When he was 18, before entering college, John Micklethwait toured the U.S. for a year with a friend, traveling on Greyhound buses. When they arrived in San Francisco, they spent a memorable evening with expat British businessman Antony Fisher, founder of London’s Institute of Economic Affairs, and his downstairs neighbor, Milton Friedman.
They talked about the possibilities now that Margaret Thatcher had become prime minister and Ronald Reagan president of the United States. The conversation made a deep impression on Mickelthwait. Then it was back to Magdalen College, Oxford, and an eventual career in journalism.
Today his companion is a major general, but Micklethwait commands many more battalions as editor-in-chief, since 2006, of The Economist. His new book is The Fourth Revolution: The Global Race to Reinvent the State, written with longtime collaborator Adrian Wooldridge, management editor of the magazine. They argue that the West should complete the revolution of the ’80s that Friedman started.
It won’t be easy, the authors acknowledge. Both the welfare state and democracy itself must be reined in, the former by redefining and reducing expectations of it; the latter by consensually imposing a series of self-denying limits: global budget caps, monetary targets, earmarked taxes, co-payments, borrowing ceilings, sunset provisions and the like.
The successful construction and adoption of such a fiscal constitution would amount to a “Fourth Revolution” in the nature of government in the West, they say. Previous revolutions they associate with three philosophers who at intervals wrote influentially on the role of the state. This catechism, a familiar device from their magazine, is designed to buttress the case for what they hope will happen next.
Thus, Thomas Hobbes described the fundamental purpose of the nation-state as the creation of law and order, thus the overwhelming force necessary to maintain the nation-state known ever since, at least to Hobbesians, as “Leviathan.” John Stuart Mill, who lived in a more prosperous time, imagined the state as a kind of “night watchman,” dedicated to free trade, social rights (of women in particular), and education. And Fabian Society socialist Beatrice Webb conjured a ”welfatre state” in the 20th century in which government influence extended into every sphere of production and consumption.
The authors are then off on a round of breathless reporting: to California, which they say illustrates everything that is wrong with modern democratic government, until, miraculously, under Gov. Jerry Brown, the state begins to straighten itself out; to Singapore, to see Lee Kuan Yew, founding father of a new model of national development, adopted in some ways by China, “that is in many ways leaner and more efficient than the decadent Western model”; to Sweden, where a wave of privatizations has reduced government spending in 20 years from 67 percent of GDP to 49 percent.
Along the way, we meet many of the usual suspects. Clayton Christensen, of the Harvard Business School, is “perhaps the world’s most respected writer on innovation,” who thinks that the public sector will be upset by what he calls “mutants” -- new organisms that may spin out from unexpected directions. (Their esteem is not universally shared.) Peter Theil, a prominent venture capitalist, laments that technology has so far failed to change the public sector.
Devi Shetty, an entrepreneur, “whom American surgeons may one day remember the same way that American engineers think of Kiichiro Toyoda,” has a production line of 40 cardiologists who perform 600 operations a week in Bangalore.
There is a peroration in the book:
"The Fourth Revolution is about many things. It is about harnessing the power of technology to provide better services. It is about finding clever ideas from every corner of the world. It is about getting rid of outdated labor practices. But at its heart it is about reviving the power of two great liberal ideas. It is about reviving the spirit of liberty by putting more emphasis on individual rights and less on social rights. And it is about reviving the spirit of democracy by lightening the burden of the state.''
One indication that history may not be tending in this direction is that the subject of climate change comes up nowhere in the book. This is odd because the weekly Economist does such a good job of reporting on the growing scientific consensus that global warming is becoming a serious problem.
Another contraindication is to be found in the authors’ proposal to “leapfrog over the muddle of Obamacare,” borrowing equally from “Old Europe and New Asia.” Why not combine a European-style single-payer health care system, featuring an independent medical board to evaluate the cost-effectiveness of medicines, devices and procedures, with means tests and a Singapore-style stream of earmarked taxes pay for it. That might strike Tea Party fundamentalists as socialism, they write, but it is precisely the kind of transparency-inducing global cap that they advocate in other connections, including Social Security.
