Adam Garfinkle sat down with Jon Huntsman in the office of the Atlantic Council in Washington, DC, on October 19. Here is, more or less, how the conversation went:
TAI: I’d like to start, Mr. Ambassador, by noting that we have something in common: We have both run unsuccessfully for President. There was a folk singer named U. Utah Phillips who used to claim he was running for President on the Sloth and Indolence ticket. He was a latter-day Wobbly as opposed to a latter-day saint—kind of an anarchist, but not the violent sort—and his platform was, basically, “If you want to get something done, do it yourself, because as President I’m just going to sit around the Oval Office and shoot pool. Solve your own problems.” It was, of course, meant to be funny, just to go along with his songs. But it wasn’t just funny, it seems to me. Anyway, after he died, I picked up the Sloth and Indolence label and ran for President, except that, as the label suggests, my campaign was not very energetic. I didn’t win. So I know how you feel about that escapade of yours four years ago.
Which brings me to my first question. Looking back four years ago today, you were in the thick of the politics stuff, and you’ve made some comments about what you think went wrong. What did you learn from your experience? How does that lesson strike you now, looking at the primary season this time around?
JMH: I’d have to say that what struck me about this time four years ago is how show business has infiltrated politics. And I don’t totally say that tongue-in-cheek. It’s very real. It’s the politics of entertainment as opposed to substance. I got into the race thinking I could do as a candidate for President what I did as candidate for Governor of a state—where you draw a roadmap for your state, create a vision, and then you break out its component parts, you articulate those to the people, you bring in a team to fashion policy positions that will bring you there, and you say, “If elected, here’s what I’m going to do!” And they elect you and re-elect you because you actually found a way to do a lot of the stuff you promised them you’d do. And I thought, “Gee, it worked pretty well as Governor out in Utah: We left with an 80 percent approval rating, we got 78 percent of the vote for reelection, we carried every county (first time a Republican had carried every county in the state), and it couldn’t be that terribly different running for President.
Well, of course, in the interregnum we went over to China, a slight detour—and I’ve lived in Asia four times, so it was kind of like going home, in a sense, to a region we were familiar with. But things changed here in the United States while we were in China. And the change that was most pronounced was the transition from what I would call the “pre-Lehman Brothers Collapse Republican Party” to the “post-Lehman Brothers Collapse Republican Party.” The pre-Lehman Collapse Republican Party was bold, innovative, risk-taking, a little more inclusive, broader, more expansive in terms of policy considerations; and the post-Lehman Party became angry, a little frightened, narrower in its worldview—for reasons that are all totally understandable. People had lost their savings, jobs were being totally disrupted, we were staring down a fundamentally new economic reality that we didn’t fully understand. Who should we blame for this debacle? The party turned inward, and in a way I think it’s still fighting itself over what it needs to do next.
What will the party be on the world stage? Will it be the party of Lincoln and Theodore Roosevelt and Ronald Reagan: big, inclusive, optimistic, and growing from our best frontier instincts as a free people? Or will it be what it has now become: a kind of perpetual opposition party—not a governing party, not a leadership party.
TAI: There’s an analogue of sorts in the Labour Party on the other side of the Atlantic, in Britain. This happens all the time: parties that lose big elections often become more counterproductively radical before they come back to the center.
But something you just said intrigues me. You speak as though the Lehman Brothers collapse was a key tipping point, followed by a gradual realization that the Recession of 2007–09 was an “L” rather than a “U”-shaped recession—in other words, that it represented a structural change in the character of the American economy and of the labor profile. You seem to be suggesting that something about that realization is what changed the tone and temper of the Republican Party. Could you just elaborate a little bit on what you mean by that? Was this a case of Republican politicians tactically trying to tap into the anger and frustration of the population? Or was this something deeper, an intellectual shift that led them to a different tone?
JMH: I would term it “the ultimate attention-getter by the voters.” Politicians are generally pretty good at trying to stay ahead of the sentiments of the voters, because when they subsume you, you’re in deep trouble. But I think it was the ultimate attention-getter that turned into something more mere political tactics. We faced a collapsed economy, a world we no longer felt in control of, and people who had just had enough emotionally. So we saw the rise of the Tea Party, the divisions within the Republican Party, and the “enough’s enough” mentality. We’ve been bailing out industries, we’ve been breaking budgets forever—whenever we can come up with one on time at all—and we can’t seem to bring anything into balance, and look where we are.
