Political Order and Political Decay (10 page)

FIGURE 4.
State Scope and State Strength

There are a number of rough measures for how far out on the horizontal axis a given state is. The one most typically used by economists is the proportion of total GDP taken in through taxes; alternatively, one could measure public spending as a proportion of GDP since that amount is often larger than taxes and covered by borrowing. These measures are not wholly adequate, however, since some activist functions, like regulation and industrial policy, have large impacts on society without necessarily affecting fiscal policy.

MEASURING THE QUALITY OF GOVERNMENT

Measuring the strength or quality of the state—that is, its position on the vertical axis—is far more complex. Max Weber famously identified a modern state with a set of procedures, the most important of which had to do with the strict functional organization of offices and the selection of bureaucrats based on merit and technical competence rather than patronage.
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Some of Weber's criteria are not necessarily conditions that we would today accept as necessary for good bureaucratic functioning, such as the office constituting a lifetime career and the need for strict discipline and control through an administrative hierarchy. The idea, however, that bureaucrats should be chosen according to their technical qualifications and promoted on the basis of merit rather than through personal connections is both widely accepted and correlated with positive governance outcomes like low corruption and economic growth.
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Whereas Weber highlighted bureaucratic form, political scientist Bo Rothstein has suggested the use of “impartiality” as a measure of government quality, a normative characteristic that he argues correlates strongly with efficient performance.
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Conversely, one could also assess the quality of government through measures of dysfunction, such as perceived levels of government corruption like Transparency International's Corruption Perception Index.
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Measuring the strength of government through procedures alone is unlikely to capture its real quality, however. Weber's classic definition assumes that modern government is a rigid, rule-bound institution that is mechanically tasked with carrying out the functions set it by the principal. But in fact procedural rigidity, rather than being a virtue, is at the core of what people dislike about modern government. Weber himself spoke of bureaucratic administration as an “iron cage” in which people were trapped.
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An alternative method to a procedural approach is an assessment of the capacity of a government to formulate policies and carry them out, or what Joel Migdal calls the ability of a state to “penetrate” the society over which it presides.
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Capacity, in turn, is defined by a number of factors, including the size of the bureaucracy, the resources at its disposal, and the levels of education and expertise of government officials. Some scholars use the rate at which a government can extract taxes from its population as a capacity measure, the same used to measure scope. The reason for this is that taxes, particularly direct ones like an income tax, are hard to collect and also represent resources at the government's disposal. However, the ability of an organization to perform its functions is never simply a matter of measurable resources. Organizational culture also matters—the degree to which the individuals who make up the organization can function cooperatively, engender trust, take risks, innovate, and the like. A Weberian bureaucracy defined only by formal procedures may or may not have the intangible qualities necessary to make it function effectively.

A different approach to measuring the quality of government would be to look not at what the government is, but rather at what it does. The purpose of government, after all, is not to follow procedures but to provide the population with basic services including education, defense, public safety, and legal access; an output measure like the degree to which children were being educated by the public school system would be more informative than data about teacher numbers, recruitment, or training. Lant Pritchett, Michael Woolcock, and Matt Andrews have argued that one of the big problems with developing countries' governments is that they engage in what they term “isomorphic mimicry,” that is, copying the outward forms of developed countries' governments, while being unable to reproduce the kinds of outputs, like education and health, that the latter achieve.
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Measuring what the government actually does rather than how it does it would avoid this problem.

Appealing as output measures are, however, they can be misleading. Good outcomes, like quality public education, are a complex mixture of inputs provided by governments (teachers, curriculum, classrooms, etc.) as well as characteristics of the population being served, including their income, social habits, and culture (that is, the degree to which learning is valued in the home). A classic study of educational outcomes in the United States was the 1966 Coleman Report, whose statistical analysis showed that quality education was much more a reflection of a student's friends and family than of the inputs being supplied by the government.
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In any event, measuring outcomes is often difficult for the kinds of complex services offered by modern governments. For example, how does one measure the quality of a judicial system? Clearly a gross output measure of the number of cases closed or the number of convictions is meaningless in the absence of qualitative measures of whether the courts were adjudicating cases fairly, or using torture to extract confessions. Absent such judgments, police states will always seem to perform better than those that adhere to a strict rule of law.

