"A manifesto for renewing liberalism", The Economist (II/II)

(cont. II-II)
THE bill in front of the House was a wretched thing, as the opposition politician explained. It would “appeal to insular prejudice against foreigners, to racial prejudice against Jews, and to Labour prejudice against competition”. But he could see why the majority party might like it. It would “no doubt supply a variety of rhetorical phrases for the approaching election.”
Substitute the word “Mexicans” for “Jews”, and this might have been a Democrat on the floor of the House of Representatives denouncing this year’s Securing America’s Future Act, a hardline Republican immigration bill. In fact they are the words of Winston Churchill, in 1904, speaking from the Liberal benches in opposition to the Aliens Bill that the Conservatives had brought before the House of Commons. The bill was the first attempt to legislate a limit to migration into Britain.
Immigration was as politically potent in the early 20th century as it is in the early 21st. Previous decades had seen a surge of people on the move across Europe. Millions had moved farther, heading across the Atlantic to America: hundreds of thousands of Chinese crossed the Pacific to the same destination. Xenophobic backlashes followed. Congress passed a law prohibiting Chinese migrants in 1882. By the time of the Immigration Act of 1924 it had, in effect, banned non-white immigration. It also curtailed the rights of non-whites already there in the same ways as it did the rights of its black population, with laws against miscegenation and the like. The flow of migrants across Europe produced a similar reaction. In “The Crisis of Liberalism” (1902) Célestin Bouglé, a French sociologist, marvelled at how a modern society could spawn bigotry and nativism. When Churchill mocked the idea of a “swarming invasion” in 1904, Britain was the only European country without immigration curbs; the following year it brought in its first.
Today some 13% of Americans are foreign-born; that proportion is approximately what it was in 1900, but much higher than it was in the intervening years. In 1965 it was just 5%: older Americans grew up in a pretty homogeneous society that was hardly a nation of immigrants. In many European countries the foreign-born share of the population has surged. In Sweden it is 19%, twice what it was a generation ago; in Germany, 11%; in Italy, 8.5%.
Open borders are rarely if ever politically feasible
The reactions have not been as harsh as they were a century ago. Indeed, in America the appetite for more immigration has grown even as the immigrants have arrived. In 1965 only 7% thought the country needed more immigrants; 28% do today. But any liberals feeling complacent are clearly not paying attention. Anger over immigration has fuelled the rise of illiberal regimes in central Europe; it is the main reason why right-wing populist parties are now in power in six of the European Union’s 28 countries; it explains much of the popularity of Brexit, and of Donald Trump. Concerns are growing in emerging economies, too—from Latin America, where the exodus of Venezuelans is roiling the region’s politics, to Bangladesh, which is struggling with the arrival of 750,000 Rohingya fleeing genocide in Myanmar.
There are four reasons to expect the issue to get yet more divisive. First, migrant flows are likely to rise. People in the global south are still poor compared with those in the north; modern communications make them very aware of this; modern transport networks mean that, poor as they are, many can afford to try to live the life they see from afar. According to Gallup, 14% of the world’s adults would like to migrate permanently to another country, and most of those would-be migrants would like to go to western Europe or the United States. Over the coming decades the consequences of climate change are likely to force large numbers of people, particularly in sub-Saharan Africa and south Asia, to move, and though most will probably not move all that far, some will try to go all the way. Some will be welcome; ageing populations in developed countries will need more working-age people to look after them and pay tax. It is very unlikely that all will.
Second, the world lacks good systems for managing migration. The 1951 UN Convention on Refugees set up a liberal and eventually near-universal regime for people fleeing oppression and other state malfeasance. It is ambitious and (theoretically) generous. There are no other mechanisms that give people general rights to seek their fortunes abroad. The result is that refugees’ treatment frequently falls far short of the legal rights to which they are entitled. Meanwhile low-skilled people without family members in rich countries with whom they might seek to be reunited have no way in. So some seek refugee status on dubious grounds.