It is not fair to place so much weight, as the authors do, on Milton Friedman’s shoulders. The Chicago economist, who was 94 when he died, in 2006, was a deeply consequential 20th Century figure whose role is not yet well understood. He may be fruitfully compared to John Maynard Keynes. Both men were authors of clarion wake-up calls. Keynes argued that government had a role in stabilization policy that it must not shirk; Friedman, that there are many economic ways to address a problem (including, presumably, the threat of global warming). Neither man was much concerned in his day with the finer points of economic analysis, but each commanded the attention and, ultimately, the agreement of his age. Other theorists, notably James Buchanan and Friedrich Hayek, have been more concerned with the idea of fiscal constitution.
At one point in their roundup, the authors quote Michael Bloomberg, the billionaire financial analytics entrepreneur who served three successful terms as mayor of New York City before returning to civilian life. Among other things,he oversees Bloomberg BusinessWeek, which he bought while he was mayor. Running a city is different from running a business, Bloomberg says.
''People are motivated by different things and you face a much more intrusive press. You cannot pay good staff a lot of money…. In business you experiment and you back the projects that win. The healthy bits get the money, and the unhealthy bits wither. In government the unhealthy bits get all the attention because they have the fiercest defenders.''
Doubtless so. But that doesn’t mean that governmental processes are not being improved, mainly along the lines advocated by Micklethwait and Wooldridge. Perhaps it is familiarity with the details that makes Bloomberg BusinessWeek so consistently interesting when it arrives along with The Economist each week. Hardly a week passes that I don’t compare the one to the other. In coverage of the Fourth Revolution, most weeks I think that the Americans are getting ahead.
A 14-page article, The Biden Agenda: Reckoning with Ukraine and Iraq, and keeping an eye on 2016, by Evan Osnos, in the current issue of The New Yorker, signals the vice-president’s willingness to contest the Democratic presidential nomination with former Secretary of State Hillary Rodham Clinton. For both the politician and the journalist it is an impressive outing (Osnos, recently returned from China, is author of Age of Ambition: Chasing Fortune, Truth and Fraith in the New China). The article would seem to promise a spirited campaign.
David Warsh, an economic historian and a longtime financial journalist, is proprietor of economic principals.com.
By JAMES P. FREEMAN
“We’ve got no future, we’ve got no past
Here today, built to last…”
The Pet Shop Boys--“West End Girls”
A wit once said we live in an era of “re’s.” Today we regift, repurpose and reboot. But it is the wise who revisit. As did over 100 on a sweltering afternoon last summer on the campus green of Providence College for the 25th reunion of the Class of 1988.
While it was a celebration of silver tokens and conversation among graying scalps, it also afforded the opportunity to rediscover the Excellent Eighties and reflect upon contemporary culture.
The '80s still command little respect, as evident from the recent Radio Shack commercial mocking the era—its icons and gear—as obsolescent old-school relics. Indeed, Gen Xers (from 1965-1979, 80 million) are still overshadowed by Baby Boomers (1946-1964, 76 million) and their incessant self-indulgent generational ownership or a kind of “cultural hegemony.” The recent 50-year commemorations of the Beatles conquering America and the JFK assassination were given weighty television documentaries. By contrast, the seeming superficiality of the '80s are relegated to kitschy nostalgia programming on music channels.
But Daniel J. Boorstein, writing for Life Books in 1989, believed that the 80s saw “accelerating contrary movements home and abroad.” It was a decade of dichotomy that could live with cultural contradictions and synthesize the schizophrenia of silly and serious. The Brat Pack and Warsaw Pact. Tom Cruise and cruise missiles. Cher and Chernobyl.
As children, its members were born into the Space Age and Information Age of the '60s, the warp-speed mobility of man and data. By 1988, ET could phone home in analog and digital.
The formative years, however, were the 1970s, where disco and discontentment settled in amidst the thick stagnation. No wonder, then, that from this period emerged a pope, prime minister and president who would set the tone for the upcoming decade and prove to be towering 20th Century figures.
For students, Ronald Reagan was the central figure of the decade. The class of ’88 cast its first votes for president in 1984; it would mark the last time young Americans voted Republican in large numbers (with Reagan getting slightly under 60 percent of the vote.). The president’s stark good-vs.-evil persona paralleled the hot whites, midnight blacks and sharp edges of the Eighties. Gone were the browns, burnt oranges and soft shapes of the prior decade. It was a projection of power. Super powers and power suits.
