Our Democracy Is Broken. Can We Fix It?

John Locke*

Despite being over ten years old, Niall Ferguson's The Great Degeneration remains must reading for those who wish to understand our current cultural malaise. For this reason I have devoted a number of blog posts to sharing the insights he offers us in this perceptive book.

As I've noted previously, the four cornerstones of Western Civilization's achievements are Democracy (representative government), Capitalism, Rule of Law and Civil Society. Here are some of my gleanings from his discussion of representative government. The basic tenet here is that "it is generally better for government to be somewhat representative of the governed than not." The reason this is so, he says, is because a representative government is more likely to be responsive to shifting popular preferences. 

Ferguson is emphatic in his defense of representative government, despite the increasing cacophony of voices complaining that Democracy is broken. Yearning for a Beijing model of a one-party state is not going to bring us the satisfaction we long for.  (Look no further than the Chinese system of technocrats instituting five-year plans.) Some decisions--such as their economic zones--may have good results, but population planning like the one-child policy has been a disaster.

Critics are correct, though, in noting how unhealthy our economic state is today. Look no further than the massive debt we have accumulated. We just recently surpassed the 30 trillion dollar mark, or 7 trillion dollars more than our GDP. Don't know where it's goin' but that debt pile just keeps growin'.

The problem with public debt is that it allows our current generation of voters to live the lives they want at the expense of those too young to vote or as yet are unborn. Even now, we have leaders offering universal health care, free college tuition and a host of other benefits in exchange for votes. But who will pick up the tab? Just as our Founding Father passed the slavery issue on to the next generation, so we're passing the consequences of our fiscal irresponsibility to future generations. 

There are only two reasonable future scenarios, states Ferguson--either increased taxation or drastic cuts in public expenditures. Neither course is likely to be popular.

This is precisely what Madison was privately concerned about when the Constitution was being hammered out. Once the public figures out that they can elect leaders who will give them whatever they want, the two party system will become a competition between whoever can offer the most toys and candy. 

To eliminate the current fiscal gap--which has grown since Ferguson wrote these words--would require a 64% increase in Federal taxes or "an immediate 40% cut in all Federal expenditures." Now how many voters have the stomach for that? 

At this point the author cites Edmund Burke who wrote that we have a social contract that is greater than ourselves, a responsibility to our forebears who sacrificed to provide us a better world as well as a responsibility to our offspring that they might be unimpeded in the pursuit of their own destinies and dreams. In other words, there is a Social Contract between the generations, from our forebears to our offspring. 

Ferguson makes the case that this Social Contract is broken, and if we are to survive it must be restored. Can it be? How? "I recognize that the obstacles to doing so are daunting," he writes.

The hurdles ahead of us are many, not the least of which is having confidence that we can pull it off. Why make sacrifices and put in all the work necessary to restore things if you don't have faith that it will pay off? And how can the State be our partner when we, the people, constantly see decisions made that make us feel it's our adversary?

For Ferguson there are only two scenarios that will get us out of this mess. The first involves getting the young--and their parents and grandparents--to elect leaders who will commit to a more responsible fiscal policy. (The hard part here is that such a move by leaders will inflict short term pain for the sake of long term gains, and few people want short term pain. We've been trained to "want the world and we want it now.")

The way to do this, the author believes, involves altering the manner in which governments account for their finances. The current method is fraudulent. They bury the facts and the truth. Says he, there are no regularly published factual balance sheets. Future liabilities are hidden from view. This is why one of the chief criticisms of government is its lack of transparency. 

A better way would be to have a government's liabilities (including future commitments) arranged so they can be compared with their assets. Governments should adopt the generally accepted accounting principles of legitimate businesses. Finally, our government should make absolutely clear the intergenerational implications of our fiscal policies.

The alternative, he writes, goes like this: "If we do not embark on a whole new reform of government finance, then I'm afraid we are going to end up with a bad but more likely second scenario. Western democracies are going to carry on in their current feckless fashion until one after another they follow Greece and other Mediterranean economies into the fiscal death spiral that begins with a loss of credibility, continues with rising borrowing costs and ends as governments are forced to impose spending cuts and higher taxes at the worst possible moment."

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While reading these things several thoughts come to mind. First, I get an image of creepy crawly things slithering in the muck beneath rocks that everyone is afraid to overturn because of what they might find there. 

Second, because our flabby, inefficient, bloated government bureaucracy is dependent on keeping existing systems alive, because the gravy train is so nourishing, there's no incentive to change anything.  

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Maybe there's another solution. Instead of griping about the Federal mess that seems so out of our control, maybe we can roll up our sleeves locally and do the work of getting better informed here in our home communities. It won't solve everything, but it's a start.

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* John Locke expanded on Thomas Hobbes's social contract theory and developed the concept of natural rights, the right to private property and the principle of the consent of the governed.