The wrong kind of liberalism
Third, the modern welfare state complicates the issues around migration in a way that it did not a century ago. Illegal immigrants are not entitled to such benefits. But refugees often qualify, as do the children of people who have arrived illegally. The absolute level of spending may be small; the perception of inequity, though, can be beyond all proportion to the cost. People resent paying taxes to fund benefits that they perceive as going to outsiders.
Fourth, liberal attitudes to immigration have changed. Liberalism came of age in a Europe of nation states steeped in barely questioned racism. Nineteenth-century liberals were quite capable of believing that nations had no duties towards people beyond their borders. The Economist, although it did not support the Aliens Bill in 1904, made clear that it did “not want to see the already overgrown population swollen by ‘undesirable aliens’”.
Much modern liberalism has a more universalist view, along the lines of that enshrined in the Universal Declaration of Human Rights. To some, this means that no controls on immigration are justified: that a person born in Mali has the same right to choose where to live as one born in Germany. Totally open borders are rarely if ever politically feasible. But increased migration tends to be seen as good in itself by today’s liberals. It removes barriers that keep people from the lives they want, it produces more diverse societies and it offers economic betterment to all. People who move to places where they can be more productive realise almost instant gains; higher shares of immigrants are correlated with higher rates of entrepreneurship and dynamism. Economists estimate that, were the world able to accommodate the wishes of all those who wanted to migrate, global GDP would double.
A positive attitude to immigration pits liberals against many of their fellow citizens—for all liberals, despite what anyone may say, are citizens of somewhere—more than any of their other beliefs do. The conflict is made worse by the fact that today’s left, including many identified in America as liberals, has moved sharply towards an emphasis on group identity, whether based on race, gender or sexual preference, over civic identity. This leaves them leery of imposing cultural norms, let alone a sense of patriotism.
The 19th-century assumption that immigrants would assimilate and learn their new country’s language seems, to such sensibilities, oppressive. Several American universities have declared the phrase “America is a melting pot” to be a “microaggression” (a term in pervasive use and taken by the majority to be innocuous but which communicates a hostile message to minorities). It is hard, given such views, for left-liberals to articulate a position on immigration much more sophisticated than opposition to whatever restrictions on it currently seem most egregious. The more opposition you show, the better your credentials.
Trust, but E-verify
This is not a way to win. Liberals need to temper the most ambitious demands for immigration while finding ways to increase popular support for more moderate flows. They have to recognise that others place greater weight on ethnic and cultural homogeneity than they do, and that this source of conflict cannot be wished away. They must also find ways for the arrival of new migrants to offer tangible benefits to the people worried about their advent.
People often dislike immigration because it exacerbates a sense that they have lost control over their lives—a sense that has grown stronger as globalisation has failed to spread its prosperity as fully as it should have. Removing other barriers that get in the way of self-determination for people already living in their countries is thus both a good in itself and a way to lessen antipathy to migration. But restoring a sense of control also means migration has to be governed by clear laws that are enforced fairly but firmly.
Wary though liberals rightly are of state snooping, technology can help with this in various ways. Fully 75% of Americans support E-verify, a system that allows employers to check a worker’s immigration status online. If the system is administered in a just, efficient way and with proper procedures for appeal, liberals should feel happy to join them.
One aspect of setting clear rules is reforming the international system for refugees. In “Refuge” (2017) Alexander Betts and Paul Collier, two British academics, argue for a complete overhaul. This would include a broader definition of refugee status while encouraging people who claim that status to stay closer to their former homes. For this to work the refugees need to be integrated into local labour markets; investment needed to further that end should come from richer countries. At the same time, new avenues need to be found to give people who do not qualify as refugees some real hope of a legitimate route to wherever they want to go.
