Black Swans and Elephants on the Move: Can Emergencies Trigger Welfare State Reform?

If President Obama really intends to overcome the political logjam that has frustrated health reform in the States for many decades, or indeed if Gordon Brown and Obama want genuine action to reform the institutions of capitalism that produced the present financial meltdown, it is a lesson these leaders would do well to remember.

 

"The big institutional changes to modern societies of the past century have invariably been brought about by ‘black swans’ – sudden and frightening national emergencies – that challenge our understandings of how our societies work.

Emergencies can move mountains; crises simply cause malaise. The big institutional changes to modern societies of the past century have invariably been brought about by ‘black swans’ – sudden and frightening national emergencies – that challenge our understandings of how our societies work and how they should work in future. The Great Depression showed us that traditional economic policies could not secure a decent level of employment or prevent mass destitution, and the insecurities of World War Two bred the solidarity to do something about it. The modern welfare states fashioned in Britain and across Western Europe in the post-War era were the lasting legacy.

 

Emergencies can mobilise populations to urgent action; crises breed immobility. Some governments – the Roosevelt administration in the States, the Social Democrats in Sweden and Labour in New Zealand – responded to the Great Depression with immediate welfare state building initiatives, without waiting for the War to give them an extra prod.

These countries were the ones in which newly elected governments sought to portray national economic conditions as emergencies requiring urgent action, policy innovation and the kind of institution-building needed to prevent such emergencies ever occurring again. The countries that tried to pursue a policy of “business as usual” simply presided over the long drawn-out consequences of the continuing crisis.

That is the leadership test that contemporary progressive governments so often fail. Rather than upping the ante and spelling out the dire consequences of failure to act; of challenging existing institutions which have all the inertia of ‘elephants on the move’, they attempt the balancing act of arguing the case for change while suggesting that their judicious use of present policies can hold the line. Such a strategy may be electorally advantageous in the short-run in not offending the defenders of the status quo and in not panicking the voters, but is scarcely a recipe for building new more effective institutions or for creating the basis of a new long-term consensus capable of changing the political climate for a generation or more, as occurred in Social Democratic Sweden.

"Modern examples of political leaders ready to buck the advice of political managers and deliberately foster a sense of emergency to create a fulcrum for reform are few and far between.

Somehow he persuaded a normally highly risk averse Liberal Party to take the calculated risk of facing off entrenched interests [both gun owners and an electorate who were asked to demonstrate their solidarity by paying a one per cent additional income tax levy for a year] in the name of resolving a national emergency that threatened the lives of ordinary and innocent Australians.

President Obama wants to create the kind of national health care institutions that already exist in all other advanced Western nations. For that matter, he and many other Democrats want to reform gun laws with far more serious aggregate effects than any in Australia. In both areas, the obstacles to reform are far greater than almost anywhere else in the civilized world simply in virtue of the memory of a long list of attempted reforms that have failed.

That should not be an excuse for political timidity; for gracefully accepting defeat for another eight years in the manner of the Clinton administration over the last round of health reforms.

It should be a reason for harnessing the ‘black swan’ events that will inevitably come along – the swine flu mortality that may well be with us this autumn, the next Columbine – to foster the sense of true national emergency that will almost certainly be needed to mobilise political action for real change.

Clearly, the same argument applies to other governments and other issues. Business as usual responses to the financial meltdown and the ecological catastrophes attendant on global warming will not get us the kind of solutions to which most governments pay lip service and which most populations would probably support with real leadership. The political courage to orchestrate emergencies as a first step in building new institutions is a quality that all countries are likely to require in coming years. The ‘black swans’ are out there and waiting: governments need to learn to use them rather than use spin to defuse their electoral consequences.

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Frank Castles is Emeritus Professor of Social and Public Policy, University of Edinburgh and Adjunct Professor in the Political Science Program, Australian National University. He will deliver a lecture on these issues at Oxford University on behalf of the Foundation for Law, Justice and Society at 5.30 pm on 7 October. Full details and ticket booking