The Wake-up Call: How the Pandemic Has Exposed the Weakness of the West

COVID-19 gives us a chance to rethink the overall design of our system and ask what government is for — something that has not happened for decades.

COVID-19 gives us a chance to rethink the overall design of our system and ask what government is for — something which has not happened for decades.

has been its talent for reinONE OF THE WEST’S GREAT STRENGTHS vention. Just when everything looks hopeless, it succeeds in regenerating itself, spurred on by new ideas, new technology and the threat of competition. Woken up, the West could do a lot, quite quickly. Our hope is that the pandemic, by exposing so many weaknesses, will force Western governments to embark on a sustained period of reform.

Any renewal must involve three ingredients: basic modernization; luring talented people back into public service; and focusing the state on what it does well. They are linked. An unmodernized state that tries to do everything (and therefore does lots of things badly) will never get good people to work for it — and without better people, the public sector doesn’t have a chance of successful reform.

The challenge now seems most similar to the one faced in the 19th century when a new liberal order of open competition and efficiency swept away a flabbier old order of patronage and corruption. Imagine that the two most formidable Anglo-saxon politicians from that era, Abraham Lincoln and William Gladstone, were resurrected, fused together and elected to the White House on a platform of reforming government. What could ‘President Bill Lincoln’ do?

Our new president would combine the best of his two antecedents. Neither were perfect men — especially when young — but once they got to power they showed a willingness to cleanse government. From the ‘People’s William,’ Bill Lincoln inherits a drive to direct resources away from the old corruption of special interests and cash-for-perks towards those who really need them. From ‘Honest Abe’, he gets a desire to unite his country and rid it of the scourge of racial injustice.

Both men believed passionately in improving the lot of ordinary people — especially through education. President Bill Lincoln could be either a Republican or a Democrat — he is both a ‘left-wing’ social reformer and a ‘right-wing’ small-government man who believes in self-reliance.

So, let’s put the great man to work. In our 2020 book, we detail 13 reforms President Bill Lincoln would start applying in the U.S. In this article, we will present six of them. All are based on what is already working around the world, so the barriers to implementing them are political, not practical. We chose the United States because it is the West’s biggest country, its natural leader and the one that has most obviously flunked the COVID-19 test. But most of these reforms could be applied in other countries.

REFORM 1: BUILD RESILIENCE

The obvious place for Bill Lincoln to start is the complete lack of preparedness for the virus. His country has just lost more citizens to COVID-19 than it did in Vietnam. This lack of preparedness was a dereliction of public duty given that the first role of any government is to protect its citizens from threats to life and limb.

It is not as if the U.S. was not warned. COVID-19 was the third outbreak of a coronavirus this century — after SARS (2003) and MERS (2012). It had also watched the damage done by swine flu in 2009, Ebola in 2014 and Zika in 2016. For a while America looked prepared. Under Bill Clinton it created a National Pharmaceutical Stockpile to store supplies. George W. Bush warned the American public to beware of a global pandemic, declaring that “if we wait for a pandemic to appear, it will be too late to prepare.” Barack Obama drew up ambitious plans to produce 20 million reusable face masks and cheap ventilators. But when the stockpile was tapped to deal with swine flu, Ebola and Zika, the supplies were never fully replaced.

And Donald Trump cared even less. In 2018, the National Security Council’s ‘pandemic preparedness’ team was dissolved, and the next year the administration withdrew an epidemiologist it had embedded in China’s epidemic unit. Since 2010, the Centers for Disease Control’s budget has either fallen or remained flat, depending on who you believe.

The U.S. government was so overloaded with less important preoccupations that it lost the ability to focus on real dangers. The urgent always drove out the important. And once the virus struck, Washington had lost the ability to learn — not only compared with Asian governments, but also compared with America’s private sector.

The head of one of the country’s biggest employers admits that, at the start of 2020, he underestimated COVID-19 too, dismissing it as an ‘East Asian phenomenon’. But by February, once it was clearly spreading, his team studied how countries had dealt with SARS: They talked to officials, started ordering equipment, worked on how social distancing and stay-at-home requirements would affect them, organized emergency financing and so on. The CEO still berates himself for not being fast enough, and is trying to ‘benchmark’ his performance against other companies, but he says that he was flabbergasted by the way U.S. government officials seldom tried to make simple phone calls to find out what worked in Asia.

