9 hours Ago
By Loukis Skaliotis The democratic system of government has come to be accepted as the preferred system, primarily because it provides legitimacy to those who govern. It is supposed to be, – on paper at least – a “government of the people, by the people, for the people”as Abraham Lincoln famously put it. The cost of this legitimacy is the efficiency which is surrendered in getting things done.
It is obviously far more difficult to make decisions in democracies as opposed to autocratic systems where rulers govern by decree. One would not mind paying this cost if things were actually getting done. Unfortunately, in modern societies, there is growing evidence that this is not happening and increasing dissatisfaction about how things are working in practice.
One recent local example is the Takata airbag issue, which has cost the lives of two people. Despite the relevant government departments knowing the problems with the defective airbags since 2018, they have failed to adequately act on it. I do not know the exact circumstances of how decisions were made but the public – let alone the families of the above two young persons – deserves to know.
The government should initiate an inquiry into the matter and publish its findings so lessons can be learnt. The issue for an effective government is usually lost in the confusion created by the debate politicians often like to simplify the matter into, of big versus small government. Yet as is often the case, it is not so much about the size, but how effectively you use it.
In my mind there is a flaw in framing the debate as big versus small because, a small government is not necessarily an efficient one, nor is a big government a panacea to all our problems. The search for an effective government is not something new. Adam Smith recognised the need, writing about it in book IV of his Wealth of Nations in 1776, despite his laissez faire credentials.
Today however, the discussion has been hijacked with the hyperbolic claims of the likes of Elon Musk in the US. He has been assigned by Donald Trump the role of making savings to the government budget, and he initially enthused he would find annual savings of $2 trillion but has since come down to earth saying he would settle for $500 billion. And there’s Argentina’s Javier Milei in Argentina, famous for his appearances holding a chainsaw to cut down the size of government.
Argentina of course is a special case. One of the richest countries in the world as late as the early 20th century, it has managed to totally mismanage itself to poverty. This is partly due to inefficient and corrupt institutions and an ever-expanding public sector that has crippled the economy.
Milei’s first year in government has indeed eliminated the budget deficit and brought inflation under control. This, however, has come at the price of increased poverty. Whether he will succeed in turning the economy around to provide the growth necessary to help the Argentinian people is an open question.
The experiment is being closely watched, and the outcome will provide lessons for everyone. (See “Argentina: has Javier Milei proved his critics wrong?” Financial Times, December 10, 2024). But looking for an efficient state is not something restricted to a right-wing government.
Keir Starmer’s Labour Party in the UK has highlighted the need for reforming the state with Cabinet Office minister and senior lieutenant, Pat McFadden, being particularly outspoken recently. ( https://www.gov.
uk/government/speeches/reform-of-the-state-has-to-deliver-for-the-people ). He recognises that while value for money is important, the level of the services provided is just as important. The way government departments are structured and staffed needs to be rethought.
They should be run more like profit or service centres with authority over their budgets and recruiting with the accountability this flexibility entails. A shift away from sticking to a rules-based checklist, into an outcome-based focus on providing real solutions to problems, even if they do not tick all the boxes, is necessary. Thus, the simple issuing of a circular by the Cyprus Road Transport Department in 2018 regarding the faulty Takata airbags is not acceptable as fulfilling their role.
This overriding rules-based approach is at the heart of the problem of eliminating the critical thinking necessary to identify potential problems and seek solutions before problems develop. Instead, the tick box approach is simply trying to ensure our asses are covered after the shit hits the fan. This is what I believe McFadden was referring to when talking about how government departments should be acting more like startups.
This inevitably attracted a lot of criticism, even having an editorial by the Guardian arguing against it. ( https://www.theguardian.
com/commentisfree/2024/dec/11/the-guardian-view-on-politicians-using-business-logic-public-services-arent-startups ). I believe however, the criticism to be misguided. Although government departments cannot be profit seeking institutions, it does not mean that they should not be accountable for their actions.
Otherwise, bad decisions keep getting made. There are other voices in support of this as shown in Martin Kettle’s article also in the Guardian. (https://www.
theguardian.com/commentisfree/2024/dec/11/keir-starmer-labour-britain-reform-state-civil-servants). Reforming the way government works is a painstaking and ongoing process.
We should not be reminded of this only when we have to mourn fatalities. Otherwise, we run the risk of ending up with a government that needs Milei’s chainsaw. Loukis Skaliotis is an economist.
