Chinese lessons for America

Image of Gillian Tett

As 2013 gets under way, a striking statistic hangs over California. In 2011 the state spent about 7.5 per cent of its budget on its sprawling network of public schools. But it also spent 11 per cent on its prison system.

Yes, you read that correctly: the US’s so-called “Golden State” is now devoting more resources to locking up its adults than educating its kids. This is partly because crime rates have risen while voters have blocked increases in taxes for schools. It is hard to imagine a more dispiriting pattern, particularly given its implications for future growth.

So whose fault is this? And what, if anything, can ordinary citizens do to change it? That is the question raised in a fascinating book about political governance (from which the above statistics are drawn): Intelligent Governance for the 21st Century, by Nicolas Berggruen, an investor-cum-philanthropist, and Nathan Gardels, a Californian journalist.

At first glance, Berggruen is not the type of person who would obviously fret about issues such as municipal education. The son of a fabulously successful German art dealer, Berggruen grew up flitting between France, Britain and the US. These days, as an investor, he continues to globetrot; a few years back, he decided that it was so much hassle dealing with his fabulous homes and possessions, that he sold them all, and now lives in hotels (earning him the epithet of the “homeless billionaire”).

But although that odd background means that Berggruen can flee any local government that he dislikes – including that of the problem-plagued Golden State – he has recently become oddly obsessed with the cause of local government reform. Most notably, he has created a Los Angeles institute that has assembled American grandees to push for a more sane governmental system for California. They want to introduce more localised democracy, a broader tax base and an end to the current system where a small minority of voters can veto almost anything they dislike.

Now Berggruen is trying to extend these ideas to the rest of the world. In particular, he has become convinced that the political structures of the US and China are both so flawed that they are unstable. And the only solution, he argues, is for each to adopt the opposing features of the other.

In the case of America, its biggest Achilles heel is “consumer culture” politics: voters constantly demand instant gratification and have no patience for long-term structural reform, or for politicians who impose pain. Hence the explosion in public debt, the reactive nature of policy making, and the inability to implement serious, long-term plans. The Chinese system, by contrast, is run by a technocratic elite who rise to their posts by endless meritocratic competition (Berggruen and Gardels point out that Barack Obama could never have run the Chinese system since top officials can only ascend after being “road-tested” in numerous management posts, which Obama was not).

This enables China to produce long-term policy plans, but it is not very responsive to the popular will. “The modern mandarinate of nominally Communist China is not self-correcting, and thus not sustainable,” he argues.

“In a mirror image of China’s challenge, one-person-one-vote electoral democracy embedded in a consumer culture of immediate gratification is also headed for terminal political decay unless it reforms.”

So Berggruen wants China to become more flexible – and western democracy to adopt more technocratic government, coupled with some direct democracy. Voters should be polled often for their views and engaged citizens given a bigger voice – but committees of “wise men” should be created to make long-term plans beyond an election cycle. That would presumably enable California to implement sane education reform (and toss fewer people into jail) – or, at least, to implement the type of grandiose long-term investment plans that proliferated in America immediately after the second world war.

Now, some Americans will undoubtedly find this advice offensive. The idea of “learning” from Chinese politics is almost taboo, given the US’s reverence for its constitution, with its complex system of checks and balances. And Berggruen’s comments may be doubly inflammatory given his elite, globetrotting lifestyle.

But even if you hate his ideas, the fact is that he is not the only person who is expressing a growing unease about the system of governance in America (or elsewhere in the west.)

Surveys show that many ordinary voters appear increasingly disenchanted too. And among the US’s business and political elite, there is now an orgy of hand-wringing about the shortcomings of the political structure, fuelled by the recent gridlock over the fiscal woes. This year, the former American central bank governor Paul Volcker is also planning to launch an institution that will promote debate about how to make government work better, at local and federal levels. Other grandees are mulling similar schemes.

Berggruen’s ideas may sound bold, and I would be astonished if Washington or Beijing were to listen. But, if nothing else, his book is a powerful sign of the times. Brace yourself to hear plenty more about these themes in 2013. Especially if these fiscal rows rumble on, while the social and income gaps grow.

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