The Great Recession ignited something that was very real. I was in China watching all this from 10,000 miles away. Among those who would filter through the embassy were those who were involved in partisan politics, and some of those people said to me, “You wouldn’t believe what’s happening to the party.” It had dramatically changed.
TAI: China itself was not totally divorced from the analysis, too, and I want to come back to that. But before we do that I want to ask about the No Labels political movement. If you think back, say, two or three administrations, and you were to put your optimistic hat on and point out to some foreigner three or four really positive policy innovations the United States has undertaken in the last Democratic and Republican administrations, could you think of any? It seems to me that over time the number of achievements one can cite has diminished, and I suspect that one of the reasons is that that we’re at a point in American history where, really for the first time, there’s no obvious consensus as to what we’re doing together as a political community. In the very beginning, of course, it was religious freedom and then continental expansion and developmentalism. And even before the Civil War, there was consensus—it was just the consensus had a positive and a negative valence. But now we’ve got a lot of people who want to do this or want to do that, but there’s no consensus as to what we’re doing together as a political community.
JMH: Yes, certainly. We wouldn’t have NASA but for both parties coming together. We wouldn’t have the Human Genome Project but for both parties coming together, which is unleashing advancements in science that I think are going to change the very fabric of health care as we know it, how it’s delivered, how we analyze disease, and how we deal with it. A balanced budget in the 1990s, welfare reform in the 1980s, tax reform 1986—there are examples along life’s pathway of both parties actually setting a goal and going for it. We don’t set goals anymore; that’s one of the big problems. There are no consensus American goals, no national goals right now. And that’s a problem because the articulation of goals is an extension of our basic interests. How do you define an “American interest?” Well I think we could all come around to those things that speak to our institutions of governance and our values. It doesn’t matter whether you’re a Republican or a Democrat; there are just some things that are American.
So what do we have to do to build those traditions and keep them strong? Well, we must have a robust economy, must have good schools, must have continuous and effective investment in infrastructure, must have people who understand and respect the rule of law, and are respectful of one another. There’re a lot of things that can be an outgrowth of American values and interests.
And since you raised it—one of the reasons I’m drawn to No Labels is that I have a firm belief, having lived overseas, that unless and until we strengthen our fundamentals here in this country, we’re weakened abroad. The messages that we articulate fall on deaf ears. They’re mere words to everyone else abroad until we can practice them here with greater perfection. And it’s of real concern to me that our democratic institutions are being weakened by people who appear to be abusing them for political purpose. The last election cycle, 2014, witnessed the lowest voter turnout of any cycle in 75 years—you have to go all the way back to World War II. Young kids are becoming unaffiliated, and feeling disenfranchised. And it’s because our fundamentals are weakening. We haven’t put points on the board—as Americans! Not as Republicans and Democrats, but as Americans. So the thing that attracts me here is the same thing that gave me such great joy serving as a Governor: You’re everyone’s Governor. You’re not a Republican Governor, not a Democratic Governor; you’re there for Utahans. You set goals that are Utah goals, and you bring Republicans and Democrats and independents together to make them happen. Most states are a microcosm of how the country’s supposed to work, but our country just doesn’t seem to function like that anymore.
TAI: I certainly agree. If you don’t have stretch goals, the founding virtues can’t really find ways to express themselves. That’s very troubling.
JMH: At the moment, we don’t so much need stretch goals; we don’t need a new eco-boost engine. We’ve got a solid old V-8 engine and we can continue using that for a while. It would be nice to create a new eco-boost engine, and maybe we can in time, but let’s attend to the fundamentals of the V-8 or else it’s going to stop running. And that’s where No Labels and its four big pillars of deliverables are so salient in today’s political conversation: because these are just the basics. It’s the carburetor, it’s the spark plugs, it’s the crankshaft—it’s the basics for any engine to keep it going.
