Economist editor: Strong leader needed for national reinvention

John Micklethwait, editor in chief of the magazine The Economist, is a journalist who sets his own agenda.

He is known as a thought leader who produces ideas regarding international politics and economics by combining information from a range of sources - news, academia and statistical data.

The New York Times even named Micklethwait as an Aspen man, a reference to a modern journalist “specially adapted to the corporatized landscape of the modern media biome.”

Indeed, he’s been seemingly everywhere, having spoken at a number of international conferences, including the Aspen Strategy Group, the World Economic Forum and TED talks, greatly influencing key business and political figures worldwide.

Earlier this year, Micklethwait published “The Fourth Revolution: Global Race to Reinvent the State,” in which he argues that government efficiency is the central contributing factor in nurturing the Western world to take on global leadership.

The main idea of his book revolves around the notion that nations with Western democracies are now facing serious crises across all fronts.

“Government reinvention is a solution that’s more urgent than any other in social affairs,” Micklethwait said in a recent interview with the JoongAng Sunday.

“A radical overhaul on government organization should take place to make the state more efficient, and solid principles on state governance have to settle based on the spirit of freedom and creativity. The existence of the basic concept of state depends on them.”

Q. Why are the two most urgent goals state innovation and government overhaul?

A. Countries like the United States, Japan and many European countries that have implemented Western democracy are usually referred as advanced nations, but they are all undergoing severe crises.

That’s because the government, government workers and politicians are unable to do the work they’re expected to do. However, citizens of those countries have almost given up on changing the government and ask how a government can be changed by its people. It’s dangerous for citizens to give up on their own state. Being unable to solve the problem may be a threat to the existence of the country.

French poet Charles Baudelaire said that government is the citizens’ servant, meaning that public workers like city hall workers, high-level government officials and lawmakers are there to take care of the citizenry and their hardships.

In the real world, however, these public workers pursue public works that are mostly geared toward their own interests. This trend has become so severe that an authoritative country like China argues that its [authoritative] model works better than Western democracy.

The concept of state in Western democracy has evolved while undergoing three revolutions and continuous reformation efforts, such as the birth of the modern state in the 17th century, the laissez-faire spirit that lasted through the 18th to 19th centuries, and the welfare state spirit that existed in the early 20th century, and the neoliberalism pursued by [British Prime Minister Margaret] Thatcher and [U.S. President Ronald] Reagan in the mid-20th century to prevent any adverse effects from the previous political basis. That’s why my book is called “The Fourth Revolution.” Revolutionary reinvention of state is still possible in this time of day.

(Micklethwait says that a state can be reinvented in roughly two ways: by enhancing efficiency and setting up a firm set of governance principles. He argues in his book that such reformation is possibly through taxation and pension reforms and efficient privatization to enhance public services while allowing private sectors to provide quality service in areas that can’t be carried out efficiently by the public sector. According to the book, the countries that implemented Western democracy should pursue freedom, creativity and transparency as their three core values, as democracy with these three pillars allows those nations to easily perform a systematic overhaul and shift the direction.)

If a government only focuses on efficiency, how does it deal with social inequality and polarization?

I think there are two great debates getting on underneath virtually all politics and enlightenment, and the first - as you pointed out - is to do with inequality. This, in large extent, is a debate about Barack Obama’s criticism that bad companies move their corporate bodies overseas to avoid heavy taxation. You can see the same fairness issue in the wealth tax in France and mansion tax in the United Kingdom.

The Crown Prince Party in China is a big example. That is why equality and fairness are important. I think, in general, that the West does tend to pull society to the left [when it comes to the issue of inequality]. By contrast, I think they are urged to reform the state, which tends, on the whole, to pull society to the right.

But that is quite a lot of overlap between the left and right. For instance, when you begin to really drill down into inequality, where does it originate? It is based in things like the uneven education system, and this virtually old kind of education reform that focuses on public education. The bubble of chronic capitalism that misallocates government resources does not help equality at all.

To use the classic example of America, more government money is spent on mortgage tax interest deductions for the top 5 percent, which is larger than the amount spent to support social housing for the lower 50 percent of asset owners.