Then there is the question of distributing the benefits. Today most of the financial gains from migration accrue to the migrants themselves. Lant Pritchett of Harvard University reckons the annual income of the average low-skilled migrant to the United States increases by between $15,000 and $20,000. How could some of those gains be shared with the hosts? The late Gary Becker, an economist from the University of Chicago, argued for auctioning migrant visas, with the proceeds going to the host state. In their book “Radical Markets” Eric Posner and Glen Weyl argue that individual citizens should be able to sponsor a migrant, taking a cut of their earnings in exchange for responsibility for their actions. There is a bevy of less extreme reform ideas, such as “inclusion funds” paid for by a modest tax on the migrants themselves, which would spend their money in the places where migrants make up a disproportionate share of the population.
As well as taking a little more from immigrants, there will be circumstances when the state should give them a little less. Systems that offer migrants no path to citizenship, such as those of the Gulf states, are hard for liberals to stomach, and that is as it should be. But that does not mean all distinctions between migrants and established citizens should cease the moment they leave the airport. In America entitlement to retirement benefits kicks in only after ten years of contributions; in France, we hear, no one gets free baguettes until they can quote Racine. This is all entirely reasonable, and not illiberal. All who have arrived legally, or have had no choice in the matter, should have access to education and health care. Other benefits may for a time be diluted or deferred.
Liberal idealists may object to some or all of this. But if history is a guide, the backlashes that often follow periods of fast migration hurt would-be migrants, the migrants who have already arrived and liberal ideals more generally. Liberals must not make the perfect into the enemy of the good. In the long run, pluralist societies will accept more pluralism. In the short run, liberals risk undermining the cause of free movement if they push beyond the bounds of pragmatism.
The new social contract
OTTO VON BISMARCK—no one’s idea of a liberal—started Germany down the road to a welfare state in the 19th century. Trade unionists across the world fought for them in the 20th. Benito Mussolini built a fascist one. And James Wilson would have hated the idea. But from Lloyd George’s People’s Budget of 1909 to FDR’s New Deal in the 1930s to Ludwig Erhard’s soziale Marktwirtschaft in post-war West Germany, there was a distinctive liberal cast to the creation of modern welfare states. William Beveridge, the architect of the post-war British welfare state, was a liberal and Liberal politician. (He was also a trustee of The Economist.)
Some liberals, as well as most conservatives, grudgingly accepted these reforms as the lesser of two evils. By sharing the benefits of free enterprise more evenly welfare states could stave off the more radical, and damaging, redistributive promises of fascism and, for rather longer, socialism. But their creation was more than just a way to maintain the conditions in which liberalism could flourish. At their best and most liberal, welfare states cushion people from the rougher edges of capitalism while still putting a distinctive liberal stress on individual responsibility. They enhance freedom, enable free enterprise and bring about a broader embrace of progress. Or at least that is what their liberal creators believed—and what today’s liberals need to make sure of.
Giving governments responsibility for the education of the young, pensions for the old, financial support for the indigent, disabled and jobless, and health care for at least some, and occasionally all, required massive reforms, the details and ambition of which varied in different places. Since their creation, though, welfare states have changed rather little. Some countries have added benefits. America, even before Obamacare, was incrementally expanding the government’s role in health. Others, especially in Europe, have trimmed them: less generous assistance for the unemployed, extra conditions for welfare. But Beveridge would recognise today’s NHS, and FDR would recognise America’s unemployment insurance.
This is not because everyone is satisfied with the status quo. Conservatives contend that it dulls the edge of capitalism and the urge for self-betterment. Those on the left see it as a flimsy and patchy safety-net that needs expanding. Indeed, those countervailing stances go a long way towards explaining why social protection has changed remarkably little since the 1970s. The problem is that while welfare states have stood still, societies have not. And interventions originally intended to help people help themselves have not always done so.
Welfare systems and tax regimes have lagged behind a changing world
Far more women take paid work now than in the middle of the 20th century. Far more households are headed by a single parent. Jobs are much less likely to last for life, to start at nine or to end at five. People are more likely to have more than one at a time. Some of them like this, especially when one is a passion that the other subsidises. Others resent working at unpredictable hours for little money at the beck and call of more than one master. An OECD study suggests only 60% of the rich world’s workforce has stable employment. Most important, in terms of expense, health care is getting costlier and people are living much longer.