The thing about No Labels is: I’m a practitioner, not a theorist. I do the jobs; I don’t think overly much about them. You bring in people who have given it deep thought and they can help craft the pathway forward for you. But if you sit here as a practitioner—both of domestic politics and of international politics that you know well—you know that in order to get some things done in this country, you’ve got to have a few things present. You have to have an army of the likeminded on Capitol Hill. So we’ve constructed the Problem Solvers Caucus: 70-80 strong, half R’s, half D’s, who really are into this stuff. We get them in a room, and they’re speaking the lingo. They’re saying “we need to build trust across the impenetrable divide.” We need to get some things done. So that’s number one. Two, you need to have a strategy. Where are you going? And what are the elements of that journey? And how do you measure progress? We’ve got that in the National Strategic Agenda, which we didn’t have before. And third, what took us a week ago today to New Hampshire, is to infuse this concept into presidential politics, so you can get people thinking about the same thing.
And just imagine a world—I know it might seem to be a long shot right now—but just imagine a new President who says, “Okay, I want to get something big done. And I’m going to need Congress to help me do it. And I’m going to call the leadership of both houses and both parties together, and we’re going to set a goal, or two. And we’re going to take different pathways, but we’re going to wind up in a common American destiny.” And I think it’s doable. But it’s not going to happen unless we build the foundation, take it to New Hampshire as we did, get 2,000 citizens there and all the candidates who were willing to come.
TAI: I certainly hope it works. In the beginning, what worried me about the No Labels philosophy was that it seemed to say nothing more than, “If we could be more civil, if we can take the edge off the partisanship, then somehow it’ll all work out”—and that struck me as naïve because the problems are not just ones of tone but rather ones of fundamental disagreement, different core perspectives. But you guys are beyond that now, I think.
JMH: Yes, you’re right, that’s totally naive, and in fact I’ve said “No Labels” probably isn’t the best title for this movement. The No Labels label can suggest the proverbial kumbaya moment—but that doesn’t exist in politics. Whatever it’s called, what matters is that we’re problem-solvers. We’re looking not just for more civility in politics but we’re looking to focus on the problems we need to solve and that we can solve.
TAI: I want to talk about China. A couple of months ago, the Chinese stock market developed a bit of a case of indigestion trying to digest a real estate bubble, and economists and others were heatedly debating whether this was just a correction, or maybe that the Chinese were at the end of their post-Mao developmental model—the same way the Japanese had a somewhat similar export model, then came to the end of their frontier and then had to figure out a way to restage a growth model.
In our group here at The American Interest, we have tended toward the latter interpretation—that this is a much more serious challenge for the Chinese leadership, not just a business-cycle correction. They are up against the outer frontier of the old growth model, and they have to convince a whole lot of Chinese to consume a whole lot more than they have been. This is already a process in motion for a few years now, but given the political environment in China today, it’s not obvious how this will all turn out.
But between those who think China is on an inexorable rise and those who worry more about an implosion being the problem—and I don’t see the two possibilities as necessarily being mutually exclusive—how do you handicap the future?
JMH: I think the first place to focus is on Xi Jinping as a leader. I think he’s fundamentally a different kind of leader. He has a vision, he has a sense of direction, very much unlike Hu Jintao, who presided over a lost decade. Hu Jintao was a consensus manager, he had a larger standing committee than the Politburo, he had personalities within the Politburo, like Zhou Yongkang, who was more powerful as a political figure than even Hu Jintao. So it was therefore no surprise that you would see rogue military operations from time to time. There was a disconnect between the central military commission and key members of the Standing Committee.
Those days are gone. There is now have a central figure who has, I think, the respect and command of the Central Military Commission (the Chinese version of our Joint Chiefs, in other words), the Party apparatus, and the princeling population, which, whether you like it or not, is central to power in China. The grandsons and granddaughters of the revolutionary elite now populate the state-owned enterprises and many of the ministries. Xi Jinping is one of them, so he can speak their lingo and tell them where to go. Hu Jintao could never do that.