That means that housing policy is poorly run by the state. Housing doesn’t need to be run by the state that way, and that is heading entirely toward the wrong end of the market, and this should not be happening. You won’t help people from housing. It should be right on the very bottom, not for people on the top.

So yes, there is tension between social rights and individual rights. A good state is more likely, in the end, to deliver a less unequal society.

How would radical change in a country come about?

Well, I think the answer to that is interesting. Radical change comes from the following ways: The first way comes from a radical leader like Margaret Thatcher, somebody who really can unsettle things and change things dramatically.

The second way in which things change is - again, this helped Thatcher in the 1970s in the depression - when you simply run out of money.

A great example of that is in Sweden. If you think the Western welfare model can go on and on without accountability and without a day of reckoning, then Sweden is a good model.

Sweden spent far too much [on welfare]. Eventually the government was overwhelmed with [welfare spending]. The country reacted when the government reached a point where welfare spending stood at 67 percent of gross domestic product [GDP].

Then, the Swedish government was forced to deal with it, and they [the government and politicians from the left and right] united.

Their thoughts about public services are still very free and oriented toward helping poor people. But equally and clearly, they have to be much more open about who, precisely, can deliver their services. All they care about is that the services are free at the point of contact.

A third way is evident in past examples. You can see London has begun to do something; you can look around and you can look at small places like in Singapore.

The more you look and the more people begin to think that something is radically different, it is more likely to change. When I first went to America back in the 1980s, I tried to rent a car, and the airport’s car rental company only rented out American cars, which often didn’t work. Japanese vehicles and Korean cars weren’t quite that big back then. It was basically the same. One car didn’t work and you tried to avoid it, but the other one did. Now, when you land in America, it doesn’t matter because the differences were eliminated by competition.

Now look at the public sector, there are vast differences in terms of the quality of the services offered between countries, education and things.

Also within countries, you end up with two places that are very similar, two health districts with similar ages, population, wealth and even similar numbers of hospitals. And they end up with dramatically different health and cost results - same with the education.

The more people get online to see how bad [the political status-quo is], then the better it is. That is another way in which change is going to come.

Lastly is the spread of ideas, and this book is part of that. We’re saying that revolutions that happen before the government may tend to happen with technology, ideas and global competition. You can see what the Internet has begun to do. The beginning is the big ideas.

Finally, you’ve got the essence of competition, certainly now from Asia, which is challenging the Western model. That is very interesting to me.

You frequently mention China in your book as a successful model of state overhaul. Does that mean that the Chinese government is a good government?

I think China has advanced in part by copying some of the things that the West has done. And they just try to raise transparency. The book criticizes China’s corruption, problems to do with education and various other things that are wrong with the Chinese model. I didn’t mean that there is no problem in the Chinese model.

Also, the Asian model I emphasized in the book is anchored more on Singapore, rather than on the Chinese model.

China has managed to make an autocracy at least slightly more accountable by replacing leadership every 10 years in a fairly regular and disciplined way. And that is different to the way that other regimes have worked. It does mean there is more meritocracy at the top than there generally is. I think there are a lot of problems in China, and we are just beginning to see them.

But there are not enough models or enough of a challenge. It is good that something is getting done - that is something that the West should face up to, particularly at a time when Western democracy seems to be so uneven.

Many countries choose Western democracy even if they weren’t past colonies of a Western country. Japan and Korea are just some of the few examples that succeeded in achieving economic development under Western democracy.

In terms of Korea, I think it’s interesting that Korea became notably more democratic. That, I think, is a big challenge to China, because if you look at what happened to Korea and in Taiwan, people want to set the level of wealth and a certain level of comfort, and are not prepared to put up with a new unaccountable government. That is, perhaps for the longest term, the big challenge for China. China now has to learn to pull through that.

Japan has a dysfunctional political system, which has proved that change is extremely difficult. But in some ways, in Japan’s case, you have to ask questions about how long it takes for democracy to take initiative to fix problems. But in the end, it does start change.

You can see that with [Prime Minister Shinzo] Abe. It will be an exemplary case if Korea and Japan improve their governments by overhauling them to more Westernize their democracy, while authoritative China and Singapore cry out for boosting the efficiency of their governments.

by BY PARK SUNG-WOO [jiyoon.kim@joongang.co.kr]