communities were largely self-governing. The federal government was tiny and preoccupied mostly with foreign affairs. Unlike in Europe, personal initiative was not crushed by a powerful and intrusive central state. The US now bears little resemblance to the America that so entranced De Troqueville. Aggrandisement by the federal government is in a class of its own."

From an article in the Financial Times, 5 Feb 95

Governments have become much less important. The decline in state power probably started about 20 years ago, reversing a trend that was at least 200 years old. So it looks likley that it has a long way to run. The shift is so new that it is not easy to see quite where the power is going. The financial markets are an obvious beneficiary; so are international media groups; and the experience of the past week suggests that such global pressure groups as Greenpeace are also increasingly influential. But I suspect that the shift of power will go much further than this.

There is, however, one area where national economic policy remains enormously important, and that is the long term balance of fiscal policy, for that will help shape the relationship between the individual and the state over the next generation. Get the balance right, and the state will be able to fulfil its obligations to the individual; get it wrong, and it will be unable to do so and thereby hasten its own decline.

The key area where the state has been accumulating liabilities it will be unable to meet is in pensions. The latest OECD Economic Outlook shows that present pensions contributions are inadequate to fund the state pension schemes in the US, Germany and Japan. Much the same position applies to all the other G7 countries such as France , Italy and Canada. Only Britain has a state pension scheme that is just about in balance but even we will have a problem during the first two decades of the next century.

Hamish McCrae, Economics Editor in the Independent on Sunday, 25 June 1995

It is repeatedly said that the communications revolution will make big changes the way we are governed. Consider what has already happened--television. This has already enabled large numbers of people to become well informed about a very large number of issues, some of them quite complicated. The assiduous TV viewer is probably more widely briefed now than the average MP. Another feature of television, the personal interview, also enables the viewer to scrutinise the politician as never before--and often found wanting. Television has already produced a deep credibility gap between the citizen and professional politicians and government.

But electronics is hardly going to change this. Is it seriously suggested that the mass electorate is going to vote directly on legislation? It is technically possible, but hardly likely. Also, the communications revolution means that we can lobby our MPs more effectively by fax or e-mail. But lobbyism is already one of the chief weaknesses of late-20th-century democracy, producing impasse rather than sensible decisions--so this will only get worse if we continue to accept our present institutions.

But what electronics can do is to bring far-distant people together. We are thus likely to see the continued falling away of the middle ground (governments) and the development of more lateral, specialised, globalised forms of governance. Also, because of continuing government ineptness (and indebtedness), many other welfare and similar issues will have to be solved by people in their own localities. We are thus likely to see the development of the big and the small; the distant and the local.

From Newsletter, Job Society, June 1995

At least in the eyes of a growing number of people and are a further sign of the growing lack of credibilty of governments. Illegal demonstrations against new motorways, nuclear power, and the export of live animals are attracting growing public support. A new survey shows that 68 per cent of people believe that there are times when protesters are justified in breaking the law. This is 14 per cent higher than the last time a similar poll was taken in 1984. The research, conducted by Gallup last month, found approval of civil disobedience across the political spectrum and all classes.

The figures were welcomed yesterday by pressure groups whose tactics in recent years have ranged from commando raids on nuclear plants to mass sit-down protests to stop lorries carrying calves for export. Occupying buildings is apporved of by 32 per cent of people, a 10 point rise on the figure 11 years ago. Stopping traffic has the approval of a quarter of people, compared with 14 per cent in 1984. Just over half of Tory voters said there were times when people protesting against matters which they found unjust could break the law. More than 75 per cent of Labour voters and 70 per cent of Liberal Democrats agreed. There was consistent support for the idea of civil disobedience among working class and middle class people: 67 per cent of ABC1s and 68 per cent of DEs were in favour.

Although most people are completely opposed to violent protest, the changing support for disobedience in a general way suggests a growing disillusionment with the response of politicians and government to public opinion.

From an article in the Daily Telegraph, 5 June 1995

Shell UK has just been forced to abandon its controversial plan to tow the Brent Spar drilling rig from its site in the North Sea and dump it in a 7,800 ft trench in the Atlantic. Previously, Shell, and the British Government, said that the dumping method was environmentally preferable because towing the Brent Spar to shallower waters and then dismantling it onshore would be dangerous because it might fall apart and release the toxic pollutants and radioactive scale it is said to contain.

