05 December 2017

Inside Job: How government insiders subvert the public interest

Mark A Zupan
2017, Cambridge University Press, 207 pages,
ISBN 9781316607770

Reviewer: Rosemary Connell

Two world wars reduced the number of monarchies and the extent of colonial holdings. Celebration of new democratic movements have often proved premature, though, and many autocratic regimes once overthrown are replaced by another autocracy. Democracy has failed to produce the economic goods in countries as varied as Venezuela, Argentina, Japan, Portugal, Italy, Greece and Spain.

Looking at how government insiders operate from the supply side of politics, the author of this book argues that the collapse of regimes has often been due to an ‘inside job’, or internal weaknesses in other words.  For example the excesses of the Bourbons led to the French Revolution. Yet equally inside jobs can also lead to the advancement of the public good, as in the example Lee Kuan Yew and the Singapore economic miracle. Some autocratic leaders, obvious examples of government insiders, have become extraordinarily rich, profiting from their power. Equally history shows that inside jobs can bring down nations – witness the Ottoman Empire and the Ming dynasty. North Korea, Russia, Iran and Venezuela are four autocracies where government insiders operate for their own benefit at the expense of the public good. Democracies suffer too, such as India with its bureaucracy bribery and corruption, and also Argentina Greece, and Portugal for one reason or another.

So in both democracies and autocracies government insiders divert resources from serving the public good for their own benefit. The author provides a number of detailed examples from the Clintons to the Marmalukes. Insiders also uses government resources for patronage, to reward chosen people for their political support. Many factors increase government size often with negative consequences. These should be curbed, the book argues. Electoral competition may help but is not entirely effective.

Government insiders have an incentive to hang onto power because of the perks and such regimes retain power longer in autocracies than they do in democracies due in part to lower accountability. The author provides examples throughout history to demonstrate how democracies and autocracies subvert the public interest. These include Ancient Egypt, a number of US cities. Detailed case studies are provided, ranging from China (autocracy) to the USA (democracy).

In a democracy one must first enable the government to control the governed and then oblige it to control itself. The state is often the supplier of monopoly goods and services so policies letting government employees bargain with their employer enhance supply side monopoly power. For example American public workers could not collectively bargain until the late 1950s, but since then public workers’ collective bargaining power has increased markedly; unions promote their members interests at the expense of the public interest.

Possible solutions to limit supply side ‘inside jobs’ include promoting competition for the supply of government goods and services; limiting opportunities to hold public offices for life; governance to promote greater accountability; improving transparency; and constitutional curbs on government spending and debt. However as history has shown all of these are tricky to achieve. The author provides striking examples of failures and details the Swiss brake rule (mandating limited budget deficits) as an example of success. Democracy is not sufficient; government by the people must operate for the people. This scholarly book with its extensive bibliography provides a panorama of the pitfalls and opportunities of democracies, autocracies and other forms of government. It must be of interest to a very wide readership.