John Micklethwait

THE WORLD IS AT A CROSSROADS. John Micklethwait is Editor-in-Chief of Bloomberg News. He oversees editorial content across all Bloomberg platforms, as well as its research services including Bloomberg Intelligence. He was previously the Editor-in-Chief of The Economist from 2006 to 2015.

John Micklethwait, why did you and Adrian Wooldridge write The Wake-up Call: Why the Pandemic Has Exposed the Weakness of the West, and How to Fix It? This book of 176 pages has just been published in the UK and comes out on September 15^th in the US?

First, the virus has been like an examination, a test of how competent governments are; some did well, others less well. Second, if historians look back at 2020 they will either say this was the year when Asia seized global leadership from the West, or this was the year that the West began to wake up to a challenge. Empires have wake-up calls when something bad happens, like plague or military defeat. Such reversals matter, but what really matters is how you react to them.

The West has reacted strongly and well in other times of crisis, but now civil servants are not first class people like those of China and Singapore. How badly has the West done?

Some countries have done really badly. In Britain the death rate per million is above 600. Italy, Spain and the US are in the 500s. Germany is only around 100 per million. But the numbers for places like South Korea, Taiwan, Singapore or Japan are around 10. China claims a rate of 3. Even if the true death toll is ten times higher, Xi Jinping would still be twenty times better at protecting his people than Donald Trump or Boris Johnson have been. The scale of difference is gigantic.

Why is this?

There is now a worrying gap between the elites and government across the West. In the graveyard of any European church you find the graves of the then elite officer class who died in the First World War. Elites had a sense of public duty; they were closer to government. The relationship of the current elites of Silicon Valley and Wall Street with government is tenuous. Ivy League graduates don’t work in the public sector, because it offers less money and fewer rewards. By contrast, Singapore pays its top civil servants million dollar salaries and sacks low performers; its public sector gets better people.

John Micklethwait, don’t we just have poor leaders?

Individuals made bad mistakes, whether it was Boris Johnson delaying lockdown or Emmanuel Macron letting French elections go ahead; both decisions cost lives. But it goes much deeper than that. To compete with China and other East Asian countries, the West requires substantial reform. In general the 1960s was the last time when we in the West had confidence in our governments. Confidence has gone down ever since, despite high points like the fall of the Berlin Wall. The state has kept growing. You do not reform government by making it bigger, but by making government better, smarter, which is a big ask. Reforming outdated government is the single biggest challenge for the West. For instance, American schools still follow a timetable set for the agricultural age; children have long knowledge-destroying summer holidays so they can collect the harvest.

If Joe Biden wins the election in America, can he change things?

The virus was the wrong challenge for Trump. His strengths as a leader are in confrontation, not organization; he dislikes listening to experts and working with allies. Biden may be better at those things, but when it comes to reforming government, Biden has challenges. One of America’s weakest points is high school education. The Democrats are very close to public sector unions and to the teachers particularly. To overhaul American government, you have to come at it from the centre, and draw on the right wing idea of making government as efficient as possible and on the left wing idea of making sure it looks after the poor and disadvantaged people who need it.

Is the next election result clear cut?

There could be surprises. Disorder in the streets has traditionally played to the advantage of Republicans, and the failure to keep order of Democratic mayors in Portland and beyond could cost the party. Donald Trump has strength in the South, and if he wins a big chunk of the Midwest again, then he will win the election even if Biden gets more popular votes. Donald Trump is not America’s biggest problem. He didn’t invent a health service overly aimed at elderly, rich people. He didn’t start the police beating up black people on the streets. He didn’t make America’s schools bad. These are deep, systemic things that America needs to fix.

From airports to streets to bridges, the infrastructure of America is not in great shape compared to Asia?

America is a very modern country, but the country that has the wonder Silicon Valley also has the shabbiness of LaGuardia. An Asian airport is a much more efficient and pleasant experience, as is an Asian subway. In China they can tell which people have been on which subway car to test them for Covid. A little bit creepy, but it also shows the Asians have got well ahead of America in smart infrastructure.

Does it matter that there is a big difference between a very good private sector and a not good public sector?

It is beginning to matter. The private sector now is dominated by young companies like Google, Amazon and Facebook. The public sector has not changed. Whole systems need to be rethought: why should rich people get state pensions or free bus passes? In other cases better government means more government: America needs a much more universal healthcare system, using both public and private providers. You can’t just have the old socialist system, but the world’s most powerful country should not leave so many people uncovered.

Why do you say in the book that it’s important for richer people to realise that if they don’t help poorer people, that would be bad for them too?