This week, Greenpeace protestors had repeatedly invaded the rig from helicopters, despite being forcibly evicted several times, and being hosed down with high-pressure water jets. However, European environmentalists began a boycott of Shell filling stations, causing their sales to plummet immediately by about 20 per cent. Shell gave way yesterday and said that it would seek a licence from the Government to bring it onshore and dismantle it. Government ministers are furious, criticising Shell for caving in under pressure.

There are three significant lessons to draw from this episode. The first is that important information must be made public. It is not enough for Shell and the Government to say that experts considered it safer to dump the rig. The second is that Shell, as a TNC with much clout, is more powerful than the UK Government. In "seeking" a licence, it is actually telling the government that it wants one. The third is that the consumer is, at the end of the day, more powerful even than the TNCs. This is what Keniche Ohmae has been saying for years. As competition between TNCs becomes more intense over the coming years, this "democratic" lesson will be learned repeatedly by Shell and their ilk.

From Newsletter, Job Society, 21 June 1995

Compared with France or Italy, this country does not suffer serious financial corruption, but there are other ways in which politics can become corrupted, degraded or deformed. During the past four years or so, I have increasingly felt that the whole nature of UK political life was undergoing a subtle degradation. I first began to notice it during the early stages of the Maastricht debate. To put it bluntly: the Government was telling lies. There were various fibs and falsehoods, but the fundamental lie, tirelessly propagated, was the claim that the Maastricht Treaty was a triumph of "decentralisation" and that the drift towards a federal European state has actually been reversed.

The truth, which anyone who read the Treaty could discover, was that it transferred more powers to the European level: it was not "decentralising", merely less rapidly centralising than some of the other proposals on offer. For a government to tell lies was, in itself, nothing new. But these were lies of a new and different kind. Together with these untruths, there came the implication that ordinary MPs (let alone members of the public) were not competent to judge whether they were true or false.

What is happening here, I think, is that the methods of democratic politics are being gradually supplanted by the methods of international diplomacy. Real politics requires genuine debate, and truthful answers. That is, or used to be, the great strength of the British political tradition. With Britain at the heart of Europe, and diplomacy eating like a cancer at the heart of our politics, I am not sure how much longer that tradition can survive.

From an article by Noel Malcom in the Daily Telegraph, 30 Mar 1995

A radical fiscal reform is explored in an article by Prof Dwight Lee of the University of Georgia in the latest issue of the Cato Journal in which the Federal Government would surrender its power to tax.

If, instead, the right to tax is vested in the States, free riding is effectively prevented by requiring States to transfer a given percentage of their revenue to the Federal Government--the same percentage in all cases. This percentage would be set to cover only the costs of functions that must be performed centrally, such as national defence, foreign policy, monetary policy, justice and trade relations.

Under this regime, the climate for interest groups would grow chilly. There would be no point lobbying Washington for concessions as the Federal Government would have no independent means of increasing its budget. Pork-barrel spending would thus be out of the question. The incentives facing States and localities would also change radically. Since a portion of their revenues would be remitted to Washington, they would not be able to provide local services equal in value to the burden of local taxes. Voters would thus be more sceptical of government, supporting only those services that offered large collective benefits; nor would they be sympathetic to demands from sectional interests. Fiscal competition between States would intensify, putting further downward pressure on tax rates and spending.

The beauty of reverse revenue sharing its that it would reverse the incentives that fuelled the expansion of government in recent decades. It would tame Leviathan.

From an article in the Financial Times, 22 May 1995

With the end of the Cold War, the age of the Nation-state is coming to an end as well. It is being undermined by both external and internal forces. The external forces are mainly technological. Finance is now globalised. Up to $1,000 billion a day are moved across the exchanges by business and financial institutions. These movements determine a country's exchange rates, interest rates, balance of payments, investment and output, irrespective of the will of national governments.

