My Weekly Reader 3 June 2017.

It is characteristic of the long-running funk into which many Western societies have fallen that there have been many “decline of the West” books published in recent decades.  They offer varying analyses shaded by varying clouds of pessimism.  Some focus on economic issues, some on misguided international policies, and some on cultural factors (with rotten schools in the forefront).  Many are inspired by China’s challenge to societies that otherwise could remain complacent.  Some are compelling, many are not.  One recent example come from the former editor of the Economist, Bill Emmot.[1]

Thirty years ago Mancur Olson investigated the rapid revival of the devastated German and Japanese economies after the Second World War and the slower growth of the Western victors in that war.[2]  He found the answer in the role of intermediate groups–political as well as economic–in the different societies.  By intermediate groups he meant both labor unions and businessmen’s association, but also intrusive government regulators.  These groups entrenched established organizations at the expense of newcomers.  They entrenched established procedures at the expense of innovation.  Dictatorship, war, defeat, and foreign occupation had destroyed these intermediate groups in Germany and Japan.  This left individual entrepreneurs free to do what they wanted in a dynamic fashion.  (“And all that implies.”—“The Iron Giant.”)  Elsewhere, the intermediate groups survived the war and sometimes even tightened their grip.

It’s possible to find many examples of dysfunction in Western societies.  Take both the Republican and Democratic parties in the United States for example.  Or the low labor participation rate in the United States as men have fled to disability programs as an alternative to lost familiar work.  Or Japan’s descent from Olsonian prime example of success into a barnacle-encrusted sampan.  Or the domination of the American—and perhaps “Western”–political economies by the banks.  In Japan that has meant a “lack of entrepreneurship or corporate investment” needed for growth.  In the United States, it has meant exploiting a public safety-net to cover imprudent risk.  This has resulted in “rising inequality, distortion of public policy, and [the] generation of collective economic pain and anger.”  And now the dreaded “populism.”

Much later on, several different countries sought to scrape these “barnacles” off the hull. Sweden “reduc[ed] taxation and deregulat[ed] all manner of industries” in pursuit of “more freedom of choice and creativity.”  Switzerland adopted an openness to immigration and also deregulated its labor market to get the right mix of workers to the right industries.  Britain’s embrace of the “Thatcher Revolution,” joined with membership in the European Union allowed Britain to reap both a “brain gain” and a “brawn gain.”[3]

What does Emmott offer by way of possible solutions?  Refreshingly, he does not glom every unpleasant surprise into one whole.  Thus, Putin’s Russia and Islamist terrorism pose no existential threats to Western civilization.  They can be mastered with a coherent effort.  Similarly, “Brexit” is a bad idea but not a rejection of Western values or most Western institutions.  In contrast, he over-states the real danger posed by the Donald Trump administration.  Trump speaks neither for mainstream Republicans nor for Democrats, and his administration will not last beyond his first term.  Then it will be back to business as usual.

Emmott has less to say about solving the real danger: Olson’s intermediate groups.  Appeals for “openness” in discussion isn’t likely to suffice.  It may take a real crisis, alas.

[1] Bill Emmott, The Fate of the West: The Battle to Save the World’s Most Successful Political Idea (2017).

[2] See: https://waroftheworldblog.com/2016/06/18/the-rise-and-decline-of-nations/

[3] See: https://en.wikipedia.org/wiki/Polish_Plumber.