What would President Bill Lincoln do about this? He would overhaul America’s health system to be sure, with the aim of making it cheaper and fairer. Rather than the government building up central stockpiles of medical supplies, he could copy the cheaper, more flexible Swiss system, where each employer is responsible for keeping up-to-date protective equipment for its workers. He would certainly rejoin the World Health Organization, not out of some woolly multilateralism, but because a pandemic is a global problem: Not working with other countries loses one friends and costs both lives and money. And he would also ask himself: Where else is America unprepared to protect its citizens against catastrophe?

One obvious area is climate change. Like the pandemic, the exact nature of the threat is debated, but, given the damage a warmer world could do, it is crazy not to take out insurance. The cheapest premiums are multilateral ones: America will get more protection through a global-warming agreement than it will ever get unilaterally. But there are still things for Bill Lincoln to do at home.

The $20 billion in subsidies that go to the fossil fuel industry, even though the world is awash with cheap oil, would obviously disappear. But how to encourage renewables? The most efficient way to change behaviour is a carbon tax, which hands the job of choosing technologies to the market. Some 25 countries already have one, including Japan and Singapore. Lincoln would copy Canada, also a resource-rich country with a powerful energy industry: It introduced a clever carbon tax that started relatively low at $20 a ton in 2019, but rises gradually to $50 a ton in 2022 — and stays at that level. As in Canada, individual states could raise it higher — and some of the proceeds could be directed towards workers who lost their jobs, such as coal miners in West Virginia.

REFORM 2: PROTECT AND UNITE

If the pandemic exposed how an unresponsive Leviathan fails to protect, the murder of George Floyd showed how it can actually do harm. The warnings America had about viruses striking its population were theoretical and sporadic; the warnings about racist policing were real and repetitive. Nearly 30 years after one of us covered Rodney King’s beating in Los Angeles, Blacks are three times more likely than whites to be killed by the police; indeed, death-by-cop is the sixth leading cause of death for young Black men.

There are two constitutional problems that bedevil police reform in America. First, most policing is local — far too local.

There are more than 18,000 law enforcement agencies, some of them tiny, and in big cities like Los Angeles, multiple different forces still overlap. Second, thanks to the Second Amendment, America is a heavily armed country where guns kill 40,000 people a year.

The police are terrified of being shot: Most of the people they shoot have guns. Lincoln should do anything possible to get guns off the streets and toughen up background checks. More immediately, he could abolish the Pentagon program that doles out its surplus weapons to the police. When police swagger around even small towns with armed Humvees and machine guns that have seen service in Iraq, they look like an occupying army.

The U.S. needs to fire bad cops. When it comes to racism and violence, armed officers of the law should be held to higher standards, not lower ones, than the rest of us. To get around the unions, federal law should insist that disciplinary records are kept in full. America should follow other countries and require more training for its cops. It’s astonishing that a Louisiana cop can use deadly force after just 300 hours of training. Camden, a rough town in New Jersey, reduced its police violence problem with education in de-escalation and conflict management.

More broadly, the job should be redefined. The police are a classic example of the overloaded state, with cops being asked to deal with problems such as mental health, family breakdown, and juvenile delinquency. ‘Defund the police’ should become ‘deconstruct the police’, with some functions handed over to trained (and unarmed) social workers.

Police reform by itself will not right the system that throttled George Floyd to death. Gladstone made a habit of creating big commissions into pressing social problems and then implementing their recommendations. Bill Lincoln could set up one to look at criminal justice, particularly America’s habit of sending people to prison for minor offenses. The total incarceration rate is roughly double that of Turkey, the sternest in Europe, and eight times the rate in Scandinavia, the Netherlands and Ireland. There are more Blacks than whites in American prisons, despite the fact they make up only a sixth of the population.

A second reform commission would look at poverty — an obsession for both the original Lincoln and Gladstone. From cradle to grave, Black America gets the worst of the state — shoddy maternity care, lousy preschool education, substandard schools, expensive universities, no sick pay and a medical system designed for rich people. In some cases, righting these wrongs will involve more public spending, but more cash should be conditional on the producer lobbies — especially teachers’ unions — accepting reform.

The relative success of charter schools and voucher programs could begin to provide Blacks with more control over their own lives. A reformed welfare state that sought to help the poor and needy rather than the old and rich would help Black America disproportionately.

