When bad government matters

Here’s a nice contrast. On the one hand, Tim Stanley says:

Britain's still absolutely fine, by the way, probably better off than its ever been. It's just politics that's a mess. If you think this is the Apocalypse, which some people apparently do, then you haven't lived long enough or travelled far enough.

But on the other Tony Yates says that “the difficulties we face now have the potential to be much worse” than the financial crisis of 2008.

I agree with both.

The government is obviously a shit-show. But the messy Brexit negotiations are – so far – having only a small impact on real life. Yes, it’s plausible that they are adding to the output cost of the original decision to leave. And they seem to be contributing to weakness in the housing market. And they have forced down sterling which will raise import prices slightly. But on the other hand, their impact upon the stock market has been small – much smaller than the impact of gyrations in global markets. Net, these are minor irritations – much less than the everyday hassles of traffic jams, stressful work and troubled relationships.

For those of us outside of the Westminster bubble, life is going on as normal. Westminster politics is like my garden – an ugly mess but only if you look at it. In this sense, Tim is right. For someone wise enough to ignore day-to-day politics, life goes on as normal.

But Tony might also be right. What matters here is the distinction between government and the state. The government is a mess. But the state, to some extent, is not: the NHS is carrying on as usual, taxes and benefits are being paid and so on. (An exception, here of course, is that there is state failure in that Universal Credit is being maladministered: it is this, more than the mishandling of the Brexit negotiations, for which the government deserves contempt.)

Let’s put this another way. We can think of the state as a provider of intermediate goods – things that enter the production process: transport links, banking regulation, the rule of law and so on. And as Chad Jones has rightly stressed, these have multiplier effects: bad law enforcement (for example) can impoverish a nation, which can limit its tax-raising powers, which can make it harder to finance good law enforcement thus keeping it trapped in poverty.

One such intermediate good provided by the state, of course, are international trading arrangements. And these are in jeopardy: how much so is, I fear, indeterminable given the high noise-signal ratio.

 It’s for this reason that Tony is right: less good trading arrangements have multiplier effects in the sense that less trade means less innovation and (pdf) productivity growth (pdf) and hence lower wage growth for everybody.

In the short-term – which can last months – government by Keystone Kops is relatively harmless: it might even be a good thing, insofar as it reminds young people that the world is not a meritocracy. The more sensible of us can ignore it, and the more stupid of us can treat it as a game – which is how Oxford Union Tories and their BBC fan club regard it. In the longer-run, though, government failure threatens state failure. And that matters – a lot.

Comments

[Dave Timoney]

I think the question this raises is: to what extent is the government shit-show symptomatic of structural failings within the state?

Despite the Brexit ultras' painting of Olly Robbins as some eminence grise, it's pretty obvious that Whitehall has lacked capacity and often competence. It's not all down to May's stubbornness or lack of finesse.

[Peter K.]

In the States the kids are getting a hard lesson about the world not being a meritocracy.

But as David Roth writes

"Trump is transparently not up to the actual work of the job, which has paradoxically or not been the closest thing his presidency has to a saving grace; the man himself is a teetering, sopping-wet stack of stupendously cheesy vices and past-due debts, but his forgetfulness and best-in-class distractibility have at least kept him from focusing on making things worse. The best-case scenario is still awful: he watches TV and tweets and that’s it, and it’s all terribly distasteful but at the very least silo’ed by the marble in which he’s encased itself. He can be left there indefinitely, if also sometimes rolled out for those ceremonial duties. Those he will fuck up in hilarious ways, because the man has no idea how to do even simple things. He has never done those simple things and is too stubborn and checked-out and incurious to learn them; all he has done is golf and gossip and complain and sometimes shake rich people’s hands for decades now, and so these things are not simple at all to him."

But one wonders how half the country could vote for him.

[Jonny]

I'm surprised by this post and so think I need a clarification here.

Do you mean that the nation continues to be administered? Or do you mean that the things we look to measure as improvements in a nation are on an upwards trajectory (living standards, productivity growth, etc.)? Perhaps Mr Stanley is right to suggest that *globally* the world has never had it so good, but to suggest that of developed nations is basically wrong.

Whilst I could agree that the country continues to function, I (and others, such as the UN, the Trussell Trust, and Simon Wren-Lewis) would point to the growth in foodbank use, increased claiming of in-work benefits, treatment of the disabled under fitness-to-work, weak productivity growth, and one of the slowest recoveries in the Eurozone post financial crisis, and suggest that nearly all the things we should look to the state to improve, they have measurably failed us on.

Brexit paralysis might have been "okay" if we were ticking along, but the government is straight up failing us on so many measures outside this area. So ultimately I would disagree that it's "just politics" that is a mess.

[AMB]

Arse to Elbow- is that a function of the civil service or inherent problems in Brexit- it’s vast scale, and intractable contradictions?

The last couple of governments have been scaling back the civil service, to which we can add the resignation of some of our best qualified European negotiators.

I’d agree that generally all professions have been undermined by the financialisation of life- much talent has been drawn from productive activity to casino playing in the city- but I’m not sure that’s a siecifuc problem for our top civil servants.

[Andrew Curry]

I was waiting for a dental appointment at a London hospital this week when a disability campaigner canvassed me about the universal credit catastrophe. Outside an old man was begging because he had no access to income. Child poverty is going through the roof as a result of almost a decade of austerity. I could go on Britain’s not “fine”.

[Dave Timoney]

@AMB

I think it's both. Brexit is a bitch but the Civil Service is also weaker than it might have otherwise have been, not least because it has gradually lost capability since 1973 as a function of the EU's pooling of competences.

The diversion of talent to the City has been a factor, but so to has been the ideological war on big government, which has devalued the very idea of state expertise.

[Brian]

The international trading assignments are definitely a risk that's hard to factor in. Bigger government leads to larger lobbying spend. It's a feedback loop that will lead to more and more government. Inevitably taxes and deficits will climb.