I think there are two fundamentally important transitions underway that are quite historic, one economic—as you pointed out—and one political that is epitomized by a new leadership style. And I think that the very fact of these simultaneous transitions has resulted in a profound sense of insecurity among many of the Chinese leaders. You layer on top of that transitional insecurity spawned by the anti-corruption campaign, and everything is frozen, nobody wants to make a decision.
TAI: Anti-corruption campaign, party purge—it’s a little bit hard to figure out where one starts and the other one ends. Some people don’t take the anti-corruption label seriously because the analysis is, if you have a government that’s effectively featuring rule by law but not rule of law in a regime that’s essentially illegitimate, you can’t mount a real anti-corruption campaign because you can’t just draw a line and say, “It stops below me.” A true anti-corruption campaign would implicate the party itself, and the party can’t let that happen. So there’s kind of a logical contradiction here, isn’t there?
JMH: What we’re seeing is a bit of triaging by Xi Jinping, so the anti-corruption effort is real, even though it’s limited. He’s simply got to stem the flow of corruption before people completely lose their faith in the party, because he knows that there’s no alternative governing structure. A party collapse means a governance collapse, not a substitution into power by some other coherent political force-in-waiting. In away they face something similar to what we’ve had here: a trust deficit. People just don’t believe that their institutions of power and government are serving the national interest any longer. It’s corrupt, there’s deadwood within, lack of transparency, nobody knows what’s going on, nobody has a say in terms of the affairs of state, and it’s reaching the 212-degree boiling point. And so Xi is saying, “I’m with the people. I’m going to clean out the deadwood”, or at least I’m going to get enough of the visible corruption out of the system to the point where people will say, “he’s on our side.”
I live in Asia during the summer months, and I spent a lot of time in China this past summer, in Beijing, Shanghai, Nanjing, and Guangzhou. And I always do the taxicab test: I just jump in cabs in these cities and talk to the drivers. And I always ask about Xi Jinping: “What do you think about Xi Jinping? How’s he doing?” I have yet to find a taxi driver who does not say, “He’s one of us. He’s on our side.” He’s captured the imagination of the people. They feel he’s really on their side—which is a good place for a politician to be, even in China.
TAI: Yes, but he’s still got some serious problems. When I think of the dilemmas of the Chinese Communist Party right now, it kind of reminds me of the military bureaucracy in Egypt. In order for the economy to be truly reformed, it needs to be preceded by political reform, because the Egyptian military bureaucracy has its hand in everything that makes money in Egypt. China, with the state-owned enterprises and with the neo-patrimonialism you describe among the princelings, it’s similar in a way. In order to get the economy really moving ahead again, and to keep it moving at the kind of level that can meet heightened expectations, the state-owned enterprises have to be fundamentally reformed. But if you try to reform them, then you undercut the political basis of the regime. So there’s a kind of double bind at work here, isn’t there?
JMH: That’s why Xi is such an important and consequential leader at this point in history, because he’s the only one who can open up the hood of the car, the state-owned enterprise, and say, “The old rules are gone. We’ve got new rules of the road, and they’re going to include the following.” And if you look at the 18th Party Congress, and what came out of that two and a half years ago, followed up by the Third Plenum, and the Fourth Plenum (which was less about economic reform), just take that and read it again. That is a road map. It hasn’t been instituted or pursued with any real ambition at this point, because Xi Jinping is probably going to wait and do it after the 19th Party Congress in 2017, when he’s really got a firm base of power. But it really is a roadmap directed at reform, mostly of the state-owned enterprises, of which there are maybe 110 big ones and five mega, mega big ones, (like China Telecom, CNOOC, and SinoPec, the latter of which is probably the largest company in the world today in terms of market capitalization). I just met with the new head of SinoPec when I was last in China; we’re doing a joint venture with them in Nanjing. So I’ve gotten to know their bureaucracy quite well, and they’re old and they’re stale. They’ve got no board of directors, no transparency, no corporate governance that’s worth a damn. They get discounted raw materials and preferential costs of capital. All that has to end.
TAI: It’s really important that it end, because as much savings as China has, the financial system is not efficient. China wastes enormous amounts of capital because of the political cronyism that goes on, and if they’re ever really going to get the whole economy macro-economically sound, they need a financial system that isn’t corrupt.
