An interesting idea, but what Branko Milanović does not address is what happens when a society crosses the invisible line into a different category of vice.
Branko Milanović is an economist specialised in development and inequality.
Branko will be holding a talk in our series “Economics beyond the Swabian hausfrau” on 1 April 2019 in Berlin at 7 pm in the Monarch Bar, Skalitzer Str. 134, 10999 Berlin (U Bahn Kottbusser Tor). The subect will be “”Recent trends in global income distribution and their political Implications”
Cross-posted with kind permission from Branko Milanovic’s blog Global Inequality
When you travel from a less orderly country (which is practically every country in the world save Singapore and Norway) to Switzerland you notice all the usual things associated with Switzerland: order, cleanliness, perverseness of rules, trains that run on time etc. This is so well known—and has been known for at least three centuries—that is not worth pointing out. (Even Asterix has a couple of comic books about it.)
But one should also notice that all the things that are apparently sources of disorder in other countries exist in Switzerland too: people are drinking, drugs are abundant, prostitution is easily noticeable, casinos are practically everywhere, stealing of money (provided it comes from elsewhere) is acceptable. The same is largely true for Nordic countries, and even Singapore.
So what makes these countries successful, despite the presence of all these vices, and others unsuccessful?
I think it is useful to divide governments into three categories: governments of open vice, governments of limited vice, and governments of virtue.
Governments of virtue consider human nature as malleable and fundamentally (given sufficient “massage”) virtuous. They try to impose that virtuous behavior on its citizens, but since they misread human nature, they end up by producing an enormous generalized hypocrisy where everyone claims to behave according to the virtuous principles but in reality does the reverse. These are governments that impose bans of alcohol, pre-marital intercourse, or believe that people should work regardless of material incentives for the benefit of a “community”. Such governments invariably fail. This happened to Savonarola in Florence, Robespierre in France, the prohibition of alcohol in the US, Stakhanovite movement in the USSR, Cultural Revolution in China, 1972 zafra in Cuba, ban on alcohol and open sex in Iran and elsewhere in the Islamic world. Other than fostering hypocrisy, they manage to create lack of trust among their citizens which makes collaboration needed for development difficult. They fail because their idea of human nature is wrong: we do not want to be ruled by virtue.
At the other extreme are governments of open vice. They accept human nature as it is and impose no, or almost no, constraints on it. They let corruption, drugs, prostitution, stealing flourish. The examples are many and monotonous. Just think of China in the 1930s, Cuba in the 1950s (or today?), Russia in the 1990s, Colombia of the drug lords, or Congo now.
The successful countries have regimes that also start from the premise of true human nature which is not virtuous (or at least is not virtuous all the time). They allow vice to flourish but limit its score, both physically (areas where it can be exercised) and “ideally” (activities where it can be done). They allow corruption but call it lobbying and ask that you register. They allow gambling but ask that casinos be located in big, imposing buildings, and that everybody be impeccably dressed and sober. They allow prostitution but ask that prostitutes issue bills and pay taxes. They allow stealing so long as it is done discreetly.
But as soon as any one of these vices spills out of its confined area, governments of limited vice crack down on it with all their might. Vices thus never threaten to overwhelm the body public and to spread beyond acceptable limits. People continue functioning on a daily basis as upstanding members of community. Ostensible virtue is projected far and wide. But their actions at work, in family, or at night remain limited to those “acceptable” areas of vice and are never mentioned. They are thus not allowed to “contaminate” the rest.
Governments of limited vice do not pretend to impose virtue, except when from time to time, at the occasion of national holidays, they give it a lip service. But since that lip service is not in such a glaring contradiction with reality as it is in the case of governments of virtue, people –themselves beneficiaries of the implicit contract—are willing participate in the pretense.
Such governments are stable. Everybody seems to follow the Way—even if everyone knows that this it is only a partial truth.