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  • America: Your Arteries Are Hardening

    Posted by Joseph Fouche on January 14th, 2010 (All posts by )

    At least ossification isn’t the end of the world. If you’re suffering a case of ossification, you’re at least moving at a rapid enough pace to avoid fossilization. However, even if you’re escaping terminal mineral seepage that can turn your bones to stones, ossification is still a serious problem. Reaction time is glacial. Adaption is stunted and malformed. You are the living definition of the slow animal at the back of the herd that is little better than wolf-bait.

    America suffers from systemic ossification. Its ability to learn from its experiences is broken. Potential reactions and adaptations are muted, mis-aimed, and skim the surface of deeper pathologies. Symptoms receive morphine for the pain instead of the sharp medicine that would cure the patient. Ideas and actions follow well worn ruts. Using grandfather’s wooden club to beat on your obnoxious neighbor is preferred to building your own club from space age materials.

    Why does a formerly healthy system break down and why does it resist all attempts to heal it, especially the most sweeping endeavors?

    There are many explanations. In 1992, Jonathan Rauch summarized a few of the more popular ones in his essay Demosclerosis, later expanded into a book that I first read in the early nineties (there’s an updated version I haven’t read) that covers:

    Liberals blame conservatives. “Government has stopped addressing accumulated public problems,” wrote the liberal journalist Robert Kuttner in The New Republic [not so] recently: “a deliberate strategy of laissez-faire Republicans, who don’t believe in government.”
     
    Conservatives blame liberals, alleging that left-wing ideology drives liberals to cling brainlessly to every program ever adopted. “Reactionary liberalism,” the conservatives call it.
     
    Populists and business-bashers, such as the liberal journalist William Greider, blame moneyed elites and corporate lobbying. Political analysts blame the current state [as of 1992] of the political system: divided control of the government, the early-1970s reforms that dispersed power in Congress, the breakdown of strong political parties, the rise of a professional political class and so forth.
     
    The public blames, above all, “leadership,” of the lack of it. A strong leader (runs the theory), uncorrupted by politics as usual, could shake the barnacles from the system. Thus the wave of support for Ross Perot.

    Rauch suggested there were deeper forces at work:

    In 1982, a University of Maryland economist published a scholarly book called The Rise and Decline of Nations. Mancur Olson set out to explain, or partially explain, why societies tend to ossify and stagnate as they age…
     
    In every society, Olson said, there are two ways for people to improve their lot and grow rich. One is to produce more; the other is to capture more of what others produce. Doing the latter is possible, but requires political pull or marketplace power; attaining either of those requires that people band together to form either interest groups or cartels.
     
    Interest groups can make their members better off by seeking subsidies, tax breaks, monopolies, favorable regulations and so on. Postal workers seek a monopoly on first-class mail; dairy farmers seek production controls to jack up prices; and so on. Private cartels can make their members better off by raising prices and barring newcomers from the market. Olson called such beggar-thy-neighbor groups “distributional coalitions.”
     
    So far, so obvious. Then Olson went on to the less obvious. Despite what you might think, to organize an interest group or cartel is difficult. The organizer will bear most of the start-up costs, and yet can expect only a fraction of the benefits, which must be shared among the members. Members, in turn, will be reluctant to join until they see that the group is successful. Even then, they may stay out and let others do the work.
     
    As a result, Olson wrote, “organization for collective action takes a good deal of time to emerge.” Trade unions did not appear, for instance, until almost a century after the Industrial Revolution. Farmers’ groups didn’t appear in America until after World War I. Social security dates back to 1935, but the AARP didn’t appear until 1958.
     
    Once groups organize, however, they almost never disappear. Instead, Olson wrote, “they usually survive until there is a social upheaval or other form of violence or instability.” Furthermore, over time the interest groups professionalize. This makes them still less likely to go away: Amateur activists can always drop the cause and go home, but for professionals, the cause pays the mortgage.
     
    The result, Olson concluded, is this rule: “Stable societies with unchanged boundaries tend to accumulate more collusions and organizations for collective action over time.”…
     
    Cartels have not proved to be the problem that Americans once expected, thanks mainly to foreign completion. If cartels organize the domestic market, as some say the Big Three automakers did informally through the 1970s, fat profits lure in imports to bust the trust.
     
    But political pressure groups have the added power of the law, and are not so easily undermined. These groups’ effects are of two kinds, economic and governmental.
     
