A hands-on state has served society well during recent weeks. A selectively hands-off state is now needed for the economy to bounce back.
Except during war it is hard to think of any other circumstance when decisive government intervention is more needed than during a deadly pandemic. However, the Coronavirus story is not only a story of much tragic death and arguably necessary hardline intervention.
It is also a story of astonishing human resourcefulness, survival – and also necessary rules abandonment. Organisations otherwise often bogged down by protocol have been forced to care about such protocol only when clearly helpful. Merely hours after lockdown was mandated we were all operating under a sort of house arrest. Yet, through a long series of mini miracles, society has learned to cope.
Tapping into today’s remarkable resourcefulness and doer mentality is key to speeding up economic recovery. But how to do so in practice? The best way is to take proactive steps to ensure that the doers of society remain in power also when the coronavirus crisis subsides.
For the first time in decades these doers are not forced to engage in an endless stream of box ticking surveys, codes of conduct exercises, trivial health and safety regulations as well as pointless – but always politically correct – procedural meetings. Activities which stifle internal creativity, reduce the time spent on real work – and give bureaucracy a bad name. So why do bureaucracies, given time, tend to turn a bit silly? Because such is human nature, when we have our hands on other people’s money, that we will find reasons to expand our mandate way beyond a useful purpose. Which is why shake-up reforms are regularly needed.
A golden such reform opportunity has now presented itself due to the forced power shift in favour of society’s doers. Shake-up during a time of national solidarity should not be about downsizing (that discussion can wait), but about seeking broad political support for improvement through doer empowerment.
The billions spent every year on agencies and quangos without direct contact with the field of practical reality should be redirected to the government entities which include the operational heroes of today. Health carers. Police. Case workers. Transportation industry staff. And so on. However, to ensure a result oriented organisational culture the total number of administrators in each organisation should be capped.
That way administrators will not be able to gain such a critical power mass that adherence to bureaucratic routines takes precedence over actually achieving the objectives of the organisation. Fewer administrators will also help to solve the problems relating to responsibility overlap. Including the possibility to get away with negligence simply by mutual finger pointing. Also, experience from the field of practical reality should be a prerequisite before elevation to any role as a top administrator.
As economies are yet again fired up it will require hard work for governments around the world to realise a redistribution reform such as the one suggested above. Why? Because there is always a massive outcry when upsetting the existing power balance. It is always a lot easier to take action by simply throwing taxpayer money at things. However, too often government intervention tends to be, as famously described by Luigi Zingales in A Capitalism for the People, pro-business rather than pro-market.
The “only” truly magic economic wand a government can swing is the wand that encourages people – us – to use our imagination in ways which simultaneously serve both ourselves and society. Regarding the relationship between the state and “the market” the only useful guiding principle is live-and-let-live specialisation. Governments must be allowed and cheered on when doing what they do best: protect lives, serve as a social safety net as well as a proactive leveller of the economic playing field.
The latter by not yielding to the self-interest of either public sector bureaucrats or dominant private sector pressure groups. Private sector participants must be allowed and cheered on when doing what they do best: adapt quickly and flexibly to new circumstances while competing to provide customer satisfaction. A strong state and a free market is not a contradiction. Now as before it is a recipe for success.
Politics remains the art of the possible and stakeholder fairy tales will not go away. However, as brilliantly described by James A. Robinson and Daron Acemoglu in Why Nations Fail, open “inclusive” nations will always do better than “exclusive” states dominated by the big and powerful. Despite bright prospects in Argentina, a hundred years ago, the country turned into a basket case while the promising path towards ever more inclusiveness was halted. The big lobbyists are already far too powerful in both Washington and Brussels. The UK is famously leaving Brussels and lobbyists must not be allowed to push forward, excessively, through other means. In the aftermath of the Coronavirus crisis.
Massive stimulus packages usually serve mainly the lobbyists who spend PR-millions on claiming that these packages are absolutely necessary. Most taxpayers are typically left with little more than an enormous debt. Much preferable to stimulus programs is to work proactively to empower the people. In the public sector through the grassroots oriented redistribution reform suggested above, and in the private sector through a government hands-off attitude. If doing so society can, believe it or not, come out of the present crisis stronger than ever.