The future of the State
When hearing this title one thinks I will praise existing state models or propose new ones. Some think about radical proposals, revolutions or even a new world order. None of these thoughts are right, because today I am talking about the future of everybody sitting in this room, the future of our generation and the task which it is to tackle. Let me start with a simple question: How many of you vote regularly? I assume many people feel good they have voted because they've done their duty. They've expressed themselves maybe by voting straight ticket and then letting the government run the machine. I hope you're not satisfied with this “restaurant” state system: where you order, the waiter takes your order, serves you, you pay and then go take a nap. I hope you are here today because you want positively impact society. In this speech I am firstly going to give you some examples of what is wrong with modern states and secondly propose some ideas about the future.
Let me get directly to the point: Most states and governments are inefficient, whereby inefficiency means much less outcome in respect to the efforts and money used in spending. One problem is that states have a messy structure: within the state and also on an international level it is not clear who actually holds which competences and once you've figured it out there is a long process in front of you to get the service you want. The borders between offices and departments are not clear and the immediate effect is that some work is done twice, some not at all and overall it takes a long time. This problem of competences costs the citizens a lot of time and money. There are several layers of rules and an uncountable amount of bureaucrats. Some offices, departments or even whole departments should be closed, others need to be well-oiled and better coordinated. At the end of the 1990s it was fashionable to talk about the end of the state model because of new technologies and the domain of the global economy. But the state resisted fiercely and government spending has even enlarged from 44,7% of GDP in 1990 (average of OECD countries) to 47,7% in 2009. These are very high spendings, although it is hard to find an appropriate or ideal level of government spending against which a countries’ and not learning from books. crisis medicine economic performance should be measured. Factors like culture and geography have an impact on the need for government and demands on government vary widely between developed and developing countries. In addition governments operate outside of market constraints and competition. Whatever the ideal level of government spending is, the political and economic developments of the past year have made clear that in many societies the limits of appropriate spending have been surpassed.
Yes, there are also big expenses that states have to face and yes the state has to operate in fields where the market principles can’t be applied. Still, this is no reason to justify inefficiency. Let's take health care for example. It is one of the most important services today but in many countries it costs too much (like in Britain) while in others the service is much better and costs are relatively low (like in Sweden). Should we abolish the welfare state and turn back to times when many people lived in misery and ignorance? The obvious answer is no; the modern welfare state is necessary not only for social order but also to guarantee a certain standard of life.
Social order means to have a system of institutions, which capable of reproducing at least those conditions essential for existence. According to Thomas Hobbes the State is necessary to escape the “war of all against all” and a social contract regulates the relationship between individuals and their governments. The idea of even other philosophers from the 17th century is that we need rules for our own well-being. A lot of state and government forms succeeded each other since that period but two core problems remained: rules turn out to be inefficient because there are too many, they are not clear and they do not apply to everybody in the same we find ourselves in a system where neither social society nor economy can prosper. The economic analysis of law takes this into consideration. There are many theories about it and large numbers of literature, but basically we can identify two distinct strands of thought: we shall call one strand policy analysis and the second strand political economy. Policy analysis focuses on the analysis of the effects of legal rules on outcomes. An outcome consists of the “objective” effects of the rule or institution on the behaviour of “private” individuals. In Italy for example there are several hundreds of thousands of laws (researches have been made by the University of Genoa and the Parliament) and they are “amoral and illogical” according to Vatican State, which doesn’t implement them anymore automatically. The effect is that people try to bypass laws whenever possible. By contrast, political economy investigates the operation of political institutions such as courts, legislatures, the executive and administrative agencies.1 Italy is ranked in place 87 of the economic freedom index of 2011, after countries like Rwanda and Burkina Faso. Economic freedom is measured by freedom from corruption business freedom, trade freedom, fiscal freedom and others. This means Italy is considered a moderately free country but it finds itself on the edge (after position 90) to mostly unfree countries. In other words, Italy is not an attractive location for business.
A certain standard of life is certainly not the “ all you can eat welfare state” as Mr. Lee Kuan Yew, a Singaporean Statesman, puts it in which many Westerners live. Singapore is in second place of the world economic freedom index, therefore there must be something true to these words. Indeed westerns are used to subsidies and benefits without considering their costs. If a party tries to limit the extravagance it won’t be re-elected. Governments – no matter if centrist, left or right – spend then much of their time trying to get re-elected by pushing up public expenses. Singapore’s approach, by contrast, is for the government to provide people with assets that allow them to look after themselves. A good education for all is one big part of it.2
I could make some more examples but I think every single one of you knows about the limits of modern states. I am going to the second part of my speech: What can you, future world leaders, do to improve the situation?
I am sure you agree with me when I say that improvement is necessary and it should be achieved together by the actual world leaders and younger generations. There should be a common short term and a long term approach.
For the short term we should all use the days that follow. We have a unique platform at our disposal to discuss topics of utmost importance. I would like to thank the organizers for this year’s edition of The Rhodes Youth Forum and the chosen topics. Allow me to quote Ban Ki Moon, the Secretary General of the United Nations: „The creativity, energy and passion of young people are indispensable for tackling global challenges. Whenever I spend time with 1 The Economic Analysis of Law, First published Mon Nov 26, 2001; substantive revision Fri Aug 12, 2011, http://plato.stanford.edu/entries/legal-econanalysis/#EffConLaw, last time visited on 1th October 2010.