The system has tried to cope, especially with the bits that most drain the public purse. But the coping has been neither sufficient (increases in retirement age have not kept up with increases in life expectancy) nor popular (people, especially people likely to rely on state pensions, do not like having the retirement age raised). As for helping people to adapt to changes in the world of work, much too little has been done. The greatly increased need for parental leave and for some forms of child care has been scarcely addressed. Workers desperate for new skills see public investment in education overwhelmingly directed at the not-yet-employed. Meanwhile the interaction of tax policy and welfare system often makes jobs unreasonably unattractive. Nearly 40% of the jobless in the OECD see a marginal tax rate of more than 80% when they start work.
The failure of welfare systems to cushion the huge changes brought about largely by liberal policies—on destigmatising single parenthood as much as on trade—is one of the reasons people are a lot less likely than they once were to trust liberals offering to fix things. But things must be fixed. According to the OECD, the ratio of working-age to retired people across rich countries is set to fall from 4:1 in 2015 to 2:1 in 2050. Add on higher health-care costs and spending on the old will soar as the number of workers to sustain that spending plunges. If the failure to raise the retirement age significantly is expensive today, it will be ruinous tomorrow. And if workers are not made more productive, even the less-than-ruinous expenses will be hard to pay.
UBI enchaîné
The erosive effects of robotisation and artificial intelligence on the world of work are debatable and frequently exaggerated. But though optimists think clever and more dexterous machines will make most of their human colleagues more productive, rather than redundant, they hardly see a return to the 20th-century world of copious lifelong jobs. The coming decades will further strain people’s ability to predict what skills they will need and how their careers will evolve.
This means that a liberal rethink of the welfare state starts with education. Thanks to earlier liberal reformers, who sought universal schooling in the 19th century and welcomed greatly expanded universities in the 20th, today’s states make their educational investments mostly in people from five or six to 20 or 21. This no longer makes much sense. Pre-school interventions, including many not specifically aimed at the classroom, do a lot more for the life chances of poor children than spending on universities does. And people can need training and further education a long time after their years of university and apprenticeship. There is a case for a big change in priorities here.
New approaches should lay less stress on existing institutions and more on helping people take down the barriers that stand in their way. The periodic “lifetime learning” credit that Singapore gives to all adults to pay for training is one way forward, but things need to go further, perhaps with lifetime vocational education taking the place of a year or so’s support at university.
Then there is the challenge of curbing the continuous rise in pension payments by focusing their benefits on the people who need them most. Better educated, more skilled people are working and living longer; the less affluent and skilled stop work earlier and tend to live less long. (In America they are seeing their life expectancy fall.) Pension policy should reflect this. It makes no sense for rich workers to begin drawing a state pension in their 60s. They do not need the support and their long lives mean that the state will end up paying out for years. There are people with better claims on that money.
The greatest potential for reform, however, lies in consolidating and reducing the distortions in the mass of other social-protection schemes—unemployment insurance, food stamps, welfare and so forth. In the past few years the idea of a “universal basic income” (UBI) that would be paid to all, with no strings attached, has generated a lot of debate, and significant support, both on the left and the right.
Right-wing UBI supporters like it because an unconditional payment does not affect people’s incentives to work; an extra job, or an extra hour at work, does not reduce benefits. They also see it as removing various distortions in today’s welfare states, slashing bureaucracy and government snooping. Supporters on the left are keen because they see UBIs as redistributive, egalitarian, welfare enhancing and liberating. Enthusiasm for UBIs has spawned pressure groups, public campaigns and randomised trials.


