America in decay: Is Fukuyama right?

Update July 2016: Readers of this post might also be interested in my new book, Four Crises of American Democracy.  Details here.

One of the odd consequences of the global financial crisis — an instance of massive market failure — has been a boom in literature about the defects of contemporary democracy.  I’ve recently written reviews of several books in this genre.  In the new issue of Foreign Affairs, the distinguished political scientist Francis Fukuyama joins in the fray.  America, says Fukuyama, is in the process of “political decay.”  Certainly, this is not the best of times for American democracy.  But there are five reasons why we should take Fukuyama’s assessment with a grain of salt.

First, a nutshell of Fukuyama’s argument.   The U.S. political system is in decay.  Its major political institutions are “increasingly dysfunctional,” and the effectiveness of federal agencies in performing critical functions is in long-term decline.  There are two major reasons for this.  First, Congress has too much influence over the executive branch.  Bending to the influence of interest groups, Congress imposes multiple mandates and restrictions on the federal bureaucracy, impeding its ability to get work done.  Congress has also been undermined because of its inability to control the fallout from political polarization.  (Fukuyama follows the argument by Mann and Ornstein here.)  At the same time, courts have extended their influence over the executive branch, with similarly malign effects.  The current woes of the federal government have their roots in choices about constitutional design made long ago.  The “traditional system of checks and balances” is ill-suited to the complexities of modern governance.  But the probability of improvement is low: there is no well-organized coalition pressing for reform, and there are few ideas on how the system might be made better.

Now, here are five major limitations of this argument:

1.  Confusing American government with the federal government alone

Fukuyama’s article provides us with a dire assessment of the state of American politics — that is, the whole of it.  Here are some quotes that illustrate the breadth of Fukuyama’s indictment:

[W]hile democratic political systems theoretically have self-correcting mechanisms that allow them to reform, they also open themselves up to decay by legitimating the activities of powerful interest groups that can block needed change.  This is precisely what has been happening in the United States in recent decades, as many of its political institutions have become increasingly dysfunctional. (p. 10)

In fact, these days there is too much law and too much democracy relative to American state capacity. (p. 12)

Over the past half century, the American state has been “repatrimonialized.” (p. 15)

In full perspective, therefore, the U.S. political system presents a complex picture in which checks and balances excessively constraint decisionmaking on the part of majorities, but in which there are also many instances of potentially dangerous delegations of authority to poorly accountable institutions. (p. 24)

The U.S. political system has decayed over time because its traditional system of checks and balances has deepened and become increasingly rigid . . . This is not the first time that the U.S. political system has been polarized and indecisive . . . Today, once again, the United States is trapped by its political institutions. . . . [T]he decay of American politics will probably continue until some external shock comes along. (pp. 25-26)

All of these criticisms of “the American state” and “the U.S. political system” and “American politics” might be right, but they are not substantiated by this article, which focuses primarily on federal politics and institutions.  There are also fifty state governments, five territorial governments, three thousand county governments, sixteen thousand township governments, twenty thousand municipal governments, and fifty thousand district governments.  (The Census Bureau provides a helpful map.)  Fukuyama says little about how all of these institutions are working.  Perhaps it could be argued that state and local government is dysfunctional too, but Fukuyama does not make that claim.  (For example, you could argue that there are simply too many units of government.)  Alternatively, it might be argued that federal politics is so important that a damning judgment on that aspect alone is enough to discredit the whole “U.S. political system.”  Probably, that is Fukuyama’s position.  But it ought to be stated explicitly — because it involves an assumption about the proper role of the federal government in American life, which many Americans might disagree with.  (See #5, below.  This, incidentally, is an error that is made by many authors who lament the current state of American democracy.)

2.  Exaggerating the lack of exit routes

Fukuyama — or at least the editors at Foreign Affairs — tell us that there is “no way out” of the country’s current predicament (p. 25).  One reason why is the inability to generate clever ways of making current institutions work better.  As Fukuyama says:

The second problem is a matter of ideas.  The traditional American solution to perceived governmental dysfunction has been to try to expand democratic participation and transparency.  This happened at a national level in the 1970s, for example, as reformers pushed for more open primaries, greater citizen access to the courts, and round-the-clock media coverage of Congress (p. 26)

This is a misreading of history.  Or to put it more precisely, this is a reading of history that puts undue weight on the experience of the 1970s, when the thrust of institutional change was toward participation and transparency.  In the longer run, however, Americans have experimented with many responses to governmental dysfunction.  For example:

• In the 1930s, the “crisis of democracy” was dealt with by bolstering presidential power over the executive branch.  “The President’s administrative equipment is is far less developed than his responsibilities,” said the 1937 report of the President’s Committee on Administrative Management, “a major task before the American Government is to remedy this dangerous situation.”  This led to creation of the Executive Office of the President, the reorganization of the Bureau of the Budget, and the creation of a National Resources Planning Board, among other things.  (The cartoon at right, from the Richmond Times Dispatch of March 11, 1937, shows what some critics thought of the reforms at the time.)  And the United States has bolstered executive power at other critical moments as well — such as in the wake of the 9/11 attacks, and in the early phase of the financial crisis in Fall 2008.
• There have also been other large-scale reorganizations that have been designed to address major threats to American welfare.  We should not forget the massive reorganization of defense and intelligence agencies under the National Security Act of 1947, and subsequent renovation of the defense establishment by the Goldwater-Nichols Act of 1986, as well as the massive reorganization of domestic security functions by the Homeland Security Act of 2002.  There were flaws with all of these reorganizations, of course.  But they do bolster the position that American politicians have responded to governance crises through techniques other than “participation and transparency.”
• More evidence on this point: Sometimes the “crisis of democracy” has been dealt with by delegating more authority to technocrats who are buffered from political control, either by Congress or the President.  For example, one response to the economic malaise of the 1970s was bolstering the independence of the Federal Reserve.  This was about expert, rather than executive, power.  Paul Volcker, chairman of the Federal Reserve from 1979 to 1987, was given the freedom to make deeply unpopular decisions about interest rates.  We tend to forget how much the role of the Federal Reserve has shifted in the last forty years.  In 1967, John Kenneth Galbraith said that the Federal Reserve ought to be regarded as “a minor instrumentality of the state . . . standing in importance between the Bureau of Printing and Engraving and the Interstate Commerce Commission.”  By 2000, Fed chairman Alan Greenspan had “rock star status.”
• In the 1990s and early 2000s, another response to the crisis of democracy was privatization of key functions.  This was a more radical way of taking key functions out of the control of democratically elected politicians.  One example might be ICANN, the body that helps to regulate the internet, which is now set up as a non-profit corporation under California law.  And of course there are a vast number of people who perform federal functions but work for contractors — which is another way of accommodating perceived dysfunction in federal laws governing the bureaucracy.
• And finally, attempts have been made to deal with dysfunction by imposing new rules that correct the less desirable tendencies of democratic governments.  That is why almost all state governments have constitutional or statutory rules that limit deficit spending and borrowing.  (I discuss the adoption of these rules in my 2012 book, America’s First Great Depression.  “It is to prevent the evils resulting from excitement and passion,” one Indiana politician explained in 1850, “that we take our calmer and quieter hours to bind ourselves.”)  It was a similar sensibility that led to the passage of statutes like the 1985-87 Gramm-Rudman-Hollings laws, the Budget Enforcement Act of 1990, and Balanced Budget Act of 1997 — all of which played a role in controlling federal finances in the 1980s and 1990s.

Have their been moments in American history where voters and politicians have responded to “perceived governmental dysfunction” by demanding more democracy and transparency?  Absolutely.  But that does not mean that it has been the dominant or traditional response.  It is one of a suite of techniques for dealing with dysfunction.  In the long run, the distinguishing pattern of Anglo-American politics has been pragmatism in the face of crisis.

3.  Confusion about the remedy: executive power or bureaucratic power?

Fukuyama himself appears to favor two paths of reform for federal institutions.  There is a tendency in the article to conflate these two paths — but they are distinct, and to some degree inconsistent with one another.  The virtues of both reform paths might also be overstated.

The first path for reform is strengthening executive power.  As noted, Fukuyama takes the view that the United States has a mode of government — premised on the separation of powers — that makes it hard to deal with big problems in a timely way, especially when politics is highly polarized and minority parties in Congress have little incentive to make compromises.  Fukuyama contrasts the Westminster system, in which the party that controls the executive also has a working majority in the legislative branch, at least on critical issues like government finances.  “The Westminster system” says Fukuyama, “produces stronger governments than those in the United States . . . [T]his type of hierarchical system can take a longer-term strategic view and produce much more coherent legislation” (p. 22).

As an aside, it should be said that Fukuyama probably oversells the benefits of the Westminster model.  He says that it is “still fundamentally democratic,” but that’s not obviously the case when the model also relies on a first-past-the-post electoral system.  For example, there hasn’t been a British government since the second world war that has won an election with more than fifty percent of the popular vote.  Remember the angst about “mandate” in 1992 when Bill Clinton was elected with only 43 percent of the popular vote? Margaret Thatcher never did better than that.  But that didn’t stop her from pursuing dramatic changes in British life.  In New Zealand, another “pure” Westminster system, popular frustration about policies pursued by like-minded governments in the 1980s eventually resulted in a complete overhaul of the electoral system.  There are other defects with Westminster systems.  They might also cost more.  (See Fig. 1.2 of my book, The Collapse of Fortress Bush.)   And as Simon Jenkins argued in the 1990s, they tend to undercut local and non-governmental authority, even when they purport to be interested in “small government.”

