There are many reasons why some of us (ahem) can be sanctimonious about the importance of politics, and impatient with people whose instinct is to tune out of the admittedly messy business. The foundation, however, is simple: policy outcomes matter. Anyone who doubts that should consider what a few hundred different votes in Florida circa November 2000 would have meant to the widows and orphans of Iraq right about now.
Policy matters, and the ideas that motivate policy matter, too. In their new book, The Fourth Revolution, Economist editors John Micklethwait and Adrian Wooldridge argue that there’s a sea change underway in policymaking across the world—just not in the most industrialized countries of the West. The argument seems tied to their view of a smaller, less interventionist state, but some facts stand out even if you don’t like their politics: the success of Brazil’s Bolsa Familia, which even the Trotskyites at the World Bank call a revolution in poverty reduction, for one; then there’s India’s success in health care.
Micklethwait and Wooldridge say these policy innovations are happening in the developing world because, increasingly, it’s not possible to look to the United States, the EU, or the UK as models of good governance. (And, fair enough.) As they say in the Wall Street Journal, “Many Chinese think there is far less to be gained from studying Western government than they did from studying Western capitalism.”
If that’s supposed to alarm us, it’s not clear why: if the Chinese/Brazilians/Indians/whoever are spending a substantial chunk of their time and money trying out new policies the West isn’t, that’s an opportunity for us to sit back and see which ones work, which ones don’t, and which ones we should try out here. If we won’t choose to adopt good ideas from abroad, that’s the part that should alarm us.
Even a quick glance at any one of a dozen policy disputes—say, supply management in the farming sector, or liquor retailing in Ontario, or, yes, food trucks in Toronto—could make you pessimistic about changing any entrenched policies domestically; most days, the status quo is armed for battle before the opposition can even get its boots on.
If Micklethwait and Wooldridge are correct, it’s that kind of risk aversion in policy-making that’s holding back western countries while developing countries find new ways of doing things.
It’s always the author’s temptation to try to situate his thesis in the grand sweep of history. But, if that’s your inclination, spare some time for the argument James Robinson and Daron Acemoğlu made in Why Nations Fail, in which the authors tried to explain the divergence between the wealthiest economies and everyone else. If you’re going to worry about developing countries closing the gap between them and us, it’s worth remembering how the gap got so large in the first place.
As Acemoğlu and Robinson write, what enables countries to race ahead isn’t something as simple as the policies they pursue. Rather, it’s more fundamental: countries that have institutions that keep their leaders accountable, provide incentives for advancement and entrepreneurialism, and keep corruption to bearable levels are the ones that move ahead with broad prosperity. Countries where economic wealth all flows upwards, meanwhile—where little of the benefits of growth are shared with the broader workforce—stagnate and fall behind.
While worrying about up-and-coming developing economies is an old sport, Acemoğlu and Robinson are there to throw some cold water on the West’s pity party. Some developing countries will indeed make important leaps forward, but others will stumble behind after initially-impressive growth. A lot of countries look good when the economy is growing quickly. It’s when the good times stop rolling that countries are put to the test.
That test, however, can also help us judge the West’s performance. During the most recent financial crisis, US policymakers moved heaven and earth to bail out the banks that caused the crisis in the first place, while mostly abandoning homeowners (suddenly faced with unsustainable debts) to their fates. This had not been American policy either domestically or abroad in the past, but in 2008, something changed: when the good times stopped, there was a choice to roll out help for Wall Street and assume that, like a game of nine-ball, the middle class would recover indirectly. How’s that working out for you?
We don’t have to be alarmed about the rise of developing countries just because they’re trying new things—in their trying, they’ll fail quite a bit, and some of those failures are going to be costly. But the thought that good ideas from abroad won’t get a fair hearing—or, for that matter, that good ideas generated here won’t, because it’s in other people’s interests that they don’t—should alarm all of us quite a bit.