Many of the idea’s attributes appeal to liberals too. A UBI would reduce the state’s interference in people’s lives. But from the liberal point of view such gains must be set against two big disadvantages, one a matter of principle, one of practicality. The principle is that the 20th-century social contract from which the welfare state was born was that the state would help people help themselves, rather than just give them stuff: it should provide a safety-net, not a platform scattered with silk divans. Liberals tend to believe that people will be happiest if they can achieve self-reliance. And, in practical terms, UBIs would mean either eye-popping increases in tax or cuts in support for the genuinely needy, particularly in countries where welfare spending is already relatively targeted on the poor. In America a UBI of $10,000 a year would require a tax take of at least 33% of GDP—less than the level in many countries, but some $1.5trn more than the current 26%.
A more modest, but still radical, alternative is to replace today’s welfare schemes with an expanded commitment to guaranteeing minimum income through negative income taxes. First championed by Milton Friedman, such taxes mean that the state tops up the income of anyone earning less than a guaranteed minimum. Both Britain and America have tax credits to top up wages along these lines.
Because they avoid transfers to the rich, such schemes are inherently cheaper than UBIs. A great deal could be achieved by simultaneously overhauling payroll taxes (the form of tax that has the greatest impact on low-income earners) so that the path from receiving a top-up to paying taxes is much smoother, and perhaps by broadening the eligibility criteria for the negative tax. There are various forms of currently unpaid labour, most notably in caring, that some societies might wish to support in such a way.
This, though, is only the beginning of the reform needed. Like welfare systems, tax regimes have lagged behind a changing world. Indeed, reform has often gone the wrong way. Over the past 40-odd years taxes on capital have fallen, as have income taxes on high earners. That made sense, considering the heights which the top rates of those taxes reached. The benefits that accrue to society as a whole from investment and well-rewarded work required that taxes be reduced.
At the same time wealth taxes, particularly on property and inheritance, have been reduced or eliminated in many developed countries. As a result the share of tax revenue from property has stayed the same and that from capital has fallen, even as the value of property and the share of national incomes going to capital have soared. Outside America, value-added taxes have been imposed on consumption, producing a welcome increase in the tax system’s efficiency but also making it more regressive.
In the 21st-century economy these shifts should be reversed. Labour, particularly low-skilled labour, should be taxed less. Folding payroll and other employment taxes into the income-tax system would ease the squeeze for low-skilled workers. Shrinking the gap between taxes on capital and taxes on labour would counter the skew towards capital; and if capital investment were written off against corporation tax, this would not need to deter investment. Moderate inheritance taxes—a liberal invention, stemming in part from a healthy distrust of the concentration of wealth and power—should be maintained or reinstated, not least because they are fairly efficient. Loopholes used to avoid them should be tightened up. Property taxes should be reformed into land taxes. Taxes on carbon and other negative externalities, though not a universal panacea for the problems of climate change, would be a reform in the right direction, too.
This adds up to an agenda for reform much bigger than the tax-and-welfare tinkering seen over recent decades. In some ways these changes are likely to be politically harder than the reforms which built up the welfare state and the taxation systems which support it in the first place. It is easier to build from scratch than to attempt to change a huge and complex edifice on which millions rely, which millions resent, and which all have opinions on. And all this needs to happen in a world where the threat of socialism no longer scares conservatives into taking the liberal side.
But if liberal democracies are to continue to provide progress for their citizens they need a new form of welfare. And if they are to afford that welfare reform, they need a tax system that is both more efficient and better fitted to encouraging what society wants more of and discouraging what does it harm.
Similar arguments apply to the other great innovation of the post-second-world-war world: the international liberal order. It is necessary to preserve it; it is perhaps harder to preserve than to build; and there is no longer a socialist, or indeed communist, bogeyman that can serve to unite liberals with all others committed to private property and economic well-being. Indeed, there is what some might see as a state-led post-communist siren instead. It is to that challenge that we now turn.
A liberal world order to fight for
WERE a single document to mark the high-point of liberal-world-order hubris, it would surely be “The End of History?”, an essay written by Francis Fukuyama, an American academic, in 1989. Mr Fukuyama’s question, posed a couple of months before the fall of the Berlin Wall, was whether the world was seeing the “universalisation of Western liberal democracy as the final form of human government”. His answer was yes.
