January 4, 2011 10:59 pm

The strange death of the technocracy

Democracy is striking back at control by technocrats

Perhaps the most important development of the financial and economic crisis is that technocrats are losing control over policy debates to the populists. This may be temporary. If the economy returns to vigorous health, it probably will be just that. But there is a good chance that economies will do no such thing. If so, a period of political turbulence is surely on the way.

The change is most obvious in the US. The rise of the Tea Party brings to the legislature people who believe that much of the legislation and constitutional practice of the past 100 years was fundamentally wrong. Voters have sent to Washington people who object to Barack Obama’s healthcare reforms not as misguided, but as unconstitutional. Many of the new legislators reject the New Deal of Franklin Delano Roosevelt, the existence of the Federal Reserve and even the income tax.

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These are counter-revolutionaries. They want to roll back the power of the technocratic elites that have come to dominate policy. The Fed is perhaps the obvious target. The insurrectionists object to the notion of fiat (or-government-made) money. On both left and right there is fundamental opposition to the coupling of private banking with the federal government that managed the entire response to the financial crisis.

Europe is also seeing a counter-revolution against two technocratic “coups” of the past two decades: the euro and liberal immigration. The dominant political and bureaucratic elites saw both as self-evidently in the interests of the citizenry. A good part of the citizenry disagrees. This explains the contortions that the German government is going through to disguise its intention to do whatever is needed to keep the eurozone afloat, with all its members. The German public is grumpy. The Dutch, known for their attachment to European integration and domestic tolerance, are also upset with liberal immigration and the European “project”. The backlash is evident.

In Japan, too, the decline of the once all-powerful Liberal Democratic party signals the end of a system of power exercised over the heads of a passive population by a triangle of business, bureaucratic and political elites. What will ultimately happen is quite unclear. But the country is in a period of political transition, as the structures that dominated its extraordinarily successful postwar resurgence weaken. This is a similar process to that in Europe, where postwar certainties are fading and national identities are reasserting themselves, notably in Germany.

In the long run, failing elites are discarded. That happened to the aristocracies and monarchies of old. In high-income countries, recent failures of elites have been too obvious to ignore. The advantage of democracy is that it discards failure more quickly and less violently than other systems. True, electorates may well make serious mistakes, by discarding what works for what turns out not to do so. Yet democracy imposes an invaluable discipline on elites: the latter must convince the public that they know what they are doing. Recent performance is making this quite a challenge. The people are complaining loudly. Elites must both listen and respond.

At the same time, in China, today’s rising power, a successful technocracy seems firmly in power. The country’s success cements the legitimacy of the communist mandarins. Yet even they cannot take their position for granted. They know that their hold on power depends on their ability to deliver rapidly rising standards of living. As their people become richer, meeting that challenge will get harder. In a sophisticated modern society, the technocracy ultimately depends on the consent of the governed. That is how it should be. Elites may believe the mass of the people mistaken. But they cannot ignore their views.

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