‘A post-ideological index of good governance’

This post on good-governance countries by Scott Sumner is fascinating (via Reihan Salam). People on the left and the right may disagree with many of the particulars, but I think the overall thrust of Sumner’s post remains true: namely, that good-governance is really important and that smaller countries (like Sweden and Denmark, or city-states like Singapore and Hong Kong) are able to do this much better than big countries like the United States.

Riffing off of the World Economic Forum’s Global Economic Report, Sumner tries to recalculate the best governed countries:

It seemed to me that many of those categories measure “good governance” more effectively than the Heritage Index (which doesn’t tend to measure the output of services traditionally provided by governments (infrastructure, health, education, etc.)  But market size seemed irrelevant to me, and I noticed it partly explained the high scores of the US, Germany and Japan.  And I also thought the last two categories were unrelated.  Innovation would reward countries that happened to have a comparative advantage in tech industries, and what the hell is “sophistication?”  So I averaged the first 9, and here’s what I got:

1.  Singapore   5.852

2.  Switzerland 5.799

3.  Hong Kong  5.696 5.778

4.  Sweden  5.696

5.  Denmark  5.602

6. Finland   5.584

7.  Holland   5.513

8.  Canada   5.509

9.  Australia   5.452

10.  Norway   5.444

11.  Germany   5.361

13.  U.K.   5.358

13.  Taiwan  5.271

13.  France   5.271

15.  U.S.   5.187

16.  Japan   5.147

Actually the WEF list is far longer.  I did not re-compute all of the index numbers; a few other smaller European countries would probably have overtaken the US and Japan if I had.  Here are some reactions to the new list:

1.  Small countries are better governed.

2.  The list has something for both those on the left and those on the right.  Most of the top scorers are the sort of European welfare state beloved by liberals.  France overtakes the US in this list.  On the other hand the top three are usually regarded as pretty capitalistic places, and even if you throw out the two Asian city-states (which I’d oppose) Switzerland is often called the most capitalist country in Europe.

It seems to me this list is exposing a perspective that is orthogonal to the tired left/right debate over big government.  It suggests multiple paths to nirvana.

There’s a lot more to the piece, so it’s worth digesting in full, but the long and short of it seems to be that the typical left/right divide on economic policy and the welfare state is really pretty irrelevant when it comes to successful governance. Switzerland features very high on the list, and it has one of the most functional systems of competitive federalism in the world, while Sweden – which is far more socialistic than anything most Americans would ever dream of and much more centralized than Switzerland – none the less has a 100% voucherized school system, something many American right-wingers would love to implement here. Many of these countries have far freer markets than America does, yet even the hyper-capitalistic Asian city states like Hong Kong and Singapore still have pretty significant welfare systems (and Singapore has a truly brilliant healthcare system that blends health-savings accounts with single-payer).

Sumner continues by asking some questions about these top-performing countries:

A.   What values should government policies embody? 

B.   What policies effectively deliver those values?

C.  When there is a dispute about which policies work best, how should the dispute be resolved?

The first question is moral, and the answer I give is “utilitarianism.”  Unlike 99% of people in the humanities, I regard utilitarianism as a radically egalitarian value system—where people put the best interest of society ahead of their own narrow self-interest.  The second question is scientific, and my answer is ‘economistic’ policies, those that are implemented by people cognizant of the (counter-intuitive) way taxes and regulations often distort decision-making.  The sort of fiscal regime you get if 100 Martin Feldsteins sat down and designed a country on a pad of paper.  In other words—Singapore.  The third question is political, and my answer is democracy.  And I don’t mean just having elections; I mean a system where the people actually govern.  Where every school is a separate school district.  Where taxes must be approved by referenda.  Where every decision is made at the lowest feasible level of government.  

Low and behold, all three of these models are represented in the top 5 of my list.

I think this makes a pretty good case for what Will Wilkinson describes as ‘limited-government liberalism’ or what has largely come to be known ‘liberal-tarianism’ around the blogosphere.

I think Sumner’s claims about the Laffer curve are a bit too strong. Economists disagree mightily on what sort of tax rates would actually start to hit productivity and I think we could go quite a bit higher than Sumner suggests, but I could be wrong. I do think he’s right to point out that effective governance is key – in a country with really effective government, tax dollars simply go farther and produce more value. The problem with a very big, very populous and – let’s face it – very politically dysfunctional system like our own is that tax dollars do not produce all that much value. Much of our revenue effervesces quite quickly, or get sucked into our burgeoning defense budget or innumerable other wasteful programs. This is not an argument against generating revenue, by any means – taxes are an inevitability and probably a lot less important than most anti-tax advocates think in the big scheme – but rather an argument about how best to generate and spend it. I think a more decentralized system akin to the Swiss model makes sense for this country. (Perhaps ironically, we have already moved a bit closer to the Swiss healthcare model.)

Lots to think about, one way or another. And probably plenty to argue about as well. Politics is a vulgar business, but economics is the realm of mystics and seers.