JMH: Yes; they must have an efficient financial system, and really deal with the state-owned enterprises, which are in every major sector of the economy. And if you can’t change that, you’re never going to be able to level the playing field for real competition. I think Xi gets that, and I certainly know Wang Qishan and certain others in government who are way up truly understand why this is important.
TAI: You were Ambassador to Singapore before you were Ambassador to China. Have the Chinese ever looked to the Singaporeans and said, “Hmm, how did those guys do it?” People talk about the China-Singapore model as the authoritarian-capitalist model, but there’s another kind of model. The Singaporeans actually have a pretty sleek, well-oiled machine when it comes to connecting their industrial capacities and their service industries to their financial system. Maybe the Chinese could learn something from the Singaporeans…
JMH: And I think they will—beyond the trip the Deng Xiaoping took in 1978 to see Harry Lee. It was as though Deng imitated Brigham Young when he said in Utah, “This is the place!”
TAI: That’s ancient history now, isn’t it?
JMH: Well, that inspiration from Singapore was more the combination of the GLCs—the government-linked corporations—in Singapore with the more authoritarian one-party dominance, “This is our future”, in China. But I do think if you want to extrapolate China fifty years into the future and ask, “What is it going to look like? Will there be a collapse of the party?”, I’m not sure that there’ll be a collapse of the party. I think it’ll look much different than it does today. There will be more elements of democracy, and it’ll look more like a People’s Action Party kind of thing. It will be more of a parliamentary system with a dominant party—the Communist Party, or whatever they choose to call it fifty years from now. And it will have an economy that’s freed up well beyond what we see today.
So there’s the economic transition. I think you’re quite right: It is a fundamentally different economy, moving from the middle-income trap to a consumption model, moving away from investment-led exports; those days are gone. And India and Vietnam and others will pick up the pace. Many industries are already moving out of China to new locations. And in order to get to the promised land, the Chinese need to have things like business rules of the road, business adjudication, a greater sense of commercial law, and all of this sort of stuff is knocking on the door of rule of law. And they know that. They’re getting closer and closer to a stronger foundation of rule of law to guide their future, which then, heaven forbid, might give rise to some aspects of a robust civil society. I think this is around the bend, and it’s almost unavoidable. It all plays back to the economic reforms that will give rise to a sturdy, modern, 21st-century China.
TAI: I hope they get there. If there are too many bumps in the road, too much creative destruction in the meantime, then the only thing that the party has left to appeal to is nationalism—which it is doing already, of course, to some extent—and that can certainly derail the train.
JMH: This is the part that bothers me, or concerns me, rather, about an insecure China. An insecure China that is doing all it can on the economic side and not succeeding terribly well then has only nationalism to fall back on. And then the South China Sea and other issues become the only levers they have to show that they’re still in control.
TAI: That, and the fact that they spend more money on their internal security than they do on their foreign policy, right?
JMH: Yes, indeed. Look at the Ministry of State Security, the Ministry of Public Security. And they’re funding probably $120 billion, $130 billion a year, versus national defense. That tells you everything you need to know about where their perception of threat lies.
TAI: I want to ask you about the TPP and the politics of trade here in the United States, as well as the somewhat surprising decision by Hillary Clinton to oppose the pact that was negotiated while she was Secretary of State. You were Deputy Trade Representative once, so you know plenty about this business. How does all this look to you right now? What are the prospects for ratification?
I guess it’s kind of a two-part question. Some people are arguing that these trade fora, the TPP in the Pacific and the TTIP with the Europeans, is really a kind of second-best deal because the Doha Round never really got legs—and that, in a sense, these kinds of deals undermine attempts to free up trade on a global scale. Several observers have characterized them as the rich countries getting together and having a good time while leaving everybody else hung out to dry. And then there’s the sort of internal political argument, that this is really just a kind of fix for already well-placed corporations. It’s why the unions oppose it, that it’s another bone thrown to capital as opposed to labor. And the argument is made that it’s a race to the bottom when it comes to environmental standards and labor standards.
These two arguments—one about the global effects of this, and one about the internal effects—come around in a horseshoe shape and connect. How do you assess the arguments being made right now about these trade agreements?