In New York, maybe the richest city on the planet, doctors were wearing ski masks, and nurses wore garbage bags because there wasn’t enough protective equipment. A great many poor, and usually not white, people died of this virus. For many rich Americans that was a wake-up call, that society is not working as well as it should. The point of a state goes back to Thomas Hobbes, an English founder of modern political philosophy. The state’s first duty is to protect you. This time it failed. And rich people saw that.

You say that security is very important, but too much security is the beginning of totalitarianism. Do you insist that security is subordinated to liberty?

Yes, we do. Autocracies have an advantage when something like Covid comes along, because they care less about freedom and privacy. To begin with, China’s autocracy hurt its response; local officials tried to hide the disease. Since then it has generally done a better job at protecting people than, say, America. But that does not mean autocracy is better than democracy. There are plenty of democracies, like South Korea, Taiwan, Singapore, Germany and New Zealand which did better than China; and plenty of autocracies, like Belarus, Iran, North Korea and Russia, that didn’t do well. That said, there is a real worry that if you were a poor Indian and saw how China has dealt with this virus generally better than America, you might draw the lesson that autocracy is more useful; something that Mr. Modi seems to have noticed.

Isn’t autocracy more efficient than democracy?

Part of the cost of democracy has to be that we care about liberties, so sadly sometimes we will be a little bit slow. But the main reasons why the West did not work well with Covid have little to do with liberty and more to do with out of date governments, which haven’t made enough effort to reform.

Some of the advice Trump gave was eccentric?

Yes: for instance, suggesting injecting yourself with bleach. More seriously, if ever there was a time to work together, this was it, and Trump did not do that in America, and he certainly didn’t unite the West. Stopping flights to Europe did save some lives, but doing so without informing allies was wrong. He also left the World Health Organization (WHO), which is a flawed organization, but you need people working together on things like vaccines.

John Micklethwait, why do you claim that the strength of democracies in the Western World comes from being united?  

We bring back to life the two main Anglo-Saxon reformers of the 19th century: Abraham Lincoln from America and William Gladstone from Britain. We imagine a “President Bill Lincoln”, and charge him with reforming America and uniting the West. If you pulled democracies together, for instance through big Trans-Pacific and Trans-Atlantic trade pacts, the world’s democracies would be much stronger than autocracies. But you have to have some cement that holds them together.

Covid19 is a big problem for the world economy and for people’s welfare. Politicians were suddenly hit by something bigger than they’d ever dealt with before, an apparent choice between keeping the economy open or trying to save lives?

You are right – and there was a difficult balance to strike. But the complexity of the big problem (of how much you open up) should not be an excuse for not doing the things that make government work; provide testing centres, getting protective equipment. These are not big, awkward decisions. These are to do with the practicalities of making government work.

What about the fact that the stock market is very high, and the ability of governments to borrow money is staggeringly high?

In the book, we use Italy as an example. On the one hand, many Italians want to expand parts of their state, so it will be better prepared if another Covid attack comes along. It also needs to deal with an ageing population. But it also has a very high debt burden. At the moment the markets are happy to lend to Italy. But for how long? We quote an Ernest Hemingway character who is asked: “How did you go bankrupt?” He replies: “Two ways. Gradually then suddenly!” The markets could turn against Italy. The same goes for Britain, which now has two trillion pounds worth of debt. But the argument of our book is that you don’t need bigger government; we need smarter government. Places like Singapore that are ahead of us, have smaller states than us but better schools and hospitals, because they don’t waste money the way we do.

Your book opens the eyes on what is going wrong in the West. In a few practical chapters at the end you suggest what should be done: raise the retirement age; provide nearly free health care for all; create excellent civil servants and pay them millions of dollars; introduce national service, civic rather than military. Are politicians going to listen and act on these things?

At the moment, most politicians are focused on the here and now, trying to open schools after lockdown, trying to find a vaccine. But a reckoning is coming. And there are people inside and around governments who are just beginning to realise how big the problem is. Like Dominic Cummings, who, whatever his other faults, is determined to change the British government. What we’re saying is: wake up! Eventually the markets will stop lending money for nothing. Now is the time to reform government so it gives more protection to the poor. We’ve tried to put some ideas out there.

What about technology?

Technology is changing the world like nothing else, but it hasn’t changed the public sector. Most government technology comes from the age of floppy disks. Many of the software systems in America’s Health Department were “legacy” ones – so old that you can no longer get service and support. Asia is decades ahead, especially when it comes to mobile phones and the internet of things, as Covid showed.