How extraordinary that seems in 2018. China, the world’s most successful economy over the past 30 years and likely to be its largest over the coming 30, is growing less liberal, not more, and its state-led, quasi-capitalist illiberalism is attracting admirers across the emerging world. In the Muslim world, and elsewhere, ties of sect and community, often reinforced by war and the fear of war, bind far tighter than those of liberal aspiration. On a measure of democracy made by the Economist Intelligence Unit, our sister organisation, more than half of the 167 countries surveyed in 2017 were slipping backwards. The backsliders include America, where the president seems to prefer dictators to democrats.
That is particularly worrying. America did more than any other nation to create and sustain the order Mr Fukuyama celebrated. In the 1940s it underwrote the Marshall plan and championed the creation of the IMF, the World Bank, the GATT and NATO. It cheered on the first moves towards European unity. Its armed forces contained liberalism’s greatest enemy, the Soviet Union. Its dollar underpinned the global economy. And because America was founded on liberal values, this Pax Americana espoused liberal values, even if it did not always live up to them.
Mr Fukuyama thought the end of the cold war would let the liberal internationalist project move beyond its reliance on American power. The prosperous examples of America, Europe, East Asia’s tiger economies and a Latin America abandoning military rule, along with a lack of alternatives, would bring the rest of the world on board. So it did, to some extent, for a while. But it was far from universal. And America has become an unhappy Atlas.
President Donald Trump’s rejection of the values underlying NATO and the WTO has been remarkable, his spurning of America’s role in maintaining them even more so. Yet his approach is not without precedent, or support. In 2002, the outrages of September 11th 2001 still fresh in their minds and hearts, only 30% of Americans agreed that “America should deal with its own problems and let other countries deal with theirs”. But long, painful wars in Afghanistan and Iraq have reinforced American scepticism about interventions abroad that cannot be pulled off quickly and do not seem vital to the national interest. By 2016, the idea of America dealing with its own problems and leaving the rest of the world to deal with theirs appealed to 57%. Younger people are astonishingly insouciant about revanchist Russia and ascendant China. Only one in two millennials think it is important for America to maintain its military superiority.
Liberal ideals are worthless unless backed by military power
It is possible that the next president could swing in the opposite direction, recognising the vital role its alliances play in American security, seeking to reform rather than vilify international institutions like the WTO and reinvigorating international co-operation on climate change—a grave threat to the world order which has been far less doughtily faced than that of communism. But it is unlikely. So is any notion of Europe and other democracies taking on the challenge. And even if either were to come about, China would still represent a daunting challenge. Xi Jinping’s determination to centralise power and to hold on to it indefinitely is a large part of that. But Mr Xi may represent a deeper shift: one made possible by the addition of digital technology to the apparatus of centralised authoritarianism.
Liberals have long believed that state control eventually collapses under its inefficiencies and the damage that the abuse of power does to systems that lend themselves to it. But the enthusiasm with which China has embraced digital living has given the Communist Party new tools for political control and responsive tyranny. Cyber-China may not have solved for all time the challenge of identifying and quashing opposition without stirring up more of it. But its efforts in that direction could last longer than hitherto imagined. It would be a foolish mistake to base an international order on the assumption that China will become more liberal any time soon.
Liberals also used to believe that autocracies might be capable of one-off bursts of innovation, like Sputnik, but could not produce technical progress reliably, year in year out. Yet in the past five years, Chinese tech firms have generated hundreds of billions of dollars of wealth. The protection afforded them by the Great Firewall and government policy is part of that success, but not all of it. China’s government is investing huge resources in tomorrow’s technologies while its new digital giants make full use of the vast amounts of data they have on Chinese needs, habits and desires.
Mr Xi sometimes stresses China’s commitment to peaceful, harmonious development. But he then speaks more ominously about “great-power diplomacy with Chinese characteristics”. On climate change, or indeed trade, China talks warmly of the rules-based global system. Yet it ignores international-court rulings against its militarised island-building in the South China Sea and blocks UN criticism of its abysmal record on human rights.