JMH: I think generally they’re a net plus for the U.S. economy. They allow economic lifelines to the major markets of the world, which we wouldn’t have otherwise. It’s a shame that the Doha Round didn’t do what it was built to do, but that’s a function of the World Trade Organization and its governance system. If every one of the one 150 member countries has veto rights, how can you expect to get anything done?
And again, it always hits agriculture reform, because you’ve got farmers in France and Japan—and in the United States, by the way, where they get $18 billion in subsidies every year—that have tremendous political clout. So then you have to ask: Do we then stop trade altogether? Do we use the WTO as a sort of dispute-settlement mechanism body and use it for other means by which we can pontificate about the future of trade?
Maybe. But that shouldn’t be the end of the trade discussion. We should move on, and we should do trade in a way that rewards those who want to liberalize, who want to move toward greater openness, greater transparency, and better rules of the road. I think TPP is an example of that American tradition. My party has moved a little bit away from their support of trade, more to a populist line, and again, I think that is part of the post-Lehman Collapse worldview. And you know, if the employment picture were something different than it is today, people would have more confidence about venturing out into the world.
So I think it’s a net plus for the United States; it will engage the countries of the Pacific, 12 of them (11, if you don’t include the United States) with 40 percent of the world’s GDP. It will take us to a new gold standard for trade, which will include environment and labor. Today, you can’t get a deal done without including environment and labor, and that’s good and fair. We dealt with that 12, 15 years ago with the Singapore Free Trade Agreement, the Australia Free Trade Agreement, and various trade-investment frameworks we did in different regions of the world.
I’ve always thought that the United States being aggressive in the area of trade is an extension of our domestic interests, our economic interests, because we are global players and by engaging others we up the game substantially. We don’t go down, we always go up. And if we’re not there, you have less benevolent players who generally fill that void, and I’ve seen China very aggressively in the past 10–15 years, while we’ve virtually been out of the trade game, who have struck up a lot of FTAs. But then you look at these FTAs, and they’re not much. They’re a real poor substitute for what we would be negotiating.
So you’ve got the RCEP agreement that China has fashioned, which is sort of their own version of TPP with most of their partners in the region. And it isn’t a gold standard agreement; it is more of a race to the bottom. And many people are bullied or intimidated into doing something with China just to show that they’re doing something with China, to keep the largesse coming in. So when the United States steps in, we generally do a pretty good job of upping the trade game globally: higher standards, greater transparency, and more voices who are part of fashioning trade agreements. I think that’s a good thing.
TAI: But on the domestic side it’s not easy to make these arguments persuasively. The way I like to explain this to students is that, if you’re talking about national security, you can make the argument that everyone has the same percentage share of an effective national security policy, even if someone lives in the middle of the country as opposed to the coasts. It’s equal. But with international trade policy, it’s not equal, because people have different interests internally. Those whose jobs are dependent on exports are liable to do better thanks to trade deals than those whose jobs aren’t. People’s oxen get gored asymmetrically when it comes to trade agreements, and I think that’s what engenders some of the political pushback against them. And more pushback comes from the Democratic side, obviously, because of the role of labor unions—and I think it’s true that free trade agreements tend to advantage capital over labor.
Now the argument that economists make—and it’s logical, but it’s politically hard to sell—is that when we trade with other countries, they’re going to get richer, their middle classes are going to grow, and these new middle classes are going to want to buy stuff from us. So when we empower their spending power, that helps jobs in the United States, it helps everybody, raises all boats. But the practical question is: How many decades do we have to wait until their middle classes are wealthy enough to buy our stuff? So the theories don’t fare so well down in political trenches, do they?
JMH: That’s right. We haven’t done a sizable trade agreement in quite a long time, which proves your point. One of our first free trade agreements was with Canada. We export a lot to Canada; we make a lot of money that way. The traditional markets in Europe we generally do pretty well in (when their economy is working, which was a long time ago). But when was the last time we did a big trade agreement where exports were a real possibility? You look at most of the FTAs of recent years, and they’re with smaller economies. And we just don’t export that much anyways, so people are saying, where’s the return? It seems that we’re just throwing things away without any real return. The big markets are going to be China and India, ultimately. But I think the waiting is about over; with China now moving toward the largest middle class the world has ever seen, they will be consuming a lot more of our goods. They like American goods, we generally lead the way in terms of innovation, and when they have more buying power (which they will) they’re going to buy more of our products. So I think trade, and exports specifically, will be one of our most important engines of growth in the years ahead.
