What happened to the idea of the Great Society?

May 22, 2014 5:15 pm

What happened to the idea of the Great Society?

By John Micklethwait and Adrian Wooldridge

Johnson’s noble vision had compelling objectives, say John Micklethwait and Adrian Wooldridge

Fifty years ago, Lyndon Johnson unveiled his vision of the “Great Society”. This would be one in which no child would go unfed and no youngster unschooled; a society in which the ancient evils of racism and injustice would be combated; a society, above all, in which the state would deliver justice and opportunity.

Most anniversaries pass unnoticed, and rightly so. But this one matters. The era of the Great Society was perhaps the last time Americans thought government could improve their lives. The 1964 election pitted Johnson against Barry Goldwater, an unapologetic advocate of a minimal state. Johnson won in a landslide.

The 1960s were also the heyday of the European welfare state, first outlined by Fabians such as Beatrice and Sidney Webb. Their ideas at first failed to take flight in America. But after the Great Depression and the collectivist success of the second world war, state planning was finally in fashion. Johnson’s Great Society was the Democrats’ version of the British Labour party’s New Jerusalem. Even the phrase, the “Great Society”, was stolen from a British Fabian, Graham Wallas.

Today US politics is in a stalemate and the “big government liberalism” of Johnson is in retreat. Ever since the 1970s, when the Great Society began to lose its “wars” on poverty, crime and inequality (and North Vietnam), American voters have embraced conservatives such as Ronald Reagan, who said government was the problem, not the solution; and Democrats such as Bill Clinton, who proclaimed the era of big government over. Only one in 10 Americans trusts politicians to do the right thing, compared with 60 per cent in Johnson’s time.

In practice, however, big government remains the American way. Many of the Great Society programmes, from Medicare to the National Endowment for the Arts, survive. The state has continued to grow, boosted by Republicans as well as Democrats: George W Bush increased spending more than any president since Johnson. And regulation has sprawled. Even Webb, the son of a hairdresser, might have been surprised to find his mother would have had to spend a year studying the art of cutting and blow-drying to acquire a licence to operate in California.

And the same stalemate is true of Europe – perhaps more so. Few of the voters trudging to the polls this weekend expect their politicians to deliver solutions. Yet Europe still has a huge welfare state: as Angela Merkel, the German chancellor, points out, the EU accounts for 7 per cent of the world’s population, 35 per cent of its gross domestic product and 50 per cent of its social spending. Indeed, this week is less a matter of the Great Society hitting 50 than the western welfare state reaching its century. It was invented for an industrial age, when people thought scientific management by experts and economies of scale similar to those in Henry Ford’s factories really could deliver equality and justice. Now it feels out of date.

What the US – and Europe – needs is more cool-headed pragmatism. Government is neither a monster nor a saviour

Most of the interesting experiments in government are taking place far from Washington: in Singapore, which delivers much better public services at a fraction of the cost; in Brazil, with its “conditional” welfare payments, dependent on behaviour; in Scandinavia, where “socialist” Sweden has cut state spending from 67 per cent of GDP in 1993 to 49 per cent, introduced school vouchers and brought entitlements into balance by raising the retirement age. In the US, the dynamic bits of government are in its cities, where pragmatic mayors are experimenting with technology.

What will replace the Great Society? For Republicans, the answer looks easy: just shrink government. But this gut instinct runs up against two big problems. The assumption that government is evil means they never take it seriously (Singapore has a tiny state but pays its best civil servants $2m a year). And, in practice, American conservatives are addicted to Big Government: hence the $1.3tn of exemptions in the US tax code, most of which are in effect a welfare state for the rich.

For Democrats, the problem is even worse. Having become used to promising ever more entitlements to voters, they face a series of unedifying choices: whether to serve society at large (by making schools better) or to protect public sector unions (teachers account for many of their activists); and whether to offer ever less generous universal benefits to the entire population or to target spending on the disadvantaged.

This is where the politics of the future will be fought, on both sides of the Atlantic. It will not be as inspiring as the Great Society. It will be about slimming and modernising government, tying pensions to life expectancy and unleashing technology on the public sector.

But what the US – and Europe – needs is cool-headed pragmatism. Government is neither a monster nor a saviour but an indispensable part of a decent society that, like most organisations, works best when it focuses on doing a few things well.

The writers are respectively the editor and Schumpeter columnist of The Economist. They have just published ‘The Fourth Revolution’


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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