Why Democracy is Losing its Appeal

A lack of purpose prompts a reaction from the mission-driven few. It's time to take The Sniff Test.

A New Political Hero

The World Bank lost sight of $41 billion, which is 40% of its climate financing over the past seven years. While it’s possible that it went to impactful projects, what are the odds? The recipients run the same countries demanding $5 trillion a year from rich nations to address the climate crisis. Little wonder the final number from COP 29 was a measly $300 billion.

Yet the rich world is in no position to judge. The US Government Accountability Office reports $175 billion of overpayments in 2023, for example to dead people, and another $45 billion unaccountable. The UK National Audit Office is for the first time refusing to sign off the public sector accounts. Only one in ten local authorities is to be trusted, while £134 billion for property, plant and equipment, £105 billion for public sector pensions and £26 billion in staff costs cannot be explained.

Into the arena strides a new political hero to rid us of waste. In the US the enemy is the administrative state and the Department of Government Efficiency under Musk and Ramaswamy has come to sweep it away. The UK is a political cycle behind, but the Conservative leader Kemi Badenoch opposes the bureaucratic state as a battleline for the next election. These movements want to sweep away layers of government to save a way of life we call Western democracy. Are they the threat to democracy?

What’s Wrong with Democracy?

Ancient Athens is considered the birthplace of rule by the people. The Greek words for people and power are demos and kratos, from where we get democracy. The experiment lasted a couple of centuries before Athens was overrun by the illiberal Spartans. Nonetheless, a dream was born that refused to die.

Not all the people can rule. Only male citizens over 18 were enfranchised, which captured at its most inclusive 40,000 from a population of 260,000, more than half of whom were slaves. There has been debate and dogfighting over who should be allowed to vote ever since. As a result, there is no definition of democracy that includes eligibility and the rules are left to individual countries to develop and evolve.

Plato was an early critic of democracy, because the people were persuaded by the best salesmen, rather than the wisest or most prudent policies. His answer was a philosopher king, an educated noble who was benign and wise. Guess who the philosopher Plato thought would make a great ruler?

This idea is back in fashion and its champion is the pseudonymous Mencius Moldbug. He believes that America suffers from the decline of executive power and the simultaneous rise of the universities and the media. What America needs is a startup guy – Lenin and Napoleon are two examples – to get things back on track. The reason is that Americans have lost faith in public institutions.

A short summary of the history of American politics is the rise of executive power. This is not strictly linear, but industrialisation, technology and expansion make it easier and necessary to have control from the centre. The idea that small states are best suited to democracy goes back to Rousseau and the early days of Enlightenment thinking.

The counter to this is that increasing presidential power threatens the separation of powers and therefore the core of American democracy. The Supreme Court is the ultimate upholder of the Constitution and the new radicals want to make its rulings mere advice. Their weapon of choice is the power of the people, democracy rediscovered.

In 2020, Trump issued an executive order known as “Schedule F” that reclassified 50,000 civil servants as political appointees, meaning they could be replaced by an incoming administration. Biden repealed the order but watch this space. The principle is that the machinery of government is so large that the only way a president may be effective is to bring their own army of administrators.

The first obstacle to this is the election of representatives in Congress, who are responsible for passing the laws that the president proposes. The answer is a list of approved candidates who vote for the president’s policies. This centralisation of power rides roughshod over the regional differences that shape every country.

What evolves is starting to look like parliamentary democracy. Of course the idea is not to copy Europe, which a lot of the people who espouse these views see as a museum. The Europeans, including the UK, have too many bureaucrats and lack executive leadership. In short, they don’t have startup guys because they don’t have Silicon Valley.

No one CARES

People aren’t interested in the day-to-day details of politics. Elections are decided on a few big issues and then business as usual resumes. Parliament and Congress pass laws, once in a while we vote on their effectiveness and that is democracy. Critically this definition says nothing about what are the right sort of democratic politics, because that changes and evolves.

What is wrong with this that we need an appeal to the people from a new type of leader who cuts out the administrative state in the middle? The answer is decadence and waste of the type that did for Athens, Rome and any number of empires before and after. All of a sudden the airwaves are filled with examples.

California businesses face an unexpected hike in payroll taxes. The federal government declared the state in default of a loan, which under federal law requires local businesses to make up the shortfall. Rather than ask for cash, the state raised taxes, which caught a lot of people by surprise because no one knew about this law. Why?

Just as we the people are not interested in the minutiae of politics, neither are our representatives. We devolve our power to them and they devolve it to congressional staff and civil servants who craft legislation. These laws are a headline policy with a myriad of unrelated items tacked on. The tendency to pass fewer, bigger laws has compounded this problem and played into the hands of lobbyists, of which there are 12,000 registered in America.

Exhibit one of many is The Coronavirus Aid, Relief, and Economic Security, or CARES, Act. This started life at $1.0 trillion, left the Senate twice that size, and was passed on a voice vote in the House the next day. The bill is 5,593 pages long, added $2.2 trillion to the federal deficit and was impossible for anyone to read before a vote.

Covid relief in the US therefore included $300 million to Public Broadcasting, $720 million for the Social Security Administration and $4.7 billion in foreign aid for nine countries. These are just three examples. Congressional rules allow representatives to earmark money as it passes through and divert it to favoured projects. They may also add to spending, for example bumping an allocation to a hospital from $1 billion to $1.1 billion, and tack on additional amounts that the bill’s sponsors did not request. As a result, headline packages to address particular problems grow in size and feed a host of special interests.

The US is not the only country where this happens, but the numbers are bigger, data collection is better and there is a thriving community of independent reporters investigating misdeeds. Now we have a new type of leadership determined to sweep the corruption away.

Government as Business

The UK is no stranger to governments being kicked out for incompetence. Recent decades have seen periods of one party rule in which the politicians became complacent and decadent. In time they are kicked out and we start over. For a certain type of leader this is a disaster, because there is no plan, no progress and no big picture.

It takes a visionary CEO, who is secure in his tenure, to shape policy over the long-term. Politicians are too short-term, too focused on keeping their seat and too unprincipled to be trusted. It is no coincidence that Silicon Valley pioneers create special classes of shares that allow them to retain control of companies long after they are sold to the public. Shareholder democracy gives you a vote, but not on the big issue of who is in charge.

The purpose of The Sniff Test is to illuminate the direction of travel. I cannot help expressing personal views, but the idea is to show what’s coming and why. A consistent theme is the cycles of history and a confluence of opinions that a major clash of cultures is coming. What looms large is a battle for the definition of democracy. On one side we have the slow evolution of political process and on the other, a radical vision of government as business. Both lay claim to represent the power of the people.