2 Go East, young bureaucrat, The Economist, March 2011, http://www.economist.com/node/18359852, last time visited on 1th October 2010.
young people I am always impressed by the contributions they make to their communities, and inspired by the insight and devotion thy bring to the issues on the United Nations Agenda.“ Everybody has a different background and this makes our discussions, vivid, fruitful and diverse. Furthermore, you already have a higher education and can bring in new ideas and share your views. The approach to today’s challenges must be universal since distances have become smaller, exchanges more important and economies and cultures more integrated. The long term approach is what happens after our meeting. The state today faces some serious troubles, some are caused by its structure while others because of governance, but this should not be a reason for pessimism. Let me use again the words of Ban Ki Moon: “You and your colleagues have the ingenuity and vision to lead by example where others - including governments - are lagging behind.” I know implementation of new ideas will not be easy because fundamental changes are always hard to achieve, but already small changes can often have a big impact. You all are good at using computers and social networks because you've grown up with them. Just to give an example: you can use these skills to improve business, government systems, and share information with the community. Governmental programs and associations, organisations and NGO’s are another way. We are young and dynamic and eager to bring our voice, influence and power and we will always find programs which support us. If we mobilize our friends, partners, colleagues and lobby for our ideas we will be heard and can together build the future – our future. Thank you for your time and I wish a very productive meeting.
Yes, there are also big expenses that states have to face and yes the state has to operate in fields where the market principles can’t be applied. Still, this is no reason to justify inefficiency. Let's take health care for example. It is one of the most important services today but in many countries it costs too much (like in Britain) while in others the service is much better and costs are relatively low (like in Sweden). Should we abolish the welfare state and turn back to times when many people lived in misery and ignorance? The obvious answer is no; the modern welfare state is necessary not only for social order but also to guarantee a certain standard of life.
Social order means to have a system of institutions, which capable of reproducing at least those conditions essential for existence. According to Thomas Hobbes the State is necessary to escape the “war of all against all” and a social contract regulates the relationship between individuals and their governments. The idea of even other philosophers from the 17th century is that we need rules for our own well-being. A lot of state and government forms succeeded each other since that period but two core problems remained: rules turn out to be inefficient because there are too many, they are not clear and they do not apply to everybody in the same we find ourselves in a system where neither social society nor economy can prosper. The economic analysis of law takes this into consideration. There are many theories about it and large numbers of literature, but basically we can identify two distinct strands of thought: we shall call one strand policy analysis and the second strand political economy. Policy analysis focuses on the analysis of the effects of legal rules on outcomes. An outcome consists of the “objective” effects of the rule or institution on the behaviour of “private” individuals. In Italy for example there are several hundreds of thousands of laws (researches have been made by the University of Genoa and the Parliament) and they are “amoral and illogical” according to Vatican State, which doesn’t implement them anymore automatically. The effect is that people try to bypass laws whenever possible. By contrast, political economy investigates the operation of political institutions such as courts, legislatures, the executive and administrative agencies.1 Italy is ranked in place 87 of the economic freedom index of 2011, after countries like Rwanda and Burkina Faso. Economic freedom is measured by freedom from corruption business freedom, trade freedom, fiscal freedom and others. This means Italy is considered a moderately free country but it finds itself on the edge (after position 90) to mostly unfree countries. In other words, Italy is not an attractive location for business.
A certain standard of life is certainly not the “ all you can eat welfare state” as Mr. Lee Kuan Yew, a Singaporean Statesman, puts it in which many Westerners live. Singapore is in second place of the world economic freedom index, therefore there must be something true to these words. Indeed westerns are used to subsidies and benefits without considering their costs. If a party tries to limit the extravagance it won’t be re-elected. Governments – no matter if centrist, left or right – spend then much of their time trying to get re-elected by pushing up public expenses. Singapore’s approach, by contrast, is for the government to provide people with assets that allow them to look after themselves. A good education for all is one big part of it.2
I could make some more examples but I think every single one of you knows about the limits of modern states. I am going to the second part of my speech: What can you, future world leaders, do to improve the situation?
I am sure you agree with me when I say that improvement is necessary and it should be achieved together by the actual world leaders and younger generations. There should be a common short term and a long term approach.
For the short term we should all use the days that follow. We have a unique platform at our disposal to discuss topics of utmost importance. I would like to thank the organizers for this year’s edition of The Rhodes Youth Forum and the chosen topics. Allow me to quote Ban Ki Moon, the Secretary General of the United Nations: „The creativity, energy and passion of young people are indispensable for tackling global challenges. Whenever I spend time with 1 The Economic Analysis of Law, First published Mon Nov 26, 2001; substantive revision Fri Aug 12, 2011, http://plato.stanford.edu/entries/legal-econanalysis/#EffConLaw, last time visited on 1th October 2010.
2 Go East, young bureaucrat, The Economist, March 2011, http://www.economist.com/node/18359852, last time visited on 1th October 2010.
young people I am always impressed by the contributions they make to their communities, and inspired by the insight and devotion thy bring to the issues on the United Nations Agenda.“ Everybody has a different background and this makes our discussions, vivid, fruitful and diverse. Furthermore, you already have a higher education and can bring in new ideas and share your views. The approach to today’s challenges must be universal since distances have become smaller, exchanges more important and economies and cultures more integrated. The long term approach is what happens after our meeting. The state today faces some serious troubles, some are caused by its structure while others because of governance, but this should not be a reason for pessimism. Let me use again the words of Ban Ki Moon: “You and your colleagues have the ingenuity and vision to lead by example where others - including governments - are lagging behind.” I know implementation of new ideas will not be easy because fundamental changes are always hard to achieve, but already small changes can often have a big impact. You all are good at using computers and social networks because you've grown up with them. Just to give an example: you can use these skills to improve business, government systems, and share information with the community. Governmental programs and associations, organisations and NGO’s are another way. We are young and dynamic and eager to bring our voice, influence and power and we will always find programs which support us. If we mobilize our friends, partners, colleagues and lobby for our ideas we will be heard and can together build the future – our future. Thank you for your time and I wish a very productive meeting.