Fukuyama also identifies a second path for reform — giving more autonomy to government agencies.  (He has pursued this line of argument elsewhere.  See, for example, his 2013 commentary in the journal Governance, which I co-edit.)  He leads with the example of the United States Forest Service, which he says was able to succeed in its mission after it “secure[d] bureaucratic autonomy and escape routine interference by Congress” (p. 5).  When the Service’s autonomy was eroded in later years, Fukuyama says, its performance deteriorated (p. 7).  Later he generalizes the point.  Processes that “lead to a reduction of bureaucratic autonomy” eventually cause “rigid, rule-bound, uncreative and incoherent government” (p. 11).

Another aside, similar to the previous one: Fukuyama may oversell the virtues of bureaucratic autonomy as well.  As he notes, powerful agencies can exploit their power to extract more money from the community than they really need to do their work.  And autonomous agencies can also be subject to groupthink.  (See Robert Shiller’s comments about groupthink in the Federal Reserve in the years before the financial crisis.)  Fukuyama notes that public respect is highest for “those agencies, such as the military or NASA, that are the least subject to immediate democratic oversight” (p. 23).  But this wasn’t always the case — remember Vietnam, and the Columbia and Challenger disasters.  What factor contributed more to those debacles — bureaucratic autonomy, or democratic oversight?

But this, again, is an aside.  The larger point is this: the appeal for increased bureaucratic autonomy is not necessarily consistent with the appeal for increased executive power along the lines of the Westminster model.  Indeed, classical Westminster systems rely on the principle of ministerial responsibility, which says that the minister alone is responsible for everything that bureaucrats beneath him do — and that, as a result, the minister must have final say over everything that those bureaucrats do.  For this reason, Westminster systems also hewed to the rule of bureaucratic anonymity.  You could not know who the public servants were, and you could not hold them personally accountable, because the operating fiction was that ministers did everything themselves.

Since the 1980s, some Westminster systems have experimented with reforms (sometimes known as agencification) that were intended to delegate more authority to agencies, and also to create personal accountability for agency heads.  These experiments have had mixed success, partly because of the conflict between the strategy of delegating authority to bureaucrats, and the constitutional principle of ministerial responsibility.  (A good illustration is the conflict over the British Prison Service in the 1990s, discussed briefly here.)  Agencification also caused problems for the British government during the financial crisis.  Before the crisis, British politicians had carefully delegated responsibilities for monetary policy, banking regulation, and fiscal policy to three separate bodies — the Bank of England, the Financial Services Authority, and the Treasury.  Each organization had a clear mission and operational autonomy, but the capacity to coordinate policies during the crisis was compromised.

The bottom line: it may be necessary for Fukuyama to explain more clearly what he cares about more — executive power, or bureaucratic autonomy — and how he would reconcile the tensions between those two concepts.

4.  Maybe it’s just about the money

It’s also possible that declining governmental performance has other causes — such as underfunding of critical functions.  The share of GDP that is committed to non-defense discretionary programs (that is, excluding programs like Social Security, Medicare and Medicaid, and also the military) has barely changed over the last fifty years — despite the expansion of federal responsibilities during that period.  So why do agencies like the Forest Service perform worse than they used to?  It might be lack of autonomy.  It might also be that we are getting what we pay for.

5.  The elephant in the room: The role of the federal government

Or maybe we are simply asking too much of the federal government.  It is certainly the case that the federal government looms larger in everyday life that it did a century ago.  (This Google NGram chart illustrates the shift.)  Professor Peter Schuck of Yale University has just published an impressive book, Why Government Fails So Often, that closely examines the problems of policy formulation and execution within the federal government.  Schuck distills forty years of scholarship by experts in the field of public policy analysis, and concludes: “Government failures [at the federal level] do not merely reflect poor implementation of sound policies . . . but are built into the system” (p. 30).  “Most government failures,” he says later, “are structural” (p. 372; emphasis in original).

This being the case, there is one solution to declining performance that we might consider: reducing the obligations that we impose on national government.  Of course, this is a familiar refrain of conservative Republicans.  One of the reasons we are seeing such sharp political polarization today is precisely because there is division within the country on the basic question of what the federal government ought to do.  Many critics of the performance of the federal government — including Fukuyama — do not address this question directly.  Instead, they operate on the implicit assumption that federal initiative is essential if most of today’s big problems are going to be resolved.  Of course, they may be right.  But that subject ought to be tackled forthrightly.  And we might want to consider the possibility that federal gridlock is, in a perverse way, actually resolving the problem of deficient government performance — by encouraging policy activists to seek their remedies at lower levels of American government.