Sunday, January 24, 2010

The Carbon Tax

A defense.

The Civil Service and Policymaking

Matt Yglesias brings France into a discussion of what has gone wrong with the policy process in the US:

Something we pay much too little attention to when we talk about policy in the United States is the nuts and bolts of making policy work. The French, for example, have a whole system of higher education oriented around the idea that going to bureaucrat school [the ENA] is incredibly prestigious and that has a lot of consequences for what it’s possible to expect the bureaucracy to do. ... In addition, I think there’s the airy question of the social status of professional regulators. In the post-1980 United States of America rich CEOs of profitable financial firms are very prestigious individuals. If one of them gets into an argument with a career civil servant, the civil servant loses. That’s not a law you can repeal, it’s a cultural fact you can work to change

 Now, there is some truth in this comparison, but I think Matt's focus is too narrow. It's not just the way top civil servants in France are selected and trained. The whole French system is pervaded by a tension between rationality and democracy. The bureaucracy is supposed to embody rationality, and it is seen as a corrective to democracy, which is presumed to be subject to the distortions of passions, caprices, and irrational exuberance or depression. And it is not just bureaucrats who are selected by the competition for places in top schools: it is also the people in the most influential economic positions.

By contrast, in the US, the cultural prejudice is different: Americans fear concentrated power, even, or perhaps especially, in the hands of the highly educated, who are suspected of serving themselves whenever they get the chance. Competition, whether in the marketplace or in the political arena, is supposed to check irrationality and excess, and the result of such competition is deemed to be a form of "rationality" higher than the deductive reasoning of the elite. So the wealthy banker in Matt's example wins the dispute with the bureaucrat not just because he is more prestigious (or wealthier) but because it is presumed that if he is wrong, his failure will be exposed by his competitors. It was the failure of competition to correct systematic bias that caused Alan Greenspan to say that the financial crisis had shaken his entire understanding of the world. He had placed his faith in rational markets rather than rational people, because, in the American view, even rational people are distorted in their judgments by self-interest, whether they are bankers or regulators.

This is indeed a deep cultural difference between the two countries--and also within them: there are American critics of the American idea of rationality and French critics of the French. Indeed, domestic critics of their own systems tend to be dismissed as influenced by alien ways of thought. Thus, in France, those who question the rationality of the administration (and at times Sarkozy, known for his anti-ENA views, is one of them) are branded "Anglo-Saxon neoliberals," whereas in the US "socialism" is the label reserved for those who are "European" or, worse, "French" enough to want to use government to correct market failures. Each system has its characteristic vices, and among those vices is the tendency to assume that the aspiration to virtue is merely a Trojan horse for bringing the vices of the other system within the gates of the City.