REFORM 3: STOP SUBSIDIZING THE RICH AND THE OLD

Every dollar liberated by cancelling subsidies for ethanol producers and tax breaks for hedge funds can be used elsewhere. The elephant in the room is, of course, entitlements. The elderly, not the poor, are the biggest charges on the state. This should be an argument about security.

“You and I agree that security is our greatest need,” Franklin Roosevelt told Americans in one of his fireside chats in 1938. “Therefore I am determined to do all in my power to help you attain security.” That is why he called the pension program he created in 1935 ‘social security’. But the biggest danger to any safety net is to stretch it too thin. America’s poor get less than they need because the main benefits are universal ones. It is not clear that the security of Bruce Springsteen or Warren Buffett is in any way improved by the fact they are entitled to a free state pension. Means testing Social Security and raising the retirement age rapidly to 70 would help balance the budget.

Of course, the politics of this are explosive. But again, copy what has worked elsewhere — and set up an independent commission charged with reforming the entitlement system (with its final proposal subject to a straight yes/no vote). Sweden did this in the 1990s with the explicit aim of bringing its entitlement system, which had reached American levels of dysfunction, into balance. All Swedes still get pensions, but they don’t automatically increase regardless of the country’s ability to afford them.

Too radical for America? This is the country that set up an independent central bank in 1913 to avoid the repetition of the situation in which J.P. Morgan rescued the country from financial

collapse by locking bankers in his house until they came up with a plan to prevent the run on the dollar. As Garett Jones points out, giving powers away to independent central bankers has reduced inflation — and saved politicians from having to make unpopular decisions. Doing the same with entitlements could make sense.

REFORM 4: A FAIRER HEALTHCARE SYSTEM

Sooner or later, any reforming president has to grapple with the most wasteful part of America’s government: its gerrymandered healthcare system. Bill Lincoln could argue that the pandemic has made a compelling case for sweeping reform, not just to remove the main source of insecurity for the poor, but also to save money.

The current absurdly complicated system, with its hidden subsidies, convoluted insurance requirements and misplaced incentives, means the U.S. spends around 18 per cent of its GDP on healthcare, far more than anywhere else, while leaving one in five non-elderly people uninsured. And no matter how much the health industry and their lapdogs in the Republican Party howl about the threat of socialized medicine, there is nothing free market about a system that spends proportionately more public money on health than ‘socialist’ Sweden (which, like just about every other rich country, has a healthier population).

There is no perfect health system. One option would be to expand Medicare, the public system for seniors, so it covers younger people too. This is a simple way to extend coverage within the existing arrangements, but, without other reforms, it would add costs. Bill Lincoln could draw on the German model, where health insurance is compulsory, with 90 per cent of the population using subsidized public insurance and the richest tenth staying private. Germany manages to keep waiting times relatively short, but with more than a hundred funds to choose from, it has some of the complexity that bedevils America.

Canada and Singapore both have merits. Drug firms and insurers have done a good job of persuading Americans that single-payer systems, like Canada’s, where the state foots the bill, involve long waiting times at government hospitals. Against that, having a single payer with set fees for procedures gets rid of a lot of the paperwork that comes from insurers, patients and hospitals arguing about who covers what, whether doctors are ‘in network’ or ‘out of network,’ how big a co-payment is needed, and the rest of the American healthcare nightmare. The administration costs in America’s system are roughly double Canada’s.

The Canadian government also has much greater bargaining power over drug companies, so medicines are cheaper north of the border. The beauty of Singapore’s Central Provident Fund is that it makes people more responsible for their health. It also requires users to pay a small fee when they visit their primary provider in order to discourage the unnecessary visits that plague ‘all you can eat’ systems like Britain’s National Health System.

However Bill Lincoln put his system together, it would combine three features. It would guarantee every American a certain standard of free healthcare, paid for by the government but provided at both public and private hospitals. There would be a hypothecated healthcare tax so each American can see how much the public system costs on their (enormously shorter) income tax return. And he would continue to subsidize private health insurance at the personal level (on the basis that some private spending is saving the state money). Individual Americans would be allowed a small tax break, capped at, say, $500. But this perk would be personal and portable, not the convoluted corporate version (introduced by accident during World War II to deal with temporary labour shortages). There would be incentives to stay healthy and get vaccinated. But, as in slimmer countries, there would be taxes on the sugar and junk food that encourage obesity and diabetes. Private medicine would survive, as it does in Singapore, Germany and Canada.

