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The Fourth Revolution: A Good Read

"The Fourth Revolution: The Global Race to Reinvent the State" by Economist Editor in Chief John Micklethwaite and Economist Managing Editor Adrian Wooldridge is a well-written argument for change.

Their thesis is that there have been three and one half revolutions: The invention of the nation-state, the liberal state (embodied and executed most dramatically in the American and French Revolutions highlighting individual rights), the welfare state and the "half revolution" or the Thatcher-Reagan reforms based on the economics of Milton Friedman that "failed in the end to do anything to reverse the size of the state."

Their taxonomy is interesting and their conclusion indisputable: "The West has been the world's most creative region because it has repeatedly reinvented the state." These government revolutions have provided necessary ingredients, such as safety and order, to create stable societies, economies, educational institutions and innovation.

But they argue for another revolution as destabilization and disenchantment with government and its intrusions over taxes, income disparity and corruption spread and will worsen.

"The state is about to change. A revolution is in the air, driven partly by the necessity of diminishing resources, partly by the logic of renewed competition among nation-states, and partly by the opportunity to do things better. This Fourth Revolution in government will change the world," they write.

The ideal is to avoid the excesses of today's welfare states, vote-buying democracies or dictatorial command and control hybrids like China and Russia. Singapore may come closest to an ideal template- pro-business and orderly -- but it has failings. Nepotism is an issue, along with severe restrictions on speech, press, lifestyle and other freedoms.

The United States is politically fragmented to the point of gridlock because wealthy elites control the agenda. Its Congress has become a "vetocracy."

The European Union is also run by elites from its member nations who live beyond their means. As Germany's Angela Merkel likes to point out, the European Union has 7 per cent of the world's population; 25 per cent of its GDP and 50 per cent of its social spending.

Government spending and high taxes undermine these nations. Spending in the world's 13 richest countries has increased from 10 per cent of GDP in 1900 to 47 per cent in 2011. The International Monetary Fund, they note, forecasted that by 2030 the cuts in spending needed to reduce debts to 60 per cent GDP levels would be dramatic or 11.7 per cent in the United States; 16.8 per cent in Japan and 9.3 per cent across the G20.

Interestingly, all government types have in common bloated, inefficient and inflexible public sectors that must be bridled. All have proliferated due to "four terrible assumptions": that governments should not outsource services and should do everything in house; decision-making should be centralized; public institutions should be uniform and that change is always for the worse.

Clearly, governments must be reinvented again and aimed at attaining sustainable goals. They must be rational too not libertarian. "Too much government is better than too little," they write.

The book's mission statement is sensible and simple.

"Any state that harnesses the most powerful innovative forces in society will pull ahead of its peers. The Fourth Revolution is about harnessing the power of technology to provide better services. It is about reviving the spirit of liberty by putting more emphasis on individual rights and less on social rights. And it is about lightening the burden of the state."

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