The death of former US president Ronald Reagan last month and the moving tribute paid to him by former British prime minister Margaret Thatcher remind us that we still live in their shadow, in an era in which the chief impulse of politics has been to reduce the size of the state.
That agenda was critical in
its time, for it was clear that the enormous growth of state sectors in the developed world in the 20th century had become economically harmful and socially stultifying. China and India have begun to free themselves from excessive state control, which reached monstrous dimensions under communism.
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But there are signs that the Reagan-Thatcher era is ending and that the pendulum will swing the other way. Many recent problems have tended to come from the lack of sufficient state oversight, as with the Enron, WorldCom and other auditing scandals, or the privatizations of railways in Britain or electricity in California.
The easy gains from privatization and deregulation have long since been achieved.
The real date of the end of the Reagan-Thatcher era, however, was Sept. 11, 2001. The terrorist attacks on New York and Washington put back on the table foreign policy and security, which are pre-eminently issues for nation states. The US created a new Cabinet-level agency, the Department of Homeland Security, in direct response. But Sept. 11 also underscored a key feature of the post-Cold War world. While the great problems of world order in the 20th century were caused by too-powerful nation states such as Germany, Japan and the former Soviet Union, many of the problems of our current age, from poverty to refugees to human rights to HIV and AIDS to terrorism, are caused by states in the developing world that are too weak.
This lies at the roots of Africa's development problem; and a band of weak or failed states from North Africa through the Balkans and the Middle East to South Asia has become the breeding ground of radical Islamism and terror.
It is important to distinguish between the scope of states and their strength. State scope refers to a state's range of functions, from domestic and foreign security, the rule of law and other public goods, to regulation and social safety nets, to ambitious functions such as industrial policy or running parastatals. State strength refers
to the effectiveness with which countries can implement a given policy. States can be extensive in scope and yet damagingly weak,
as when state-owned firms are run corruptly or for political patronage.
From the standpoint of economic growth, it is best to have a state relatively modest in scope, but strong in ability to carry out basic state functions such as the maintenance of law and the protection of property. Unfortunately, many developing countries either combine state weakness with excessive scope, as in the case of Brazil, Turkey or Mexico, or they do little, and what little they do is done incompetently. This is the reality of such failed states as Liberia, Somalia or Afghanistan. Some, such as the Central Asian dictatorships that have emerged after the collapse of the Soviet Union, manage to be strong in all the wrong areas: they are good
at jailing journalists or political opponents, but can't process visas or business licenses in less than six months.
The Reagan-Thatcher revolution was properly directed against excessive state scope, seeking to reduce regulation and government interference with private economic activity. But applied to developing countries, it had a perversely damaging effect. The policies known as the Washington consensus, pushed by international financial institutions such as the IMF and the World Bank, including such measures as privatization, trade liberalization and deregulation, failed to take account of missing institutional capacity in many developing nations.
Excessive zeal in pursuing this "neo-liberal" agenda undermined the strength of states to carry out those necessary residual government functions. Russia went from a state that controlled all aspects of the economy and civil society to one that could not collect taxes properly or protect its citizens from criminals.
It turns out that privatization, while reducing the scope of states, takes a fair amount of state capacity to implement cleanly. This is something
Russia did not have as it sold off telecoms and energy companies to well-connected oligarchs.
Thailand liberalized its capital markets before it had an adequate bank regulation system; the result was the collapse of its currency during the Asian crisis of 1997. Elites in sub-Saharan Africa used IMF-mandated structural adjustment programs to cut core state functions while increasing the size of the patrimonial state.
Dealing with the AIDS crisis has become immensely more
difficult due to the cuts in state capacity that have taken place in most African countries in the past generation.
It is perhaps in light of experiences like these that Milton
Friedman, dean of free-market economists, said a couple of years ago that his advice to former socialist countries 10 years earlier had been to "privatize, privatize, privatize."
"But I was wrong," he said.
"It turns out that the rule of law is probably more basic than privatization," he added.
The cost of learning this lesson was high.
The Sept. 11 attacks underlined the fact that the lack of governance in poor and troubled parts of the world like Afghanistan could have profound security consequences for the developed world.
This has led to the ironic result that US President George W. Bush, who said when he was running for the presidency in 2000, "I don't think our troops ought to be used for what's called nation-building," has embarked on major nation-building exercises in Afghanistan and Iraq in his first term. The US experience in both countries has underlined another unpleasant truth: while the US has the ability to reach around the world militarily and unseat regimes, it does not have a corresponding capability or the institutions to provide them with strong governance.
The international community also needs new institutions. The UN, usually tasked with organizing post-conflict reconstruction, suffers from weaknesses both in legitimacy with respect to its democratic credentials, and in effectiveness in its ability to intervene and provide security. The international community did stabilize Bosnia and Kosovo, but it rules both countries like a European raj; it has no idea how to create self-sustaining institutions in either place that would permit a graceful exit. The UN needs reform and to be supplemented by other, overlapping multilateral bodies, such as NATO or the Community of Democracies, to act where it cannot.
In what now seems like the distant era of the dotcom revolution, a lot of Silicon Valley techno-libertarians saw an increasingly stateless world in which governments "got out of the way" of wealth creators. Unfortunately, that world is one in which a lot of other, less beneficent actors run free as well. Radical Islamists can make good use of the Internet videos of their beheaded captives. With globalization, coercive technologies have become democratized and more freely available to "super-empowered individuals."
Nation states, with their legitimate monopolies of force, will have to fill this vacuum. State building, as well as state-deconstructing, is something we will have to think seriously about in the post-Reagan era now unfolding.
A nation has several pillars of national defense, among them are military strength, energy and food security, and national unity. Military strength is very much on the forefront of the debate, while several recent editorials have dealt with energy security. National unity and a sense of shared purpose — especially while a powerful, hostile state is becoming increasingly menacing — are problematic, and would continue to be until the nation’s schizophrenia is properly managed. The controversy over the past few days over former navy lieutenant commander Lu Li-shih’s (呂禮詩) usage of the term “our China” during an interview about his attendance
Bo Guagua (薄瓜瓜), the son of former Chinese Communist Party (CCP) Central Committee Politburo member and former Chongqing Municipal Communist Party secretary Bo Xilai (薄熙來), used his British passport to make a low-key entry into Taiwan on a flight originating in Canada. He is set to marry the granddaughter of former political heavyweight Hsu Wen-cheng (許文政), the founder of Luodong Poh-Ai Hospital in Yilan County’s Luodong Township (羅東). Bo Xilai is a former high-ranking CCP official who was once a challenger to Chinese President Xi Jinping (習近平) for the chairmanship of the CCP. That makes Bo Guagua a bona fide “third-generation red”
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Historically, in Taiwan, and in present-day China, many people advocate the idea of a “great Chinese nation.” It is not worth arguing with extremists to say that the so-called “great Chinese nation” is a fabricated political myth rather than an academic term. Rather, they should read the following excerpt from Chinese writer Lin Yutang’s (林語堂) book My Country and My People: “It is also inevitable that I should offend many writers about China, especially my own countrymen and great patriots. These great patriots — I have nothing to do with them, for their god is not my god, and their patriotism is
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