Sumner concludes:

In my view the left/right debate is this country is so vicious because we are debating second best policies in a policy-making regime that is profoundly dysfunctional.  Thus Matt Yglesias and I probably disagree strongly about extending the Bush tax cuts for the rich, but we both favor a simple progressive consumption tax as the ideal.  I see these small countries with good governance as models that point the way forward, past our stale ideological debates.  The question is whether we will pay attention to the lessons they are providing.

(this post was cross-posted at Balloon Juice)

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10 thoughts on “‘A post-ideological index of good governance’

  1. Really interesting stuff. One of the older, inside the beltway criticisms of Obama is that he is GOGO guy. GOGO is an acronym for good government. ( at least as i remember). Trying to have actual good gov is a far afterthought to many, since ideology holds sway. While i agree that much of the L vs R debate is stale and pointless, i think you are missing a bit. One of the EVVIIIILLLL things liberals have done is try to learn lessons from all those terrible euro countries regarding HCR. Well how does mindlessly ignoring any other successful system lead to good gov. Now you could easily point out that some conservatives use things like Sweden’s school voucher system as an example. Very true, although that is a small minority on the Con side and usually among the ignored wonks. Which side of the aisle is more focused on evidence and pragmatic solutions?

    The only other thing to add is that to successfully come together on solutions both sides have to be willing to build trust in each other and make sure each sides concerns are satisfied. Perhaps we should ask Sarah and Rush and Newt about that stuff.

    I’m not really sure leads to bad gov or that small is always better, but it is interesting what this evidence shows.

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  2. Not just smaller countries, but more homogenous ones, too. It’s a lot easier to have good governance in a high-trust society. That’s easier to do in a country where you all feel like you’re in it together. That’s a harder feeling to get in a large and/or diverse country. I believe that we could enact the exact same policies as some of the other countries ahead of us and have very different results. Actually, I somewhat doubt we can enact the policies to begin with due to a lack of faith in the efficacy of central government to begin with. For which, of course, liberals will blame conservatives and conservatives will blame liberals.

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    • Canada’s large (geographically, if not population-wise), diverse, and has a lot of regional divisions, and we score pretty high on the good-governance index, so I don’t think homogeneity is necessarily a requirement.

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      • @Katherine, not necessary, but helpful. Homogeneity can backfire, too, with people collectively making bad decisions without the balance-of-viewpoint that comes from differing perspectives. But generally speaking, homogeneity seems to be more beneficial than not, as does smallness.

        At the very least, I think that you have to look at governing countries like the US differently than you look at governing countries like Sweden or Hong Kong and I think that those that lust after various things that Sweden does (such as high taxes and redistribution on the left or comparatively less regulation on the right) may not be as aware as they should that what works in one setting may not work as well in another.

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  3. ahhh yeah because it has been a major plank of liberals to destroy belief in government. Plenty of conservatives have been open that they want people to hate government, don’t see any use in it and a few have actually pushed for making gov a PITA so that people don’t like it.

    I agree somewhat on your point about homogeneity. But some of that is peoples choice to feel a connection to others. Of course its also leadership and the burdens of history, but part of it is a desire to want to see yourself in others and others in yourself.

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  4. Except the cops and the prosecutors and often the military… though that’s not really where I was going with that comment. Rather, I was considering how when the opposition has the government they serve at the behest of Bad People who want to do Bad Things or oppress you. I’m not arguing that these criticisms are invalid – they are often quite valid. But rather, they increase the mistrust of the government to the extent that when they turn around and say “We’re different now that we’re in charge!” it’s a difficult sell because the other side is saying the exact same thing the first side was saying up until the baton was passed. So if you’re not a committed liberal or a committed conservative, the governments on both sides are out to get you.

    If it makes you feel any better, I believe that this is something that liberals have to do. If they didn’t, (a) they would be failing to draw attention to the bad things that conservatives are doing and (b) they would be doormats unless conservatives stopped doing the exact same thing. Be that as it may, it is not conducive to the sort of trust in government required for the government to be able to make the difficult choices for the public good.

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  5. This is a repeat of my comment over at Balloon Juice. Interesting-a country that is effectively a family run dictatorship (Singapore) ranks at the top in terms of governance. Singapore has a free for all business climate that allows business literally to get away with murder. Protest what the PAP wants? You get sued to the bejesus for libel. Ask Joshua B. Jeyaretnam.

    Their health care system is great-but it is an anthema to Tea Partiers. It REQUIRES that you contribute to both your health care and retirement-in fact you are basically required to fork over 35% of your income for Retirement Savings, health care and taxes. Then again-you can use your retirement savings as collateral on a home loan-which is why Singapore has one of the highest rates of home ownership in the world.

    But don’t fool yourself-its all done to keep the masses happy so they won’t complain about the blatant class system there ( Chinese first, Malay’s second, Europeans third and every body else a lot lower)-and the lack of basic rights we take for granted.

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  6. So what you are really saying is we should go back to each state being effectively a small country in it’s own right, with the federal government playing referee & guardian?

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