When Government is Broken

In the US and Europe, disillusion with politics is feeding the far right. We need a radical response that returns power to people

The recent debacle in Washington, where wrangling over the debt limit has triggered a downgrading of American debt, has underlined the deep incompetence of the US political system. Thanks to needless brinkmanship, particularly by the Republicans, confidence in US debt has been undermined, thereby likely increasing the cost of borrowing – a price that will eventually be paid by all Americans.

The story in Europe is not much better. Here, too, decision-makers have been unable to come up with a response to the debt crisis sufficient to reassure the markets. As a result, larger economies, like Italy and Spain, are joining Greece in facing a severe debt crisis, and equally severe austerity as a likely consequence. As in America, the political system has been shown to be inadequate to manage the economic system.

The origins of both failures are different, but similar. In the US, bi-annual congressional elections have placed politicians in almost permanent campaign mode, giving them little incentive to compromise – or, more specifically, to be seen to compromise. The division of power between the executive and legislature is a further hindrance to coherent policymaking.

In th EU, the intergovernmental structures designed to manage the eurozone economy are not sufficiently integrated to deal with the threats to that economy. It has become increasingly clear that the only way to manage a single currency area is to unite fiscal policy – that is, for tax and expenditure to be decided in common, rather than on a national basis, as it is now. Greece would no longer be able to overspend, running up huge debts – and thus risk.

But the reforms necessary to improve the ability of these systems of government are unlikely, to put it mildly. Constitutional reform in the US is about as plausible as turkeys voting, en masse, for Thanksgiving (or Christmas). In the EU, the establishment of what would amount to a single government for the eurozone appears very unlikely and, for many Europeans, equally undesirable.

Instead, as the failure of government becomes more evident, more atavistic forces are rising. In the US, the Tea Party has gone rapidly from strength to strength. Moderate Republican leadership seems invisible, and certainly bereft of ideas in the face of the ideological certainty of the new right. In Europe, from Finland to Italy, anti-immigrant, anti-EU, reactionary parties are scoring more and more significant electoral successes. Watch next year’s French presidential elections closely: the National Front’s worryingly plausible Marine Le Pen will do much better than currently predicted.

The rise of the new right in the west cannot be surprising. Globalisation has not delivered clear benefits to the bulk of the middle classes, whose incomes have stagnated on both sides of the Atlantic, while a tiny proportion have grown vastly richer. Instead, global competition, immigration and the ferocious pace of change in the modern economy have combined to produce a sense of deep insecurity. No one knows if their jobs will last, or if they will afford a reasonable retirement. Frustration with the political class is inevitable when it proves itself so incompetent to manage the economy, on which everyone’s welfare depends.

The record of government in providing security, government’s other fundamental duty, is little better. Vastly expensive wars in Iraq and Afghanistan – and deployments in scores of other less-reported places – seem endless. While the immediate threat from al-Qaida may have been reduced, our actions have contributed to a situation amounting to permanent war, with a never-ending stream of would-be terrorists, at home and abroad.

In short, government is in crisis.

There is now a real risk of a slide into greater confrontation, of the dismal kind Washington has treated us to over the last few weeks, or a creeping shift to the right, whether of the Tea Party or Italy’s Northern League. To prevent this, radical change is necessary.

The first step is the abandonment of the comforting but misplaced belief that government will sort it out. Globalisation has produced trans-boundary forces of competition, migration and price volatility, as well as terrorism and climate change, that national governments are less and less able to manage. Politicians will claim that if only they are in charge, things will be better. Do not believe them (I am not sure they believe it themselves).

International cooperation will not fix it either. As I have argued before, emerging global banking rules have been expertly judged as inadequate in preventing another 2008-style meltdown. Even if such rules emerged, the pressure of competition and innovation will doubtless produce new and unpredicted dangers, just as the risk created by credit default swaps was underestimated by banks and regulators alike. On other issues of cardinal importance, like climate change, effective global rules seem far away.

Instead, something else is needed. We need to start to take the burdens of government upon ourselves. This sounds frightening, but may prove, in fact, liberating. And it may contribute to greater moderation in our affairs than the fractious instability that characterises today’s politics. I’ll return to what that might mean in practice in my next article here.


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