Until 500 years ago Asia had the best government. China had the world’s biggest economy, a professional civil service, and a system of canals. Turkey and India were the next most advanced. Europe was a bloody backwater. In the book we use the example of Ambrogio Lorenzetti’s Allegory of Good and Bad Government in Siena. On the good government side, everybody is happy and Justice is a beautiful woman; on the bad government side, there is mayhem and Justice lies bound at the feet of a tyrant. When Lorenzetti painted it in 1339, Siena was about as advanced as the West could be – but it was still far behind China. Since 1500, the West began to catch up. We had the ideas, the technology, and the will. We competed with each other. Now the challenge to stay ahead is down to us.

People say that corona virus has changed and will change the world.  Is there more idealism? Is there more desire for change or do people just want to go back to the way they were before?

The hope is that there is more idealism to change after Covid. I would point to three groups who are now thinking about reform. One is the rich, the elite: their eyes were opened, however briefly, to the idea of a government that simply does not protect the poor. The second important group are the patriots and nationalists, deeply worried by the emergence of China. National competition always gets things going: Europe originally went past China because it was full of nation states competing against each. The third group are business people. I spoke to the head of an American company, one of the world’s best known consumer brands, who fully admits he was caught napping by Covid. He thought this was just a local Asian thing; but when, by late February, it was obvious to him it wasn’t, he quickly borrowed ideas from the Asian countries that had already clamped down. Back in America he found, in the public sector, none of the same desire to find out what was working in Asia and what wasn’t. Take those three groups of people; and you have the elites finally beginning to wake up to things.

John Micklethwait, is President Trump opening a kind of Cold War with China to weaken it? 

Trump deserves credit for one thing: he called out China on trade abuses. He is right that there is a big competition between the West and China at the moment, but he has ignored the great lessons about how you win this. The first lesson is that you must involve allies. America did not eventually vanquish the Soviet Union by itself; it had most of Europe behind it. On the Bloomberg website the Huawei Barometer shows the areas of the world where Huawei has been accepted. Very few people have listened to America, because Trump is rude to allies. The second lesson also has to do with soft power: the language you use makes a difference. In the last competition with the Soviet Union, America sang the song of liberty and freedom, of individual rights. It did not always live up to those words, but it kept saying them. Trump has made it clear that it’s fine you being a dictator, he’ll still do deals with you. That undercuts the message of the West. The West has to be about more than “America First”.

In the luxury business the retail market saving them from bankruptcy is China. European businesses are dependent on the Chinese and isn’t that how the Chinese are conquering Europe? 

That’s entirely true. China is a huge market. In my career as a journalist, I have always defended free trade. I would always rather have a global market, but the grim reality is that we’re heading towards a split world, with two supply chains, two Internets. Companies will face a choice. In that world Europeans will want to buy Chinese goods because they are good and cheap. But they don’t want to take the rest of the Chinese package – the authoritarianism and so on.

Now all kinds of things that are necessary to live, to build a car, to make medicine, come from China?

Yes, but there are also lots of things that come from America and other places too. Again Trump was half right. There needs to be a better trade deal with China – but the West would be so much more powerful as a negotiator if the democracies negotiated with China together. Not just America and Europe, but Australia, New Zealand, India, South Korea, Japan, Indonesia. It can be done. Look at the way Europe now has a common currency and so on, which was unthinkable before. But Europe also shows another problem: the need to keep reforming. I am a Briton but I believe Europe needs more integration. It’s very difficult to have a currency union without a banking union or a transfer union. So I think it is a good sign that for the first time the Northern Europeans, after Covid, have been willing to canvass the idea of some money going towards the south. They should build on that.

At the end of the day, am I right that your message is both pessimistic and optimistic?

We still have a chance. Covid is like a health scare. The doctor says you are not in good shape but if you lose some weight, take more exercise, put yourself right, there’s no reason why you can’t be fit again. For 500 years the West has led in terms of government; now we have had a scare. In the past, plagues were a wake-up call. They played a role in the decline of both Athens and Rome.  So, if you fail a test, wake up and start thinking about what you’re going to do about it.

Do you think we will?

I’m guardedly optimistic. The West still has a lot of the brains; we have technology, the private sector, and freedom. But we cannot win as long as the public sector is a generation behind the private sector. The solutions we give in our book are not hard. There’s nothing in our list of prescriptions that people aren’t doing already somewhere. I think a lot depends on the readers of things like La Stampa. It depends on people actually thinking that government matters and choosing reform.

Covid showed two things. The first is something Ambrogio Lorenzetti and Thomas Hobbes understood: good government matters. In this case it was the difference between living and dying. Second, Covid revealed a world where power is shifting, where the West is no longer always ahead.

In the end, those are the two big issues.

John Micklethwait, thank you very much.

 September 2020