A reasonable forecast is that China will embrace international collaboration where it sees advantage in doing so and act unilaterally where its interests dictate. It will also devote some of its burgeoning technological capabilities to new ways of making war. If America continues on its current path it will do much the same. This will not make the two equivalent. Though China’s military capabilities will grow quickly, they will not match America’s. And it will always be easier and wiser for liberals to trust America to do the right thing in the end.
But if there is no clear international order, just big powers doing what they want, the world will get more of the same as Brazil, Indonesia, India, Nigeria and others increase in strength. Regional powers rubbing up against each other unconstrained; nuclear weapons; the destabilising effects of climate change: it might all work out for the best. But that is not the way to bet.
Getting a League of Nations right
Faced with this uncomfortable reality, 21st-century liberals must remember two lessons from the 20th. The failure of the League of Nations between the world wars showed that liberal ideals are worthless unless backed by the military power of determined nation states. The defeat of communism showed the strength of committed alliances.
Liberals should thus ensure that the states which protect their way of life are able to defend themselves decisively and, when necessary, to blunt the ambitions of others. America’s European and Asian allies should spend both more, and more wisely, on their arsenals and training their troops. Healthier existing alliances will ease the creation of new ones with countries that have reason to worry about China’s ambitions.


Military capabilities are crucial. Only with them firmly in hand can the most be made of the world’s many mechanisms for peace. In the cold war, the West and the Soviet Union had few economic links. The big economies of the 21st century are highly integrated. The gains to be reaped from working together to repair, reform and sustain the rules-based trade and economic system are huge.
In this spirit China’s ambitions to make the yuan an international currency should, in general, be welcomed—they will only serve to hasten its economic liberalisation. The new Asian infrastructure bank it supports is likely to prove a useful addition to international finance. Some of the “One Belt One Road” infrastructure with which it is forging links to the rest of Eurasia will be useful—though the West needs to keep an eye out for cryptic militarisation. A strong West can welcome China’s more forthright voice and increased influence, while limiting the threats that it poses.
The strength which serves that end cannot be purely military, or indeed purely economic. It must be a strength of values, too. At the moment, the West is in disarray on this front. Mr Trump has no values worth the name. European politicians are hard put to maintain liberal values at home, let alone stand up for them abroad. Nor do the leaders of India, South Africa, Brazil and the other big democracies of the developing world go out of their way to support abroad the values they espouse at home.
A decade ago the late John McCain proposed the idea of a “league of democracies”. Such a league’s members might champion liberal, democratic values and at the same time hold each other to account in such matters. It is an idea worth revisiting as a credible and useful alternative forum to the UN. The more clearly the people of liberal democracies can show that their countries work well, and work well together, the more secure they will feel, the more secure they will be and the more others will wish to join them. The world needs a vision of international relations which shores up, promulgates and defends liberal ideals. If liberal nations look only inward and give up either the power or the will to act, they will lose the moment, and perhaps their future.
A call to arms
OVER the past couple of years there has been a boom in gloomy books with titles such as “The Retreat of Western Liberalism” or “Has the West Lost It?”. Magazine articles routinely ask “Is Democracy Dying?” (Foreign Affairs and more recently the Atlantic) or “What’s killing liberalism?” (the Atlantic again). The cock-of-the-walk confidence with which liberals strode into the 21st century has given way to trembling self-doubt.
Good. A complacent liberal is a failing liberal. The crucial liberal reinventions at the turn of the 20th century, during the Depression, and in the stagnation and inflation of the 1970s were all accompanied by books in which liberals (and sometimes a few others) declared the creed to be in crisis, betrayed or dead. Such restless self-doubt spurred the adaptability that has proved liberalism’s greatest strength.



This essay has argued that liberalism needs an equally ambitious reinvention today. The social contract and geopolitical norms that underpin liberal democracies and the world order that sustains them were not built for this century. Geography and technology have produced new concentrations of economic power to tackle. The developed and the developing world alike need fresh ideas for the design of better welfare states and tax systems. The rights of people to move from one country to another need to be redefined. American apathy and China’s rise require a rethinking of the world order—not least because the huge gains that free trade has provided must be preserved.