Business is now globalised as well. The 10 largest trans-national corporations each produce more than 87 of the world's Nation-states. And all the firms now put new factories wherever the relevant labour is cheapest and their ultimate market is nearest--whatever their government may say. Perhaps $1,500 billion of criminal profits are laundered worldwide every year--one third of them from the drugs trade. The criminal mafias co-operate with one another far more closely than the Nation-states which are supposed to repress them.

Meanwhile, the stability of even the prosperous Western democracies is undermined by the growing insecurity of their peoples, the proletarianisation of their middle and professional classes and the growth of an alienated underclass. National cultures will persist but the concept and practice of the Nation-state of the last two centuries are coming to an end.

A precis of an article in by Dennis Healey, former Chancellor of the Exchequer and Foreign Secretary in The Sunday Times, 5 March 1995

"There is no such thing as the nation-state any longer. It is becoming just like England in the time of the War of the Roses. There are competing leagues of power within each nation. We now have tribalism rather than nationality. Our law makers are shadowy bodies rather than sovereign entities, and there are activities of all sorts which are simply outside the law. The writ of the central state has already ceased to run in parts of the advanced countries and, in this respect, we are now returning to the Middle Ages."

Prof Norman Stone, Oxford University

"Since the 18th century, we in continental Europe have had a vision of hsitorical optimism. This is going to be wiped out. Despair and indifference are already taking over. We are already seeing the emergence of 'grey zones' in which any kind of power does not exist any more, rather like the Middle Ages with its vast abandoned areas. For three centuries, we have been establishing the State to create order. Today, we are seeing areas developing without any kind of order or any kind of State."

Alain Minc, Le Nouveau Moyen Age, 1994 Both speaking on Late Night Show, BBC2 28 Nov 94

In the UK, civil servants at the highest levels, it would seem, are constantly trying to consolidate themselves in positions of considerable power. Their latest wheeze was to persuade ministers that they should have sole responsibility for controlling most of the important policies of the largest departments: Environment, Employment, Transport and Trade & Industry. Ten senior civil servants are meant to have unprecedented powers which will make virtually provincial governors of England with a total budget of ś4 billion a year.

They have been likened to the District Commissioners who used to control huge tracts of the British Empire, or to Roman Pro-consuls or to French Prefects. They can allocate enterprise grants, organise training schemes, order local authorities to carry out repairs to housing estates, negotiate with the European Commission, run employment services, determine industrial policies and transport policies. They are formally responsible to individual Secretaries of State but only through the screen of their immediate bosses, the Permanent Secretaries of their departments. Thus the latter will be both servants and masters at the same time.

With such immense powers, it might be expected that they should be answerable directly to the House of Commons, and many MPs are saying that they should come under some sort of scrutiny. It remains to be seen whether this will happen in any effective way.

Newsletter, Job Society, March 1995

As governments in the rich countries are finding that they are going to have to reduce public expenditure in the coming years, they are trying to grapple with the most difficult problem of all. This is how to reduce the size of their own civil services. Like all bureaucracies in the past, the present ones have a facility for growing steadily whatever the circumstances, whether clement or inclement. They can always find a very good reason for expanding so that salaries at all grades of the hierarchy can benefit.

Sometimes, even when redundancies have been announced, local and central civil servants have been known to take on extra personnel to carry out the redundancies -- and then end up with more staff at the end than they started out with! Civil servants, especially those at the very top, are wily birds and can usually completely outwit their political masters who, generally, have no managerial experience in industry or commerce.

Another wrinkle is to faithfully carry out the redundancies (usually among the lower ranks only) and then to promote those who remain in order to "justify" higher salaries for all. This has recently happened in the UK when the average cost of employing each civil servant rose in 1994, in spite of the widespread public sector job cuts and low official pay settlements. Pay settlements were of the order of 2 per cent, yet pay costs per head in the civil service rose by 3.6 per cent. Wily birds indeed!

From the Newsletter of the Job Society, May 1995

The erosion of nation-state sovereignty has created a democratic deficit. Citizens continue to hold their national governments accountable on issue over which states have no autonomous control. The strong sense of allegiance to the nation-state borne by its citizens, and developed over the past two hundred years, has not yet weakened in line with the diminution of the autonomy of national governments. Despite the advent of the ‘global village’, individuals so far feel little more than token allegiance to emerging supranational bodies such as the European Union. Where is the reflection of self, of the group, of the nation?