It was Reagan who anticipated and advanced the shift of power from Washington to Wall Street. Gordon Gekko would become the most quotable financial icon only months after the then-largest point drop in the Dow Jones in 1987. By graduation, Yuppie finance figured conspicuously in literature with The Art of The Deal and Bonfire of the Vanities on non-fiction and fiction bestseller lists.
But as Wall Street was being erected in lower Manhattan a wall was about to be dismantled in the streets of Berlin. Reagan, often ridiculed as a warmonger, famously urged Mikhail Gorbachev to “tear down this wall” in June 1987 and lived to see the fall of the Berlin Wall in 1989, without so much a shot being fired. It would mark the end of a decade exquisitely, if not ironically, begun with shots on goal between the USA and USSR during the 1980 Winter Olympics.
The largest conflict proved to be between Iran and Iraq, a war that presaged future regional conflicts. In April of 1987, Iraqi Ambassador to the U.S. Nizar Hamdoon visited a political-science class at the college and warned of the greater effects of the war. One of the 20th Century’s longest conventional wars ended in August of 1988—the year the stealth bomber was unveiled -- with over 1.5 million dead.
For one class member, war would be at the center of a career. Michael P. Sullivan, former director of rule of law for the U.S. State Department, was awarded a personal achievement award by the national alumni association. He had visited many of the world’s hot spots: Bosnia-Herzegovina, Iraq and Afghanistan.
The '80s, however, were more than money and magniloquence. As the century waned, it weighed the contrasting philosophical musings of Jean Paul Sartre’s amoralism with John Paul II’s absolute morality. As the century’s longest serving pope, no other world figure would better articulate with a severe clarity the dignity and sanctity of life. Coupled with Britain’s Margaret Thatcher and Reagan’s leadership, the advancement of freedom globally was also moving fast.
As the only American college administered by the Dominican Friars, theology played a pivotal role in everyday life as did sports, particularly basketball in the spring of 1987--the Final Four. As juniors, they would seek pardon for the men they admired most: Rick Pitino, Billy Donovan and Ernie DiGregorio as the father, son and holy ghost.
Much is made of 80’s pop culture and Madonna’s Material World. Much had to do with the new technology allowing greater access in the distribution of content, particularly with music and movies--where forwarding the experience, in order to rewind it, became a newfound joy. This would be the first generation to embrace the individualism of Sony Walkman’s and rental VHS tapes, along with the communalism of Live Aid and Midnight Madness theatre showings, with equal enthusiasm.
MTV, the CD and synthesizer rescued a dying music industry. In 1982 there were no commercially released compact discs; by 1989 over 150 million were sold. By the end of the decade with VCRs blinking “12:00,” over “sixty percent of America fast-forward[ed],” according to Life Magazine. Dialogue and lyrics, as a consequence, would become more memorable.
In film, youthful indiscretion and accidental discovery played by effervescent capers and exultant crusaders defined the era. Unlike the '70s, characters wanted to live in the decade, not escape from it. Enter Ferris, Joel, Duckie and Rambo.
It was a time of Michaels… as in Jackson and Jordan.
But Michael J. Fox’s characters best personified the decade. A trilogy of films The Secret of My Success, Bright Lights, Big City, Casualties of War, saw dreamy optimism perish to jaded reality. Sequenced in 1987, 1988 and 1989, together they encapsulate the era from ambition (as a corporate buccaneer) to anxiety (as a writer) to asymmetry (as a warrior).
Then, in 1992, came the election of the first Baby Boomer president. And the '90s gave the world Clinton and Casual Fridays. Aspiration melted into angst. The world seemed safer, if not simpler, in a bi-polar globe, East and West.
The Class of ’88, in spite of it all, is remarkably composed. There were no existential crises, the kind embalmed by The Big Chill—there those Boomers go again... If anything, members reimagined a world before wardrobe malfunctions, Facebook creeping, derivatives and mobile apps. And 9/11.
A just appraisal of this period reveals that with the fun and frivolity there was substance and solicitude. Rubik’s Cubes and rubric conservatism. As Boorstein concludes, the “remembered record” for the' 80s will “also reassure us of the random vitality of Americans and of the human race.”
James P. Freeman is a former columnist with The Cape Cod Time.