*This areticle has been published in Oxford Government Review 2: Bridging the Gap, October 2017.
Moving into the 21st century, the problems of our world seem to show no signs of diminishing. The list is long: the growing disparity between the rich and the poor, mass migration, the emerging anti-globalisation trend, the withdrawal of traditional global powers from significant global affairs, tension in Asia, imbalances between EU nations, changing population structures, and the threat of AI-supported robots to people’s jobs. Today’s world is no safer than it was a century ago.
The global order established after the Second World War is under serious threat, and a possible new order has not yet emerged. Two important issues facing today’s global community are the direction in which human civilisation is heading and where leadership will come from.
Since the 1980s, decades of bureaucratic reform have weakened public trust in government, even as increasing social issues require state intervention. We are at a crossroads: the gap between our problems and our institutional capacity to address them is increasing, as is the gap between the return to capital and that to labour. There is a need to improve public trust but a lack of the means to do so. We need more global collaboration just when interest in global issues is diminishing.
What are the root causes of these problems, and where do their solutions lie? We can look to the United States, China and the UK to identify the sources of both.
1. Reform theories were wrong and reform efforts failed to be on the right track
The reform rhetoric of recent decades glorified privatisation almost to the point that it seemed like its advocates wanted government disbanded. Ronald Reagan once forcefully claimed that his measures were not intended to change the government, but to do away with it. There is of course nothing wrong with emphasising individual rights and private efforts. However, downplaying the forces that coordinate those private efforts, and inflating the importance of self-interest way beyond that of the public interest, tipped the balance of society. It accelerated the growth of the gap between social classes, legitimised extreme self-serving behaviour, and demoralised those engaged in civil service. Ideally, the Reagan-Thatcher privatisation and decentralisation reforms should have helped alleviate bureaucratic red tape, correct governmental failures, and reignite public-service enthusiasm. However, the consequences took the world in a different direction, where the spirit of public interest became less valued and civil service capacity was eroded. Trust in government as well as in society has declined because of this rhetoric that government is rarely the answer. The theories guiding the reform were grounded in maximising self-interest (public choice theory) and market failure theory (only when there is market failure should the government take action). The massive global financial crisis was a direct consequence. US Congressman Henry Waxman put it to Lehman Brothers’ CEO Dick Fuld that “your company is now bankrupt and our country is in a state of crisis. You get to keep $480m. I have a very basic question: Is that fair?” The fact this question even has to be asked tells us the business world has got something seriously wrong.
2. We need a new theory of governance and government intervention
The global financial crisis provided today’s society with a serious lesson about Wall Street greed. French economist Thomas Piketty’s important book Capital in the 21st Century uses decades of data to show that the return on capital has always been larger than the return on labour except during some times of war. Therefore, regardless of how hard people work, the gap between social classes is bound to increase. This suggests that the classical theory that government should intervene only when there is market failure is problematic, for markets are doomed to fail without the political and economic structures provided by government. The key, therefore, is how to make government more efficient.
Barry Bozeman, an American professor, wrote a book called All Organisations Are Public. His argument is that this is true, only to differing degrees. All organisations are subject to public scrutiny, are not supposed to harm society, are regulated by public policy, and are obliged to pay taxes. In this sense, in today’s entangled world, the behaviour of organisations is bound to have impact on the public’s life. The Lehman Brothers’ bankruptcy made a few people rich but destroyed the lives of many, and left behind a huge problem for the government to handle. Bozeman argues that we should not wait until the market fails, and instead proposes a theory of Public Value Failure, which allows governments to intervene at an earlier stage.
In our new century, we surely realise that harmonious coexistence, global warming, a shared global economy, and sustainable development are among society’s most powerful drivers. The key emphasis of public service is no longer economic development and technological innovation, which are now automatically built into our processes: the average per capita GDP is 17,000 US dollars and technological breakthroughs occur on a daily basis. But the world is still riddled with poverty and homelessness. As time goes by and economic structures stabilise, our world and our governments face fresh challenges and priorities. Bridging the gap seems to be a critical concern of our time, and public policy has a great role to play.
3. Reasserting public values, infrastructure building, public service delivery, and justice in distribution are the key to governmental success
The evidence of recent decades shows us that privatisation and decentralisation are not enough. A shared belief in the promotion of public interest is the key to social success. In order that our human society eventually triumphs over our basic instinct for self-interest, and that we elevate ourselves to a new level of civilisation, we need leadership and robust government that asserts public values, builds infrastructure, delivers public services, and ensures justice in the redistribution of social wealth. Only when all individuals live with freedom and dignity, can the gaps that split our society be filled and our world become a sustainable and harmonious global village for humankind. OLUGI