International and regional organisations also face more fundamental problems in seeking to manage the global economy. The crisis in the European Monetary System from 1992-3 underlined the difficulties of accommodating an internal shock as great as German unification. The General Agreement in Taraiffs and Trade spent seven years negotiating an accord that was supposed to be finished in five, and one that falls far short of the original goals. The US-Canada Free Trade agreement and the subsequent North American Free Trade Agreement aroused strong opposition and its much-vaunted disputes mechanism did not pre-empt tit-for-tat trade measures. A global economy with ineffectual political oversight risks leaving citizens of all social classes disenfranchised.

Citizens will retain power as consumers, but will have less obvious influence on the political structure that underpins the international economy. As the diminution of single-state power becomes evident, citizens will tend to think more closely -- about their own communities.

From "After the Nation-State" published by Harper Collins, 1995

Watching the Tory party leadership contest the other day, I could not help reflecting what a false view most people have of politics. At least since the days of Greek philosophers, staecraft and diplomacy have enjoyed an undeserved prestige. The classical ideal, of course, was a life of contemplation: but failing that, a career as a public servant was seen as superior to commercial life. Individual politicians may be flawed, the argument runs, but their calling is an elevated onbe. They pursue the public good.

But is politics really a nobler occupation. To find out I visited a group of "public choice" theorists at George Mason University near Washington DC. The theory there assumes that politicans are normally as self-interested as the rest of us. They seek votes primarily ot further their own careers. Professor Robert Mollison suggested that US politics was primarily about the transfer of money between different groups in society. The main function of Congress was to serve as brokers or middle men. They had to identify people who wanted services of various sorts and then find ways of raising the resources -- through taxation. Legislation was was the process of bringing supply and demand into balance for "transfers" into balance.

The winners in this cynical game are those who can cheaply organise themselves into lobbies or interest groups. The presence of 2,500 such groups in Washington illustrates their importance. The net result of this is to increase the welath of organised parts of society at the expense of the unorganised; overall welath, of course, is reduced since the process is highly inefficient. It thus turns out that politicans occupy a market place every bit as grubby as that of private business. Since public sectors account for 40 to 50 per cent of national income in many countries, the size of the political market is enormous.

But there is a big difference between businessmen and politicians. Politicians depend upon coercion -- that of majorities against minorities. Provate busines is less oppressive because it depends entirely on the voluntary choices of individuals. The real heroes of society are not the politicans-brokers who merely transfer wealth. They are the entrepreneurs who create it. The Greeks had it upside down: commerce, not public service, is the realm of virtue.

From the Financial Times, 10 July 1995

There is an old saying: Whose bread I eat, his song I sing. For many UK Members of Parliament, it has been adapted: Whose dough I pocket, his questions I ask, his speeches I make, his amendments I table. This week, MPs will once again debate the ethical cleansing of their House of Ill-Repute. And once again, reform will be resisted by an alliance of the old-fashioned knights of the shires, who think honourable chaps embarrass themselves by talking about money in front of the voters, and the hired guns of the suburbs, who fear any restriction or scrutiny of their nice large earners from consultancies.

They have already delayed implementation of the terribly modest proposals in the Nolan report by shuffling them off to a select committee of MPs. Predictably, this has turned out to be a selection committee. On the curcuial issue of MPs’ outside earnings, the Conservatives and the lone Liberal Democrat on the committee have concluded that there needs to be "further consideration". Phooey! If they can get away with it, they will be considering for eternity. Most of the Tory MPs who spoke in the last debate were opposed to anything that would restrain their use of the Palace of Westminster as a cash machine.

We will hear more thrteadbare protestations about parliamentary sovereignty from those who have auctioned it to outside interests. We will be told that to give up extra-curricular activities would cut them off from the real world. None of this impresses their constituents who do not expect to see their MPs spend the coming recess getting in touch with the real world of being a street cleaner or a hospital porter. The public overwhelmingly believes that MPs should not have any bits on the side at all.

From The Observer, 16 July 1995