REFORM 5: UNLEASH TECHNOLOGY

America’s lead over China in technology through Silicon Valley is perhaps its most important asset. Yet very little of that inventiveness has been applied to its public sector. What chance was there of fighting COVID-19, when around 40 per cent of the IT systems at the Department of Health and Human Services were legacy systems, no longer supported by their manufacturers?

Asian governments are stealing a march on America in using the Internet of Things to monitor smart infrastructure. In Singapore, water pipes report back to the authorities if they spring a leak, while lamp posts gather data on temperature, humidity and traffic flow. Some American states are getting

From cradle to grave, Black America gets the worst of the state.

better at communicating with people through mobile phones and apps: But again, COVID-19 underlined how far ahead East Asia is. In Shanghai, each subway car has its own QR code (or bar code) that you scan when you get on, so that if one of the passengers gets sick, only people who have travelled in that particular car need to be contacted.

Of course there are privacy concerns with this, but the main barrier to this happening in America is technological. The New York subway system only started introducing Asian-style cashless payments in 2019. And on the subject of cashless systems, China is building the infrastructure for a digital currency that some people think might unseat the dollar.

The U.S. has stinted on high-tech infrastructure for the same two reasons that it has let its bridges and roads crumble: Because entitlements absorb so much cash and because nobody counts the dilapidation in the national accounts. America’s tech budget is eaten up by the cost of supporting legacy systems — and the elderly workers who run them — because nobody has had the courage to pay for the upgrade. Bill Lincoln should borrow from America’s past, as well as Asia’s present. Roosevelt built the dams. Dwight D. Eisenhower built the freeways. Bill Lincoln will use the fact that America can borrow long-term money at close to zero per cent to build the infrastructure a knowledge economy needs. That includes a subsidized Internet, but also an overhaul of technology in every department. Otherwise the shabbiness of Laguardia Airport will be repeated in cyberspace.

REFORM 6: REINVIGORATE TALENT

Any overhaul of government has to include improving the quality of people in the public sector. Prime Minister Gladstone was a pioneer of meritocracy — the idea that you have to put the cleverest people you can find in charge of the machinery of state. He masterminded the Northcote-trevelyan reforms that opened jobs in the British Civil Service to competitive examination. An elite corps of civil servants succeeded in reshaping the government of both Britain and the Empire. The French bureaucracy that emerged from the Revolution and Napoleonic Wars was even more selective than Gladstone’s version. But today the public sector has lost its cachet in the West. With a few small exceptions, the federal government ‘does average’ the whole time.

Continuing his drive against money politics, Bill Lincoln would massively reduce the number of political appointees. Ambassadorships would no longer be for sale; they would go to diplomats. He would start paying the heads of government departments the same sort of salaries they could get in the private sector — while imposing limits on what they can do after public service. He would copy Singapore’s idea of scholarships for public service: Pay the full fees of poor students at elite universities in return for a commitment that they will work for, say, five years in the public sector.

Why shouldn’t a bright kid from the Bronx go to Harvard for free but then spend a few years working as a public servant? This would allow the Ivy League to broaden its catchment and thereby reconnect it with the life of the nation (currently more Harvard students come from the top tenth of the population in terms of wealth than from the bottom half ). It could also provide, say, the Department of Housing and Urban Development with access to talented young people who treat the citizens of the Bronx as brothers, cousins and friends rather than just as statistics. Personnel is perspective as well as policy.

In closing

We sent Bill Lincoln to reform America, but you can apply the same thought experiment to any Western capital. Leviathans everywhere could be simplified and improved just by pragmatic modernization. You can get a long way just by doing repair work, room by room. But COVID-19 gives us a chance to rethink the overall design — something that has not happened for decades.

John Micklethwait is the Editor in Chief of Bloomberg News. He was previously Editor in Chief of The Economist from 2006 to 2015. Adrian Wooldridge is The Economist’s political editor and writes the magazine’s Bagehot column. They are the co-authors of The Wake-up Call: Why the Pandemic Has Exposed the Weakness of the West and What to Do About It (Harpervia, 2020), from which this article is an adapted excerpt.