    Economically speaking, entrenched interest groups slow the adoption of new technology and ideas by clinging to the status quo. They distort the economy, and so reduce its efficiency, by locking out competition and locking in subsidies. As they grow, they suck more of society’s top talent into the redistribution industry. All in all, the economic costs can be very large.
     
    The other kind of effect is on government. The accretion of interest groups, and the rise of bickering over scarce resources, Olson feared, can “make societies ungovernable.”
     
    Now the theory’s darker implications come into view. “The logic of the argument implies that countries that have had democratic freedom of organization without upheaval or invasion the longest will suffer the most from growth-repressing organizations and combinations,” Olson wrote. If he is right, then the piling up of entrenched interest groups, each clinging to some favorable deal or subsidy, is an inevitable process as democracies age.
     
    However, occasionally some cataclysmic event — war, perhaps, or revolution — may sweep away an existing government and, with it, the countless cozy arrangements that are protected by interest groups.
     
    If his theory is right, Olson concludes, “it follows that countries whose distributional coalitions have been emasculated or abolished by totalitarian government or foreign occupation should grow relatively quickly after a free and stable legal order is established.”
     
    Look at Japan and [the former] West Germany, where authoritarian regimes and then foreign occupations swept away entrenched interest groups and anticompetitive deals. “Economic miracles” followed in both countries as resources were freed from groups that had captured and monopolized them. (Catch-up growth, Olson says, can explain only a part of Japan’s and Germany’s success.) By contrast, “Great Britain, the major nation with the longest immunity from dictatorship, invasion and revolution, has had in this century a lower rate of growth than other large, developed democracies.”
     
    Even in the United States, Olson said, the pattern applies. Statistical tests comparing the 50 states showed that “the longer a state has been settled and the longer the time it has had to accumulate special-interest groups, the slower its rate of growth.”
     
    His hypothesis suggested a social cycle:
     
    A country emerges from a period of political repression or upheaval into a period of stability and freedom. If other conditions are favorable, rapid growth ensues. (South Korea and Taiwan, both emerging from dictatorship and both showing rapid growth, would be in this stage today [in 1992]; China might be next [not yet].) Gradually, interest groups organize and secure anticompetitive deals. These deals accumulate, each being jealously defended. Over time, growth slows and paralysis sets in.

    Rauch takes Olson’s insights from economics to politics and returns us to our original question:

    Why has government become so ossified and immobile?
     
    In large, complex systems, the key to successful adaptation is the method of trial and error. In the large, complex system of biological evolution, species undergo mutations, the vast majority of which fail. A few, however, succeed brilliantly, and those proliferate by out-competing the others. That is how life adapts to changing environments.
     
    Similarly with a capitalist economy: The key to its adaptability is that it makes many mistakes but corrects them quickly. Entrepreneurs open businesses; many fail, but every so often someone hits on a brilliant innovation. The more-successful strategies will proliferate by out-competing the others. Capitalism adapts through trial and error.
     
    Similarly with science: It tries out countless hypotheses every day and abandons most of them. The knowledge base adapts through trial and error.
     
    Government is another big, complex social system. The way for governments to learn what works in a changing world is to try various approaches and quickly abandon or adjust the failures: trial and error. However, something has gone badly wrong.
     
    For fiscal 1993 alone, the [George H. W.] Bush Administration proposed ending 246 federal programs and 4,192 federal projects. How many of those will die? Approximately none. The Reagan Administration made a fetish of trying to eliminate federal programs. Despite President Reagan’s high popularity and his effective control of Congress in 1981-82, during his eight years in office a grand total of two major programs — general revenue sharing and urban development action grants — actually got killed.
     
    One reason is that people disagree about which programs failed, and even about what “failing” means. Another reason is that as soon as a program is set up, the people who depend on it — both the direct beneficiaries and the program’s employees and administrators — organize to defend it ferociously. These groups are, of course, none other than Olson’s “distributional coalitions” — what others have for years described as part of an “iron triangle.” They have money, votes and passion. They can be defied, but only at serious political risk…
     
    Not only are policies hard to kill, they are also hard to change. Every wrinkle in the law produces a winner who will resist reform….And so programs are impossible to kill and very difficult to correct. The implications of this are profound.Imagine an economy in which every important business enterprise is kept alive by an interest group with political clout. Over time, the world would change, but the businesses wouldn’t. Obsolescent companies would gobble up resources, crowding out new companies. The economy would cease to adapt.
     
    That is what happened to the Soviet economy. Which imploded.
     
    In principle, the U.S. government’s situation is like the Soviet economy’s. In both, the method of trial and error has collapsed.
     