TAI: Tyler Cowen makes the same argument, and he’s made it persuasively in our pages. It’s just hard to sell politically, because you’re frontloading the pain and the benefits only come down the road.
JMH: It is a tough sell politically, no doubt about that. But if I were Governor or Mayor of a big city, I would be working with Washington to try and fashion some kind of export policy that would ensure that we had an edge in the export game with the rise of China and their consumption model, which will begin playing out with cars and consumer electronics. Again, they like our products; they’re just harder to get in because of market access issues, and because consumers just haven’t had the wherewithal to buy. That’s going to change.
TAI: We may have an even harder time getting into India. The Indians are changing their way of thinking about economics, too; they’re not pure London School of Economics anymore, but it’s still a very protected economy.
JMH: With India, as you know, we’ll see what Prime Minister Modi is able to do. He was a strong Governor of Gujarat, and he did a lot of good things there. But the states are so much more powerful in India than the provinces are in China, who all have to report up through the party line. The Indian states are really powerful: Maharashtra is a state, Gujarat is a state, these are powerful players. The center-periphery balance is almost the opposite of what you find in China.
TAI: It’s an interesting comparison, absolutely.
Last question for now, please. You said you were a practitioner and not a theorist, but I wanted to ask you a general theoretical question anyway. Let’s talk about federalism. When you look at the history and the current structure of American federalism, do you think it’s overbalanced toward the center? And if so, what kinds of practical things would make sense in rebalancing it, in keeping more resources and problem-solving authority at the state level?
JMH: You can’t govern a state without reflecting the view that we’re way too centralized and overbalanced toward the Federal government at the expense of the states. Each state has own constitution, and is its own sovereign entity in theory, but the long arm of Washington seems to be in every one of your cookie jars.
A healthy federal arrangement enables the competition of states; if you’re a Governor, you’re always looking around to find best practices. You’re looking at those in your own neighborhood and beyond for best practice in education, in land-use management, in tax policy, in infrastructure innovations, you name it. You’re looking not at Washington. “If only I had” what such-and-such a state had, you would say as Governor; “If only I had the freedom or flexibility to do this in education policy or this in land use policy, we would be a better state, in terms of our ability to make the economy really soar.” But Federal centralization puts a lot of things out of reach just because of how the money flows to and back from Washington. So I am certainly in favor of greater autonomy for the states in certain policy areas where Washington has achieved greater reach than anyone envisioned.
TAI: There’s even a philosophical advantage to thinking that way, it seems to me, beyond the merely theoretical. We have this blue vs. red problem, as we all know. But if states did more than the Federal government de facto allows them to do today, then we could be both blue and red at the same time. People in Rhode Island could have the blue-style government they seem tom prefer, and people in Nebraska could have their red-style. The health care needs of a community in some rural place in Wyoming are not going to be the same as they are in Boston, so trying, for example, to create a national health care policy is, it has always seemed to me, just a bad idea in principle. It’s a straightjacket that depresses policy experimentation and innovation; it’s a way of thinking the flies in the face of rational subsidiarity.
JMH: It’s a bad idea, I agree. And it’s now just about health care. How you manage land and schools and energy issue; the one-size-fits-all approach just doesn’t work very well. It does take the element of competition out of public policy, as you suggested. Because if you don’t have to compete, if everything major aspect of domestic policy becomes wedded to a one-size-fits-all model, who cares about coming up with better ideas? I love the notion of the competition of the states, the incubators of democracy. It’s very real when you’re a Governor, and it’s a race to the top, not a race to the bottom. And that’s how it should be, but you’ve got to have the flexibility from Washington to make that race a successful one.
TAI: Thank you so much, and I’ll say both “Mr. Ambassador” and “Governor”—since you’ve done both.
JMH: You’re most welcome; it’s been a pleasure.