The need for new thinking does not mean ignoring the lessons of history. The 21st century brings some challenges not seen before, most obviously and most worryingly climate change, but also the prospects of intrusive new technologies of the mind. But inequality of opportunity and the discontent it drives are not new. Nor is the unhealthy concentration of wealth and power. That is why it is worth dusting off 19th-century ideas, from vigorous competition policy to the taxation of land and inheritance.
Whether it was the Anti-Corn Law League, America’s Progressive movement, the architects of the Bretton Woods system or the free-marketeers who urged the taming of inflation and the rolling back of the state in the 1970s, liberal reformers at their best have shared a dissatisfaction with the status quo and a determination to attack established interests. That sense of urgency and boldness is missing now. Liberal reformers have become liberal insiders, satisfied beneficiaries of the world they have helped to build. Their setbacks provoke despondency and panic more than determination. They lack a motivator on a par with the fear (of socialism, fascism or communism) or the trauma of failure (the Depression, the world wars) that drove past reinventions. The threats of nationalism and authoritarianism, though grave and pressing, seem less acute. The success with which policymakers prevented the 2008 financial crisis from spiralling into a global depression added to the complacency and dulled the hunger for more radical reform—even though the mishandling of the crisis in Europe led to many of that continent’s current political problems.
Liberals need to shake themselves out of this torpor. And they need to persuade others of their ideas. All too often, in recent years, liberal reforms have been imposed by judges, by central banks and by unaccountable supranational organisations. Perhaps the best-founded part of today’s reaction against liberalism is the outrage people feel when its nostrums are imposed on them with condescending promises that they will be the better for it.
Liberals also need to look at the degree to which self-interest blunts their reforming zeal. The people who produce and promulgate liberal policy are pretty well enmeshed with the increasingly concentrated corporate elite. Its well-heeled baby-boomer bloc is happy to get pensions that economic logic says it should forgo. If there is a greater liberal stronghold than the international institutions which liberals need to reform, it is the universities that they need to reappraise, given the urgent need to support lifetime learning. Liberals have gained the most when they have taken on entrenched power. Now that means attacking both their current allies and their own prerogatives.
How do you kick-start a liberal reinvention? It may be necessary to up-end traditional party structures, much as Emmanuel Macron has already done in France. It may demand a new generation of politicians who cannot be blamed for the way things are and articulate better than today’s crop how things should be. But whoever leads, they and their followers need to be willing to test their ideas against others’ as forthrightly as possible.
That means free speech—a lot of it. And speech that is well informed and in good faith, too. But as autocrats gain clout, the room for free speech is shrinking. Only 13% of the world’s people live in a country with a truly free press, according to Freedom House. In America, Donald Trump’s pathological lying and constant attacks on the media as “enemies of the people” and “fake news” are taking their toll. But the fact-free world of paranoid fantasy that right-wing media provide for his followers is a bigger problem.
So is the echo chamber afforded by social media—even when they are not being manipulated by foreign powers. By reinforcing people’s biases, they cut off the competition ideas need if they are to improve. At the same time they discredit the compromise that democracy needs. They relentlessly encourage a focus on the identity politics that increasingly consume left-liberals, particularly in America, drawing attention away from the broad canvas of economic and political reform to the fine brush strokes of comparative victimology. Online as elsewhere, identity politics have obstructed robust debate and promoted soft censorship.
The Economist thus marks its 175th anniversary with wariness, with optimism and with purpose. Wariness because not enough people have grasped the scale and urgency of the reforms needed if the values and insights that underpin our founding creed are to flourish as they should. Optimism because those values are as relevant as ever.

Purpose because nothing serves liberalism better than “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress”. James Wilson’s words are reprinted on the first page of his newspaper this week and every week. We start our second 175 years with a renewed determination to live up to them.