In addition to considering procedural and output functions, there is a final dimension of government quality that is relevant when assessing the functioning of a state: the degree of autonomy that a government enjoys. All governments serve a political master, whether a democratic public or an authoritarian ruler, but they can be granted more or less autonomy in their ability to carry out their tasks. The most basic form of autonomy concerns the right to control the government's own staff and hire personnel based on professional rather than political grounds. But autonomy is important also for implementation, since highly complex or contradictory mandates seldom produce good results. Too much autonomy, on the other hand, can also lead to disaster, either in terms of corruption or bureaucracies that set their own agendas beyond any type of political control.

Good procedures, capacity, outputs, and bureaucratic autonomy are thus all possible ways of defining where a state lies on the vertical axis of Figure 4. It would be nice if there were scholarly agreement on a standardized way of measuring state quality, but no such measure exists. In recent years, a number of economists have tried to devise quantitative measures of the quality of government, with varying success. Comprehensive comparison is made more difficult by the fact that the quality of government within each country varies tremendously depending on region, function, and level (national, state, or local).

Despite these challenges, one commonly used cross-national measure of government performance is the World Bank Institute's Worldwide Governance Indicators (WGI), which has been produced annually since the early 2000s. These indicators measure six dimensions of governance for a wide range of countries (voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption).
Figure 5
extracts two of these dimensions, control of corruption and government effectiveness, for a selected group of developed and less developed countries, ranked in order of their scores on the effectiveness indicator.

FIGURE 5.
Government Effectiveness and Control of Corruption, Selected Countries, 2011

SOURCE
: World Bank Institute, Worldwide Governance Indicators, 2011

It is hard to know what the WGI numbers actually represent, since they are a mixture of procedural, capacity, and output measures, often based on surveys of experts. The measures also fail to capture the variance in the quality of government that exists within each country; the U.S. Marine Corps is very different from a local police force in rural Louisiana, just as the quality of education differs greatly between Shanghai and a poor county in the interior of China. Nonetheless, these indicators broadly suggest the tremendous degree of variance in the quality of government that exists across the world, and the fact that government effectiveness and level of corruption are correlated. As any number of studies have indicated, the quality of government correlates very strongly with a country's degree of economic development.

We can fill in the two-dimensional matrix of state scope versus state strength from Figure 4 with some real data, using tax revenues as a percentage of GDP as a proxy for scope and the World Bank government effectiveness indicator as a proxy for strength (see
Figure 6
). Developed countries vary considerably in the size of their governments, but we see that they all lie in the upper portion of the matrix. That is, you can become a high-income country with a large state—Denmark, the Netherlands—or with a relatively small one—Singapore, the United States. But no country can get rich without an effective government. There are a number of emerging market countries, such as China, India, and Russia, that are at approximately the midpoint of the vertical axis;
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the poor countries in the sample are all nearer the bottom, and the weakest states are closer to zero.

FIGURE 6.
State Scope vs. State Strength

SOURCE
: World Bank, Worldwide Governance Indicators, OECD

Taxes are for central governments only, excluding fines, penalties, and social security contributions.

Americans love to argue endlessly about the size of government. But what the cross-national data suggest is that the quality of government matters much more than its size for good outcomes.

What accounts for this variance in the performance of governments around the world? Why do some, like those in Northern Europe, provide a wide range of services with reasonably high effectiveness, engendering a high degree of social trust on the part of citizens, while others seem permanently mired in corruption and inefficiency, and as a consequence are regarded as parasites rather than facilitators by the population? And what is the relationship between good government and the other dimensions of development: the rule of law, accountability, economic growth, and social mobilization?

The following chapters will try to explain why some countries developed strong and capable states and why others did not. I will compare five cases: Prussia/Germany, Greece, Italy, Britain, and the United States. Prussia/Germany and Greece and Italy stand as bookends within the contemporary European Union. Germany has always had a reputation for strong and effective bureaucracy, and, after its disastrous performance in the first half of the twentieth century, has maintained sound macroeconomic policies throughout the postwar period. Greece and Italy, by contrast, have been known for high levels of clientelistic and corrupt government, and both have had problematic public finances that erupted during the 2010 euro crisis. Where this divergence came from and how it persisted into the present will be the topic of the comparison.