    In Washington, every program is quasi-permanent, every mistake is written into a law that some vested interest will defend furiously. The result is that as the old clutter accumulates, government cannot adapt.
     
    First, old programs and policies cannot be gotten rid of, and yet continue to suck up money and energy. And so there is little money or energy for new programs and policies. The old crowds out the new.
     
    Second, and at least as important: When every program is permanent, the price of failure becomes extravagant. The key to experimenting successfully is knowing that you can correct your mistakes and try again. But what if you are stuck with your mistakes forever, or at least for decades? Then experimentation becomes extremely risky…Yesterday’s innovations became today’s prisons…
     
    Countless policies are on the books not because they make sense in 1992, but merely because they cannot be gotten rid of. They are dinosaurs that will not die. In a Darwinian sense, the universe of federal policies is ceasing to evolve.

     

    10 Responses to “America: Your Arteries Are Hardening”

    1. cjm Says:

      9/11 provided a “jolt” but wasn’t of sufficient magnitude to really unblock things.

      there seems to be a building “pressure” between the leftists and the non-leftists in this country, that might lead to a corrective event; aka civil war.

      losing a city to jihadis would definitely unblock things.

      ironically, obama is causing so much discontent that he might unblock things unintentionally.

    2. renminbi Says:

      Mancur Olson was an original.

      What to do?Perhaps pay people to clean up the the gov’t.For instance sue, in front of a jury of people who pay taxes and aren’t dependent on the gov’t teat, to impound funds from an agency which is not useful. The money goes back to the treasury -the person bringing the suit gets paid generously for his trouble and the agency is liquidated. We still,for the time being, have a bit of a republic;I wouldn’t say that for Britain or the rest of Europe, which lives under an entrenched , and incompetent, oligarchy.The coercive power of the state should be controlled by those paying the freight,not a political nomenklatura.
      It does look like the end state for representative gov’t is something vile like Argentina,or even worse.New thinking is needed on a fundamental level.

    3. david foster Says:

      From yesterday’s NYT (article on Boone Pickens)..

      “Proponents of natural gas took a back seat when the House of Representatives passed a climate bill last year, as lawmakers from coal-producing states dug in to keep coal as the nation’s principle fuel for electricity producion. Natural gas may get a warmer hearing in the Senate, but its prospects there are also in doubt)”

      This passage implies that the fuel mix for the nation’s electricity supply is being managed by CongressCreatures, 80% of whom would not be able to explain the electricity-production process at what should be a 5th-grade level…and whoever wrote the article seemed to see nothing remarkable in that condition.

      Imagine some of the historic Congressional debates that might have occurred has this approach existed back in the day. There was the great AC-versus-DC debate of 1885. And the hugely passionate debate of 1910 about the merits of steam turbines versus improved reciprocating engines. And who could ever forget that famous speech of 1896, in which William Jennings Bryan (protesting the “diversion” of electricity to power aluminum smelters) thundered “YOU SHALL NOT CRUCIFY MANKIND UPON THIS CROSS OF ALUMINUM!”

      For many if not most CongressCreatures, of course, the actual effectivness of electricity-production choices—on economic, environmental, or any other grounds—-is no more relevant than the probable lifespan of a used car is to the sleazy used-car salesman who sells it to you. What matters is gaining the support of the right mix of “distributional coalitions” leading to re-election and to a lucrative post-“public service” career as a lobbyist or lawyer.

    4. Mrs. Davis Says:

      We’ll know more about the status of the American circulatory system on Wednesday and a lot more in November.

    5. Shannon Love Says:

      It is disturbing.

      To think that we once fought WWII in only 3 years, 7 months, and 26 days. We built a huge number of factories, ships, aircraft, vehicles and even more impressively trained, tens of millions of people how to use those things. We built the Empire State Building in a mere 410 days.

      By contrast, 9 years later Ground Zero is still a hole in the ground. Jon Stewart noted that whereas Dubia managed to build the world’s tallest building in just 5 years, we haven’t even settled on a name for the new building at Ground Zero.

      It’s not just low labor cost that draws manufactures to China, its the fact that you can design, plan and build a factory in a matter of months. If you have some new product that needs to get to market quickly, you wouldn’t even think of trying to build a factory for it in the US.

      I believe the primary culprit is the idea of “stakeholders” i.e. people who contribute nothing to a project but who can stop it based on some argument that they are vaguely affected by it. Environmental laws that let anyone anywhere sue to stop any project on any grounds is the most obvious example but even prosaic laws like zoning have mutated to the point where building anything major such as a factory becomes primarily a political exercise. As a result builders can longer know when they’re projects will finish or even if they will be allowed to finish or even begin.

      Why bother? Capital is fluid. Why assume all the risk and uncertainty of building a factory in the rustbelt or California when you can just bang one out in China?

      The stakeholder cancer represents the spread of the parasite. People who produce nothing must create a rational for why they have the moral and political right to confiscate what the productive produce. We have vast intellectual edifices built to explain why productive people cannot be trusted and why they must be continuously and minutely overseen by a morally superior class of aristocratic pseudo-intellectuals.

      I fear this process cannot be stopped. China went through repeated cycles of a fresh dynasty bursting with energy and reforms slowly succumbing to the institutional ossification of mandarinism. The death grip of the mandarins was only broken by civil war, collapse, foreign invasion and often all three at once.

    6. david foster Says:

      Mandarins: Is there anyone here who is an expert in Chinese history? My take from very casual reading has always been that they were pretty much a class of credentialed parasites: one English seaman who visited China in the 19th century observed that every fishing boat had a mandarin attached to it who was there to ensure that the fish-tax was paid, but who made no useful contribution to the fishing.

      OTOH, I’ve also read that some Mandarins did very valuable work in planning & execution of irrigation projects, canals, etc.

      Would love to see some posts by someone who knows Chinese history and can compare & contrast it with western history.

    7. david foster Says:

      Our blogfriend Bill Waddell has a very depressing post & video about real capitalism vs crony capitalism, in the window business:

      http://www.evolvingexcellence.com/blog/2010/01/share.html

    8. vulgar moralist Says:

      Machiavelli could explain this without a lot of citations. Republics accumulate corruption in time: to survive, they must “renovate” their morals – that is, return to first principles.

      That’s the case with the US. The test wasn’t 9/11, which except for those who suffered personally was, to the vast majority of citizens, a TV event. The test is now. The combination of a financial collapse with an administration which actively plans to move us to the European model presents us with a choice: follow the president or return to our founding principles of Jeffersonian, bottom-up democracy.

      Nothing is fated. We elect and unelect our rulers. It’s really up to us.

      See “A return to first principles: the argument from morality”:

      http://vulgarmorality.wordpress.com/2010/01/13/a-return-to-first-principles-the-argument-from-morality/

    9. Joseph Fouche Says:

      China’s mandarinate provided advanced administrative services for its time and place. Admission to the bureaucracy was based on competitive exams focused on demonstrating knowledge of the Confucian classics. This provided some limited social mobility, though most candidates came from the nobility and gentry because they could afford the time to study. The system was most responsive when there was a strong emperor but tended to succumb to inertia under weak emperors. Repeated foreign invasions and dynastic breakdown tended to reinvigorate the bureaucracy from time to time.

      On the other hand, however, the cohesion of the bureaucratic-scholastic complex was an advantage for Chinese civilization. Barbarian conquerors like the Mongols and Manchu found the services of native Chinese bureaucrats and scholars to be indispensable in ruling their shiny new Chinese domains. This led to the native Chinese bureaucrats and scholars exercising great influence on their new masters, which tended to sinicize the barbarians within a few generations. The Manchu tried to make the distinctions between the ruling minority and the Chinese majority clear through dress codes. The shaved foreheads and long queue of hair characteristic of Chinese males in the nineteenth century was the result. The Manchu were disappearing through the same process of cultural sinicization that had swallowed their barbarian predecessors but the traditional cycle was suddenly overtaken by the rush of Western modernity.

      Chinese bureaucrats were good and bad. Confucianism is basically an ideology of bureaucratic virtue and many bureaucrats lived up to the Confucian ideal. Lin Tse-hsü was known for his dedication and incorruptibility. He waged a successful anti-drug campaign which ran afoul of what historian Niall Ferguson called “history’s most successful narco-state”. However, a significant number were corrupt and/or ineffective. Eventually the sheer speed of Western development in the nineteenth century overwhelmed the ability of a bureaucracy based on intimate knowledge of ancient classics to adapt. The imperial examination system was abolished in 1905 but it was too little, too late. China’s rot was to far gone and it quickly descended into fifty years of chaos and foreign invasion.

    10. Joseph Fouche Says:

      These documents on the outcomes of reforms in imperial China over 1500 years make interesting reading:

      http://www.pacificrim.usfca.edu/research/perspectives/anderson.pdf

      http://www.ac.wwu.edu/~kaplan/H370/mp28.pdf